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Grant of unconditional interim injunction is improper and contrary to the legislative policy: Bom HC

The Division Bench of the Bombay High Court comprising Justices Nitin Jamdar and Abhay Ahuja was hearing a petition and held that the grant of unconditional interim injunction without considering the admitted positions and implications, and without imposing any conditions, was improper and contrary to the legislative policy, leading to the quashing of the impugned order.

In the present case, the record placed before the court discussed a loan restructuring where the liability increased, and the petitioner (IIFL) and respondent granted an indulgence to the borrowers. However, the secured creditors cannot be expected to wait indefinitely for their dues. The respondents' offer of a one-time settlement for a lower amount was conditional and involved borrowing from a third party, so the petitioner was justified in rejecting it.

The Debt Recovery Appellate Tribunal (DRAT) did not render any finding on merits but directed the Debt Recovery Tribunal (DRT) to dispose of the Securitization Application promptly. The petitioner argues that it can be seen from the reasoning, the dismissal of the appeal was mechanical and DRAT failed to consider their points or the governing enactments.

The respondents argued that the impugned order was only interim, and the matter was fixed before the DRT. They propose time-bound disposal and cooperation. However, the petitioner claimed that the injunctive orders have hindered them from recovering their dues since June 2022, and they should be allowed to proceed with enforcement.

The document criticizes the DRT and DRAT for treating the grant of interim relief as routine, without considering the implications or balancing the equities. The DRT should have taken into account the admitted positions and technical objections raised by the respondents. The dismissal of the appeal by the DRAT was seen as mechanical and contrary to the governing statutes' objective.

The High Court noted that the respondents are not entitled to unconditional interim injunctions. The impugned order will operate until a specified date, and any extension of the relief will not be automatic or unconditional. The DRT may impose conditions for granting interim relief, such as depositing the principal sum due or cancelling the sub-delegation made by the Mamlatdar.

The High Court quashed the DRAT's order and limits the ad-interim relief until a specific date. The DRT may continue the relief with conditions or take corrective measures regarding the sub-delegation.

The writ petition was allowed.


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