Kotak Mahindra Bank Limited vs. Narendra Jayantilal Trivedi & Anr.
Background
A borrower had defaulted on a loan for over two decades since the bank's civil suit was filed in 1986; the debt (with the Debts Recovery Tribunal decree and later SARFAESI proceedings) remained substantially unpaid despite the borrower recovering only a fraction of the demanded amount. After a Single Judge of the Gujarat High Court dismissed the borrower's writ petition with exemplary costs (finding it an abuse of process meant only to stall recovery), the borrower filed a Letters Patent Appeal before the Division Bench, which granted an ex-parte ad-interim stay against dispossession and against paying costs. The bank appealed to the Supreme Court against that stay.
Decision Breakdown
The Supreme Court found that the borrower had used a string of proceedings across two decades solely to delay repayment, and criticized the Division Bench for granting and then extending an ex-parte stay without engaging with the strong findings of the DRT and the Single Judge (both of which found the borrower had acted in bad faith and used litigation only to avoid payment). It also disapproved of the borrower's tactic of withdrawing the Letters Patent Appeal, after the Supreme Court had already issued notice on the bank's appeal, in a "calculative move" to make the bank's appeal infructuous, while still trying to keep the benefit of the interim relief. The Court quashed the parts of the Division Bench's order that had extended the stay, reduced costs, and shielded the Single Judge's adverse observations from consideration by other forums, and disposed of the appeals with an enhanced cost of Rs. 1,00,000 payable by the borrower.
Lesson Learnt
Courts will not tolerate litigants who file successive proceedings purely to delay recovery of an admitted debt, or who try to strategically withdraw an appeal to defeat a pending appeal in a higher court while still keeping its interim benefits: such conduct invites costs and reversal.