The HC had, while issuing notice to the government and various lenders including RBL Bank and Yes Bank, refused to stay the DRT order and posted the matter for hearing on October 18.
Future Corporate Resources and Future Brands told a bench led by Chief Justice DY Chandrachud that the HC had observed the existence of a prima facie case in their favour, but erred in failing to note that irreparable injury will be caused by depriving them of the right to use their property without due process of law.
Senior counsel AM Singhvi and Ritin Rai, appearing for Future Group firms, said the companies have been restrained from dealing with not only the assets secured against credit facilities availed from one of the lenders only, but also all other assets as well.
Furthermore, the HC had failed to note that the tribunal had restrained them from dealing with assets worth ₹4,478.22 crore against a total debt of ₹132.41 crore, the appeal stated. Challenging the validity of various provisions of the Recovery of Debt and Bankruptcy Act 1993 that allegedly “confer drastic and extraordinary powers” upon the tribunal, the two Future companies said the provisions do not provide an opportunity of being heard before adverse orders are passed mechanically and without application of mind by the tribunal in respect of the assets and properties of debt-laden firms.
Such “wide-sweeping orders” of the tribunal have the effect of incapacitating the borrower from discharging the debt by liquidating its unsecured assets, thereby obstructing the recovery of debt and, thus act contrary to the very purpose of the Act, the firms stated.