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Judgment
Ashok Menon, Chairperson
1 The matter is taken up for hearing by way of a praecipe filed by the Appellants for seeking urgent relief.
The Appellants are in appeal impugning the order dated 12. 03.2024 in the Securitization Application (S.A.) No. 552/2019 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) wherein the Ld. Presiding Officer passed an interlocutory order granting protection to the Appellants against the Sarfaesi action taken by the Respondent bank for the recovery of the debt due under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). Several contentions have been raised in the application filed by the Appellants the main among which is the validity of the demand notice issued u/s 13 (2) of the SARFAESI Act. The Ld. Presiding Officer did not go into the merits of the contentions raised. The only consideration made in the impugned order is based on the submission made by the Chief Manager of the bank who stated that for up-gradation of the account from Non-Performing Asset (NPA) to regular, the Appellants would have to pay total a sum of ₹61,73,521.39 and that there is a total outstanding amount a sum of ₹1 crore due and payable by the Appellants. The Appellants did not make any undertaking to pay the amount. The impugned order refers to the Appellant's undertaking to pay the total sum of ₹25 lakhs on or before 31.12.2023 toward the full and final settlement of the entire dues. But the figures given by the Chief Manager of the bank were different. The Ld. Presiding Officer has not gone into the merits of demand and has directed the Appellants to deposit a sum of ₹5 lakhs within two days from the date of the order and a balance of ₹56,73,521/- in three tranches during April. The Appellants are aggrieved and hence, in the appeal. The Appellants submit that they had not undertaken to pay the amount as directed in the impugned order. They had undertaken to pay only a sum of ₹25 lakhs which they believe was the balance due.
It is pertinent to note that the Sarfaesi action was initiated against five items of the secured assets. Out of that, two items of properties have already been sold and the sale has not been challenged. A sum of ₹47.71 lakhs recovered by the sale of the items of the properties are to be accounted for. Over and above that the Appellants had also paid a sum of ₹32 lakhs. The total amount that is demanded in the 13 (2) notice dated 01.01.2019 is ₹79,78,957.01 and the Appellants have already paid a sum of ₹79.71 lakhs since they have not challenged the sale. Despite that, the demand is now for a sum of more than ₹1 crore. It is not understood how the amount has swollen in such proportion. No account statement was submitted by the Respondent bank. The perusal of the 13 (2) notice indicates that only a total sum was demanded, and over and above that, unapplied interest was also demanded. What is the unapplied interest has not been specified. Under the circumstances, prima facie, there is a clear violation of section 13 (3) of the SARFAESI Act and the demand notice does not stand the scrutiny of the statutory provision for the Sarfaesi action to be initiated by the Respondent bank. In case the demand notice is faulty, the entire Sarfaesi action will have to fall. But not a word has been uttered in the impugned order about the insufficiency of the demand notice, which is very unfortunate. Indeed, an unconditional stay of the Sarfaesi action is not what is contemplated. A praecipe was moved earlier and the Ld. Counsel appearing for the Respondent bank had sought time to file a reply. But even today when the matter is taken up, no reply is forthcoming and the Ld. Counsel appearing for the Respondent bank seeks further time to file a reply. The exact amount that is due is not available for consideration by this Tribunal.
The outstanding amount that the Respondent bank mentioned as an over-due before the D.R.T. is ₹61,73,521.39. The Appellants have produced the statement of the account which after deducting the amount which has been received by the bank by way of sale and the payment made by the Appellants would indicate that the total shows outstanding due as ₹27,74,975.01 as of 21.02.2024. But it is clear from the account statement there is no interest calculated. Since the Appellants are not challenging the sale of the two items of the properties the amount received by way of sale as also the amount which is being paid by them will have to be deducted from the outstanding amount. But in that case, the unapplied interest will also have to be calculated and added up. It is clear from the account statement that no interest has been calculated. Undoubtedly there is some amount due toward the interest from 01.01.2019 onward. The Ld. Counsel appearing for the Respondent bank has no instruction regarding the account statement which is produced by the Appellants. I would, therefore, roughly take the threshold amount as ₹30 lakhs. The Appellants are directed to deposit a sum of ₹12 lakhs as pre-deposit. The Ld. Counsel appearing Appellants submits demand draft for a sum of ₹5 lakhs is being deposited today and the balance amount a sum of ₹7 lakhs shall be deposited within three weeks, i.e. on or before 23.04.2024.
Given the payment of a sum of ₹5 lakhs today, the possession of the property intended to be taken on 06.04.2024 shall stand deferred till the next date of hearing.
Default in payment of any of the instalments/amount on time shall entail the dismissal of the appeal without any further reference to this Tribunal.
The amount shall be deposited in the form of a Demand Draft/RTGS in favour of the Registrar of this Tribunal.
As and when the said amounts are deposited, they shall be invested in term deposits in the name of Registrar, DRAT, Mumbai, with any nationalised bank, initially for 13 months, and thereafter to be renewed periodically.
With these observations, the I.A. is disposed of. The Respondents is at liberty to file a reply in the Appeal with an advance copy to the other side.
Post on 24.04.2024 for reporting compliance regarding the payment.