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Judgment
Ashok Menon, Chairperson
The appellants are in appeal impugning the order dated 29.02.2024 in Securitisation Application (S.A.) No. 39 of 2024 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) wherein no protection whatsoever was granted to the appellants against the Sarfaesi action taken by the respondent bank under the provisions of the of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act,” for short) to recover the amount due to the bank from the appellants. The appellants have raised several contentions challenging the Sarfaesi action the main among which is that the interest calculated and demanded is not proper and as per the guidelines issued by the RBI. The appellants had expressed their willingness to regularise the account for which a correct calculation of the amount was necessary which was not provided. The S.A. when it came for the first time before the D.R.T, the appellants had filed I.A. No. 240 of 2024 for interim protection.
By order dated 06.02.2024, the appellants were granted protection till the next date of hearing subject to a deposit of ₹40 lakhs immediately. It is stated that the appellants had deposited ₹40 lakhs immediately and therefore, they were granted protection till the next date of hearing. However, the I.A. was disposed of without entering into the merits of contentions in the S.A. When the S.A. came up for hearing again on 29.02.2024, the applicants requested an extension of stay because the I.A. requiring a stay was already disposed of on 06.02.2024. The D.R.T. was not inclined to grant any stay as a result of which the respondent bank is allegedly proceeding with the Sarfaesi action under Sec. 13(4) and threatened dispossession of the residential building which is the secured asset. The appellants are before this Tribunal in appeal.
To entertain this appeal, the appellants will first have to comply with the mandatory provisions of Sec. 18(1) of the SARFAESI Act. After adjusting the sum of ₹40 lakhs which was paid to the respondent bank towards the principal amount due, the amount demanded under Sec. 13(2) which was ₹1,45,84,747/- as on 14.12.2018. The amount has come down to ₹1,36,09,398/ as of 20.02.2024.
The Ld. Counsel appearing for the appellants submits that the appellants are under financial strain. The first appellant is a company and the appellant Nos. 2 and 3 are the directors of the company. the mother of the second appellant is allegedly suffering from cancer and is undergoing treatment for which expenses are required and the second appellant has children studying in the college for which too, expenses will have to be incurred and therefore, they are not in a financially sound position to pay 50% of the debt due. Therefore, they seek the indulgence of the Tribunal exercising the jurisdiction under Sec. 3rd proviso to Sec. 18(1) to waive deposit of 25% of the debt due.
The Ld. Counsel appearing for the respondent bank submits that the appellants are not entitled to any indulgence and therefore, they would be directed to deposit 50% of the amount due. It is also pointed out that the disposal of I.A. No. 240 of 2024 was never challenged though it was disposed of by order dated 06.02.2024. Therefore, the appellants are not entitled to any relief challenging the order dated 29.02.2024 which does not state anything regarding the extension or decline of the interlocutory order to protect the appellants. The reading of the order would indicate that neither the appellants' request for protection was granted, nor declined. Therefore, a strict interpretation of the order does not allow the appellants to challenge that order. The order that ought to have been challenged is the order dated 06.02.2024 which they did not do. Moreover, it is also pertinent to note that the appellants have not produced the income tax returns or the balance sheet of the first appellant company to substantiate their case of financial strain. Since the appellants had paid ₹40 lakhs towards the debt due directly to the bank, some indulgence needs to be shown in the matter of deposit of the pre-deposit. Hence, the appellants are directed to deposit a sum of ₹45 lakhs as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellants undertakes to deposit ₹35 lakhs on or before 24.06.2024 and the balance amount of ₹10 lakhs shall be deposited within three weeks thereafter i.e. on or before 15.07.2024 as stated hereinunder.
Number of Instalments
Payment on or before
1st Instalment of ₹35.00 lakhs
24.06.2024
2nd Instalment of ₹10.00 lakhs
15.07.2024
Subject to the deposit of ₹35 lakhs, further Sarfaesi actions shall stand stalled 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 with 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.As. are disposed of. The respondent is at liberty to file a reply in these appeals with an advance copy to the other side.
Post on 25.06.2024 for reporting compliance regarding the payment of the first instalment.