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Judgment
Ashok Menon, Chairperson
This is an application filed under section 18 (1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFAESI Act, for short) filed by the Appellants seeking the indulgence of this Tribunal to entertain the appeal on accepting a mandatory pre-deposit of 25% of the debt due.
The Appellants impugn the order dated 22/02/2024 in Securitisation Application (S.A.) No. 46 of 2024 on the files of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) declining to grant protection against the 1st Respondent Union Bank of India from proceeding to take physical possession of the secured assets for recovery of the debt allegedly due from the Appellants.
The facts and brief are thus:
Late Ashokbhai Ramanbhai Barot and his wife Hinaben, the 1st Appellant herein had admittedly availed a loan from the 1st Respondent bank for purchasing a house which was sanctioned vide letter dated 18/11/2013 and was repayable in 240 equated monthly instalments (EMI) of ₹ 29,056/-each commencing from December 2013. The loan was secured by a mortgage deed executed by the Appellant and her late husband. Mr Ajay Ishwarbhai Prajapati stood as personal guarantor. Repayment of the loan was defaulted resulting in the account being classified as non-performing assets (NPA) on 31/08/2019. The demand notice was issued under section 13 (2) of the SARFAESI Act on 03/12/2022 demanding a sum of ₹32,02,061.49. The amount was not paid within the stipulated time resulting in the bank taking symbolic possession of the subject property on 18/08/2023 under section 13 (4) of the SARFAESI Act. The subject property was put up for auction sale on 13/10/2023 vide sale notice dated 02/09/2023. Notice was allegedly served on the borrowers on 09/09/2003. The property was sold to the highest bidders namely Prakashkumar Krushnakumar Sonerga and Mrs Vandana Dashrathbhai Parmar for a consideration of ₹53.44 lakhs. The entire sale consideration was paid and the sale was confirmed.
The bank applied under section 14 of the SARFAESI Act before the Additional Chief Metropolitan Magistrate, Ahmedabad (ACMM ) for taking physical possession of the subject property. Orders were passed on 20/12/2023 directing the Commissioner to take physical possession of the subject property. The attempt to take physical possession of the subject property on 04/02/2024 failed and thereafter, possession was scheduled to be taken on 24/02/2024. Threatened of dispossession of the subject property, the Appellants filed the aforesaid S.A. on 31/01/2024.
The challenge raised against the Sarfaesi action by the Appellants was that the principal borrower Ashokbhai had expired on 03/01/2021. The demand notice under section 13 (2) is also the proceedings before the ACMM was initiated against the deceased borrower and therefore, is a nullity.
It is contended that the communication was received from the Respondent bank on 08/02/2023 offering to settle the entire debt under an OTS scheme for a sum of ₹22,49,530.92 as against outstanding dues of ₹24,99,478.80. The offer was open till 31/03/2023. The Appellants had allegedly accepted the offer and intimated the bank on 31/03/2023. It is further contended that the scheme was extended up to 30/09/2023. In that letter accepting the offer to settle the debt, the Appellants had allegedly intimated to the bank about the demise of Ashokbhai. There was however no response from the bank and therefore, apprehending that further action may be taken against the Appellants, they approached the Honble High Court of Gujarat by filing a Special Civil Application No. 17363 of 2023 which was disposed of on 16/10/2023 directing the bank to decide the representation allegedly made by the Appellants on 31/03/2023 offering the one-time settlement on 08/02/2023 per law.
It is alleged that the bank did not consider the representation of the Appellants. Another letter was addressed to the bank by the Appellants on 19/10/2023 requesting the bank to consider the representation made by the Appellants on 31/03/2023 accepting the OTS proposal and comply with the directions of the Honble High Court. The bank rejected the proposal vide letter dated 20/10/2023.
The Appellant therefore approached the D.R.T. with the S.A. and sought an interlocutory relief to restrain the Respondent bank from proceeding further with the Sarfaesi action. Vide the impugned order, the interlocutory relief was declined in the Appellants are now facing the threat of being dispossessed from the subject property. Hence this appeal.
For entertaining this appeal, the Appellants will first have to comply with the mandatory provisions of making a pre-deposit contemplated under section 18(1) of the SARFAESI Act. The Appellants contend that they have a good prima facie case and that being under a financial strain, they seek the indulgence of this Tribunal to invoke the discretion under the 3rd proviso to section 18 (1) by reducing the amount of pre-deposit to the minimum of 25% of the debt due.
The Ld. Counsel appearing for the Respondent bank contends that the bank was never informed about the demise of Ashokbhai. It is also contended that the bank has never received the letter dated 31/03/2023 allegedly sent by the Appellants accepting the OTS scheme. The Appellants did not respond to the demand notice issued under section 13 (2) nor did they approach the bank intimating about the demise of the principal borrower Ashokbhai. It is only when the Appellants were served with a notice regarding the taking over of physical possession of the secured assets did they approach the D.R.T. with the S.A. It is further contended that the RBI scheme of settlement by OTS had already expired by 30/09/2023. The Appellants did not avail the opportunity offered to them under the scheme. The letter issued by them to the bank to proceed with the expired OTS proposal was not considered by the bank and hence rejected. Even at the time of filing the application under section 14 of the SARFAESI Act, the bank was not aware of the demise of Ashokbhai. It is also contended that there was no representation for the bank before the High Court.
On a keen consideration of the facts and circumstances of this case, certain aspects need to be considered with regard to the contentions raised by the Appellants in the S.A. This Tribunal is therefore not inclined to throw overboard the appeal at the threshold. An opportunity is, therefore, granted to the Appellants to contest the appeal on its merits. The sale has already taken place and therefore the Appellants who are challenging the sale are under obligation to pay 50% of the amount of debt due inclusive of interest as of the date of filing of the appeal. The dues according to the statement submitted by the Ld. Counsel for the Appellant is ₹36,85,433.22. The Appellants are directed to deposit a sum of ₹18 lakhs as pre-deposit. The Appellants have already deposited a sum of ₹5 lakhs towards pre-deposit on 28/02/2024. The balance of ₹13 lakhs shall be deposited within 3 weeks from today i.e. on or before 22.03.2024.
Given the deposit of ₹5 lakhs towards pre-deposit the status quo as of date concerning the secured assets shall be maintained and the taking over of possession shall stand deferred till the next date of hearing.
Default in payment of any of the instalments entails in dismissal of the appeal without any further reference to this Tribunal.
The amount shall be deposited as a Demand Draft 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 after that to be renewed periodically.
With these observations, the I.A. is disposed of. The Respondent is at liberty to file a reply in the Appeal with an advance copy to the other side.
Post on 26.03.2024 for reporting compliance regarding payment.