Jayesh Sukhdeo Shinde vs Bank of Maharashtra & Ors

Ashok Menon, Chairperson

The appellant is in appeal impugning the order dated 28.08.2024 in I.A. No.2056/2024 in Securitisation Application(S.A.) on Diary No.1604/2024 on the files of Debts Recovery Tribunal, Pune (DRT) granting conditional protection to the applicants therein subject to payment of 20% of the amount in two tranches. The 1st tranche of 10% has been deposited and the 2nd tranche of 10% is not yet deposited. It was also made clear that the respondent bank is at liberty to take possession of the secured asset in case there is a breach in payment of the amount as directed. The amounts were not paid as directed and the appellant has come in appeal.

The appellant is the 1st applicant in the S.A. The rest of the applicants have not filed an appeal. The appellants will first have to comply with the mandatory requisite of complying with Section 18(1) of the SARFAESI Act by making a pre-deposit. The possession of the property has not been taken and the proceedings are still pending u/s 13(4) of the SARFAESI Act and therefore, as per the decision of the Hon’ble Supreme Court in M/s. Sidha Neelkanth Paper Industries Private Limited and Another versus Prudent ARC Limited and Others 2023 SCC OnLine SC 12, the threshold amount for calculation of the pre-deposit would be the amount mentioned in the demand notice. As per the demand notice issued u/s 13(2), the amount demanded is ₹1,43,52,983/-. On filing the appeal, the appellant offered to deposit ₹20 lakhs towards pre-deposit that was allowed to be deposited in two tranches of ₹10 lakhs each and that order has been complied with and subject to such payment, protection was granted from dispossession of the appellant from the secured asset till the application for waiver of deposit is heard.

The appellant has contended that the notice u/s 13(2) was issued only to the principal borrowers namely the applicant Nos.1 & 2 and the other two applicants who are the guarantors were not served with any notice u/s 13(2) and therefore, the demand made is not legal. That apart, it is also stated that following the demand notice, symbolic possession of the property was taken which also would be defective because the demand notice was not served on the guarantors.

The Ld. Counsel appearing for the respondent submits that the secured asset against which the respondent bank is proceeding belongs to the principal borrowers and they have been admittedly served with a demand notice. The fact that demand notice has not been served upon the guarantors will not be sufficient to quash the entire Sarfaesi measures because no property belonging to the guarantors has been proceeded against.

The appellant will have to prove that there is a prima facie case and also prove that he is under financial strain to get the 25% of the pre-deposit amount waived under the 3rd proviso to Section 18(1) of the SARFAESI Act. The only ground which the appellant has taken is regarding the non-service of the notice on the guarantors. I find substance in the arguments advanced by the Ld. Counsel appearing for respondent that the property which is proceeded against belongs to the principal borrowers and they have been served with notice. Only in case the property of the guarantor is being proceeded against, should a notice be issued to the guarantor and therefore, there does not appear to be any infirmity as regards the notice u/s 13(2) is concerned. The 1st applicant who is the appellant herein has produced the Income Tax Returns for the year 2022-23 which indicates that he had an income of ₹20,34,110/- for that assessment year. The 2nd

applicant in the S.A., who is the 2nd respondent herein has not produced the Income Tax Returns. When an application is filed by one of the borrowers, his income alone would not be sufficient to give him the benefit of the 3rd proviso to Section 18(1). The income of the borrowers will have to be taken in totality. The appellant as well as the 2nd respondent are both doctors and it is submitted by the Ld. Counsel appearing for the respondent that they are running a hospital that is flourishing and the photographs of that hospital are also produced in support of the reply which has been filed by the respondent. The income that is derived from the hospital is not produced to indicate that the appellant is under financial strain. Under the circumstances, the appellant is not entitled to get any indulgence of getting 25% of the pre-deposit waived. The threshold amount by calculating the pre-deposit is ₹1,43,52,983/-. The appellant is directed to pay the sum of ₹70 lakhs as pre-deposit towards which the appellant has already deposited ₹20 lakhs and the balance ₹50 lakhs shall be paid in two equal instalments of ₹25 lakhs each within a gap of three weeks and two weeks respectively, as stated hereinunder.

Numbers of Instalments

Payment on or before

1st Instalment of ₹ 25 lakhs

12.11.2024

2nd Instalment of ₹ 25 lakhs

26.11.2024

Upon deposit of the 1st instalment of the pre-deposit, the recovery stand stayed till the next date of hearing.

Default in payment of any of the amount/instalment 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. Payment by RTGS shall be communicated to the Registry for verification.

As and when the said amount is deposited, it 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 respondent is at liberty to file a reply in the appeal with an advance copy to the other side.

Post on 13.11.2024 for reporting compliance with the payment of 1st instalment.