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Judgment
Ashok Menon, Chairperson
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 27.12.2023 in Interim Application (I.A.) No. 3473/2023 in Securitization Application (S.A.) No. 244/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) wherein the Appellants asked for a stayconcerning the taking over the possession of the secured assets exercising jurisdiction under the order of the Chief Metropolitan Magistrate (CMM) u/s 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). It is understood that there are 12 flats which are the secured assets and being proceeded against. The Appellants had suggested that they are willing to surrender one flat which could also be sold by the secured creditor for the realization of the amount due. It is pointed out that each flat would fletch not less than ₹8 crores. The Appellants are also willing to settle the entire dues with the secured creditor. It is pointed out that all the flats need not be taken possession of as a couple of flats would be enough to clear the entire dues.
However, the Ld. Presiding Officer has vide this impugned order directed that the possession of the property could be taken by the Respondents but it shall not be put to sale till the next date of hearing. The possession is scheduled to take place today. The Ld. Counsel appearing for the Respondent Financial Institution under instructions, submits that the possession of the flats has already been taken by the commissioner appointed by the CMM. Hence, the appeal itself has now become infructuous, submits the Ld. Counsel. In response to that, the Ld. Counsel appearing for the Appellants on instructions submits that the possession of all flats has not yet been taken and that they have absolutely no objections to the Respondents taking possession of two flats. Out of which one flat can also be sold for the realisation of the debt due. After the sale of one of the flats, the picture would be obvious as to the actual value of each flat. There is no valuation report available at this point and therefore, it is not possible to decide on the valuation of the flats and how much flats would be required to clear the entire debt due.
To entertain the appeal, the Appellants will first have to cross the hurdle of the mandatory pre-deposit contemplated u/s 18 (1) of the SARFAESI Act. Since the Appellants have challenged the Sarfaesi measures up to section 13 (4) the threshold amount for deposit would be the amount mentioned in the demand notice u/s 13 (2) as per the settled position enunciated in Sidha Neelkanth Paper Industries Private Limited & Ano vs. Prudent ARC Limited & Ors 2023 SCC OnLine SC 12, which in the instant case is around ₹13.5 crores. the Appellants have challenged the Sarfeasi measures alleging that the classification of the account as Non-Performing Assets (NPA) was not proper. It is also pointed out that there is a necessity for taking possession of all the flats because the sale of a couple of flats would be sufficient to clear the entire dues. The steps regarding taking over symbolic possession of the flat are also challenged. The challenges raised regarding the Sarfaesi measures will have to be decided by the D.R.T. and therefore, I am not entering into the merits of those challenges at present while considering this application u/s 18 (1) of the SARFAESI Act.
The Appellants have not produced any documents to prove their financial hardship and as per the decision of the Hon’ble High Court of Bombay in Sterlite Technologies Ltd. Vs. Union of India & Ors. 2012 (2) Mh.L.J. 112, the two necessary ingredients for deciding on the mandatory pre-deposit are the existence of a prima facie case and the financial hardship of the Appellant.
Under the circumstance, the Appellants are directed to deposit a sum of ₹7 crores as pre-deposit. The Ld. Counsel appearing for the Appellants offers to deposit a sum of ₹1 crores by today by way of pay orders in favour of the Registrar of this Tribunal and seeks time to deposit the balance amount.
The Ld. Counsel appearing for the Respondents submits that unless the entire 50% amount is deposited and the mandate u/s 18(1) no interim reliefs may be granted in favour of the Appellants. After considering the entire facts and circumstances of this case, and keeping in view the deposit of ₹1 crore towards pre-deposit, there shall be an order preventing the Respondent from taking over possession of the secured assets except two flats undertaken to be surrendered, till the next date of hearing provided, the possession of the flats is not taken by 12:30 P.M. today. However, it is clarified that the Respondent is at liberty to take physical possession of two flats and even proceed to sell one of the flats. The balance amount of ₹6 crores shall be deposited in two equal instalments of two weeks each as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 3,00,00,000/-
11.01.2024
2nd Instalment of ₹ 3,00,00,000/-
25.01.2024
Default in payment of any of the instalments/amount shall entail in dismissal of the appeal without any further reference to 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 Respondent is at liberty to file a reply to the Appeal with an advance copy to the other side.
List on 12.01.2023 for reporting compliance regarding the payment of the 1st instalment.