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Judgment
Ashok Menon, Chairperson
The matter is taken up for hearing by way of a praecipe filed by the appellant for seeking urgent relief.
The appellant impugns the order dated 30.10.2024 in Securitisation Application No. 229/2024 on the files of Debts Recovery Tribunal-II, Mumbai (D.R.T.) wherein on a submission made by the respondent that the appellant had submitted an OTS for ₹ 6 crores against an outstanding amount of ₹16 crores, the proposal was objected to and the D.R.T. granted the appellant two months to settle the matter failing which liberty was granted to the respondent financial institution to take appropriate measures under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short). To understand this order, an earlier order of the D.R.T. dated 20.08.2024 will have to be perused by which, subject to payment of ₹ 6 crores in instalments, protection was granted to the appellant against the Sarfaesi measures initiated by the respondent and it was also directed that since the appellant was keen on settling the dues, they were directed to make an OTS proposal. The OTS proposal as mentioned in the order dated 30.10.2024 was only for ₹6 crores as against the outstanding amount of ₹ 16 crores and hence was rejected by the respondent which resulted in granting them the liberty to proceed with the Sarfaesi action. It is pertinent to note that neither in the order dated 20.08.2024 nor in the impugned order dated 30.10.2024 did the D.R.T. go into the merits of the contentions raised by the appellant in his challenge to the Sarfaesi action and the applications filed by the appellant pending the S.A. was to seek interlocutory protection till the disposal of the S.A. and they had raised several contentions challenging the Sarfaesi action which were not delved into.
The fact that the appellant did not comply with the directions to settle the dues, is not a reason for withdrawing the protection granted to them. An order of protection to an applicant can be only withdrawn based on the merits of the case and under a change in the circumstances, which I am afraid, has not been adhered to in the impugned order. Hence, as far as the challenge to the impugned order is concerned, the appellant does have a case in this appeal.
Regarding the challenge to the Sarfaesi action taken by the respondent, I find that the appellant does not have a very strong prima facie case. It is pointed out that there was an Arbitral Award and in consequence to that, the demand notice was issued for ₹13,40,24,954.78 as of 15.06.2022. After that, there was an OTS proposal made by the respondent on 28.11.2022 which was accepted by the appellant. Therefore, it cannot be said that the challenge to the demand notice or the Sarfaesi action thereafter, would survive given the OTS proposal made and accepted by the appellant. They had agreed to pay a sum of ₹ 9,75,00,000/- as against the then outstanding of ₹ 15,06,68,713/-. After having agreed to pay the amount, the appellant cannot now go back and challenge the Sarfaesi action.
However, to entertain this appeal, the appellant will have to comply with the mandatory requisite of making the pre-deposit u/s 18(1) of the SARFAESI Act. The appellant has pleaded impecuniosity stating that though they have certain income as is seen in the returns and the statements filed by them together with the application for waiver, they have not produced any documents to indicate that they are running short of funds to pay 50% of the demanded amount. Even as per the impugned order, they had agreed to pay ₹ 6 crores towards the settlement of the dues which indicates that they have the money. The Income Tax Returns do not show much income. But the statement which is mentioned together with the application for waiver indicates that there are certain incomes derived from the trust which is been appropriated for the expenses of the institution. The Ld. Counsel appearing for the respondent submits that the appellant has been constantly coming up with OTS proposals to stall the taking over of possession and then again default payment and come up with the application as and when further measures are taken which according to the bank indicates that the appellant lacks bonafides in his statements to repay the entire debt that is due.
Taking the entire facts and circumstances of this case, I find that the appellant is entitled to some concession though not to the extent of an entire waiver as is prayed by them in their application which is not available to them. The threshold amount is taken as the amount mentioned in the demand notice u/s 13(2) as ₹13,40,24,954.78 and the appellant is directed to pay the sum of ₹ 6 crores as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellant undertakes to pay ₹ 75 lakhs on or before 26.12.2024. The balance amount of ₹5,25,00,000/- shall be paid in two equal instalments within a gap of two weeks each as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 2,62,50,000
09.01.2025
2nd Instalment of ₹ 2,62,50,000
23.01.2025
Subject to payment of ₹ 75,00,000/-, the further Sarfaesi measures shall stand stayed till the next date of hearing.
It is made clear that in case of any 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 27.12.2024 for reporting compliance of 1st instalment of payment of pre-deposit.