AI Structured Summary
Not yet generated for this judgment
Judgment
Ashok Menon, Chairperson
Heard learned counsel for the Appellant and the Respondent on the application filed for a waiver of pre-deposit u/s 18 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act).
Appellants are challenging the impugned order dated 21.04.2022 in I.A. No. 589/2022 in S.A. No. 191/2018 on the files of D.R.T.-III, Mumbai, wherein they had sought the stay of the SARFAESI measures which were being proceeded against them by the Respondent financial institution. The Ld. P.O. refused to grant a stay and aggrieved by that, they have come up with an Appeal.
As per the provisions of Section 18(1) of the SARFAESI Act, for entertaining their Appeal, the Appellants are liable to deposit 50% of the amount that has been claimed in the demand notice issued u/s 13(2) of the SARFAESI Act. In the instant case, two notices were issued u/s 13 of the SARFAESI Act. The first notice is dated 01.11.2017, however since there was a mistake in the notice, another notice was issued on 22.11.2017 calling upon Appellants to pay Rs.94,82,181/-with further interest and other contractual charges and penalties. The respondent financial institution has filed a reply before the D.R.T. in which it is stated that as of 18.04.2022 an amount of Rs.1,47,63,091/- is due and payable after adding accrued interest. The Appellants have raised grievances regarding the correctness of the calculation and the rate of interest that has been levied and stated that interest has been charged @ 16% p.a. and penal interest @ 36% p.a. has also been charged, which is not permissible. It is stated that initial agreement of the loan, the interest was to be calculated @ 10.50 % p.a. and, therefore, the calculations if done at that rate, the amount due will be much less.
While considering the Appeal before this Tribunal it would not be proper to go into the merits and objections of the Appellants raised in the S.A. because those are the matters which are to be considered and decided by the D.R.T.
At present, what is challenged before this Tribunal is only the refusal of grant of stay by the D.R.T. As regards the Sarfaesi measures. And for entertaining the Appeal, the Appellants will have to deposit 50% of the amount which is due from them.
The decision of the Hon’ble High Court of Bombay in M/s MRB Roadconst Pvt. Ltd. Vs. Rupee Co-op. Bank Ltd. [reported in AIR 2016 (NOC) 334 (BOM.)], settles the position that “the debt” is to be calculated inclusive of interest as on the date of filing of the Appeal, and is to be assigned the meaning given in S.2(g) of the RDDB act.
The definition of "debt" in clause (g) of section 2 of the RDDB Act reads thus:-
"2(g) "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;"
From the above, it is clear that the amount of debt is inclusive of future interest accrued. The amount due from the debtor in the case in hand is not yet determined by the D.R.T., and therefore, the only claim made by the creditor before this Tribunal is the amount claimed in the 13(2) notice, and the future interest that has accrued. That amount comes to more than Rs.1.47 Crores as per the calculation given by the Respondent creditor. Calculating 50% of that amount would come to approximately Rs.75 Lakhs. However, considering the averments raised in the Appeal expressing the financial difficulties that the Appellants are going through and the high rate of interest that has been charged, I find that Appellants are entitled to the indulgence of this Tribunal in getting the amount of pre-deposit reduced to the maximum extent possible, which is up to 25%. From the records it is seen that Appellants have been making sincere efforts to pay the amount in instalments and, therefore, it does not appear that Appellants have willfully defaulted to pay the same and also they have also come up with O.T.S. proposals for settling the loan amount, however the same was not accepted by the Respondent because of the huge gap that existed between the amount offered and the amount claimed.
Prima facie, an arguable case is made out by the Appellants to entertain the appeal. Under the circumstances, the Appellants are directed to deposit a sum of Rs.37 Lakhs in two equal tranches. The first tranche of Rs.18.50 Lakhs shall be deposited on or before 23. 06.2022 and the second tranche of Rs.18.50 Lakhs shall be deposited on or before 14.07.2022. On payment of the first tranche, there shall be a stay on all further measures under the SARFAESI Act intended to be taken by the Respondents, and status-quo as on date shall be maintained till the Appeal is disposed of. In case of default in payment of any of the above-referred instalments, the Appeal stands dismissed automatically.
The amount shall be deposited in the form of 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 nationalized bank, initially for 13 months and thereafter it will be renewed periodically.
Post on 24.06.2022 for reporting compliance concerning payment of the first tranche.