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Judgment
Ashok Menon, Chairperson
The Appellants are in appeal impugning the order dated 27.12.2023 in Securitization Application (S.A.) No. 175/2022 on the files of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) dismissing the S.A. filed by the Appellants seeking to quash the Sarfaesi action taken by the Respondent bank under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act for short) against the Appellants for recovery of the debt allegedly due from the them.
The facts and brief are thus:-
The Appellant had availed a loan to the tune of a sum of ₹1,85,45,597/- vide sanction letter dated 17.12.2018. Consequent to the COVID-19 pandemic, the Appellants were not able to do their business and sustained huge losses. The vide letter dated 27.08.2020 the 1st Appellant requested the Respondent to sanction a working capital of ₹ 33 lakhs but no help was rendered. The amount was classified as a Non-Performing Asset (NPA) of 31.03.2021 and the demand notice was issued u/s 13 (2) of the SARFAESI Act calling upon the Appellants to pay a sum of ₹2,64,00,488.41 as of 30.04.2021. Since the Appellants failed to pay the amount within the stipulated time. The symbolic possession of the property was taken u/s 13 (4) of the SARFAESI Act of 02.08.2021. The Appellants raised certain objections against the action vide letter dated 27.08.2021 the bank replied to that by letter dated 08.09.2021. The Appellants allegedly deposited a sum of ₹18.50 lakhs toward the outstanding dues but the Respondent refused to restructure the loan. The original application was filed by the bank as O.A. No. 110/2022 and the proceedings under the SARFAESI Act were taken to sell the property and the sale notice was issued on 08.06.2022 fixing the auction sale of 15.07.2022. The Appellants filed the S.A. challenging the Sarfaesi measures.
The D.R.T. vide order dated 03.08.2022 directed the Appellants to deposit 10% of the outstanding dues by 18.08.2022 and a further 10% by 31.08.2022. After that, when the matter was taken on 3. 12.2022 the Appellants submitted that they had deposited 20% of the outstanding dues and moved an application for Guarantee Emergency Credit Line (GECL) facilities before the bank which the bank rejected vide letter dated 08.09.2022 on the ground that the Appellants have not deposited the entire over dues amount to regularized the account and hence, the Appellants are no entitled GECL facilities. The Appellants contend that the bank has committed irregularity in the disbursement of the loan. No help was rendered to restructure the loan or to grant a benefit to which the Appellants were entitled given the Covid-19 pandemic. The sale has now been scheduled to take place today.
The Ld. Presiding Officer did not find any substance in the contentions raised by the Appellant and therefore, the S.A. was dismissed.
Given the challenge to the sale notice the Appellants will have to comply with the mandatory provision of making a pre-deposit for the appeal to be entertained as per the decision of the Honble Supreme Court of India in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12, the Appellants will have to deposit the amount based on the sale notice which was issued. The amount mentioned in the sale notice is a sum of ₹2,78,80,939.32. The Appellants produced the income tax statement of the 1st Appellant to prove that the concerned is not functioning and therefore, requested the concession of limiting the pre-deposit to 25% of the debt due. The income tax returns of the rest of the Appellants have not been produced. The Appellants do not have a strong prima facie case also and therefore, they are not entitled to concern of getting the pre-deposit amount reduced to 25%.
Considering the entire facts and circumstances, the Appellants are directed to deposit a sum of ₹1.35 crores as pre-deposit. The said amount shall be deposited in three instalments within the gap of three weeks each as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 35,00,000/-
01.04.2024
2nd Instalment of ₹ 50,00,000/-
22.04.2024
3rd Instalment of ₹ 50,00,000/-
13.05.2024
On payment of the 1st instalment, the further Sarfaesi measures shall stand stalled till the next date of hearing.
Default in payment of any of the instalments/amount 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 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 thereafter to be renewed periodically.
With these observations, the I.A. is disposed of. The Respondents is at liberty to file a reply in the Appeal with an advance copy to the other side.
Post on 02.04.2024 for reporting compliance regarding the payment of the 1st instalment.