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Judgment
Ashok Menon, Chairperson
The Appellants are borrowers/Guarantors/Mortgages who impugned the order dated 10.10.2023 in the Interim Application (I.A.) No. 3000/2023 in Securitization Application (S.A.) No. 31/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.).
The Appellants had filed the S.A. challenging the Sarfaesi measures initiated against the secured assets by the Respondent bank for default of payment. The grounds raised by the Appellants in challenging the Sarfaesi measures are that the classification of the account as Non-Performing Assets (NPA) was improper. It is stated in the demand notice issued u/s 13 (2) and some other notices issued state two different dates of NPA mentioned by the bank and therefore, the bank itself is not clear as to exactly what is the date classification of NPA.
It is further contended that the Appellants are conducting business in agriculture products and that the state of Goa had to face natural calamities in consequence of which the Appellants suffered heavy loss. It is contended that as per RBI guidelines, in case of natural calamities restructuring the loan has to be done and a moratorium period should be granted for repayment. The Appellants were not granted such benefit of restructuring or the moratorium.
It is further contended that the objection was raised by the Appellants to the demand notice u/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). In the reply sent by the Respondent bank u/s 13 (3A), the objection raised by the Appellants have not been properly addressed. It is also contended that the rate of interest has been compounded which is not permissible in case of an agricultural loan.
To entertain the appeal, the Appellants will first have to comply with the mandatory provision of making the pre-deposit u/s 18 (1) of the SARFAESI Act. The Appellants have in this application for waiver of pre-deposit sought a complete waiver of the deposit and have contended that Appellants Nos. 4 and 5 who are the mortgagors are suffering from cancer and are undergoing treatment and they are senior citizens without any source of livelihood. It is also contended that Appellant Nos. 1, 2, and 3 have little income and are not in a position to deposit the amount contemplated u/s 18 (1) of the SARFAESI Act. The income tax returns of Appellant Nos. 1, 2, and 3 have been produced in support of the arguments that the Appellants are under financial strain.
Per contra, the Ld. Counsel appearing for the Respondent bank submits that none of the five facilities granted to the Appellants are agricultures loans. It is further contended that the restructuring of three accounts was done on 31.03.2021 and the other two accounts were restructured on 27.02.2022. It is submitted that the RBI guidelines were not violated as alleged. Even consequent to the restructuring of the loan the Appellants did not pay anything. As a result of this, the debt was classified as NPA. It is pointed out that the RBI guidelines states that on the restructuring of loans and subsequent default in payment, the original NPA has to be classified from the date of the restructuring and therefore, the argument of the Appellants are not sustainable. The demand notice u/s 13 (2) is with regard to all these accounts which have been defaulted. A sum of ₹7,10,23,555.05 was demanded vide the demand notice dated 02.07.2022. But the Appellants did not pay anything. As of today, there is an outstanding due of ₹8.5 crores.
The Appellants had earlier filed I.A. No. 2814/2023 before the D.R.T. seeking interlocutory relief to stall taking over the possession of the secured assets. The Ld. Presiding Officer had vide order dated 13.09.2023 directed payment of a sum of ₹ͅ1 crore in tranches to the Respondent bank. The Appellants paid a sum of ₹10 lakhs but thereafter, defaulted in payment of the balance amount. As a result of which the interlocutory relief was vacated.
The Appellants thereafter, filed I.A. 3000/2023 seeking a relief that direction be given to the Respondent bank to permit Appellants Nos. 4 and 5 who are the mortgagors and owners of the secured assets, to continue residing in the property as a licensee offering to pay license fees of ₹12,000/- per month as they were suffering from cancer and undergoing treatment in Manipal Hospital in Goa. Records regarding their treatment have been produced. The Ld. Presiding Officer was not enthused with the prayers in the application and since there were no payments made by the Appellants toward the debts, the application was dismissed. It is this order that stands challenged.
The Ld. Counsel appearing for the Respondent submits that after having an outstanding dues of ₹8.5 crores the Appellants are demanding to continue in possession of the property for a pittance of ₹12,000/- per month as license fees. This cannot be allowed. The Appellants are not forthcoming with any substantial payment toward the debt. It is also submitted that the claims of the Appellants having financial strain are also not true. The balance sheet of the 1st Appellant Company is not produced. The income tax returns alone may not be sufficient to prove their impecuniosity. Hence, it is prayed by the Ld. Counsel appearing for the Respondent bank that the Appellants be directed to deposit 50% amount that is demanded in the demand notice for entertaining this appeal.
After having anxiously considered the rival submissions, the Appellants’ submission to the extent that the entire pre-deposit may be waived is not acceptable. This Tribunal is only empowered to reduce the amount to the minimum 25% exercising jurisdiction under the 3rd proviso to section 18 (1). The Appellants have not paid any amount toward the debt except the amount of ₹10 lakhs as directed by the D.R.T. They have not been making any earnest attempts to clear the dues. The contentions raised by the Appellants are not very attractive and this Tribunal is not enthused with those contentions challenging the Sarfaesi measures. Hence, the Appellants do not have any prima facie case. As regards the financial strain also apart from the income tax returns of the Appellants Nos. 1, 2 & 3 there is no other evidence of any financial strain. The Appellants are not entitled to get the pre-deposit reduced to the minimum of 25%. Taking the entire facts and circumstances into consideration, the Appellants are directed to deposit a sum of ₹3 crores as per-deposit which shall be deposited in three equal instalment of ₹1 crore each within the gap of three weeks each, as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 1,00,00,000/-
08.02.2024
2nd Instalment of ₹ 1,00,00,000/-
29.02.2024
3rd Instalment of ₹ 1,00,00,000/-
21.03.2024
Default in payment of any of the instalments shall entail 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 09.02.2024 for reporting compliance regarding the payment of the 1st Instalment.