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Judgment
Ashok Menon, Chairperson
The appellants are in appeal impugning the order dated 09.01.2024 in I.A. No.41/2024 in S.A. No.13/2024 on the files of Debts Recovery Tribunal-III, Mumbai refusing to grant any protection and specifically directed them to surrender the possession of the subject property in case they default in settling the account by 29.02.2024. The possession of the property was scheduled to be taken on 10.01.2024 which was deferred subject to payment of ₹25 lakhs by the Appellants which they paid but they were not able to settle the dues by 29.02.2024 and therefore, the direction of the D.R.T. to surrender the possession without any demand would come against them and hence they are in Appeal. There is no finding on merits in the impugned order. However, it seems that the Appellants have raised certain challenges to the SARFAESI measures which started with the issuance of the demand notice under Section 13(2) on 01/11/2014 demanding a sum of ₹1,76,59,627. The Appellants thereafter came up with an OTS proposal on 24.08.2021 which was accepted by the Respondent on 31.08.2021 which obliged them to pay the total sum of ₹1.41 crores and in acceptance of that OTS proposal they made an upfront payment of ₹14 lakhs. Thereafter they could not comply with the OTS proposal and defaulted in payment. There were other OTS proposals made last of which was made by the Appellants on 28.06.2024 for a sum of ₹2.10 crores but that was neither accepted nor rejected and is still pending for consideration by the Respondent. The Appellants fear they would be dispossessed of the secured assets on the 10th instant for which they have received a notice following an order under Section 14 of the SARFAESI Act. The Appellants, therefore, submit that they may be granted a waiver of 25% of the mandatory fee deposit and also stay on the intended dispossession.
Since the possession of the property has not been taken and proceedings are still under Section 13(4), the Appellants are liable to pay 50% of the debt due as per the demand notice under Section 13(2) of the SARFAESI Act. The 1st Appellant is a trust and the rest of the Appellants are the trustees who are also guarantors. The trust has produced the balance sheet and the audit report which indicate that they have limited income and that they may not be able to pay 50% of the debt due.
Since the Appellants had accepted the OTS proposal given by them on 24/08/2021 and accepted by the respondent on 31/08/2021 and had also made payment of ₹14 lakhs towards that it has to be assumed that they have waived the debt challenges to the SARFAESI Action taken by the respondents till that date. Hence, the appellants do not have a strong prima facie case in maintaining the S.A. The only point the appellants probably have in their favour is that they are under financial strain because their income is limited and they may be unable to pay off the entire debt without assistance from other sources.
To entertain the appeal, the appellants must first cross the hurdle of making a pre-deposit. Since the appellants do not have a strong prima facie case, the discretion of this Tribunal under the 3rd proviso of Section 18(1) cannot be exercised in their favour. However, I am not inclined to deny an opportunity to the appellants for dismissal of the appeal at the threshold and hence, the appellants are directed to deposit the sum of ₹65 lakhs as pre-deposit. The Ld. Counsel appearing for the appellants, upon instructions, undertakes to deposit the sum of ₹10 lakhs by the 8th instant. Subject to the payment of ₹10 lakhs, the possession scheduled to be taken on 10. 07.2024 shall stand deferred till the next date of hearing. The balance amount of ₹55 lakhs shall be paid in two instalments as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹25 lakhs
22.07.2024
2nd Instalment of ₹ 30 lakhs
05.08.2024
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.
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 09.07.2024 for reporting compliance of the payment.