AI Structured Summary
Not yet generated for this judgment
Judgment
Ashok Menon, Chairperson
The order dated 06.09.2022 in S.A. No. 126/2022 on the files of the Debts Recovery Tribunal No. I, Ahmedabad (‘DRT’ for short) stands impugned in this Appeal by the Appellants who are aggrieved with the order declining to stay the Sarfaesi measures initiated by the Respondent State Bank of India. The Appellants state that they have a very good case on the merits. The entire Sarfaesi proceedings, starting from the demand notice issued under Sec. 13(2) onwards has been challenged. It is stated that the notice was flawed for not having complied with a mandatory provision under sub-section 3 to Sec. 13. That apart, it is also stated that the notice under Sec. 13(4) was defective. There is also a breach of Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002. However, on a prima facie consideration of the contention raised by the Appellants, the Ld. Presiding Officer was not convinced of a prima facie case in favour of the Appellants and found that insufficient to grant a stay of the Sarfaesi measures, and in consequence of which, one item of the secured assets has already been sold and the second item is being proceeded against. The Ld. Counsel appearing for the Appellants submits that there was a demand of ₹4,08,11,986.68 in the demand notice under Sec. 13(2) as of 15.11.2021. Subsequently, one item of the property has been sold thereby considerably reducing the interest component. The Appellants state that the Sarfaesi measures are flawed and will have to be ultimately set aside. They may be given the maximum benefit of the third proviso to Sec. 18(1) of the SARFAESI Act.
The Respondent Bank has filed a reply stating that the contention against the Sarfaesi measures is not sustainable. There is still a huge amount outstanding and there is absolutely no ground for invoking the third proviso to Sec. 18(1) to reduce the mandatory deposit from 50% to 25% as claimed.
After having heard both sides and on perusal of documents and records, I find that the Appellants have an arguable case and the details of the inadequacy of the notice under Sec. 13 (2) and the subsequent measures under Sec. 13(4) as well as violation of Rules will have to be examined. The Appellants have not in so many words pleaded financial stress which is also an essential requirement to invoke the provision of the third proviso to Sec. 18(1) of the SARFAESI Act. Considering that there is an outstanding amount of more than ₹4.08 crores pending to be paid, in the interest of Justice, I deem it would be sufficient to direct the Appellants to deposit a sum of ₹1.50 crores in two equal instalments as pre-deposit. The 1st instalment of ₹75 lakhs shall be paid on or before 30.11.2022 and the 2nd instalment of ₹75 lakhs shall be paid in another 3 weeks, on or before 21.12.2022. Failing which, the Appeal shall stand dismissed, 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.
On deposit of the amount within the stipulated time, all further proceedings to be initiated by Respondent under the SARFAESI Act shall stand stayed.
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 01.12.2022 for reporting compliance concerning the deposit of the 1st instalment.