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Judgment
Ashok Menon, Chairperson
The Appellants are in appeal impugning the order dated 22.12.2023 in the Securitization Application (S.A.) No. 849/2023 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) whereby the Ld. Presiding Officer declined to grant any protection to the Appellants from being dispossessed of the secured assets, mainly for the reason that they approached the D.R.T. by filing the S.A. on the eleventh hour when the possession of the property was scheduled to be taken on 24.12.2023 by the Court Commissioner deputed as per the order Sec.14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) passed by the Additional Chief Judicial Magistrate (ACJM), Surat. The Ld. Presiding Officer also observed that even if there is any infirmity of the Sarfaesi measures the Appellants would not lose the property forever considering the power granted to D.R.T. to restore the possession of the property u/s 17 (3) of the SARFAESI Act. The Appellants are aggrieved and hence, in appeal. The possession which was scheduled to take place on 24.12.2023 however did not take place and now, a fresh notice has been issued to take possession of the property on the 14th instant.
To entertain the appeal the Appellants will first have to comply with mandatory pre-deposit to make the pre-deposit u/s 18 (1) of the SARFAESI Act. The Appellants plead that they have a strong prima facie case given the Sarfaesi measures not being by the Act and Rules. It is pointed out that the demand notice under Sec. 13 (2) dated 02.06.2023 demands a sum ₹1,31,00,300/- as of 02.05.2023 without giving a breakup of the amounts due as principal and interest, which according to the Ld. Counsel appearing for the Appellants violates the mandatory provision of Sub-sec 3 to Sec. 13. It is pointed out that the symbolic possession of the secured assets was taken on 15.09.2023 and there is a violation of not complying with the mandatory provision of Rules 8, (1) & (2) of the Security Interest (Enforcement) Rules, 2002. The Appellants plead that they are under financial strain which is evidenced by the income tax returns of all the three Appellants produced by them. Since they have a good prima facie case, the mandatory pre-deposit may be kept at a minimum of 25% amount due, plead the Appellants.
The Ld. Counsel appearing for the Respondent has vehemently opposed the application for granting any concession to the Appellants in the matter of pre-deposit and states that none of the contentions raised in challenge to the Sarfaesi measures are sustainable. It is pointed out that the demand notice u/s 13 (2) contains a schedule toward the end of it which indicates the amount due as principal and interest. Hence, the breakup is given and there is no violation of Sec.13 (3) as submitted by the Ld. Counsel for the Appellants. It is further submitted that there is no violation of any of the Rules and it is also pointed out that the Ld. Presiding Officer did not enter into the merits merely because the Appellants had approached the Tribunal at the eleventh hour and therefore, it was deemed appropriate that an opportunity be given to the Respondent bank to file their reply. The Appellants could have again moved D.R.T. for an interlocutory relief which they did not, and instead, approached this Tribunal with this appeal.
It is also submitted that the D.R.T. has ample power u/s 17 (3) to restore the possession of the property in case it was ultimately found that there is a violation of the Act and Rules, and therefore, the Appellants have nothing to lose. The Ld. Counsel relied on the decision of the Hon’ble Supreme Court of India in Authorised Officer, Indian Overseas Bank V/s Ashok Saw Mill and the decision of the Hon’ble High Court of Gujarat in Punjab National Bank V/s M/s. Mithilanchal Industries Pvt. Ltd. in support of these submissions.
The Ld. Counsel appearing for the Respondent also submits that the income tax returns do not project the correct financial situation of the Appellants. The appeal memorandum, as also the income tax returns filed for the 1st Appellant indicates the 2nd Appellant as a sole proprietorship, whereas there is also a return filed for the proprietorship indicating the 3rd Appellant as the proprietor which is contradictory to each other and therefore, the income tax returns cannot be relied upon to indicate to impecuniosity of the Appellants.
After having heard both sides and having gone through the documents that are produced, I find that the Appellants have an arguable case though not a very strong prima facie case. But the appeal need not be thrown overboard at a threshold and therefore, an opportunity is to be granted to the Appellants to entertain the appeal on merits for which they are directed to deposit a sum ₹60 lakhs as pre-deposit. The Ld. Counsel appearing for the Appellants is producing a Demand Draft for a sum of ₹12 lakhs today and seeks some time to deposit the balance amount. The Appellants are directed to deposit a balance of ₹48 lakhs in two equal instalments as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 24,00,000/-
04.03.2024
2nd Instalment of ₹ 24,00,000/-
18.03.2024
Given the deposit of ₹12 lakhs, the possession intended to be taken shall stand deferred till the next date of hearing.
Default in payment of any of the instalments/amount on time shall entail in 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 05.03.2024 for reporting compliance regarding the payment of the 1st instalment.