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Judgment
Ashok Menon, Chairperson
The Appellant is in appeal impugning the dismissal of Securitization Application (S.A.) No. 03/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) vide judgment dated 12.05.2023. The Appellant is aggrieved, and hence, in appeal.
The present Interim Application (I.A.) No. 482/2023 is for waiver of pre-deposit filed u/s 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). The Respondent bank proceeded against the Appellant for recovery of the debt due and the secured assets consisting of Flat No. A/901/02 including the terrace situated in the Apartment named “Le Mirage”, Boat Club Road, Pune.
The Sarfaesi measures are challenged because the account was wrongly classified as Non-Performing Assets (NPA). It is further contended that due to the non-disbursement of the entire sanction amount, the Appellant was not able to function and carry on the business. Initially, a sum of ₹12 Crores was granted in two instalments and a further loan of ₹15 Crores was sanctioned of which, only a ₹5 Crores was disbursed. The business was adversely affected due to the outbreak of the COVID-19 pandemic, which also prevented repayment of the debt. The benefit of the moratorium was not granted to the Appellant.
The Respondent bank would contend that the Appellant had received a total sum of ₹17 Crores but no progress whatsoever was made in the business. The Appellant had filed an interlocutory application as I.A. No. 594/2021 in the aforesaid S.A. for an injunction against the taking over the possession of the property. The D.R.T. refused to grant any relief and Misc. Appeal No. 15/2022 was filed by the Appellant. This Tribunal entertained the appeal by directing the Appellant to deposit a sum of ₹4,78,10,369/-as mandatory pre-deposit, and also grant a stay. After that, the appeal was disposed of vide order dated 15.07.2022 with a direction to the D.R.T. to dispose of S.A. as expeditiously as possible, at any rate within two months.
The Ld. Counsel appearing for the Respondent submits that taking advantage of the stay granted by this Tribunal till the disposal of the S.A., the Appellant deployed dilatory practice to see that the disposal of the S.A. was protracted indefinitely. The period for the disposal was extended by this Tribunal twice. In between, there was also a change in the jurisdiction of the D.R.T., resulting in the matter being transferred to the D.R.T.-II, Mumbai, and then being remitted back to D.R.T.-I, Mumbai. At the instance of the Respondent, the S.A. was ultimately taken up for hearing and disposed of. Accordingly, to Respondent the sale notice has been issued for selling the secured assets and the notice mentions the outstanding amount as of 30.10.2023 as ₹30,57,92,764/-. The Ld. Counsel for the Respondent would, therefore, submit that because the property was put for sale, the Appellant may be directed to 50% of the aforesaid amount.
The Ld. Counsel appearing for the Appellant would submit that given the deposit already made, in the connected appeal, the Appellant may be exempted from making further deposits and the appeal may be entertained.
Heard both sides. Apart from the contentions about the calculation of the amount due not being proper, or that the moratorium was not granted, and also that the Appellant suffered because of the non-disposal of the entire amount sanctioned, there does not seem to be any specific challenge made by the Appellant concerning the Sarfaesi measures initiated by the Respondent Bank. The earlier appeal was filed at the stage when the demand notice u/s 13 (2) was issued and the possession was intended to be taken by the creditor. At present the property has been put up for sale and a sale notice has been issued. Given the latest decision of the Hon’ble Supreme Court of India Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12, the Appellant is liable to pay the 50% amount mentioned in the sale notice.
The Appellant has not pleaded any financial strain and no documents are produced to support the Appellant's financial incapability to deposit the 50% of the debt due. The Appellant is, therefore, directed to deposit a total sum of ₹12 crores as pre-deposit. Towards that amount, a sum of ₹ 4,78,10,369/- has been deposited by the Appellant in the earlier Misc. Appeal No. 15/2022. The said amount shall be brought in this appeal as payment toward the pre-deposit. The balance amount of ₹7,21,89,631/- shall be deposited in two equal instalments within the gap of two weeks each, as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 3,60,94,815/-
21.12.2023
2nd Instalment of ₹ 3,60,94,816/-
04.01.2024
On the payment of the 1st instalment, the Appellant shall be entitled to get further proceedings regarding the sale of the property deferred till the next date of hearing.
Default in payment of any of the instalments/amount 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 22.12.2023 for reporting compliance regarding the payment of the 1st instalment.