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Judgment
Ashok Menon, Chairperson
The appellants are in appeal impugning the order dated 20.09.2024 dismissing the Interlocutory Application No. 2348/2024 (I.A.) in Securitisation Application No. 287/2024 (S.A.) by the Debt Recovery Tribunal, Pune (D.R.T.) refusing to grant any protection to the appellants against the Sarfaesi measures initiated by the respondent bank under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 (“SARFAESI Act” for short) for recovery amount that is allegedly due from the appellants.
To entertain the appeal the appellants will have to comply with the mandatory provision of making the pre-deposit of u/s 18 (1) of the SARFAESI Act. The appellants contend that they have a very good prima facie case and they are under a financial strain, and therefore, 25% of the pre-deposit amount may be waived exercising jurisdiction of this Tribunal under the 3rd proviso to section 18 (1) of the SARFAESI Act.
It is contended that the demand notice issued u/s 13 (1) is defective for the reason that the classification of the account as Non-Performing Assets (NPA) is wrong and an earlier demand notice was issued on 28.12.2023 which gave a different date of NPA and thereafter, the appellants have also paid a sum of ₹20.72 lakhs to regularize the account and then again on 27.12.2023 the account was classified as NPA and the notice is issued afresh on 29.01.2024 demanding a sum of ₹3.71 crores. It is also contended that the notice does not give a bifurcation of the principal amount and interest due. The name and designation of the Authorised Office is not stated and hence, the entire demand notice is defective.
The appellants would further contend that the affidavit filed before the District Magistrate u/s 14 of the SARFAESI Act is defective because the name of the person who was sold the property is not mentioned in the affidavit. It is further contended that the 1st appellant is MSME and governed by the guideline issued under the MSME Act which has not been followed by classifying the account as NPA.
In the impugned order the Ld. Presiding Officer has not gone into these intricacies of the challenges raised and has held that the appellants are not entitled to take over the possession of the subject property stalled and hence, dismissed it. On submission made by the counsel appearing for the appellants before the D.R.T. that they would want to prefer an appeal and the Ld. Presiding Officer granted the stay subject to payment of a sum of ₹10 lakhs which has already been paid. The appellants have now stated that the physical possession of the property is scheduled to take place on 07.11.2024 and therefore, an urgency.
The Ld. Counsel appearing for the respondent submits that the classification of the account as NPA is not faulty and he also relied on the circular of the RBI dated 01.10.2021 to indicate that even in default one of the facilities would entail in the classification of all the facilities as NPA. It is pointed out specifically that the cash credit facility granted to the appellants was not renewed and therefore, it has become irregular, and as a reason all the other accounts even though there is payment subsequently made will not help the appellants to get over the classification of the account as NPA. It is also contended that the breakup of each of the facilities is given in the demand notice and therefore, it is not defective.
The appellants have to some extent established that the demand notice issued is defective for not showing the details of the principal amount and the unapplied interest payable by the appellants. Just mentioning the principal amount and the rate interest will not survive and therefore, I find prima facie there is non-compliance with the mandatory provision of giving the breakup as required u/s 13 (3).
The Ld. Counsel appearing for the respondent has also contended that the S.A. is barred by limitation because the symbolic possession was taken on 23.04.2024 and the S.A. is filed only on 18.09.2024 and therefore, it is not maintainable and there is no application for condonation of delay filed by the appellants. The Ld. Counsel appearing for the appellants would counter this argument and state that the order u/s 14 was made on 02.08.2024 and the possession notice was received much later and therefore, each action under the SARFAESI Act would be a fresh cause of action to the appellants and they can challenge previous action as well and therefore, it is not barred by the limitation.
The appellants have produced the income tax returns of the 1st and 3rd appellant which indicate that the 1st appellant had an annual income of more than sum of ₹45 lakhs during the assessment year of 2022-2023 which has compounded to a sum of ₹8 lakhs during the assessment year 2023-2024. It is stated that the 2nd appellant is a housewife and has no income and the 3rd appellant does not have sufficient income to deposit a 50% amount demanded.
Considering the entire facts and circumstances of this case, I find that the appellants have an arguable case at least to the extent of challenging the demand notice u/s 13 (2). Their impecuniosity has not been established to a great extent and therefore, they are not entitled to get the amount reduced to 25%. However, they are entitled to some concession and hence, the appellants are directed to deposit a sum of
₹1.20 Crores as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellants submits a sum of ₹10 lakhs shall be paid by tomorrow by way of RTGS. The balance amount shall be paid in three instalments within the gap of two weeks each, as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment ₹ 36,00,000/-
19.11.2024
2nd Instalment ₹ 37,00,000/-
03.12.2024
3rd Instalment ₹ 37,00,000/-
17.12.2024
Subject to payment of a sum of ₹10 lakhs by tomorrow 4 PM, the possession scheduled to take place on the 7th instant shall stand deferred till the next date of hearing.
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. Payment by RTGS shall be communicated to the Registry for verification and intimated to the counsel for the respondent.
As and when the said amounts are deposited, they shall be invested in term deposits in the name of Registrar, DRAT, Mumbai, with any Nationalized 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 21.11.2024 for reporting compliance regarding the payment of 1st instalment.