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Judgment
Ashok Menon, Chairperson
The appellant is in appeal impugning the order dated 18.07.2024 dismissing the Interlocutory Application (I.A.) No. 210/2024 in Securitisation Application (S.A.)No. 127/2022 by the Debt Recovery Tribunal, Nagpur (D.R.T.) declining to grant the prayer sought in the application. There were two prayers sought in that application. The first prayer was to the effect that possession of the subject property has been taken illegally by the bank and therefore, the possession be restored during the pendency of the S.A. The second prayer is that the further Sarfaesi measures including the sale of the property be stalled. The D.R.T. did not discuss the second prayer but found that after two OTS proposals had failed, there was no possibility of restoring the possession at this stage by invoking section 17(3) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 ( “SARFAESI Act” for short) and hence dismissed the application. The appellant is aggrieved and hence, in appeal.
To entertain the appeal, the appellant will first have to comply with the mandatory requirement of making the pre-deposit. The amount demanded as per the 13 (2) notice dated 15.04.2021 demanding a sum of ₹3.37 crores. The appellant had thereafter approached the bank with an OTS proposal on 15.12.2022 and a certain amount was paid in accordance with the proposal and thereafter defaulted. Yet another OTS proposal was made on 14. 07.2023 by the bank which was accepted by the appellant but then failed to comply with the payment in accordance with the terms and thus the OTS proposal was revoked by the bank. A total sum of ₹2.55 crore has already been paid toward the demanded amount a sum of ₹3.37 crore. Substantial concessions were granted to the appellant in the OTS proposals but the appellant could not take benefit of those proposals by paying the entire amount and subsequently, the possession of the secured asset was taken on 30.01.2024. As per the earlier OTS proposal one item of property was released subject to payment of the amount and the remaining items are yet to be proceeded against. It is a residential building of the appellant. This property has now been taken possession of inconsequence to the order passed by the District Magistrate u/s 14 of the SARFAESI Act dated 24.04.2023 and possession has been taken on 30.01.2024 about which the appellant is now aggrieved.
To get the waiver of the pre-deposit the appellant will have to prove that he has a substantial prima facie case and secondly, he has to prove that he is under financial strain.
In the instant case, the appellant cannot plead that he has a substantial prima facie case because he was granted an opportunity to settle the entire debt by two OTS proposals which he failed to comply and therefore, the decision of the Hon’ble High Court in Arce Polymer Pvt. Ltd. V/s. Alphine Pharmaceuticals Pvt. Ltd. & Ors. (2022) 2 SCC 221, would apply on all fours to this case and it has to be taken that appellant has waived the entire challenge to the Sarfaesi action. The property has been scheduled for sale on 30.12.2024 and a sale notice has been produced by the appellant which indicates that after adjusting the entire amount that has been paid by them there is still outstanding a sum of ₹1,81,32,709/- as of 21.11.2024. as per the decision of the Supreme Court of India in M/s. Sidha Neelkanth Paper Industries Pvt. Ltd. & Anr. Vs Prudent ARC Ltd. & Ors. 2023 SCC OnLine SC 12, once the sale notice has been issued the amount demanded in the sale notice would be the threshold amount for payment of the pre-deposit and therefore, the appellant is liable to pay the 50% of the aforesaid amount.
Considering the entire fact and circumstances and also considering the fact that the appellant has paid some amount towards the debt and is also interested in the clearing of the entire debt, the appellant is directed to deposit a sum of ₹85 lakhs as pre-deposit for entertaining the appeal. The Ld. Counsel appearing for the appellant submitted that they undertake to pay a sum of ₹5 lakhs upfront on or before 27.12.2024 by 4 PM toward the aforesaid deposit. The balance a sum of ₹80 lakhs shall be in three instalments as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment ₹ 25 lakhs
10.01.2025
2nd Instalment ₹ 25 lakhs
24.01.2025
3rd Instalment ₹ 30 lakhs
14.02.2025
On subject to payment of ₹5 lakhs, the e-auction of sale which is to be scheduled on 30.12.2024 shall stand deferred till the next date of hearing.
In 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 respondents.
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 Respondent is at liberty to file a reply in the Appeal with an advance copy to the other side.
List the matter on 30.12.2024 for reporting compliance regarding the payment.