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Judgment
Ashok Menon, Chairperson
The matter is taken up for hearing by way of a praecipe filed by the Appellants for seeking urgent relief.
The Appellants are in appeal impugning the order dated 05.07.2023 dismissing the Securitisation Application(S.A.) No. 471/2019, filed by the Appellants, by the Debts Recovery Tribunal-II, Mumbai (D.R.T). The Appellants had in the aforesaid S.A. raised several contentions in their challenge to the Sarfaesi measures initiated by the Respondent Asset Care Reconstruction Company under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ the SARFAESI Act” for short).
It was contended that the demand notice issued u/s. 13(2) does not contain a bifurcation of the principal amount, interest and other charges as required under sub-section(3) of Section 13. It is further contended that the notice is issued by an authorized officer whose name and designation are not specified to prove that he is empowered to issue such a demand notice.
It is further contended that the demand notice contains an amount which includes penal interest, cheque bouncing charges and other costs which could not have been added to the demand and further it is also contended that the classification of the account as Non-Performing Asset (NPA) was contrary to the guidelines of the Reserved Bank of India (RBI). There is also a contention taken by the Appellants in their S.A. that the assignment of the debt to the 1st Respondent is improper because the Stamp duty was not adequate and subsequently there was a rectification which is not possible and permitted. The Appellants were aggrieved by the dismissal of the S.A. since all these contentions raised by the Appellants were disregarded and dismissed by the Ld. Presiding Officer in the impugned judgment.
It is contended that the Appellants are under severe financial strain owing to various reasons and it is submitted that they had got into a collaboration with another entity named “Deepmala” and have run into financial crises and therefore, are facing severe liquidity crunch on that ground. The Appellants have produced income tax returns of Appellant Nos. 2,3 and 4 to indicate that they have little income to deposit 50% of the demanded amount as pre-deposit and therefore, the Appellants represented byth seek the indulgence of this Tribunal to exercise its jurisdiction under the third proviso of Sec. 18 (1) of the SARFAESI Act to keep the pre-deposit amount to the minimum of 25%.
Per-contra the Respondent has filed a detailed reply stating that as of the date of the sale notice, the outstanding amount is ₹ 84,81,20,881/- and moreover it is also contended that none of the challenges raised by the Appellants would sustain because they did not raise any challenge to their demand notice issued u/s. 13(2) by sending an objection. On the other hand, before symbolic possession was taken the Appellants sent a letter on 07.11.2019 coming up with an OTS proposal wherein they clearly stated the amount that was demanded and the proposal made which would indicate that the Appellants were fully aware of the rate of interest and the other charges which were included in the demand notice that was made.
The Ld. Senior Counsel Mr Nitin Thakkar appearing for the Respondent would contend that the only purpose of sending a demand notice with a break up is for the debtor to know the details of the amount that is claimed. Given the letter which is sent by the Appellants to the Respondent, it would indicate that they were fully aware of the breakup of the amount that was demanded by the Respondents and by the fact that they did not raise any objection to the demand notice they have waived their rights to challenge the validity of the demand notice. It is also contended that because of the OTS proposal which was not accepted, the Appellants could not have raised any objection to the Sarfaesi action taken by the Respondent.
Regarding the financial crunch pleaded by the Appellants it is pointed out by the Ld. Sr. Counsel appearing for the Respondent that the Appellant had themselves gone into a collaboration with an entity which claims to have run into loss, cannot be taken as a ground for their financial strain. That apart income tax returns of the 1st Appellant are not produced and the tax returns of the sister concern named as Sony Mony Electronics which is Appellant No. 2 alone produced and the returns by themselves may not be sufficient to prove the financial hardship is pleaded. The statement of account and the balance sheet of the company are not produced and moreover, it is also contended that the fact that there was deficiency in the stamp fees with regard to the assignment deed executed in favour of the Respondent cannot be taken advantage by the Appellants because that is something which needs to be agitated before the appropriate forum concerned with the realization of the stamp duty and it is also stated the rectification deed has been registered which would validate if at all there was any infirmity in the earlier document. Hence, the Appellant cannot be heard on the validity of the assigning in favour of the Respondent.
The amount which is taken as a threshold amount for payment of the pre-deposit is ₹ 84,81,20,881/- and in view of the detailed order dismissing the S.A. by the Ld. Presiding Officer it cannot be said that the Appellants have a very strong prima facie case. The Appellants have also not succeeded in proving their financial strain to a great extent and therefore the Appellants are not entitled to get the amount reduced to the minimum of 25%.
However, considering the facts and circumstances an opportunity ought to be given to the Appellants to agitate their appeal on merits and for that the Appellants are directed to deposit a sum of ₹ 35 crores as pre-deposit. The Appellants undertake to deposit a sum of ₹ 10.25 cores on or before 19.01.2024 by 2.30 p.m. and on payment of that amount on or before that date and time, the dispossession of the Appellants from the secured asset shall stand deferred till the next date. The balance amount shall be paid in two instalments within a gap of two weeks each, as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment ₹ 10,00,00,000
02.02.2024
2nd Instalment ₹ 14,75,00,000
16.02.2024
In default, 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.
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 22.01.2024 for reporting compliance concerning the payment.