Sunil Prabhudas Patel & Ors vs Authorized Officer, RBL Bank Ltd

Ashok Menon, Chairperson

The matter is taken up for hearing by way of Praecipe filed by the Respondent seeking urgent relief. The Appellants are in Appeal impugning the order of Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) in Securitisation Application (S.A.) No. 103/2023 dated 16.03.2023 dismissed the S.A. filed u/s 17 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) for action taken with regard to four items of the properties which were allegedly mortgaged for the debt due from the Appellants. The four properties which were proceeded against have already been sold to different auction purchasers. Four more properties remain to be sold and notice has been issued for the sale of those properties which is scheduled for 06.04.2023 and the possession is to be taken on 20.04.2023.

The Appellants are aggrieved by the order passed by the Ld.  Presiding Officer dismissing their S.A. The Ld. Counsel appearing for the Respondent Bank submits that as of the date the outstanding due from the Appellant of ₹ 8,21,42,123/- and that there are absolutely no grounds for waiver of any amount which is to be paid as mandatory per deposit u/s 18 (1) of the SARFAESI Act.

The Ld. Counsel for the Appellants submits that they are under financial strain and that they are not able to pay 50% mandatory pre-deposit on the amount that is due. And hence, seek the indulgence of this Tribunal to reduce the deposit to a minimum of 25%. The income tax return of only the 1st Appellant has been produced. The financial strain with regard to the rest of the Appellants is not pleaded or proved.

The Ld. Counsel for the Appellants argues that the S.A. was filed challenging the Sarfaesi measures on various grounds. One of the grounds is that the debt was classified as Non-performing Asset (NPA) during the Covid-19 Pandemic period while there was a stay with regard to a declaration of debts as NPA vide order of the Hon’ble Supreme Court of India in Writ Petition No. 825/2020 and others, dated 03.09.2020. Therefore, the classification of the debt as NPA on 31.12.2020 is invalid and no action could thereafter be taken with regard to said loan.

It is submitted that the Hon’ble Supreme Court of India had vacated the stay only on 23.03.2021 and therefore, the loan ought to have been declared as NPA afresh by sending intimation and hence, the notice issued u/s 13 (2) on 07.09.2021 is invalid.

Prima facie, I find that the contention raised by the Ld. Counsel for the Appellant is not sustainable because no actions have been taken by the Respondent Bank during the period of stay declared by the Hon’ble Supreme Court of India. The notice u/s. 13(2) was served long after the stay was vacated. The classification of an account as NPA is when the amount is not paid for a continuous period of 90 days. But on the basis of such classification, no action has been taken and therefore, it cannot be said that there is a violation of the Apex Court’s order.

The allegation of the Appellants is that there are different facilities provided and the property has been mortgaged during a different time therefore, the common notice demanding the amount cannot be issued. It is towards a particular loan that the amounts are sanctioned to the Appellants and it is proved that at different times more properties are mortgaged to secure that loan. Hence the contention of the Appellants would not lie.

However, the value of the secured assets would come to much less than the debt due from the Appellants, and therefore, on that ground also the contention raised regarding the correctness of the amount is inconsequential.

Under the circumstance, I find that the Appellants are not entitled to any indulgence on the part of this Tribunal exercising jurisdiction under the 3rd proviso to u/s 18 (1) of the SARFAESI Act to get the amount reduced to 25%.

Moreover, it is also pertinent to note that the sale as regards the four remaining properties has not been challenged by the Appellants by filing S.A. It is only with regard to the earlier property which was already sold that the challenge is made.

Under the circumstances, the Appellants are directed to deposit a sum of ₹ 3 Crores as mandatory pre-deposit. The said amount shall be payable in three instalments of ₹ 1 Crore each. The 1st instalment of ₹ 1 Crore shall be payable within three weeks, on or before 24. 04.2023. The 2nd instalment of ₹ 1 Crore shall be payable within three weeks therefrom on or before 15.05.2023 and the 3rd instalment of ₹ 1 Crore shall be payable, on or before 05.06.2023.

On the payment of the 1st instalment the Appellants shall be entitled to stay of the further Sarfaesi measures intended to be taken by the Respondent. Failure to deposit the 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 nationalized bank, initially for 13 months, and thereafter to be renewed periodically.

With these observations, the I.A. is disposed of. The Respondent Bank is at liberty to file a reply to the Appeal with an advance copy to the other side.

Post on 25.04.2023 for reporting compliance regarding the payment of 1st instalment