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Judgment
Ashok Menon, Chairperson
The Appellants are in appeal impugning the order dated 29.01.2024 in I.A. No. 242/2024 in S.A. No. 46/2021 on the file of Debts Recovery Tribunal – III, Mumbai (D.R.T) whereby the Ld. Presiding Officer refused to grant any interlocutory order protecting the Appellants and rejected the application.
The loan was availed from the Kalyan Janata Sahakari Bank Ltd and the debt was assigned to the Respondent, Reliance Asset Reconstruction Company Ltd. Consequently, the Respondent issued the present demand notice u/s. 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“SARFAESI Act” for short) on 05.11.2018 demanding a total sum of ₹ 1,47,25,654.46. Before that, the co-operative bank had issued more than one demand notice concerning two facilities which were availed by the Appellants and it was after that the present demand notice was issued. There are also two orders obtained under the Maharashtra Co-operative Societies Act, which amount is sought to be recovered based on the recovery certificate which has been issued.
The main contention of the Appellants is that the present demand notice demanding the entire amount is not sustainable and that one of the facilities has already been closed by payment of ₹ 98 lakhs. Nothing remains to be paid towards that account and therefore, the Respondent is not entitled to proceed against the secured assets for realization of the amounts allegedly due from the two facilities.
It is also submitted that the demand itself is not sustainable for the reason (1) that the amount stated is not correct (2) the interest rates are floating and (3) that the calculation is not correct. At this stage of hearing the application for waiver of deposit, I am not delving deep into the correctness of the amount and the calculation of the interest. It would suffice to say that there is a demand at present on account of two facilities, one is for an amount of ₹ 1,32,00,000/- and odd and the other facility is for a balance, which the Respondent claims to be ₹ 15 lakhs after making payment of ₹ 98,00,000/-. Added up the total amount comes to ₹ 1,47,00,000/-.
The Appellants have pleaded that they are under financial strain, the income tax returns of the Appellant Nos. 1 to 3 have been produced. It is pleaded that the Ld. Presiding Officer in the impugned order has not gone into the merits of the contentions raised challenging the Sarfaesi measures.
On the other hand, it was pointed out that the secured property is in the possession of tenants/licensees from which the Appellants are earning income and it violates Sec. 65A of the Transfer of Property Act. Therefore, prima facie, it was found that the Appellants are not entitled to any relief since they have not come up with clean hands.
On reading the impugned order, I find the Ld. Presiding Officer has not gone into the aspect of the challenges raised to the Sarfaesi measures which definitely will have to be looked into in the appeal which is now filed.
In the meantime, the Respondent had attempted to take possession of the property by an order u/s. 14 of the SARFAESI Act. However, it seems that the police authorities and Tahsildar were not cooperating a result of which the Reliance Asset Reconstruction Company had to approach the Hon’ble High Court by way of a writ petition. There was a specific direction given in the writ petition to the Tahsildar to take possession of the property positively and hand it over to the creditor with police assistance. The police officer was also directed by the Hon’ble High Court to appear in person or face contempt if the orders were not implemented.
Under the circumstances, the Appellants have approached this Tribunal stating that even though there are certain orders passed by the Hon’ble High Court directing the possession of the secured assets to be taken and handed over to the Respondent, the Appellants were not made parties in the writ petition and nothing would prevent them from filing this appeal challenging the impugned order of the DRT and seek interim reliefs as well.
To entertain the appeal, the Appellants will first have to comply with the mandatory provision of making a pre-deposit. The Appellants have produced the income tax returns of Appellant Nos. 1 to 3 and contended that the other Appellants do not have any income for which returns are being filed. The balance sheet of the Appellant No. 1 is also not produced as pointed out by the Ld. Counsel appearing for the Respondent would indicate that the income tax returns do not give a very clear picture of the actual financial status of the Appellants.
Taking the fact that the Appellants have raised certain contention regarding the validity of demand notice u/s. 13 (2) which will have to be considered in this appeal and also the income tax returns of Appellant Nos. 1 to 3, I am inclined to grant certain concessions to the Appellants although not to the extent of reducing the pre-deposit to the minimum of 25%.
Since the Appellants have raised contentions regarding the closing of one of the facilities which also will have to be considered in detail, the threshold amount for payment of pre-deposit is fixed at around ₹ 1,32,00,000/- and the Appellants are directed to deposit sum of ₹ 50 lakhs as pre-deposit. The Ld. Counsel appearing for the Appellants have produced a demand draft for ₹ 35 lakhs today and the balance of ₹ 15 lakhs shall be deposited within two weeks i.e. on or before 19.02.2024.
Given the deposit amount, I feel that the further Sarfaesi measures including the taking over possession have to be stalled and deferred till the next date of hearing. But because of the order of the Hon’ble High Court that the possession shall be handed over to the Respondent by the Tahsildar and there is a direction to report the fact of, taking over possession to the High Court. The fact regarding the passing of this order by this Tribunal shall be represented before the Hon’ble High Court and appropriate orders obtained.
In default of the deposit, 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 20.02.2024 for reporting compliance concerning the payment.