AI Structured Summary
Not yet generated for this judgment
Judgment
S. Ravi Kumar, J
This application is filed seeking waiver of statutory deposit as required u/s. 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act).
Applicant contended that he filed Securitization Application (S.A.) No. 189/2019 challenging possession notice issued by Respondent No. 1 and as the secured properties are put to sale, Applicant filed Interlocutory Application No. 517/2019 seeking interim relief but the Tribunal below through impugned order dated 24.06.2019 dismissed the application as not maintainable in view of the order of the Hon'ble High Court of Judicature at Bombay passed on 07.02.2019 in Company Application No. 420 of 2018. It is contended that as the said order is challenged here, Applicant may be waived of the pre-deposit. It is further contended that directing such pre-deposit would tantamount to denial of justice to the Applicant, therefore, Applicant prayed to waive pre-deposit required u/s. 18 of the SARFAESI Act. Applicant filed Additional Affidavit contending that the purchaser is nothing but a shell company put up by the creditor to deprive the Applicant from recovering his properties. He further contended that it is a sham and bogus agreement.
Respondent No. 1 i.e. creditor filed reply opposing the application and contended that Section 18 of the SARFAESI Act neither contemplates nor permits for grant of waiver of pre-deposit and it is a condition precedent to deposit the amount for entertaining Appeal. It is further stated that pursuant to the confirmation of sale on 24.06.2019 the financial institution i.e. Respondent No. 1 has received a sum of Rs. 705 Crores and the same could not be appropriated in view of the legal action initiated by Applicant challenging the said sale. It is further contended that as on date of filing of the Appeal outstanding against the said account of Applicant is Rs. 109,97,32,124/- including T.D.S. of Rs. 31,39,581/- and Applicant has to deposit 50% of the same for entertaining Appeal.
Heard both sides.
Advocate for Applicant submitted that as the first Respondent has realized a sum of Rs. 705 Crores by sale of secured asset that amount has to be given credit and the liability has to reduced and the pre-deposit has to be on the reduced amount.
On the other hand, Advocate for first Respondent submitted that the sale proceeds cannot be adjusted in the application for waiver of pre-deposit as the Applicant has challenged the very same sale. In support of his argument Advocate for first Respondent relied on judgment dated 09.06.2019 of Hon'ble High Court of Bombay in Vasanji Asaria Mamania V/s. M/s. Kalyani Exporters & Ors. (Writ Petition No. 2414 of 2013 along with Writ Petition No. 2512 of 2013) and judgment dated 09.10.2014 in R. Dalpatrai & Cos. V/s. Bank of Baroda & Ors. (Writ Petition (L) No. 2361 of 2014) and Eskays Construction Pvt. Ltd. V/s. Soma Papers & Industries Ltd. & 5 Ors. (reported in MANU/MH/2565/2016 ).
In reply to above referred judgments, Advocate for Applicant submitted that those judgments are not applicable to the present case as the sale is on the basis of bogus and sham agreement.
From the submissions of both sides, first and foremost point that has to be considered is whether the sale proceeds received by first Respondent can be adjusted in the application for waiver of pre-deposit. Hon'ble High Court of Bombay has clarified this aspect in the above referred judgments of Vasanji Asaria Mamania V/s. M/s. Kalyani Exporters & Ors. and R. Dalpatrai & Cos. V/s. Bank of Baroda & Ors. that sale proceeds cannot be adjusted when the very sale is questioned. Answer of the Applicant's counsel is that these decisions are not applicable as the sale is on the basis of bogus and sham agreement. But the said objection cannot be accepted because the principle enumerated in those two decisions is on the point whether the sale proceeds can be adjusted in the application for waiver of pre-deposit. It is clearly clarified and held that the borrower cannot request to adjust the sale proceeds from the auction towards money to be deposited u/s. 18 of the SARFAESI Act while challenging the very same sale. So in view of the decisions of Hon'ble High Court of Bombay the contention of Applicant to take the sale proceeds into consideration for deciding money to be deposited u/s. 18 of the SARFAESI Act cannot be accepted. Further, Advocate for first Respondent made it clear that the sale proceeds are not given credit to the loan account and they were kept in suspense account in view of the litigation to enable the first respondent to pay back the money to auction purchaser in case the contention of the Applicant is accepted and the sale is set aside.
As the Applicant is not entitled to claim adjustment of sale proceeds, now it has to be decided what is the amount that has to be taken into consideration for the purpose of pre-deposit. Advocate for first Respondent contended that principal outstanding on the date of filing of Appeal i.e. 27.06.2019 is Rs. 69,38,30,000/- and the total interest and charges are of Rs. 40,27,62,543/- and amount of T.D.S. is Rs. 31,39,581/-, total of which comes to Rs. 109,97,32,124/- and the Applicant has to deposit 50% of this amount which comes to Rs. 54,98,66,062/-. Here it is not in dispute that measures taken by first Respondent in pursuance of 13 (2) notice are challenged in the S.A. First Respondent issued 13 (2) notice wherein the amount is indicated which was due as on the date of 13 (2) notice. Respondent No. 1 except filing a chart did not produce Statement of Account to know the detailed particulars of total claim as on 27.06.2019. Therefore, for the purpose pre-deposit, I am of the view that amount indicated in the 13 (2) notice can be taken into consideration. According to 13 (2) notice the amount claimed is Rs. 77,20,91,681/-. As the Applicant has not made out any grounds to reduce the statutory deposit from 50%, the Applicant has to deposit 50% of the 13 (2) notice amount which comes to Rs. 38,60,45,840/- for entertaining Appeal.
Advocate for Applicant submitted that Hon'ble Supreme Court has ordered to consider the prayer for interim relief. In reply, Advocate for first Respondent submitted that without making pre-deposit Appeal itself cannot be entertained, therefore, the question of considering the prayer for interim relief does not arise. Here, the Appeal is filed on 27.06.2019 and as per Praecipe moved by the Applicant on 08.07.2019, waiver application was placed on Board on 09.07.2019, on the request of Advocate for first Respondent it was posted to 10.07.2019 from 09.07.2019. On 10.07.2019 waiver application was heard and as Advocate for first Respondent requested for time to file Affidavit showing the outstanding liability as on the date of filing of Appeal, it was adjourned to 16.07.2019. On 16.07.2019, as I was on leave Office re-posted the matter to 31.07.2019 and on which date hearing of waiver application is continued and concluded. It appears before the Hon'ble Supreme Court it was represented that date fixed before this Tribunal for hearing was on 27.07.2019, but there was no such hearing date on 27.07.2019.
In view of above, Applicant shall deposit Rs. 38,60,45,840/- in two equal installments within a period of eight weeks. First installment of Rs. 19,30,22,920/- shall be paid on or before 30.08.2019 and the second installment of Rs. 19,30,22,920/- shall be paid on or before 27.09.2019 for entertaining Appeal in the form of Demand Draft with the Registrar of this Tribunal. Failure to deposit any single installment would result in automatic dismissal of Appeal.
As per section 18 proviso 2 of SARFAESI Act, unless statutory deposit is made Appeal cannot be entertained. So the question of granting any interim order does not arise without making any deposit. However, to protect the interest of both parties, it is ordered as and when amount is deposited in compliance of this order, there shall be interim protection to Applicant. That means from the date of first deposit, parties have to maintain status-quo till further orders are passed.
As and when the said amounts are deposited, it shall be invested in term deposit in the name of Registrar, DRAT, Mumbai, with any nationalized bank, initially for a period of 13 months and thereafter it will be renewed periodically.
Stand over to 03.09.2019 for reporting compliance of payment of first installment.