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Judgment
Ashok Menon, Chairperson
This is an application filed for a waiver of pre-deposit 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). This Appeal is filed u/s 18 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 (the SARFAESI Act for short). The facts, in brief, are thus:
The Appellant had filed Securitization Application (S.A.) u/s 17 of the SARFAESI Act before the Debts Recovery Tribunal, Aurangabad (the D.R.T. for short), with a delay of 6 months and 2 days on 14.06.2011 and M.A. No. 36/2012 was filed along with the S.A. for condoning the delay mentioned above. While the said application was pending consideration of the D.R.T., the Appellant filed an application for amendment of the application on 22.11.2011. After hearing both sides that application was allowed and the Applicant was directed to carry out the necessary amendment within 7 days. But the Applicant, however, failed to carry out the amendment and ultimately on 29.11.2011 the order passed amending the application was recalled and the M.A. was posted for final hearing.
On 24.01.2012 the Applicant Pursis and requested for withdrawal of the application for condonation of delay with liberty to file a fresh application. Accordingly, M.A. No. 36/2011 was disposed of as withdrawn with liberty to file a fresh.
Thereafter the Applicant filed another application as M.A. No. 15/2012 to condone the delay which had by that time gone up from
6 months and 2 days to 459 days the Applicant stated that he had run into heavy losses in business and because of his financial problems he was not able to prosecute the matter properly and, therefore, sought the delay to be condoned.
The facts as per the S.A., in brief, can be summarised thus:
The Appellant had borrowed a sum of Rs.6 Lakhs from the Respondent Bank and secured the repayment by creating a mortgage of a property bearing Survey No. 466/1, Plot No.4, admeasuring 317.125 sq. meters located in Nageshwar Colony. At the time of sanctioning the loan in the year 2006, the Appellant had produced a valuation report from two persons who were both Government Approved Valuers. Mr. S. S. Wakalkar valued the property at Rs.11.97 Lakhs, while the other valuer Mr. Prakash R. Baser valued the property between Rs.7 to 8 Lakhs. It is in accordance with these valuation reports that the Bank sanctioned a loan of Rs.6 Lakhs to the Appellant. Because of loss in business and other financial problems, the Appellant defaulted the payment. The Sarfaesi measures were initiated and ultimately the secured property was put up for sale in the year 2010. According to the Appellant, the property would have a market value of between Rs.35 to 40 Lakhs by then, but surprisingly the reserve price was fixed at only Rs.4.28 Lakhs and the property was sold to one Mr. Vani who is Respondent No.4, without any prior intimation to the Appellant and behind his back, fraudulently. The Appellant after getting to know about the sale approached the Respondent Bank but there was no response and, therefore, he was constrained to approach the D.R.T. with an application u/s 17 of the SARFAESI Act, but by that time there was a delay of 6 months and 2 days in filing the application.
The Appellant contends that he did not have sufficient knowledge of law and procedure and that Respondent Bank had protracted the matter by not supplying him with the necessary papers regarding the auction and the officers willfully neglected in selling the property at a low price thereby playing fraud upon the Appellant. It is further stated that the earlier application had some infirmities and, therefore, he sought permission to withdraw the same with liberty and accordingly, filed a fresh application for condonation of delay as M.A. No. 15/2012.
The Respondent Bank objected to the condonation of delay and submitted that there is absolutely no reason for getting the delay condoned. It is also stated that the property was sold to Respondent No.4 for a sale consideration of Rs.5 Lakhs and not as stated by the Appellant. The Sale Certificate was also issued in favour of Respondent No.4 on 29.12.2010 and the sale has now become absolute. The allegation of fraud and not valuing the property are all denied by the Bank.
The 4th Respondent, the auction purchaser, also opposed the application by filing a reply contending that the auction sale notice was published by the Respondent Bank and despite that the Appellant did not do anything to redeem his property. Notice regarding the sale notice was served by the Bank on the Appellant and he did not raise any objection. The reserve price was fixed after taking steps from time to time in accordance with the statute. It is also pointed out that the Applicant is chronic defaults of several loans which he had availed from not only the Respondent herein, but also several co-operative societies. No satisfactory reasons for condoning the delay have been stated by the Applicant and, therefore, it needs to be dismissed.
After having considered the contentions raised by both sides, the Ld. P.O. in the impugned order came to the conclusion that the earlier M.A. filed as M.A. No. 36/2011 on 14.06.2011 was withdrawn with liberty to file a fresh application because it lacked some clarity regarding sufficient cause. But subsequently, the present application also shows the very same grounds which were stated in the earlier application and the only difference is that with the passage of time, the initial delay of 6 months and 2 days has now swelled to 459 days. The Ld. P.O. also observed that the Appellant has not produced any document to show that the property would have fetched more price than the price at which it was sold. He has not raised any challenge to the sale notice which was served upon him and moreover the property was not sold for Rs.4.28 Lakhs as stated by him but for Rs.5 Lakhs to the 4th Respondent. The Ld. P.O. found that there was no reason to condone the unreasonable delay in filing the application. Hence it was dismissed.
Aggrieved by the order the Appellant has come up in Appeal.
Heard Mr. Punit Gogad, learned counsel for Appellant. There is no representation for the Respondent. Records perused.
The mandatory requirement of the second proviso to Section 18 (1) of the SARFAESI Act is that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him, as claimed by the secured creditors or determined by the D.R.T., whichever is less. It is also provided that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than 25% of the debt referred to in the second proviso. Since the Appellant is challenging the sale of the secured asset, he is not entitled to any benefit from the sale proceeds derived. The amount that is due from the Appellant as per the sale notice issued on 29.10.2010 by the bank is Rs.7,33,739/- plus interest accrued plus costs and expenses etc. The Appellant has sought maximum indulgence of this Tribunal for reducing the amount of pre-deposit. But going by the facts and the circumstances of this case, I find that the Appellant has not got a strong prima facie case to get the delay in filing the Application condoned. I am not however inclined to throw the case of the Appellant overboard at the threshold. Under the circumstances, for entertaining the Appeal the Appellant will have to deposit around 50% of the due amount inclusive of interest, about which, the Respondent has not supplied the required information. Going by a rough calculation, the amount due would be approximately more than Rs.9 Lakhs.
Considering the impecuniosity expressed by the Appellant in his application, I am inclined to fix the amount to be deposited towards pre-deposit by the Appellant at Rs.4.25 Lakhs.
The said amount shall be deposited within a period of four weeks, i.e. on or before 17.08.2022, failing which the appeal shall stand dismissed automatically.
The above 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 it will be renewed periodically.
Post on 18.08.2022 for reporting compliance.