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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 borrowers who are aggrieved by the direction given to them by the Debts Recovery Tribunal, Pune (D.R.T) in Interim Application (I.A.) No. 1527/2024 in Securitization Application (S.A.) No. 697/2023 to deposit 20% of the debt due and demanded as per the demand notice issued to them under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) by the 1st respondent creditor. The appellants are aggrieved.
The appellants had earlier filed another S.A. out of time with an application for condonation of delay as M.A. No. 45/2022 and before the application for condonation of delay was considered, the Ld. Presiding Officer had directed the appellants to deposit 20% of the demanded amount for interim protection. The appellants had complied with that order and thereafter, when the application came up for consideration, the D.R.T. had again directed the appellants to deposit a further sum of 25% to defer the taking over possession of the secured asset. The appellants however did not comply with that direction and they also did not challenge that order. Subsequently, the appellants filed the present S.A. based on a fresh possession notice issued by the Tahsildar to take possession of the subject property on 13.10.2023. The earlier S.A. as well as the application for condonation of delay were withdrawn by the appellants without seeking liberty to file a fresh S.A. on the very same grounds, and in the present S.A., they have taken the grounds of challenge which was raised by them in the earlier S.A. also
The appellants had contended that they had not been served with the demand notice u/s 13 (2). It is also contended that the person who issued the demand notice as the Authorized Officer was not properly designated since he was only the Manager and not the Chief Manager as is required under the rules. It is also contended that the nine-pointer affidavit required to accompany the application u/s 14 was not in the proper format and did not meet the requirements of Sec. 14. Under the circumstances, the appellants would contend that they have a good prima facie case in challenging the Sarfaesi measures.
The appellants would also contend that they are under financial strain, as their business is not functioning and they could not restart their business after the COVID-19 pandemic. The ITR returns have not been filed because it is submitted that the appellants are not paying any income tax for wants of taxable income. The bank account statements of the appellants would indicate that their income is not sufficient to pay 50% of the amount due and therefore, the appellants seek the indulgence of this Tribunal to waive 25% of the mandatory pre-deposit and entertain the appeal on deposit only the 25% of the debt due. The Ld. Counsel appearing for the appellants submits that the appellants are producing a demand draft for a sum of ₹10 lakhs today which may be accepted and the possession schedule to be taken on tomorrow be deferred.
The Ld. Counsel appearing for the respondents has vehemently opposed this application for waiver of pre-deposit stating that the S.A. itself is not maintainable because the appellants cannot raise all those contentions which have been raised in the earlier S.A. which was withdrawn without seeking any liberty to file a fresh application.
It is further contended that the possession notice issued by the Tahsildar dated 12.09.2023 alone stands challenged, but the possession scheduled to be taken on 13.10.2023 was not taken as scheduled, and therefore, that challenge has now become infructuous. A 2nd notice was issued by the Tahsildar on 07.06.2024 scheduling the possession to be taken on 19.07.2024, and that too has not materialized. Presently, a notice was issued on 29.07.2024 to take possession of the subject property on 23.08.2024 which is now been sought to be stalled even without a prayer for that in the S.A.
The Ld. Counsel appearing for the respondents submits that there is no specific prayer in the S.A. to stall the possession intended to be taken tomorrow and therefore, the appellants cannot seek any relief in that regard and it is also submitted that since the appellants have given up their challenge to the Sarfaesi measures before the fresh notice issued by the Tahsildar by 12.09.2023 they cannot re-agitate those challenges all over again in the present S.A. because the earlier S.A. was filed out of time and also withdrawn.
The Ld. Counsel appearing for the respondent bank would also contend that even if the challenges are to be considered, it would not lie because the respondents have produced the documents to indicate that the demand notice was served on both the appellants. The document which is relied upon by the appellants regarding the non-service of notice is the notice which has been attempted to be served on the guarantor and not only the appellants. The Ld. Counsel has produced the track consignment of the notices issued to the appellants at their different addresses which would indicate all those notices have been delivered and therefore, the challenge regarding non-delivery of notice would not lie. The Ld. Counsel for the respondents also contends that the legal manager is an Authorized Officer and designated Officer issued notice u/s 13 (2) regarding which the evidence would be produced. The Ld. Counsel also submits that the appellants have now admitted that two of the shop rooms belonging to them have been handed over to the third party on a license fee sum of ₹1,11,400/- per month which is against the mandate u/s 13(13) of the SARFAESI Act. Transfer in whatever manner is not permissible once a demand notice is issued by the creditor. The appellants have also not produced evidence regarding the income that is received by way of license fees apart from the account statement of the bank.
Under the circumstance, it is pointed out that the appellants do not have any prima facie case and that they have also not been able to prove that they are under financial strain and therefore, no indulgence may be shown to waive 25% of the mandatory pre-deposit as claimed by the appellants. It is submitted that after adjusting the amount which has been paid by the appellants during the pendency of the earlier S.A. the present outstanding due a sum of ₹1.03 crore and therefore, the appellants be directed to deposit 50% of that amount to entertain the appeal.
After hearing both sides, I find that the respondents have successfully established that the appellants had withdrawn the earlier S.A. in which challenges to the non-service of the demand notice as also the challenge to the order u/s 14 passed by the District Magistrate were raised. Given the withdrawal of that S.A., they cannot all over raise the challenges on the very same grounds. The arguments of the Ld. Counsel appearing for the appellants that once a fresh notice is issued by the Tahsildar to take possession of the property a fresh cause of action arises and all the Sarfaesi measures preceding that can be challenged, is not acceptable.
It is also pertinent to note that the possession notice which is challenged in the S.A. is the notice dated 12.09.2023 and therefore, the very maintainability of the S.A. is questionable. However, I am not entering into the finding regarding the maintainability of the S.A. which will ultimately have to be decided by the D.R.T. The appellants have not successfully established that they have a good prima facie case and they have also not established that they are under financial strain because they admittedly getting more than lakhs of rupees as license fees from the secured assets. The appellants, therefore, cannot seek a total waiver of 25% of the mandatory pre-deposit. However, I am not inclined to throw the appeal away at the threshold and I am hence I am inclined to hear the appeal on its merits.
Under the circumstances, the appellants are directed to deposit a sum of ₹40 lakhs as pre-deposit for entertaining this appeal. The appellants have deposited a sum of ₹10 lakhs by way of a demand draft today and the balance amount sum ₹30 lakhs shall be deposited in two equal instalments as stated hereunder.
Numbers of Instalments
Payment on or before
1st Instalment of ₹ 15 lakhs
05.09.2024
2nd Instalment of ₹ 15 lakhs
26.09.2024
Given the deposit of a sum of ₹10 lakhs today, the possession scheduled to be taken tomorrow shall stand deferred till the next date of hearing.
Default in payment of any instalment/amount on time shall entail the dismissal of the appeal without any further reference to this Tribunal.
The amount shall be deposited in the form of a Demand Draft/RTGS with the Registrar of this Tribunal. Payment by RTGS shall be communicated to the Registry for verification.
As and when the said amount is deposited, it 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 respondents are at liberty to file a reply in the Appeal with an advance copy to the other side.
List on 06.09.2024 for reporting compliance regarding the payment of the 1st instalment.