Yunus Ibrahim Kalwatar & Ors vs SICOM Ltd

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 in appeal impugning the order dated 16.08.2024 in Interim Application (I.A.) No. 1595/2024 in Securitization Application (S.A.) No. 265/2024 on the files of the Debts Recovery Tribunal-II, Mumbai (D.R.T.) wherein the appellants were directed to deposit a sum of ₹50 lakhs on or before 22.08.2024 and failing which, the respondent was given the liberty to go ahead and take possession of the secured assets. It is further observed that in case a sum of ₹ͅ50 lakhs is paid then the appellants should approach the respondent within two weeks and a proposal for settlement shall be made and eventually settle the matter within six months from the date of the order. Failing which, the secured assets shall be handed over to the respondent for recovery of the debt under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). The appellants are more aggrieved with the later portion of the order wherein the respondent is given the liberty to proceed with the Sarfaesi action in case the appellants fail to settle the debt within six months.

Heard both sides, I find that the order directing the appellants to settle the matter within six months failing which, granting liberty to the respondent bank to proceed with the Sarfaesi action is not proper and judicious. The D.R.T. should have considered the merits of the challenges raised by the Sarfaesi action. In case it was found that it was not sustainable prima facie, it should have ordered a dismissal of the interlocutory application and in case there was a prima facie case made out. The balance of convenience was also in favour of the appellants and irreparable injury could have been caused if the Sarfaesi measures were not stalled by way of injunction and that injunction could also be subject to payment of a certain amount.

In the instant case, the appellants were directed to pay a sum of ₹50 lakhs for deferring the taking over of possession of the property which appears to be a fairly balanced order but the 2nd portion of the order is not sustainable and therefore, the appellants have fairly good prima facie case getting the impugned order set aside.

The appellants have also raised certain contentions regarding their challenge to the Sarfaesi action but I am not going into that because the impugned order is found to be defective prima facie for the  reasons  stated  above.  However,  to  entertain  this  appeal,  the appellants must first, comply with the mandatory provision of Sec. 18 (1) of the SARFAESI Act and the Ld. Counsel appearing for the appellants offers to deposit a sum of ₹50 lakhs today. The possession is scheduled to take place tomorrow. The amount demanded as per the demand notice u/s 13 (2) is a sum of ₹1,00,98,140/- and therefore, at the most the appellants will have to deposit 50% of the said amount. In case a sum of ₹50 lakhs is deposited it would be close to that 50% mark. Since the appellants have a prima facie case in challenging the impugned order, the appellants are directed to deposit a sum of ₹50 lakhs to get this appeal entertained.

Since the appellants are producing the demand drafts for a sum of ₹50 lakhs today, the appeal shall be taken on file and the possession schedule tomorrow shall stand deferred till further orders and the appeal shall be taken on file.

The amount deposited in the form of a Demand Drafts 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.

List on 06.09.2024 before the Registrar.