Disposed

Vippin Aggarwal v. Indian Overseas Bank and Ors.

DRAT1 Sept 2022IA/344/2022

Case brief

AI extract

What is this about?

The Tribunal entertained the appeal involving a waiver or reduction of the mandatory 50% pre-deposit under the SARFAESI Act, directing the appellant to deposit Rs. 15 Crores in installments pending merits determination.

What did the court decide?

The appellant shall deposit Rs. 15 Crores in two equal tranches: first Rs. 7.5 Crores within two weeks, the second within three weeks thereafter.

Vippin Aggarwal versus Indian Overseas Bank and Ors. — Banking and Recovery | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr. Justice Ashok Menon, Chairperson

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I.A. No. 344/2022 (WoD) In

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Appeal on Diary No. 486/2022

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Between

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Mr. Vippin Aggarwal … Appellant/s V/s.

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Indian Overseas Bank & 5 Ors. …Respondent/s

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Mr G.R. Kinkhabwala w/s Mr Puneet Gogad and Mr Kushal Sawant, Advocate for the Appellant.

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Mr Charles D’Souza a/w Mr Raj Dani, Advocate for Respondent No. 1.

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Mr Siddharth Samantary a/w Mr Nishant Rana &Ms Rupa Patel, Advocate for the Respondents Nos. 4 to 6.

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-: Order dated 01/09/2022:-

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This is an application filed by the Appellant under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (for short, the ‘SARFAESI Act’) seeking a waiver of the mandatory pre-deposit under the 2^nd proviso to section 18 (1) and in the alternative to reduce the amount to 25% exercising the discretion of this tribunal under the 3^rd proviso to section 18 (1).

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The Appeal is filed impugning the order of the learned presiding officer DRT 2 Mumbai in IA No. 425 of 2021 in SA No. 118 of 2022 on the files of that Tribunal.

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3. The facts, in brief, can be encapsulated thus:

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The Appellant is the co-owner of the secured assets (the subject property) being proceeded against under the SARFAESI Act by the 1^st Respondent Bank. The 2^nd Respondent Company is the borrower to which the 1^st Respondent Bank had granted certain credit facilities. The 3^rd Respondent who is the brother of the Appellant and a co-owner of the property is also a Director of the Company. Respondents Nos. 4 to 6 are the auction purchasers of the subject property. When the company borrowed money from the first Respondent Bank, the Appellant and the third Respondent stood as guarantors/mortgagors and their property which is the subject property, was mortgaged. The borrower Company defaulted payment of the amount borrowed and the debt was classified as Non-Performing Assets (‘NPA’ for short) on 31.01.2020. Thereafter a notice under Sec. 13(2) of the SARFAESI Act was issued by the Bank claiming a sum of �37,59,77,921/- as on 01.02.2022. Thereafter, steps were taken under Sec. 13(4) and then under Sec. 14 of the SARFAESI Act. After taking possession, on 24.06.2020 a sale notice was published describing the amount due from the borrowers/mortgagors/guarantors as �39,18,47,488.38. Thereafter, the subject property was sold in the auction.

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The Appellant challenged the Sarfaesi measures by filing S.A. No. 118/2022 before D.R.T. -II, Mumbai. The auction purchasers were impleaded but the consequent application for amendment filed as I.A. No. 425/2021 and the application for stay of further

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proceedings, filed as I.A. 424/2021 were both dismissed by the Ld. P.O. This Appeal is filed aggrieved by thoseorders.

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Heard the Ld. Counsel for the Appellant Mr G. R. Kinkhabwala for the Appellant, Mr Charles D’Souza for the first Respondent and Mr Siddharth Samantary for the Respondent Nos. 4 to 6. Record perused.

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As on 24.06.2020, the amount due from the Appellant was � 39,18,47,488.38. Subsequent interest must also have accrued. The 2^nd proviso to Sec. 18(1) of the SARFAESI Act mandates the Appellant to make a pre-deposit of 50% of the amount due or determined. The Ld. Counsel for the Appellant Mr Kinkhabwala fervently argues that the Appellant has a very good case to impugn the order of the D.R.T., and therefore, seeks indulgence of this Tribunal to exercise its discretion to reduce the amount to the minimum of 25%. It is submitted that the Appellant is only a mortgagor and therefore, may not be burdened with the entire 50%. It is also submitted that the property has been sold for more than �40 Crores.

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The Appellant has challenged the sale notice and other Sarfaesi measures, as also the auction sale. He is, therefore, not entitled to get sale consideration adjusted towards the pre-payment in view of the precedents of the Hon’ble High Court of Bombay in Converntry Springs and Engineering Company Ltd. & Ors. V/s Assets Reconstruction Company India Ltd. & Ors. 2019 SCC OnLine Bom 4528 and Eskays Construction Pvt. Ltd. V/s Soma Papers and Industries Ltd. & Ors. AIR 2017 Bom 10 which was not been interfered in a challenge before the

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Hon’ble Supreme Court in SLP at Diary (s) No. 13214/2017 dated 08.09.2017. Under the circumstances, it is not possible to give any concession to the Appellant in the matter of pre-deposit by taking into account the amount remitted by the auction purchasers.

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Taking into consideration the arguments advanced by the Ld. Counsel for the Appellant, I am not inclined to non-suit the Appellant at the threshold. The Appeal needs to be entertained on merits. The Appellant is, therefore, directed to deposit a sum of Rs.15 Crores in two equal tranches. The first installement of Rs.7.5 Crores shall be paid within two weeks from today, on or before 15.09.2022. And the second installment shall be paid within three weeks therefrom, on or before 06.10.2022. In case of default in payment of any of the above-referred installments, the Appeal stands dismissed automatically.

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The amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal.

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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.

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