Allowed

Shri Atul S/O Ganeshrao Watkar v. Kotak Mahindra Bank Limited and Anr.

DRAT8 Sept 2022IA/409/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal allowed an S.A. invoking the third proviso to Section 18(1) of the SARFAESI Act, permitting payment of the pre-deposit in two installments while staying recovery proceedings pending compliance.

What did the court decide?

Deposit of Rs. 12.50 Lakhs by 29.09.2022 before stay of proceedings; second tranche of Rs. 12.50 Lakhs by 13.10.2022; hearings post 30.09.2022 for compliance.

Shri Atul S/O Ganeshrao Watkar versus Kotak Mahindra Bank… — 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. 409/2022 (WoD) In Appeal on Diary No.847/2022

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Between

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Shri Atul S/o GaneshraoWatkar … Appellant/s V/s. Kotak Mahindra Bank Ltd. & …Respondent/s Anr.

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Mr. G. Kinkhabwala, i/b Mr. Narendra L. Karamchandani, Advocate for the Appellant.

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MrRaju U Shinde, Advocate for the Respondents.

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-: Order dated: 08/09/2022:-

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I.A. No. 409/ 2022 is an application filed under Sec. 18(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short ‘SARFAESI Act’) seeking the indulgence of this Tribunal to invoke the third provision to Sec. 18(1) of the SARFAESI Act to reduce the amount to be paid as pre-deposit. The Appellant has come up with the Appeal impugning the order in Interlocutory Application (I.A.) No. 1456/2022 in S.A. No. 193/2022 on the files of D.R.T., Nagpur, which is an application seeking an extension of the time granting interim relief by Ld. Presiding Officer to deposit some amount to maintain the status-quo onSarfaesi measures initiated by the Respondent Bank against the secured asset.

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The Appellant had filed a pursis along with I.A. No. 791/2022 before the D.R.T undertaking to voluntarily deposit a sum of �16 Lakhs in two installments, and he paid a sum of �8 Lakhs immediately and offered to paythe remaining �8 Lakhswithin 1½ months (however the date mentioned in the pursis is 15.08.2022 which is inthe excess of the period of 1½ months). On the basis of pursis filed by the Appellant, the Ld. Presiding Officer passed an order of 23.06.2022 accepting the proposal made by the Appellantoffering to deposit the amount as stated above. The Appellant further offered to pay the subsequent EMIs regularly without default. The Appellant,however,defaulted payment of the second installment on time. On 16.08.2022, the Appellant filed I.A. No.1456/2022 seeking an extension of time to pay the second instalment.

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The Respondent Bank had vehemently opposed the application for an extension of time stating that there is no proper reason because he hadnot only defaulted on payment of installment, he failed to pay the EMI as well. The prayer for extension of time to stall and protract the recovery measures was also opposed.

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The Ld. Presiding Officer vide the impugned order dated 17.08.2022 held that upon going through the submission made by parties and material on record, he did not find any merit in the present application and accordingly, the same stands disposed of, refusing to grant the extension of time to pay the defaulted installment. Aggrieved by this, the Appellant has preferred the present Appeal.

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Mr G. R. Kinkhabwala, the Ld. Counsel for the Appellant submits that the impugned order is cryptic and non-speaking. He does not give any reasons whatsoever to decline an application for an extension of time. MrKinkhabwala submits that he has a good case on merits, and therefore, the mandatory pre-deposit under the second proviso to Sec. 18(1) of the SARFAESI Act may be reduced to the minimum, invoking the third proviso to Sec.18(1). In the meanwhile, the Appellant had approached the Hon’ble Bombay High Court, Nagpur Bench and obtained an order of stay of the proceedings for two weeks which ends on 09.09.2022. The Writ Petition was withdrawn with liberty to approach this Tribunal. The second proviso to Sec. 18(1) of the SARFAESI Act, mandates that no appeal shall be entertained unless the borrower deposits with the Appellate Tribunal fifty per cent of the debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less. MrKinkhabwalafervently argues that the amount determined in this case is only �8 Lakhs, as the extension sought for payment of that amount was declined by the D.R.T. The argument of the Ld. Counsel is undoubtedly attractive in the first blush, but not acceptable because the proviso states fifty per cent of the debt claimed by the secured creditor or the amount determined by the D.R.T. In this case, it cannot be stated that D.R.T. has determined the debt due. The Appellant had volunteered to deposit �16 lakhs in installments and on that basis, the Ld. P.O. had directed payment as a condition for granting a stay. It is not the determination of the debt due. Hence, 50% of the amount due as a debt from the Appellant as claimed by the

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securedcreditor will have to be paid as pre-deposit. The amount per the demand notice under Sec. 13(2) of the SARFAESI Act, is �95,63,221.15 and in the reply filed by the Respondent, it is submitted that after deducting the amountof �8 Lakhs paid by the Appellant, the amount due from the Appellant on 05.09.2022 is�1,00,31,800/-. The Ld. Counsel for the Respondent Bank submits that at least 50% of that amount needs to be paid as a pre-deposit.

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The Ld. Counsel for the Appellant argues that he is in financial difficulty and prays that the discretion under the third proviso to Sec. 18(1) of the SARFAESI Act may be invoked. 7. After considering the entire facts and circumstances of this case and on the basis of pleadings and submissions made across the bar, I am of the opinion that the Appellant has made out a prima facie case. He has been earnestly attempting to pay amounts to due from him be. The Appellant deserves indulgence in invoking the third proviso to Sec. 18(1) of the SARFAESI Act. The Appellant is directed to deposit a sum of �25 Lakhs in two equal tranches as predeposit under Sec. 18(1). The first tranche of �12.50 Lakhs shall be paid on or before 29.09.2022, and the second tranche of �12.50 Lakhs shall be paid on or before 13.10.2022. In case of default in payment of any of the above-referred tranches, 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,

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with any nationalized bank, initially for 13 months, and thereafter it will be renewed periodically.

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On deposit of the first tranche within a stipulated time, all proceedings initiated by the Respondent Bank under SARFAESI Act shall be stayed.

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It is also made clear that the Respondent Bank shall not proceed further without giving two weeks prior notice to the Appellant.

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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.

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Post on 30.09.2022 for reporting compliance concerning payment of the first tranche.

Sd/-

Chairperson

mks-03

Shri Atul S/O Ganeshrao Watkar v. Kotak Mahindra Bank Limited and Anr.

Case brief

What is this about?

What did the court decide?

Shri Atul S/O Ganeshrao Watkar v. Kotak Mahindra Bank Limited and Anr.

Case brief

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What did the court decide?

What the court decided

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