Disposed

Vinodkumar Ramgopalji Gilada v. Ao, Cfm Asset Reconstruction Pvt. Ltd. and Ors.

DRAT1 Dec 2022IA/609/2022

Case brief

AI extract

What is this about?

The DRAT allowed an interim application for a pre-deposit waiver. The Tribunal determined the pre-deposit base as the sold value of the mortgaged property rather than the total debt. A reduced pre-deposit of Rs. 75 lakhs was ordered based on the appellant's financial status.

What did the court decide?

Directing the appellant to deposit Rs. 75 lakhs as pre-deposit, with possession of the mortgaged property to await the final orders in the appeal.

Vinodkumar Ramgopalji Gilada versus Ao, Cfm Asset… — Execution and Attachment | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr. Justice Ashok Menon, Chairperson I.A. No. 609/2022(WoD)

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Appeal on Dairy No. 1283/2022

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Between

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Vinodkumar Ramgopalji Gilada … Appellant/s V/s.

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AO. CFM Asset Reconstruction Pvt. Ltd. and …Respondent/s Ors.

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Mr Rajesh Nagori, along with Mr Nilesh J. and Mr Pratik I., i/b Ms Sanjana Ghogare, Advocate for Appellant.

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Mr Charles D’souza, along with Mr Mayank Samuel, i/b M/s. Siries Legal, Advocate for Respondent No. 1.

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Mr Aniruddha Lad, i/b M/s. KLT Law Associates, Advocate for Respondent No. 2

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-: Order dated: 01/12/2022:-

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I.A. No. 609/2022 is an application filed u/s. 18 of the SARFAESI Act by the Appellant seeking a waiver of the mandatory pre-deposit. The Appellant is aggrieved because his prayer for stalling the SARFAESI measures filed as I.A. No. 1494/2022 in S.A. No. 181/2021 on the files of D.R.T., Aurangabad was declined by the Ld. Presiding Officer vide order dated 09.11.2022.

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The Appellant has in this application seeking a waiver of the mandatory pre-deposit, submitted that he is a man of restricted means. He has produced his income tax returns to show that his income is meagre and also submits that he has a very strong prima

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facie case to sustain the securitization application on its merits.

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The S.A. was filed challenging the entire SARFAESI measures starting from the demand notice issued u/s. 13 (2) of the SARFAESI Act. It is also contended that the mortgage is not a valid one. The Appellant has allegedly mortgaged his property by creating an equitable mortgage by deposit of title deeds. It is contended that the signature on the memorandum of deposit of title deeds was not subscribed by him as he usually subscribes to his signature in English whereas this is the only document in which he has allegedly put his signature in the Devnagri script, which affirms the improbabilities its being genuine. The Appellants also holds an account in the second Respondent Bank wherein his signature could have been verified and determined.

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The sale of the property had taken place in the year 2021 and it is contended for the Respondent Bank that the Appellant did not challenge the sale to date. I.A. No. 1494/2022 was filed by the Appellant to stall the SARFAESI measures. But by that time, the sale was already confirmed and the sale certificate was issued to the auction purchaser. However, the certificate is yet to be registered. The Appellant seeks a relief that the physical possession of the property may not be handed over to the auction purchaser.

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Now, coming to determine the amount for the purpose of calculating the pre-deposit, the Ld. Counsel appearing for the Appellantdraws attention to the demand notice u/s 13 (2), wherein, the appellant’s liability is restricted to the extent of the value of the mortgaged property and the term loan for which the mortgaged was

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provided is ₹ 12 crores. The property was allegedly sold for ₹ 2.25 crores though the reserve price fixed was much less than that. According to the Ld. Counsel appearing for the Appellant, the threshold amount for calculating the pre-deposit should only be ₹ 2.25 crores for which the property was allegedly sold.

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Per contra, the Ld. Counsel appearing for the first respondentassignee of the debt admits that though the mortgage was provided restricting it to the value of the mortgaged assets, there were other loans as well and the total outstanding liability from the borrower is more than ₹ 100 crores. According to the Ld. Counsel even if the Appellant may not be liable for the entire debt of ₹ 100 crores, the mortgaged property was specifically provided as security for the term loan of ₹ 12 crores. The outstanding towards that debt inclusive of interest to date would come to around ₹ 25.95 crores and therefore, the pre-deposit has to be determined on the basis of the debt for which the Appellant has stood as a mortgagor. The Ld. Counsel for the Respondent also submits that since the Appellant has challenged the entire SARFAESI measures including the notice u/s 13 (2), he cannot get the benefit of restricting the amount to only ₹ 2.25 crores for which the property was ultimately sold. The prayer for setting aside the sale is not yet incorporated in the securitization application. According to the Ld. Counsel for the Appellant, he came to know about the sale only when the orders in I.A. No. 1494/2022 were passed by the D.R.T. But according to the Respondent, the Ld. Presiding Officer has in the impugned order stated that the Appellant was aware of the sale much earlier and therefore, the

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averments that he came to know about the sale only when the application was being heard are not acceptable.

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After having heard the rival contentions raised by both sides and on perusal of the records produced, I find that the notice u/s. 13 (2) specifically states that the Appellant is liable only to the extent of the value of the mortgaged property. We don’t have any material on the value of the mortgaged property except for the price for which it was sold ultimately which is ₹ 2.25 crores. A reading of Sec. 18 of the SARFAESI Act would indicate that the borrower is liable to deposit 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(emphasis supplied). There is no determination of the amount that is due from him. However, the demand notice itself, makes clear that the Appellant is liable only to the extent of the value of the property which has been mortgaged, and therefore, under any circumstances, the creditors cannot claim any amount from the Appellant over and above the value of the mortgaged property for which it was sold.

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In view of the above, I determine the threshold amount for payment of pre-deposit at ₹ 2.25 crores. The Appellant has raised several contentions including the challenge to the very execution of the mortgaged deed and the SARFAESI measures. The order u/s. 14 of the SARFAESI Act is also subject to challenge and therefore, there may be a prima facie case made out by the Appellant. The Appellant has also produced his income tax returns to prove his impecuniosity. Hence, I am of opinion that the interests of justice would be served if the Appellant is directed to deposit a sum of ₹ 75

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lakhs towards the pre-deposit. The Counsel for the Appellant undertakes to produce a Demand Draft for ₹ 30 lakhs today and the same shall be accepted towards the first instalment of the aforesaid pre-deposit. The balance of the ₹ 45 lakhs shall be deposited within a period of three weeks. In default, the Appeal shall stand dismissed, without any further reference to this Tribunal.

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In view of the fact that the auction purchaser is not before this Tribunal, no orders prohibiting him from creating any third-party interest are possible. Since possession of the property has not yet been handed over, it shall await the final orders in this appeal or the S.A. whichever is earlier.

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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 to be renewed periodically.

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With these observations, the I.A. is disposed of. The Respondent is at liberty to file a reply to the Appeal with an advance copy to the other side.

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Post on 23.12.2022 for reporting compliance regarding the payment.

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rm-3

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Vinodkumar Ramgopalji Gilada v. Ao, Cfm Asset Reconstruction Pvt. Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

Vinodkumar Ramgopalji Gilada v. Ao, Cfm Asset Reconstruction Pvt. Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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Case details

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