Partly allowed

Dr.Yashwant Singh v. Ms Encore Asset Reconstruction Co. Pvt. Ltd. and Ors.

DRAT17 May 2022MISC APPEAL/65/2022

Case brief

AI extract

What is this about?

In an urgent appeal arising from potential property possession, the Delhi Debt Recovery Appellate Tribunal addressed the requirement for pre-deposit under Section 18 of the SARFAESI Act. The Tribunal held that the appellant must deposit 50% of the claimed debt amount to entertain the appeal, rejecting a request for waiver.

What did the court decide?

Dated order stating that the appellant has to make a 50% pre-deposit within 10 days to enable the Tribunal to entertain and hear the appeal.

Dr.Yashwant Singh versus Ms Encore Asset Reconstruction Co… — Banking and Recovery | DRAT (2022)

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DEBTS RECOVERY APPELLATE TRIBUNAL, DELHI

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Misc. Appeal No.65/2022

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Arising out of S.A. No.93/2015 (DRT-I, Delhi)

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Dr. Yashwant Singh Vs.

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Encore Asset Reconstruction Company Pvt. Ltd. & Ors.

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17.05.2022 Hon’ble Mr. Justice Brijesh Sethi

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Present: Mr. Mohit Chaudhary, Ld. counsel for the appellant

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Mr. Sudhir K. Makkar, Ld. Sr. Advocate along with Mr. Abhirup Dastgupta,, Ld. counsel for respondent no.1

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This matter has been taken up by me through Video Conferencing.

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This matter has been taken up today upon mentioning in view of the urgency expressed by the learned counsel for the appellant as respondent bank is going to take physical possession of the property in question.

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The learned senior counsel for the respondent bank alongwith Sh. Abhirup Dasgupta, learned counsel for the respondent no. 1 appeared at 1 p.m. and requested to hear the matter after some time as he wanted to go through the petition filed by the appellant. Accordingly, the matter was taken up at 1.30 p.m. and matter was heard for about two hours on the issue of waiver of pre-deposit.

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Vide this order, I shall dispose of the application bearing no.174/2022 filed for waiver of the condition of pre-deposit for the entertainment of the main appeal.

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The appellant has made the following prayers in the main appeal:-

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“In view of the facts and circumstances of the present case, it is most respectfully prayed that this Hon’ble Court may graciously be pleased to:-

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A. Set-aside order dated 13.05.2022 passed by the LD. DRT-I, Delhi in I.A. No.1052 of 2022 in SA No.93/2015 (Annexure-A1), and/or

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B. Set-aside order dated 12.04.2022 passed by the court of Ld. CMM exercising powers u/s 14 of SARFAESI Act (Annexure-A20), and/or

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C. Set aside notice dated 18.04.2022 and 16.05.2022, issued by court appointed receiver (Mr. Rizwan Ali advocate) for taking

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possession of the property of the Appellant (Annexure-A-21 and Annexure A-27), and/or

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D. Pass any other order which this Hon’ble Court deems fit.”

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Learned counsel for the appellant submits that the appellant has already paid a sum of Rs.6,61,14,586/- against a home loan of Rs.4.5 crores. It is submitted that the bank has filed an O.A. before the learned DRT for recovery of its dues, where a counter-claim has also been filed by the appellant. It is further submitted that when the main proceedings in the O.A. and the counter-claim were pending, the bank sold the account of the appellant to an Asset Reconstruction Company, namely, Encore Asset Reconstruction Company Pvt. Ltd. He further submits that the possession of the property is sought after seven years from the date of notice under Section 13(2) of the SARFAESI Act. It is submitted that aggrieved by the order of possession passed, an application (S.A.) under Section 17 of the SARFAESI Act was filed before the learned DRT-I, Delhi and in the said S.A.an application was also filed by the appellant for interim relief, but the same was dismissed on 13.05.2022 by the learned DRT. Ld. counsel states that the Court Receiver is going to execute the possession order tomorrow, i.e. 18.05.2022.

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According to the learned counsel for the appellant, there is no amount due and payable to the bank and the same is clear from the certificate issued by the government-approved Chartered Accountant and filed by the appellant. It is, therefore, prayed that the order passed by the learned DRT dated 13.05.2022 be stayed in the interest of justice by waiving the condition of pre-depoist.

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Mr. Sudhir K. Makkar, learned Senior Advocate has appeared along with Mr. Abhirup Dasgupta on behalf of the respondent ARC. Drawing my attention to Section 18 of the SARFAESI Act, learned counsel submits that before granting any order in favour of the appellant in appeal, the appellant has to cross the hurdle of pre-deposit as envisaged under Section 18 of the SARFAESI Act. Learned counsel further submits that in the notice issued by the bank on 23.01.2015 under Section 13(2) of the SARFAESI Act, the amount demanded by it is Rs.4,45,81,148.32 as on 31.12.2014 and an amount of Rs.13,71,84,467/- is due from the appellant as per application filed under Section 14 of the SARFAESI Act. Learned counsel has prayed that since huge amount of debt is due, the application for waiver of condition of pre-deposit cannot be allowed.

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I have considered the rival submissions and have gone through Section 18 of the SARFAESI Act which runs as under:-

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“ Appeal to the Appellate Tribunal. – (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.

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Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:

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Provided further that no appeal shall be entertained unless the borrower has deposited with the appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:

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Provided also that appellate Tribunal may, for the reasons to be recoreded in writing, reduce the amount to not less than twenty-fiveper cent of ebt referred to in the second proviso

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(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of Debts Due to Banks and financial Institutions Act, 1993 and rules made thereunder.”

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Proviso to the section reveals that no appeal can be entertained by this Tribunal unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less. No amount has been determined by the DRT in the O.A. filed by the bank as the same is still pending. In such circumstances, the amount relevant for the purpose of calculating the amount of pre-deposit for the entertainment of the appeal would be the one demanded by the bank under Section 13(2) of the SARFAESI Act, which is Rs.4,45,81,148.32. As per the provisions of the Act, the appellant is required to deposit 50% of the same, if he is to proceed with the appeal. No doubt, this can be reduced by this Tribunal to an amount not less than 25% for the reasons to be given in writing. Learned counsel for the appellant, however, states that since no amount is due from the appellant, this provision is not applicable to his case. I am afraid the said contention of the learned counsel for the appellant cannot be accepted as the proviso clearly states that 50% of the amount as claimed by the secured creditors is to be made as pre-deposit.

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Learned counsel for the appellant has, however, drawn my attention to Section 31(j) of the SARFAESI Act and contends that in a case in which the

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amount due is less than twenty per cent of the principal amount and interest thereon, the provisions of the Act would not be applicable. I have given my thoughts to the above contention of learned counsel for the appellant. The amount claimed by the secured creditor as due from the appellant is Rs.4,45,81,148.32 as per the demand notice issued under Section 13(2) of the SARFAESI Act, dated 23.01.2015, and, therefore, the minimum amount to be deposited by the appellant cannot be less than 25% of the principal amount. The contention of the learned counsel for the appellant, therefore, cannot be accepted.

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In view of the discussion made above, this Tribunal is of the opinion that the appellant has to make a pre-deposit with this Tribunal to enable this Tribunal to entertain and hear the appeal. Let the appellant make 50% of pre-deposit within 10 days.

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List on 31.05.2022.

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Learned counsel for the appellant, however, submits that the respondent is going to take possession of the property in question tomorrow. If such is the case, the appellant may make pre-deposit by today or tomorrow so that appeal can be entertained and heard at an early date.

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( CHAIRPERSON )

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-pk

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Dr.Yashwant Singh v. Ms Encore Asset Reconstruction Co. Pvt. Ltd. and Ors.

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Dr.Yashwant Singh v. Ms Encore Asset Reconstruction Co. Pvt. Ltd. and Ors.

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