Disposed

M/s. Europa Foams Pvt. Ltd. v. Rajkot Nagrik Sahakari Bank Limited

DRAT11 Oct 2023

Case brief

AI extract

What is this about?

The APPellate Tribunal directed the appellants to deposit 50% of the demanded amount as a pre-condition to entertain an appeal against adverse SARFAESI measures. The court ordered payment in five instalments over five weeks, citing the Supreme Court in Sidha Neelkanth Paper Industries. Failure to pay the first instalment would lead to dismissal of the appeal. The tribunal deferred possession takin

What did the court decide?

Directed to deposit ₹2.71 crores in five instalments; deferment of possession granted upon payment of first instalment.

M/s. Europa Foams Pvt. Ltd. versus Rajkot Nagrik Sahakari… — Banking and Recovery | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 685/2023(WoD)

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In Appeal on Diary No. 1740/2023

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Between

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M/s. Europa Foams Pvt.Ltd & Ors. … Appellant/s V/s.

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Rajkot Nagrik Sahakari Bank Ltd.

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…Respondent/s

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Mr. Anand Gogia, Advocate for the Appellant.

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Mr. J.R. Shah, Advocate for Respondent.

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-: Order dated: 11/10/2023:-

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The matter is taken up for hearing by way of a praecipe filed by the Appellants for seeking urgent relief.

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The Appellants herein are the borrowers who had filed Securitisation Application (S.A.) No. 439/2023 challenging the Sarfaesi measures taken by the Respondent Bank with regard to the debt which is due to be paid by the Appellants. The Appellants have filed this appeal challenging the order of Debts Recovery Tribunal-II, Ahmadabad (D.R.T) dated 23.06.2023 in the S.A. wherein the Appellants were not granted any extension of time to settle the dues which they had undertaken to clear within a stipulated time.

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The Appellants are aggrieved and hence, in appeal. In order to entertain the appeal, the Appellants may have to first comply with the mandatory provisions of u/s. 18(1) of the SARFAESI Act to make a pre-deposit. The demand notice u/s. 13 (2) of the Securitisation and Reconstruction of Financial Assets and

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Enforcement of Security Interest Act, 2002.(“ the SARFAESI Act” for short) issued on 06.12.2022 demanded a sum of ₹ 5,42,44,059.

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The Appellants have sought a waiver of the deposit on the ground that they are not in a financial position to deposit 50 % contemplated. They seek indulgence to reduce the amount invoking the jurisdiction of this Tribunal under the third proviso of Sec. 18 (1) of the SARFAESI Act. 4. The Appellants will have to establish a prima facie case and also must prove that they are under financial strain. The Appellants have not produced any material to indicate that they are under financial strain. Regarding the prima facie case also, there doesn’t appear to be a strong case because by the impugned order the Ld. Presiding Officer declined to grant any extension and the application filed as M.A. No. 35/2023 stands adjourned to 27.09.2023. The Ld. Counsel appearing for the Appellants submits that they could not comply with the direction of the DRT and the undertaking given by them for the reason that the person who had agreed to advance money was hospitalized and was disposed of in a manner that he could not help him.

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Under the circumstances, I find that to entertain this appeal. The Appellants will first have to comply with the mandatory provisions of Sec. 18 (1) and in view of the latest judgment of the Hon’ble Supreme Court of India Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SSC OnLine SC 12, the Appellants who are challenging Sarfaesi measures till the steps u/s. 13(4) will have to pay 50% of the amount which is demanded in the notice.

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The Appellants are therefore directed to deposit a sum of ₹

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2.71 crores as pre-deposit and the amount shall be paid in five instalments within a gap of three weeks each, as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹50,00,000/-	01.11.2023
2^ndInstalment of₹50,00,000/- 3^rdInstalment of₹50,00,000/-	22.11.2023 13.12.2023
4^thInstalment of₹50,00,000/-	03.01.2024
5^thInstalment of₹71,00,000/-	24.01.2024

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On payment of the 1^st instalment within the time stipulated, the Appellants shall be entitled to deferment of taking over a possession and other Sarfaesi measures initiated against secured asset by the Respondent bank. Failure to pay the amount shall entail in dismissal of the appeal without any further reference to this Tribunal.

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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 nationalised bank, initially for 13 months, and thereafter to be renewed periodically.

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