Partly allowed

Mrs. Hema D. Katariya v. Bank of Baroda

DRAT20 Nov 2023IA/109/2023

Case brief

AI extract

What is this about?

This appeal impugned the dismissal of a petition for waiver of the pre-deposit under the SARFAESI Act. The Division Bench held that the appellant failed to establish a prima facie case regarding fraud and did not plead financial strain. Relying on a 2023 Supreme Court decision, the Tribunal ordered a 50% pre-deposit.

What did the court decide?

Directed the appellant to deposit 50% of the demanded sum as pre-deposit in two instalments to proceed with the appeal and stall Sarfaesi measures pending payment.

Mrs. Hema D. Katariya versus Bank of Baroda — Company and Corporate | DRAT (2023)

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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. 109/2023 (WoD) In

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Appeal on Diary No. 59/2023

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Between

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Hema D Katariya & Ors. … Appellant/s

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V/s.

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The Authorised Officer, Bank of Baroda &Ors. …Respondent/s Mr Vandan Kumar, Advocate for Appellant.

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-: Order dated: 20/11/2023:-

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The Appellants are in appeal impugning the order dated 25.11.2022 dismissing the Securitisation Application (S.A.) No. 35/2013 by Debts Recovery Tribunal-II, Ahmedabad (D.R.T). This application is filed for a waiver of the mandatory pr-deposit required u/s. 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ SARFAESI Act”, for short).

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The Appellant had challenged the Sarfaesi measures initiated by the Respondent on various grounds which included the ground that the classification of the debt as NPA on 27.12.2012 was improper for the reason that the officers of the bank in collusion with two others had opened a fictitious account having a name similar to the name of the first Appellant proprietorship with a slight change in the spelling, and had siphoned out money which was actually due to be credited in the Appellants’ account. Had the amount come into the account of the first Appellant, there wouldn’t have been any default

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and overdue. Therefore, the classification of the account of the Appellants as NPA was not justified.

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The Appellants had borrowed a sum of ₹ 15,00,000/- and were regular in repayment but for the fraudulent act as stated above. On 02.01.2013, the Respondent issued a demand notice u/s. 13 (2) of the SARFAESI Act demanding a sum of ₹ 15,63,274/- as of 31.12.2012. Though the Appellants have raised an objection, and had also paid a sum of ₹ 5,00,000/- to the Respondent on 23.03.2013, the amount was also not accounted for in the Appellants’ account and was instead siphoned into the fictitious account that was maintained by the bank and the two other persons. The Appellant had made a police complaint against the officers of the bank and the other fraudsters and a Criminal Case No. 23/2013 is registered before the Magistrate Court Godhra. The Appellants therefore contend that the Sarfaesi measures were defective.

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The Ld. Presiding Officer in the impugned order did not find substance in the allegations made against the bank and therefore, dismissed the S.A. The Appellants are aggrieved and hence, in appeal. The Appellants state that in view of the fraudulent act by the bank, the Appellants should be granted a total exemption for payment of the mandatory pre-deposit contemplated under the second proviso u/s. 18(1) of the SARFAESI Act.

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In order to claim the indulgence of this Tribunal to get the amount of pre-deposit reduced from the mandatory 50% to 25% exercising jurisdiction under the third proviso to Sec. 18(1), the Appellant will have to prove two things. First, that they had a good

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prima facie case and second, that they are under financial strain. In order to substantiate the case of the Appellants regarding the creation of the fraudulent account siphoning of the amount etc; evidence will be required and therefore, the prima facie case has not been established. There is no plea of any financial strain to the Appellants made in the application.

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In view of the latest decision of the Hon’ble Supreme Court of India Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 OnLine SC 12 , the Appellants will have to deposit 50% of the amount demanded in the demand notice. The Appellants are therefore directed to deposit a sum of ₹ 7.8 lakhs as pre-deposit. The amount shall be paid in two instalments. The 1^st instalment of ₹ 4 lakhs shall be payable within three weeks and the balance of ₹ 3.8 lakhs shall be payable within three weeks therefrom, as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment	11.12.2023
2^ndInstalment	01.01.2024

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On paying the 1^st instalment of ₹ 4 lakhs within the stipulated time, the further Sarfaesi measures shall stand stalled till the next date of hearing. In default, the appeal shall stand dismissed, 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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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 12.12.2023 for reporting compliance regarding the deposit of the 1^st instalment.

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Sd/Chairperson

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rm-5

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Mrs. Hema D. Katariya v. Bank of Baroda

Case brief

What is this about?

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Mrs. Hema D. Katariya v. Bank of Baroda

Case brief

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