Partly allowed

M/S Kashish Food v. Bank of Maharashtra

DRAT24 Nov 2023IA/168/2022

Case brief

AI extract

What is this about?

The DRAT Mumbai addressed an interim application regarding a waiver of pre-deposit in a SARFAESI appeal. While noting the Supreme Court's decision to use the sale price as the deposit threshold, the court held that the appellants failed to prove financial strain. Consequently, it fixed the pre-deposit amount based on total demand.

What did the court decide?

Appellants directed to deposit ₹ 1.75 Crores as predeposit within four weeks.

M/S Kashish Food versus Bank of Maharashtra — Insolvency and Bankruptcy | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 168/2022 (WoD) In

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Misc. Appeal No. 62/2022

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Between

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The Appellants are in appeal impugning the order dated 10.06.2020 in Interim Application (I.A.) No. 921/2019 in Securitization Application (S.A.) No. 153/2019 on the files of Debts Recovery Tribunal, Pune (D.R.T.) whereby the interim protection sought by the Appellants against the Sarfaesi measures initiated by the Respondent Bank of Maharashtra was refused to be injuncted for the reason that the Appellants have not made out a prima facie case aggrieved by that the Appellants are in appeal.

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The Appellants submit that the fact indicates that the secured assets were already sold by the Bank and the application filed by the Appellants was to prohibit the 2^nd Respondent purchaser from creating third-party interest in the property. It is also contended that the 1^st Defendant has taken the physical possession of the movable security illegally without even obtaining an order u/s 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for

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short). No objection was raised by the Appellants with regard to the sale of the property and they came up with a securitisation application only when the physical possession of the property was to be handed over to the 2^nd Defendant auction purchaser.

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The Respondents Nos. 2 to 4 have appeared and filed a reply to the application for waiver of pre-deposit. The Ld. Counsel appearing for the Appellants would submit that the demand notice issued u/s 13 (2) demanded a sum of ₹ 3,73,74,567/- and subsequent to that ₹ 50 lakhs has been paid after filing the S.A. and that has reduced the amount to ₹ 3,23,74,567/-. The Appellants, therefore, pray that indulgence may be shown to reduce the pre-deposit to 25% of the said amount.

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In view of the decision of the Hon’ble Supreme Court of India in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12, when the property has already been sold the amount as of date will have to be taken as a threshold amount to the deposit of the mandatory pre-deposit. The secured assets were sold for ₹ 2,03,09,000/-. The Appellants would contend that the property was sold for a throw-away price and would have fetched at least ₹ 13 crores. The demand notice u/s 13 (2) was issued on 30.01.2018 and subsequent interest also would be due and payable.

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The Appellants have not produced any documents to indicate that they are under the financial strain to get the amount of predeposit reduced to 25% as claimed by them. The Appellants are, therefore, not entitled to any concession on pre-deposit. The

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Appellants are directed to deposit a sum of ₹ 1.75 Crores as predeposit within the period of four weeks. Default in payment of any of the instalments 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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With these observations, the I.A. is disposed of. The Respondents is at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 26.12.2023 for reporting compliance.

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Sd/Chairperson

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psa-04

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M/S Kashish Food v. Bank of Maharashtra

Case brief

What is this about?

What did the court decide?

M/S Kashish Food v. Bank of Maharashtra

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

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