Allowed

Vipul and company and Ors. v. Union Bank of India

DRAT8 May 2023IA/268/2023

Case brief

AI extract

What is this about?

The DRAT entertained an interim application for waiver of mandatory pre-deposit under the SARFAESI Act. The bench rejected the claim of financial strain due to lack of material evidence and meritorious aspects being reserved for the main sec application. It enhanced the pre-deposit amount and granted a limited stay pending payment. Nothing in this text describes if the appeal was allowed, dismisse

What did the court decide?

Appellants directed to deposit enhanced pre-deposit; stay of further SARFAESI measures granted until first instalment paid.

Vipul and company and Ors. versus Union Bank of India — 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. 268/2023 (WoD)

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Appeal on Diary No. 569/2023

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Between

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Vipul and Company & Ors. V/s.

Union Bank of India

… Appellant/s

…Respondent/s

Ms Sonali Jain, Advocate for Appellants.

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Mr R.P. Ojha along with Mr R.K. Dubey, Advocate for Respondent.

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-: Order dated: 08 /05/2023:-

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This is an application for waiver of deposit filed by the Appellants under Sec. 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 Appellants are aggrieved by the order dated 15.03.2023 of the Debts Recovery Tribunal No.-II, Mumbai (D.R.T.) in I.A. No. 524 of 2023 in Securitisation Application (S.A.) No. 102 of 2023 wherein the Ld. Presiding Officer directed the Appellants to deposit a sum of ₹60 lakhs in instalments to stall the taking over of the physical possession of the secured assets by the secured creditor Bank. The Appellants had allegedly deposited ₹20 lakhs in compliance but failed to pay the balance within the stipulated time and hence, face the action of being dispossessed of the secured

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asset, and hence they are in appeal.

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The first Appellant is a partnership firm and the rest of the Appellants are partners. The S.A. was filed challenging the Sarfaesi measures initiated by the Respondent Bank on various grounds which includes the challenge to the classification of debt as a NonPerforming Asset (NPA) in violation of the Government and RBI norms during the pandemic. It is also stated that the demand notice is illegal and the symbolic possession of the property was not taken after due compliance with Rules 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002. The action under Sec. 14 of the SARFAESI Act is also challenged.

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Disregarding all these objections raised by the Appellants, the Ld. Presiding Officer granted a conditional order directing the Appellants to deposit ₹60 lakhs. Towards which they could deposit only a sum of ₹20 lakhs. The Appellants contend that they are undergoing financial strain and therefore, the pre-deposit amount may be reduced to the minimum of only 25%.

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The Respondent Bank has vehemently opposed the application. The amount demanded as of the date of notice of demand under Sec. 13(2) is ₹2,52,96,577.33 on 01.03.2020. The Ld. Counsel for the Respondent submits that a sum of more than ₹ 2.90 crores is due and payable by the Appellants.

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On an anxious of the facts and circumstances of this case, I do not find any prima facie justification in the Appellants' challenge over the Sarfaesi measures initiated by the Respondent Bank. The contention raised will have to be decided in the S.A. by the Ld.

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Presiding Officer. There is no material to indicate the financial strain that the Appellants are undergoing. Hence, I find no reason to invoke the discretion of this Tribunal under the third proviso to Sec. 18(1) of the SARFAESI Act.

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Hence, the Appellants are directed to deposit a sum of ₹1.15 crores toward mandatory pre-deposit. ₹5 Lakhs has been deposited by the Appellants. The balance amount shall be deposited in three equal instalments of 36.67 lakhs each. The first instalment shall be payable within a period of two weeks from today, on or before 22.05.2023. The second instalment shall be payable within a period of two weeks therefrom, on or before 05.06.2023 and the third instalment shall be paid within another three weeks therefrom, on or before 26.06.2023. In default of the payment of any instalments on time, the appeal shall stand dismissed without any further reference of the Tribunal.

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Since the Appellants have deposited a sum of ₹5 lakhs, they shall be entitled to stay of further Sarfaesi measures till 22.05.2023. 9. On payment of the first instalment, the stay shall stand extended further.

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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

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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 23.05.2023 for reporting compliance concerning the payment of 1^st instalment.

Sd/-

Chairperson

mks- 1

Vipul and company and Ors. v. Union Bank of India

Case brief

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Vipul and company and Ors. v. Union Bank of India

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