Disposed

Tarun Madanmohan Das Sole Proprietor Ms. Ananda Aahar Veg v. Indian Bank (Allahabad Bank)

DRAT30 Jun 2023IA/284/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an interim application dismissing a merits appeal pending pre-deposit. It found an arguable case regarding NPA classification and procedural compliance but directed a deposit of ₹90,00,000 in three instalments, refusing a further reduction despite the claim of financial strain.

What did the court decide?

Appellants directed to deposit ₹90,00,000 in three equal instalments; appeal shall stand dismissed in default.

Tarun Madanmohan Das Sole Proprietor Ms. Ananda Aahar Veg… — Execution and Attachment | 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. 284/2023(WoD) In Appeal on Diary No. 636/2023

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Between

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TarunMadanmohan Das, Sole proprietor Ms AnandaAahar Veg &Anr. V/s.

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The Authorised Officer, Indian Bank &Anr.

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… Appellant/s

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…Respondent/s

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Mr. Anil Kumar, along with Mr Meghnath Navlani, Advocate for Appellants.

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Mr Ajikumar, i/b M/s. VNA Legal, Advocate for Respondent No.1. Mr. Harjot Singh, i/b M/s. Raval-Shah & Co., Advocate for Respondent No. 2.

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-: Order dated: 30/06/2023:-

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The Appellants are borrowers who are in appeal impugning the dismissal of S.A. No. 55/2017 on the files of the Debts Recovery Tribunal, Nagpur (D.R.T) vide order dated 13.04.2023.

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The Appellants are challenging the Sarfaesi measures on various grounds starting from the classification of the account as NPA on 31.03.2017. It is contended that the Respondent Bank had issued a notice on 07.03.2017 calling upon the Appellants to make a payment of ₹ 5,45,890.00 to regularise the account. The said amount was proposed to be overdue which was defaulted. The amount was directed to be paid within 15 days. The Appellants could not pay the amount within 15 days but paid a sum of ₹ 5,50,000/- on 27.03.2017.

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According to the Appellants though the account ought to have been regularized, a couple of days hence, on 31.03.2017 the account was classified as NPA and thereafter the Respondent Bank issued a demand notice u/s. 13 (2) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“ the SARFAESI Act”, for short) on 01.04.2017 demanding a total outstanding sum of ₹ 1,17,78,199/-. The Appellants state that the said notice was delivered to them only on 15.04.2017. The Appellants sent their reply to that notice on 05.06.2017. But there was no response to that notice as contemplated u/s. 13 (3A). The Appellants have also issued a cheque for ₹ 1,80,000/- on 26.04.2017 towards the overdue amount. The cheque was encashed and adjusted towards the amount due.

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After that, symbolic possession was allegedly taken on 05.06.2017 u/s. 13(4) of the SARFAESI Act which according to the Appellants is before the mandatory period of 60 days expired. A fresh notice was issued thereafter for taking symbolic possession but according to the Appellants, it was not published as required under Rule 8 of the Security Interest (Enforcement) Rules. The Appellant thereafter, approached the Respondent Bank to restructure the loan but that was not considered favourably and a fresh symbolic possession of the property was again taken on 05.09.2017 and this time, the notice was published but was not affixed as required under the Rules. The Appellants thereafter approached the Hon’ble High Court of Bombay, Nagpur Bench and obtained an interim order against the scheduled sale dated 18.07.2019. The copy of the order

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was allegedly intimated to the bank on 01.08.2019 by email. But ignoring that mail, the Authorised Officer proceeded with the registration of the sale certificate on 01.08.2019 at 19.47 hours after service of the email on the bank by the Appellants.

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Thereafter, when the matter was taken up before the Hon’ble High Court the Respondent Bank submitted that the sale has already concluded and the sale certificate issued and registered. Since the writ petition had become infructuous, it was withdrawn by the Appellants. It is submitted that the property was sold for a total sum of ₹ 72,30,000/- which is much less than the valuation made under the valuation report which indicates a value of ₹ 1,31,00,000/- in the year 2012. It is submitted that there is an irregularity in the entire proceedings under the SARFAESI Act right from the classification of the debt account as NPA till the auction sale was conducted and therefore the impugned order rejecting the S.A. is not proper the Appellant has strong prima facie case and it is also pleaded that the Appellants are in financial strain. Because of the pandemic, their business collapsed and they could not revive it thereafter. The Appellants, therefore, pray that the mandatory pre-deposit may be kept at the minimum.

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The Ld. Counsel appearing for the Respondent has vehemently opposed the application stating that the Appellants are not entitled to any indulgence on the part of this Tribunal as of the date the outstanding amount due from the Appellants is ₹ 2,36,85,685 and they should be asked to pay deposit 50 % of that amount as predeposit u/s. 18 (1) of the SARFAESI Act. The Ld. Counsel

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appearing for the Appellants submits that even though they have not produced the income tax returns pertaining to the financial strain which the Appellants are undergoing, in view of the fact their business has collapsed, indulgence may be shown to keep the deposit minimum of 25 % of the amount due, exercising jurisdiction under the second proviso to u/s. 18 (1) of the SARFAESI Act.

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After having heard the rival submissions and also having gone through the documentary evidence that has been made available, I find that the Appellants have an arguable case and that there is an indication that the classification of the account as NPA was not proper. There is also doubt regarding compliance with Sec. 13 (3A) of the SARFAESI Act and it is also pointed out that the property was sold for much less than the actual value. Though the Appellants have a prima facie case in maintaining this appeal they have not produced any evidence regarding their financial strain and therefore, I am not inclined to reduce the amount to the minimum of 25%, but they are entitled to some concession regarding the amount to be deposited.

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Under the circumstances, the Appellants are directed to deposit a sum of ₹ 90,00,000/- as pre-deposit which shall be deposited in three equal instalments. The first instalment shall be payable within 20 days i.e. or before 20.07.2023 and the second instalment shall be payable within three weeks therefrom i.e. on or before 10.08.2023 and the third instalment shall be payable within three weeks therefrom, i.e. on or before 31.08.2023. In default, the Appeal shall stand dismissed, without any further reference to this Tribunal.

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The auction purchaser is on record and appeared through Counsel and therefore, no third-party interest shall be created by the auction purchaser till the disposal of this appeal

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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 21.07.2023 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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rm-4

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Tarun Madanmohan Das Sole Proprietor Ms. Ananda Aahar Veg v. Indian Bank (Allahabad Bank)

Case brief

What is this about?

What did the court decide?

Tarun Madanmohan Das Sole Proprietor Ms. Ananda Aahar Veg v. Indian Bank (Allahabad Bank)

Case brief

What is this about?

What did the court decide?

What the court decided

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