Allowed

Shree Momai Enterprises and Ors. v. Bank of Baroda

DRAT2 Aug 2023IA/332/2023

Case brief

AI extract

What is this about?

This order exempted the appellants from filing any pre-deposit while filing an appeal against an interlocutory order in a pending original application. The Tribunal held that Section 21 requires a debt determined under Section 19, which was pending, so no deposit was applicable.

What did the court decide?

The application to exempt the appellants from payment of any pre-deposit was allowed. The appeal was taken on file.

Shree Momai Enterprises and Ors. versus Bank of Baroda — Banking and Recovery | 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. 332/2023 (WoD)

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In Appeal on Diary No. 840/2023

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Between

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Shree Momai Enterprises & Ors.

… Appellant/s

V/s.

Bank of Baroda

…Respondent/s

Mr Sachin Kaikini, i/b Mr Dhrumit D. Chauhan, Advocate for Appellants.

¶11

Mr A. R. Bamne, i/b M/s A. R. Bamne & Co., Advocate for Respondent Bank.

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-: Order dated: 02/08/2023:-

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This is an application filed by the Appellants under section 21 of the Recovery of Debts & Bankruptcy Act, 1993 (‘RDB Act’, for short) seeking the indulgence of this Tribunal to exercise its jurisdiction in favour of the Appellants to reduce the amount to be deposited to the minimum of 25% of the amount due.

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The Appellants are in appeal impugning the order dated 13/11/2019 in I.A. No. 1369 of 2023 in Original Application (O.A.) No. 1217 of 2019 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.).

¶15

The aforesaid O.A. was filed by the Respondent Bank of Baroda for recovery of ₹1,19,04,638.99 from the Appellants. The 1^st Appellant is a partnership firm which is the principal borrower. Appellants Nos.

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2 and 3 are the partners of the firm and also the guarantors. Defendants 4 to 6 in the O.A. are the mortgagors/guarantors. The defendants remained ex parte in the O.A. The Respondent Bank filed I.A. No. 1369/2023 seeking to appoint a receiver for shifting the movables lying in the mortgaged property which was being proceeded against for recovery of the debt. Measures under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) were also initiated by the bank against the defendants in the O.A. The defendants had filed Securitisation Application (S.A.) No. 417/2022 before the D.R.T. challenging the securitisation measures. The defendants had submitted a compromise proposal to pay off the outstanding debt due to the bank. However, they failed to perform in accordance with the compromise and the S.A. was disposed of by permitting the bank to proceed with the Sarfaesi measures. Physical possession of the secured assets was taken and a sale notice was issued for conducting e-auction of those properties. The mortgaged property was auctioned on 14/09/2022 for a sum of ₹19,49,500/-. The sale was confirmed and a sale certificate was issued in favour of the auction purchaser. Though the physical possession of the property was taken, the defendants did not vacate their movables from the property in spite of repeated notices issued by the bank. When the officers of the bank visited the site, the 3^rd defendant held out a threat to the bank offices and stopped the workers from removing the movable goods from the property. Hence the movables could not be shifted. It is alleged that the defendants are not cooperating to remove the movables so as to

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enable the bank to hand over vacant and peaceful possession of the property to the auction purchaser. The Applicant bank, therefore, filed the aforesaid I.A. 1369 of 2023 seeking to restrain the defendants therein from creating any obstruction in the process of shifting/removing movables/articles from the movable property which was sold to the auction purchaser. The bank also seeks the appointment of a receiver to take an inventory before shifting/removing the movables/articles lying in the auctioned property.

¶20

After considering the facts and circumstances, the Ld. Presiding Officer vide the impugned order, directed the chief manager of the Applicant bank to be appointed as receiver in accordance with the provisions of section 19 (18) of the RDB Act read with Order 41 Rule 1 and sections 151/94 of the Code of Civil Procedure and to prepare an inventory of the articles to be taken possession of for the purpose of The defendants were also restrained from shifting. disposing/transferring or alienating the movables lying on the property. In case there was any hindrance, the receiver was given the liberty to seek police assistance.

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Aggrieved by the aforesaid order of allowing I.A. No. 1369/2023, the Appellants have filed the present appeal. The main contention of the Appellants is that the property in question was auctioned under the provisions of the Sarfaesi measures taken by the bank and therefore, it is not possible to file an application in the O.A. to appoint a receiver to remove the articles which was the subject matter of the S.A. The Appellants contend that the appeal is filed

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challenging an interlocutory order in O.A. No. 1217 of 2019 and that the O.A. is still pending consideration of the Tribunal. Hence, the Appellants are under no obligation to deposit any pre-deposit for entertaining the appeal.

¶24

Per contra, the Respondent bank submits that the O.A. has been filed by the bank for recovery of ₹1,19,04,638.99 together with interest at the rate of 13.35% per annum with monthly rests. There are no grounds to exercise jurisdiction of this Tribunal to reduce the amount of pre-deposit under section 21 of the RDB Act to 25%.

¶25

Section 21 of the RDB Act reads thus:

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“^{**21.Deposit of amount of debt due, on filing appeal. -**Where} an appeal is preferred by any person from whom the amount of debt is due to a bank or financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal under such person is deposited with the Appellate Tribunal fifty percent of the amount of debt so due from him as determined by the Tribunal under section 19:

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Provided that the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to be deposited by such amount shall not be less than twenty-five percent of the amount of such debt so due to be deposited under this section.”

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A reading of the provisions would indicate that the pre-deposit as a condition precedent for entertaining the appeal is to be paid on the debt so due from him as determined by the Tribunal under section 19. (emphasis laid). In the instant case, the O.A. is still pending and

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the amount due is yet to be determined. Hence, no pre-deposit contemplated under section 21 of the RDB Act is payable for entertaining the Appeal arising from an interlocutory order passed by the D.R.T. in an original application filed under section 19 of the RDB Act.

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Hence the application is allowed and the Appellants are exempted from payment of any amount as pre-deposit. The appeal shall be taken on file in case there are no other defects to be cured.

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Post before the Registrar on 11.08.2023.

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Sd/Chairperson

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mks-1

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Shree Momai Enterprises and Ors. v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

Shree Momai Enterprises and Ors. v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

What the court decided

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