Partly allowed

M/S Khushi Seerwani and Daughters and Anr. v. Central Bank of India

DRAT28 Jun 2023IA/350/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an interpleader application for waiver of pre-deposit in a SARFAESI appeal. It rejected the request to reduce the deposit to 25%, instead directing payment of ₹20 lakhs in two installments to secure a stay on further enforcement measures against secured assets.

What did the court decide?

Directed payment of ₹20 lakhs pre-deposit in two installments; stay granted upon payment of the first instalment.

M/S Khushi Seerwani and Daughters and Anr. versus Central… — 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. 350/2023 (WoD)

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In Appeal on Diary No. 849/2023

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Between

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M/s. Khush Seerwani & Daughters & Anr. … Appellant/s V/s. Authorized Officer, Central Bank of India …Respondent/s Mr. Dhrumit Chauhan, Advocate for Appellants.

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The Appellants have served the Respondent but none appears, and hence, the Respondent is called absent and set ex-parte.

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The Ld. Counsel appearing for the Appellants are heard on the Interlocutory Application (I.A.) No. 350/2023 which is an application for waiver of pre-deposit. The Appellants impugns the interlocutory order of the Ld. Presiding Officer Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) in Securitization Application (S.A.) No. 181/2023 dated 12.05.2023 declining to grant any interim relief with regard to the Sarfaesi measures initiated by the Respondent Bank with regard to the secured assets which consist of residential property.

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The Ld. Presiding Officer had disposed of the interlocutory prayer mainly on the ground that the Appellants did not disclose the filing of the earlier Securitization Application as S.A. No. 99/2020 challenging the earlier measures taken under the SARFAESI Act.

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The Appellants are borrowers and notice u/s 13 (2) was issued on 02.05.2019 by the Respondent Bank demanding a sum of ₹ 26, 36, 943/- together with interest. Thereafter, the symbolic possession was also taken u/s 13 (4) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short). The Appellants state that they had filed S.A. No. 99/2020 challenging the validity of notice issued u/s 13 (2) because it does not give a breakup of the principal amount interest and other costs claimed from the Appellants and thus violating section 13 (3) of the SARFAESI Act.

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The taking over the symbolic possession u/s 13 (4) is also challenged for non-compliance with mandatory provisions under Rules 8 (1) and 8 (2) of the Security Interest Enforcement Rules. During the pendency of S.A. No. 99/2020, the Bank proceeded u/s 14 of the SARFAESI Act for taking physical possession of the secured assets and the District Magistrate passed an order authorizing the Mamlatdar to execute the order of taking physical possession of the property.

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It is submitted by the Ld. Counsel appearing for the Appellants that the physical possession of the property has already been taken and proceedings to sell the property are awaited. It is submitted by the Ld. Counsel appearing for the Appellants that the fact regarding the pendency of the S.A. No. 99/2020 was not informed to him and therefore, said fact could be included in the present S.A. It was not a wanton act and therefore, the observations that the Appellants had not come up with clean hands are not proved. It is also submitted that each action under the SARFAESI Act gives a fresh cause of

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action to the borrowers to proceed u/s 17 (1) of the SARFAESI Act and therefore, the irrespective of pendency of the earlier S.A. the Appellant is at liberty to file another S.A. for subsequent action taken under the SARFAESI Act. The impugned order states that the outstanding amount due from the Appellants as of the date of filing the S.A. was ₹ 44, 89, 340/-. Subsequent interest would also be due.

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The Appellants have pleaded that they are undergoing severe financial difficulty because they suffered huge losses in business. They have a very good prima facie case, and hence, the amount to be deposited of u/s 18 (1) of the SARFAESI Act may be limited to a minimum of 25 %. Apart from the pleadings, there is no documentary evidence to indicate that the Appellants are suffering from any financial strain. 7. Under the circumstances, I find that the Appellants are not entitled to get the amount of pre-deposit to reduce to a minimum of 25 %. Taking the entire facts and circumstances into consideration, I direct the Appellants to deposit the sum of ₹ 20 lakhs as pre-deposit into two equal instalments of ₹ 10 lakhs each. The 1^st instalment shall be deposited within three weeks, i.e. on or before 19.07.2023 and the 2^nd instalment shall be deposited within two weeks therefrom, i.e. on or before 02.08.2023. On the payment of the 1^st instalment within the stipulated time, the Appellants shall be entitled to a stay of the further Sarfaesi measures intended to be taken with regard to the secured assets. default in payment entails dismissal of the Appeal without any 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 20.07.2023 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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psa-04

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M/S Khushi Seerwani and Daughters and Anr. v. Central Bank of India

Case brief

What is this about?

What did the court decide?

M/S Khushi Seerwani and Daughters and Anr. v. Central Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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