Disposed

Baba Construction and Buiders v. Hdb Financial Services Ltd.

DRAT20 Jul 2023IA/498/2023

Case brief

AI extract

What is this about?

In an interim application challenging the transfer of possession of auctioned property, the Tribunal directed appellants to deposit ₹1,07,00,000 as pre-deposit under Section 18(1) of the SARFAESI Act, rejecting the plea for waiver due to lack of prima facie case and unproven financial strain.

What did the court decide?

Directions to deposit ₹1,07,00,000 in four instalments by 14.09.2023; appeal dismissal ordered upon failure to pay; possession handover deferred pending first instalment.

Baba Construction and Buiders versus Hdb Financial Services… — 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. 498/2023(WoD)

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Appeal on Diary No. 1243/2023 Between

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Baba Construction and Builders & Ors, … Appellant/s V/s.

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HDB Financial Services Ltd & Ors. …Respondent/s

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Mr. Anup Lahoti, Advocate for Appellants.

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Mr. Padmakar G, i/b S.G. Legal Associates, Advocate for Respondents.

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-: Order dated: 20/07/2023:-

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The matter is taken up for hearing by way of a praecipe filed by the Appellant for seeking urgent relief.

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The Appellants are in appeal impugning the order of the Debts Recovery Tribunal, Pune (D.R.T.) dated 28.06.2023.

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An application filed by the auction purchasers who are Respondents Nos. 6 and 7 in the Securitisation Application (S.A.) No. 1/2021, as I.A. No. 1647/2022 seeking physical possession of the property which has been purchased in auction by them as early as on 20.07.2020. Though the physical possession of the property was taken by the 1^st Respondent Financial Institution in consequence of the orders passed by the District Magistrate, Pune on 20.01.2023, the auction purchasers were deprived of possession for a fairly long time, although the sale was confirmed. Hence, they find aforesaid I.A No. 1647/2022 seeking possession of the property. The Appellants who

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are the borrowers, guarantors, and mortgages vehemently opposed the application. Overruling their contentions, the Ld. Presiding Officer allowed the application and directed the 1^st Respondent to hand over vacant and peaceful possession of the secured assets to the auction purchasers

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Aggrieved by aforesaid order the Appellants have come up in appeal. The Appellants had in their S.A. No. 1/2021 challenged all the Sarfaesi measures initiated by the 1^st Respondent. The account of the borrowers was classified as a Non-performing asset (NPA) as early as 05.04.2018. Thereafter a demand notice u/s. 13 (2) was issued by the 1^st Respondent on 24.05.2018 demanding an outstanding amount of ₹ 1,25,25,373/-. Consequent to that, symbolic possession was taken u/s. 13(4) on 09.08.2018. To take physical possession of the property an application u/s. 14 was filed before the District Magistrate on 19.12.2018 and the same was ordered on 14.01.2019. Thereafter, physical possession was taken by the 1^st Respondent on 20.01.2020 and the property was put up for sale in which Respondent Nos. 6 and 7 in the S.A. being the highest bidders came out successful and the sale in their favour was confirmed at a sale price of ₹ 1,19,00,000. The sale certificate has already been issued with what remains was intended handing over of possession scheduled for yesterday to those auction purchasers. But because of stiff resistance, police assistance was intended to be taken today. It is submitted by the Ld. Counsel for the Financial Institution that it is unlikely that the possession would be taken today.

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Hence, there is no immediate urgency in the matter. However

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the Ld. Counsel appearing for the Appellant insisted on hearing the application for a waiver of deposit. The Respondent appeared but they could not file a reply since notices were served on them only yesterday. It is pointed out that as of today the outstanding amount excluding the sale price which was received in consequence of the sale is ₹ 95,22,665.70.

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Since the Appellants are challenging all the Sarfaesi measures starting from the demand notice issued u/s. 13 (2) till the auction sale on various grounds, the Appellant will have to comply with the mandatory provisions u/s. 18 (1) and the threshold amount will have to be taken as the amount due on the date of filing the appeal inclusive of the accrued interest. That amount comes to ₹ 2,14,22,665.70. The application for a waiver does not indicate any strong prima facie case in favour of the Appellants. Apart from the challenges raised at every stage of the Sarfaesi measures they had not been able to substantiate it.

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The S.A. is still pending consideration and under the circumstances I am not inclined to pass any order on the merits of the contentions raised by the parties.

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The Appellant have not pleaded anything regarding their financial strain which is another point that is required for exercising the discretionary jurisdiction of this Tribunal to reduce the mandatory pre-deposit to a minimum of 25% under the third provision to Sec. 18 (1) of the SARFAESI Act.

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The Appellants are therefore directed to deposit a sum of ₹ 1,07,00,000/- as pre-deposit in four equal instalments. The first

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instalment of ₹ 26,75,000/- shall be payable within two weeks, i.e. on or before 03.08.2023. The second instalment of ₹ 26,75,000/- shall be payable within two weeks therefrom, i.e. on or before 17.08.2023. The third instalment of ₹ 26,75,000/- shall be payable within further two weeks therefrom, i.e. on or before 31.08.2023, and the fourth instalment of ₹ 26,75,000/- shall be payable within two weeks therefrom, i.e. on or before 14.09.2023.

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Failure to pay the aforesaid amounts shall entail dismissal of the appeal. On the payment of the 1^st instalment within the stipulated time, the handing over of possession shall stand deferred.

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The amounts 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 04.08.2023 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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rm-49

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Baba Construction and Buiders v. Hdb Financial Services Ltd.

Case brief

What is this about?

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Baba Construction and Buiders v. Hdb Financial Services Ltd.

Case brief

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