Partly allowed

Ramnath Singh v. Punjab National Bank

DRAT2 Jan 2023IA/567/2022

Case brief

AI extract

What is this about?

This appeal involved an application to waive the mandatory deposit under Section 18 of the SARFAESI Act. While setting aside the lower court's total dismissal of procedural objections to the sale notice, the Tribunal granted a concession, directing the appellants to deposit Rs. 4 lacs to obtain an interim stay on handing over possession.

What did the court decide?

Appellants directed to deposit Rs. 4 lacs as predeposit. Upon deposit, an interim stay is granted on handing over possession of the secured asset to the auction purchaser.

Ramnath Singh versus Punjab National Bank — 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. 567/2022 (WoD) In Appeal on Diary No. 1000/2022

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Between

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Ramanath Jagannath Singh & Anr. … Appellant/s

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V/s. Punjab National Bank …Respondent/s

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Mr Sanjay Anabhavane, i/b M/s M & S Legal Ventures, Advocate for Appellants.

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Ms Asha Bhuta, i/b M/s. Asha Bhuta & Co., Advocate for Respondent Bank.

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This is an application for waiver of deposit filed under Sec. 18 of the SARFAESI Act. The Appellants are the Applicants in S.A. No. 97/2020 on files of D.R.T.-III, Mumbai. I.A. No. 2034/2022 is an application filed by the Appellants to get the Sarfaesi measures stalled and the auction sale extended failed and they did not get a favourable order from the D.R.T. as a result of which they are before this Tribunal in appeal. In the impugned order dated 28.09.2022, the learned Presiding Officer has made it clear that the sale would be subject to the ultimate decision in the S.A. In the S.A., the Applicants have challenged all the Sarfaesi measures starting from the demand notice issued under Sec. 13(2), taking of the symbolic possession under Sec. 13(4) and also the order of the

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District Magistrate to take physical possession of the property under Sec. 14 of the SARFAESI Act. In view of the rejection of the prayer for stalling the sale, the sale was conducted on 25.08.2020 and the auction purchaser has deposited the entire amount and the sale certificate has been issued. The physical possession of the property is yet to be handed over to the auction purchaser. It is contended by the Appellants that the sale has taken place during the height of the pandemic and that the sale notice inferences Rule 8(6) and also Rule 8(7) and Rule 9(1) of the Security Interest (Enforcement) Rules, 2002. The Appellants, therefore, plead that they have a good case on the merits of the securitisation application.

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Although, the Appellants did not plead their financial stringency in the original application for the waiver. They filed an additional affidavit in paragraph no. 9 of which, it is stated that the first appellant was only carrying out a small estate agency business and was regularly paying Income Tax. As per the Assessment year of 2019-2020, the total taxable income of the first Appellant was only ₹3,34,400/- and the First Appellant has paid ₹2,857/- towards Income Tax. The second Appellant is only a housewife and she is not earning any income therefore, it may not be possible for the Appellants to deposit the mandatory 50% as required under the second proviso to Sec. 18(1) of the SARFAESI Act and therefore, plead that the amount may be reduced to 25% of the amount due exercising this Tribunal jurisdiction under the third proviso to Sec. 18(1) of the SARFAESI Act.

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The Respondent has filed a reply and also an additional affidavit producing the statement of accounts pertaining to the amount due from the Appellants excluding the sale amount of ₹53 lacs received on the sale of the property. The amount i.e. due from the Appellants as of 19.12.2022 is ₹12,43,000/-. The Appeal was filed in November 2022 and therefore, it would not make much difference.

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The Appellants have been paying towards the debt even subsequent to receipt of the demand notice as evident from the statement of accounts which indicates that they are earnestly attempting to make payments. It is because of the pandemic situation that there was a default in payment of the amount and even now the Appellants are willing to pay the balance amount. The Appellants have a prima facie case in view of the allegation that Rules have been violated. The learned D.R.T. has relied on the decision of the L&T Housing Finance Ltd. V/s Trishul Developers (2020)10 SCC 659 wherein the Hon’ble Supreme Court has opined that trivial and frivolous objection regarding the publication of notice has to be ignored and the purpose of the legislation is what is of prime importance. The learned counsel for the Appellants submits that the decision has been wrongly applied by the learned Presiding Officer because the objections that are pointed out by the Appellants are not trivial and cannot be brushed aside. In the decision of the Hon’ble Supreme Court, there was a mistake in mentioning the name of the company and that is what for taken as trivial but in the instant case, the objections raised would show that

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the notice was not published properly. There was a lack of affixation because it was during the pandemic period and moreover the reserve price is not shown in the notice as is required to be shown under Rule 8(7) of the Rules. I, therefore, find that there is a prima facie case established by the Appellants, which needs to be answered by the D.R.T. I am, therefore, not answering the objections which have been raised regarding the Sarfaesi measures in this Appeal because that would render the securitisation application infructuous for all practical purposes. I, therefore, would leave that to be decided by the Presiding Officer in the S.A. that is pending. However, considering the facts and circumstances, in this case, I find that the Appellants are entitled to some concession on the amount that is to be paid. The Appellants are, therefore, directed to deposit a sum of Rs.4 lacs towards predeposit.

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The learned counsel appearing for the Appellants undertakes to deposit the said amount tomorrow i.e. 03.01.2023 itself. On the deposit being made, there shall be an interim stay to the handing over of the possession of the secured asset to the auction purchaser.

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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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