Disposed

Deep Motors Gallery v. Rbl Bank Limited

DRAT5 Sept 2023IA/608/2023

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal addressed an interim application seeking waiver/reduction of the mandatory pre-deposit under Section 18(1) of the SARFAESI Act for filing an appeal. The bench declined to reduce the deposit to the minimum 25% despite the appellant's financial claims but fixed a specific installment schedule. Upon compliance, possession recovery was deferred.

What did the court decide?

Appellants directed to deposit ₹75 lakhs in installments; physical possession of secured asset deferred till next hearing pending deposit.

Deep Motors Gallery versus Rbl Bank Limited — 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. 608/2023 (WoD)

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In Appeal on Diary No. 1603/2023

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Between

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M/s. Deep Motors Gallery & Ors. … Appellant/s V/s.

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The RBL Bank Ltd. …Respondent/s

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Ms. Vaishali Bhilare, i/b Mr. Sachin P. Borhade, Advocate for Appellants.

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Mr. Bidan Chandran & Nasma Siddiqui, i/b M/s. M.V. Kini & Co., Advocate for Respondent.

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

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The Appellants are in appeal impugning the order dated 29.08.2023 in Interim Application (I.A.) No. 2664/2023 in Securitization Application (S.A.) No. 59/2023 on the files of the Debts Recovery Tribunal-III, Mumbai, wherein the Ld. Presiding Officer declined to grant any interim relief to the Appellants concerning the taking over physical possession of the secured assets which was intended to be taken on 30.08.2023. The Appellants contend that the subsequent application for amendment consequent to receipt of subsequent notice for the delivery of the property has already been sought to be incorporated in the S.A.

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The S.A. was filed consequent to the taking of measures u/s 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) and after the filing of the S.A. the Respondent Bank had obtained an order of the physical possession u/s 14 from the Chief Judicial Magistrate on 30.08.2023. It is stated that the notice that the Appellants had received for taking over possession was intended to be taken on 05.09.2023. According to the Ld. Counsel appearing for the Appellants, this particular notice does not give 15 days required by Rules.

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The Respondent Bank has vehemently opposed the application stating that the Appellants are not entitled to any relief in the S.A. much less an interlocutory relief of stalling the taking over possession of the property.

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The Appellants have applied for a stay of the Sarfaesi measures apart from the application under 18 (1) of the SARFAESI Act for waiver of pre-deposit. The amount demanded u/s 13 (2) is ₹1,52,46,978.50 as of 23.05.2022 and the Appellants would contend that they have paid a sum of ₹15 lakhs to the Respondent Bank directly when the matter was taken for hearing before the D.R.T.

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The Ld. Counsel for the Respondent submits that as of the date the amount due from the Appellants is around ₹1.81 Crore and therefore, the mandatory pre-deposit should be made based on that amount.

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Given the settled possession, the Appellants are challenging the only measures up to section 14 of the SARFAESI Act and the property has not been put for sale. The Appellants are to pay the

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pre-deposit based on the amount which is mentioned in the demand notice u/s 13 (2). The Appellants are raising several contentions regarding the inadequacies of the Sarfaesi measures. It is also contended that there are no secured assets because the property that is now intended to be proceeded against was mortgaged in an earlier facility which has already been closed and there are no documents to indicate that the subject property was offered as a security for the present facility also, for which, the Sarfaesi measures are initiated. It is also stated that the documents have been concocted and the earlier documents submitted by the Appellants in connection with the earlier loan which was been closed, are being used for these facilities by interpolating dates.

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I do not intend to go into the details of these contentions at this stage. The rival contentions are kept open to be decided in the appeal or the S.A. Meanwhile, I am only concerned about the amount that is to be paid as a pre-deposit to entertain the appeal.

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The Appellants have produced the income tax return of the 1^st Appellant firm but the returns about the rest of the Appellants who are the partners are not forthcoming. The 1^st Appellants firm is running in loss as it is borne out from the income tax returns for the years 2019-2020 and 2020-2021. The A ppellants appear to have an arguable case but their financial strain has not been sufficiently established and therefore, I am not inclined to grant them indulgence in reducing the amount to the minimum 25% as contemplated under the 3^rd proviso to section 18(1).

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However, considering the entire facts and circumstances, the Appellants are directed to deposit a sum of ₹75 lakhs as pre-deposit.

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The Ld. Counsel appearing for the Appellants submits that she is producing the demand draft of ₹10 lakhs today. The balance of ₹65 lakhs shall be paid in two equal instalments. The 1^st instalment of ₹32.50 lakhs shall be payable within three weeks, i.e. on or before 26.09.2023 and the 2^nd instalment of ₹32.50 lakhs shall be payable within two weeks therefrom, i.e. on or before 10.10.2023. Given the payment of ₹10 lakhs towards the pre-deposit, the physical possession of the secured asset intended to be taken shall be deferred till the next date of hearing. failure to pay the instalments shall entail in dismissal of the Appeal without any further 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. 11. 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 27.09.2023 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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psa-09

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Deep Motors Gallery v. Rbl Bank Limited

Case brief

What is this about?

What did the court decide?

Deep Motors Gallery v. Rbl Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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