Disposed

Shree Ganesh Tubewell and Borewell v. Jijau Commercial Co. Operative Bank Ltd.

DRAT21 Sept 2023IA/635/2023

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal considered an appeal against the DRT's refusal to grant protection from sale of secured assets. Noting the bank's non-appearance and a prima facie case that the debt was discharged, the Tribunal granted a temporary exemption from predeposit requirements.

What did the court decide?

Appellants directed to deposit ₹25,00,000 as predeposit by 19.10.2023; upon deposit, further Sarfaesi measures against sale of secured assets to stand stalled.

Shree Ganesh Tubewell and Borewell versus Jijau Commercial… — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No.635/2023(WoD)

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In Appeal on Dairy No. 1596/2023

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Between

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Shree Ganesh Tubewell & Borewell & Ors. … Appellant/s V/s Jijau Commercial Co-operative Bank Ltd. …Respondent/s Mr. Atul Pande, Advocate for Appellant.

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-: Order dated: 21/09/2023:-

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The Appellants are the borrowers who are impugning the order dated 02.08.2023 in I.A. No. 1631/2023 in S.A. No. 29/2023 on the files of the Debts Recovery Tribunal, Nagpur (D.R.T) wherein the Ld. Presiding Officer declined to grant any protection order against the secured assets which was proceeded against by the Respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ SARFAESI Act” for short).

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The Appellants have in their S.A. raised several contentions challenging the Sarfaesi measures. It is pointed out that the 1^st notice u/s. 13 (2) of the SARFAESI Act was issued on 04.09.2018 demanding a sum of ₹ 38,86,856/- as of 23.04.2018. Thereafter, no further steps were taken and again the 2^nd demand notice was issued on 08.11.2019 demanding a sum of ₹ 60,93,059/- as of 31.10.2019. The grievance of the Appellants is that the amount could not have

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been doubled between the period of the issuance of the 1^st notice and the 2^nd notice. It is also contended that the notice dated 08.11.2019 on the basis of which the present Sarfaesi measures are being proceeded with does not give a breakup of the principal amount, interest, cost etc., as required u/s. 13(3) of the SARFAESI Act and therefore, the notice is defective.

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It is also contended that on receipt of notice dated 08.11.2019, the Appellants had sent a reply to the bank contending that a sum of ₹ 1,29,57,722/- was already paid by them. The bank did not respond to that notice within the stipulated period of 15 days, and after much delay, a reply was sent on behalf of the bank by its Counsel denying all the allegations made in the reply sent by the Appellants but there is no specific denial regarding the non-receipt of ₹ 1,29,57,722/- as averred by the Appellants. It is further contended that the initial debt was of only ₹ 45,00,000/- towards which the Appellants have already paid a sum of ₹ 1,46,43,068/- altogether. Certain secured assets were also sold and sale proceeds were appropriated towards the debt. Those sales were not challenged by the Appellants. It is therefore stated that in fact, there is no amount outstanding to be paid to the Respondent bank and yet the property belonging to the Appellants is being put to sale today by an auction notice the vernacular of which is produced.

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It is submitted by the Ld. Counsel appearing for the Appellants that the notice doesn’t give 30 days time and the notice was not served upon the Appellants as required under Rules 8 and 9 of the

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Security Interest (Enforcement) Rules, 2002. It is also submitted that the notice does not mention the amount that is due and payable by the borrowers. Therefore, the notice for sale is defective, claim the Appellants.

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It is pointed out that despite bringing all these facts to the notice of the Ld. Presiding Officer the application was dismissed in a perfunctory manner by a cryptic order running in four lines stating that he does not find any merit in the present application. No discussion whatsoever has been made regarding the rival contentions of the parties and therefore, the order is defective and needs to be interfered with in appeal, submits the Ld. Counsel.

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The Respondent bank did not appear despite notice being served. The Ld. Counsel appearing for the Appellants was heard in detail, and records perused. In order to entertain the appeal the Appellants would first have to cross the hurdle of making a predeposit as required u/s. 18 (1) of the SARFAESI Act. The Ld. Counsel appearing for the Appellants submits that in view of the submissions made, no money is actually due from them, as the debt has already been paid by the Appellants i.e. and hence, no amount needs to be deposited.

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The contentions of the Appellants regarding the discharge of the debt is something which needs to be examined in detail by the D.R.T. The Ld. Counsel appearing for the Appellants has also requested the appointment of an expert to verify the statement of account of the bank to find out whether the calculations made by the

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bank are correct and reconciled. All these would have to be inquired into but on going through the initial submissions made by the Appellants, I find a strong prima facie case in favour of the Appellants and it has not been controverted by the Respondent bank in the reply which was sent under 13(3A) on or before the Ld. Presiding Officer. The income tax returns of the rest of the Appellants as well as the proprietorship of the 1^st Appellant represented by the 2^nd Appellant are also not forthcoming and therefore, the contentions that the Appellants are under financial strain cannot be accepted.

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However, finding that the Appellants have a strong prima facie case, I am inclined to grant some concession, though not to extend 25% of the debt due by exercising the jurisdiction under the third proviso of Sec. 18 (1) of the SARFAESI Act. The sale has not taken place, and the amount demanded is ₹ 60,93,059/- The Appellants are therefore directed to deposit a sum of ₹ 25,00,000/- as predeposit within a period of four weeks, i.e., on or before 19.10.2023.

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Failing to pay the amount will entail dismissal of the appeal without any further reference to this Tribunal. In the event of the amount being paid, the further Sarfaesi measures relating to the sale of secured assets shall stand stalled.

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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,

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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 20.10.2023 for reporting compliance concerning the payment.

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Sd/Chairperson

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rm-6

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Shree Ganesh Tubewell and Borewell v. Jijau Commercial Co. Operative Bank Ltd.

Case brief

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Shree Ganesh Tubewell and Borewell v. Jijau Commercial Co. Operative Bank Ltd.

Case brief

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Shree Ganesh Tubewell and Borewell versus Jijau Commercial Co. Operative Bank Ltd.