Disposed

bhavani enterprises and Ors. v. Saurashtra Gramin Bank

DRAT26 Sept 2023IA/640/2023

Case brief

AI extract

What is this about?

This IA dismisses the preliminary objection to the deposit requirement. The Court holds that the pre-deposit threshold remains the full demand amount per Supreme Court precedents but reduces the deposit to 40% of ₹ 74,57,300/- as ₹ 30,00,000/- due to appellants' financial strain, fixing instalment dates.

What did the court decide?

Appellants directed to deposit ₹ 30,00,000/- reduced pre-deposit, payable in instalments; sale deferred pending compliance.

bhavani enterprises and Ors. versus Saurashtra Gramin Bank — Banking and Recovery | DRAT (2023)

¶1

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 640/2023(WoD)

¶2

¶3

Appeal on Diary No.1634/2023 Between

¶4

M/s. Bhavani Enterprises & Ors. … Appellant/s

¶5

V/s.

¶6

The Authorized Officer, Saurashtra Gramin Bank …Respondent/s Mr. Dhrumit Chauhan, Advocate for Appellant. Mr. Prashant Pandit, along with Mr. Jay Pandit, Advocate for Respondent.

¶7

-: Order dated: 26/09/2023:-

¶8

The Appellants are in appeal impugning the order dated 06.09.2023 in S.A. No. 282/2023 on the files of the Debts Recovery Tribunal – II, Ahmadabad, wherein the Ld. Presiding Officer declined to grant any protection order with regard to the secured assets which is being 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) holding that there is no prima facie case in favour of the Appellants. The Appellants are aggrieved and hence, in appeal.

¶9

In order to entertain the appeal the Appellants will first have to cross the hurdle of making a mandatory pre-deposit u/s. 18 (1) of the SARFAESI Act. The Appellants prayed that the mandatory predeposit may be reduced to the minimum of 25% exercising the jurisdiction of this Tribunal under the third proviso of Sec. 18(1) of the SARFAESI Act. The Appellants have challenged the notice u/s.

¶10

¶11

13 (2) stating that there is no bifurcation of the amount that is claimed from the Appellants by the various facilities granted to them by the Respondent Bank.

¶12

It is also stated that the application was filed u/s. 14 of the SARFAESI Act before the District Magistrate is not accompanied by a 9-pointer affidavit as required, it is therefore defective. The details of the objection filed by the Appellants to the demand notice and the reply received from the bank are not stated in detail in the application filed u/s. 14.

¶13

It is therefore stated that the Appellants have a strong prima facie case to maintain an application under the SARFAESI Act. It is also submitted that the Appellants are under financial strain and therefore unable to deposit 50% of the amount demanded. In order to prove their financial strain, income tax returns of Appellant Nos. 2 and 6 have been produced stating that they are the persons concerned with the property against which the Sarfaesi measures have been initiated.

¶14

The Ld. Counsel appearing for the Respondent has vehemently opposed the application stating that the Appellant has no prima facie case. It is also stated that the financial strain has not been sufficiently proven because the tax returns of all the Appellants have not been produced. They are jointly and severally liable to repay the debt as mortgage/guarantors and therefore in order to get benefit under the third proviso of Sec. 18 (1), the financial strain of all the Appellants needs to be established.

¶15

After hearing both sides find that in view of the decisions of

¶16

¶17

the Hon’ble Supreme Court in the case of M/s. Sidha Neelkanth paper Industries Private Limited & Another 2023 SCC Online 12, which has been followed by the Hon’ble High Court of Gujarat in the decision of M/s. Shree Rajmoti Industries V/s The Authorized Officer, Union Bank of India R/Special Civil Application No. 9564/2022, the threshold amount for determining the pre-deposit is the amount mentioned in the demand notice. In the instant case, the amount demanded in the notice u/s. 13 (2) is ₹ 74,57,300/-.

¶18

Considering the plea of the Appellant and the financial strain relied upon by them, I am of the opinion that the Appellants should be directed to deposit a sum of ₹ 30,00,000/- as pre-deposit. The Ld. Counsel appearing for the Appellants is depositing a sum of ₹ 7,00,000/-today and the balance of ₹ 23,00,000/- shall be deposited in two equal instalments. The 1^st instalment of ₹ 10,00,000/- shall be payable within one week and the 2^nd instalment of ₹ 13,00,000/- shall be payable within two weeks therefrom, as stated hereunder.

¶19

Numbers of Instalments	Payment on or before
1^stInstalment	03.10.2023
2^ndInstalment	17.10.2023

¶20

In view of the deposit ₹ 7,00,000/- today the sale which is scheduled to take place today shall stand deferred till the next date of hearing. In default of payment of any of the instalments, the Appeal shall stand dismissed, without any further reference to this Tribunal. 9. The amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal.

¶21

¶22

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.

¶23

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.

¶24

Post on 04.10.2023 for reporting compliance regarding 1^st instalment.

¶25

Chairperson

¶26

rm-29

¶27

bhavani enterprises and Ors. v. Saurashtra Gramin Bank

Case brief

What is this about?

What did the court decide?

bhavani enterprises and Ors. v. Saurashtra Gramin Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Bank of Baroda versus Novacom Services

Shree Tuljabhavani Sugar Private Ltd. versus Vaishnavi Sugar India Ltd. and Ors.

Asset Reconstruction Company(India) Limited versus M/S Raj Minakshi Holding Pvt. Ltd. & Ors.

Smt Harsha Vinod Patel versus Asset Reconstruction Company (India) Limited

Om Shiv Estate Pvt. Ltd. and Ors. versus Punjab National Bank

Uco Bank versus Smt. Rama Rajendra Tantiya and Ors.