Partly allowed

Rolex Jewells and Anr. v. Ms Profectus Capital Pvt. Ltd.

DRAT25 Sept 2023IA/651/2023

Case brief

AI extract

What is this about?

This income tax appeal concerns the enforcement of security interest. The appellate tribunal held that pre-deposit is mandatory. It directed the appellant to deposit ₹65 lakhs to maintain the appeal and deferred possession if ₹10 lakhs were paid immediately.

What did the court decide?

Appellant directed to deposit ₹65 lakhs as pre-deposit; taking over physical possession of property deferred if ₹10 lakhs paid by next date.

Rolex Jewells and Anr. versus Ms Profectus Capital Pvt. Ltd. — 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. 651/2023 (WoD)

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Appeal on Diary No. 1682/2023

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Between

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Rolex Jewells & Ors. … Appellant/s V/s.

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M/s. Profetus Capital Pvt. Ltd. …Respondent/s

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Mr. Avinash Fatangare, i/b Ms. Kirti Purohit & Ms. Archana Shelar, Advocate for Appellant Nos. 1 to 3

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Mr. Vinayak S. i/b M/s. Vikas Salvi & Associates, 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 31.08.2023 in Securitization Application (S.A.) No. 138/2023 on the files of the Debts Recovery Tribunal-III, Mumbai (D.R.T.) wherein the earlier order of protection against the Sarfaesi measures initiated by the Respondent bank was vacated and the Respondent bank was given the liberty to pursue appropriate measures under the provision of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short). The Appellants are aggrieved and hence, in appeal.

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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

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the SARFAESI Act. The Appellants are borrowers and the demand notice under Sec. 13(2) was issued on 16.03.2022 demanding payment of a sum of ₹1,30,10,579/- from them as of 14.03.2022. The Appellants did not pay the amount and consequent to that, the symbolic possession was taken u/s 13 (4) on 15.07.2022. Subsequently, an order was also obtained u/s 14 from the Chief Metropolitan Magistrate (CMM) on 28.12.2022 to take physical possession of the property.

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Before the order u/s 14 was obtained, the Appellants challenged the Sarfaesi measures by filing the S.A. No. 138/2023 before the D.R.T. The grounds taken by the Appellants are various. It is contended that the Respondent has charged an excessive rate of interest since the earlier loan of the Axis Bank was taken over by the Respondent bank on the condition that a concession regarding the rate of interest would be given. But now, the Respondent is charging a higher rate of interest, even more than what was being charged by the earlier creditor Axis Bank. Apart from that, a contention is also raised regarding the classification of the debt account as NonPerforming Assets (NPA) against the direction given by the RBI. A challenge is also raised regarding the propriety of the notice issued u/s 13 (4) of the SARFAESI Act. The Appellants have also subsequently filed an application for an amendment to the S.A. incorporating their challenge to the order obtained u/s 14 of the SARFAESI Act.

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The Appellants were given the concession of getting the dispossession of the secured asset deferred on condition to pay a certain amount and to settle the debt by an earlier order of the

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D.R.T. It is contended that they also paid the sum of ₹15 lakhs to the bank directly and possession was deferred. But subsequently, the Appellants did not take any steps to clear the debt as undertaken, and hence, vide the impugned order, the Ld. Presiding Officer declined to grant any further protection to the Appellants and gave the green signal to the Respondent Bank to proceed with the Sarfaesi measures. The Appellants are aggrieved and hence in appeal.

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Since the Appellants have only challenged the Sarfaesi measures up to the steps u/s 13 (4), in view of the latest judgment of the Hon’ble Supreme Court of India in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 OnLine SC 12, the Appellants are liable to pay to make the pre-deposit on the basis of the amount that is demanded u/s 13 (2) of the SARFAESI Act. In this application for waiver of pre-deposit, the Appellants have not pleaded any financial strain. They also do not have any prima facie case with regard to challenging their Sarfaesi measures. Hence, the Appellants are not entitled to any concession of invoking the indulgence of this Tribunal to get the amount reduced to a minimum of 25%. The Appellants are, therefore, directed to deposit a sum of ₹65 lakhs as pre-deposit u/s 18 (1) of the SARFAESI Act. The Ld. Counsel appearing for the Appellants on instructions, undertakes to deposit a sum of ₹10 lakhs by tomorrow (26.09.2023). The balance of ₹55 lakhs shall be payable within the period of four weeks from today, i.e. on or before 23.10.2023. On the payment of ₹10 lakhs by tomorrow by way of demand draft before 12:00 Noon, the taking over physical possession of the property shall stand deferred till the

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next date of hearing before this Tribunal. Failure to pay any amount as stated above, shall entail dismissal of the appeal without any further reference to this Tribunal.

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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 Respondents is at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 25.10.2023 for reporting compliance.

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Sd/Chairperson

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psa-06

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Rolex Jewells and Anr. v. Ms Profectus Capital Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Rolex Jewells and Anr. v. Ms Profectus Capital Pvt. Ltd.

Case brief

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What did the court decide?

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