Disposed

Mr. Vilas Vasant Gandhe v. Encore Asset Reconstruction Pvt. Ltd.

DRAT12 Oct 2023IA/681/2023

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal disposed of an interim application, directing the appellant to deposit ₹5 Crore as pre-deposit under Section 18(1) of the SARFAESI Act towards pending appeal, with deferred possession of auctioned assets pending payment compliance.

What did the court decide?

Appellant directed to deposit ₹5 Crore as pre-deposit under Section 18(1) SARFAESI Act in three instalments; possession of asset deferred.

Mr. Vilas Vasant Gandhe versus Encore Asset Reconstruction… — Company and Corporate | 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. 681/2023 (WoD)

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Appeal on Diary No. 1821/2023

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Between

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Vilas Vasant Gandhe … Appellant/s V/s.

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Encore Asset Reconstruction Pvt. Ltd. …Respondent/s

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Mr. Gaurang Kinkhabwala along with Mr. Sanjay Anabhawane, Advocate for Appellant.

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Mr. Rajesh Nagory along with Mr. Vinay Deshpande & Mr. Rupak Sawangikar, i/b M/s. V. Deshpande & Co., Advocate for Respondent.

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-: Order dated: 12/10/2023:-

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The Appellant is in appeal impugning the order dated 17.05.2023 in transferred Securitization Application (S.A.) No. 27/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) dismissing the application declining the grounds raised by the Appellant in challenge to the Sarfaesi measures taken by the Respondent ARC with regards to the secured assets. The account was classified as a NonPerforming Asset (NPA) on 01.07.2017 and consequent to that a demand notice was issued to the Appellant on 12.07.2018 u/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) demanding a sum of ₹6,32,55,510.14. The Appellant did not pay the amount but instead issued an ojection to the Respondent stating that there is no bifurcation of the amount demanded. The

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Respondent sends a reply to the objection raised by the Appellant stating that the notice is in compliance with the Act and Rules.

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Thereafter, an order was obtained from the District Magistrate, Thane on 29.11.2019 under the provision of section 14 of the SARFAESI Act. Notice was issued on 28.11.2022 fixing the reserve price of the property of ₹8.85 crores and the sale scheduled on 10.01.2023. The auction sale was successful and the auction purchaser purchased the property for a sum of ₹8.90 crores. The Appellant has objections regarding the sale and it is stated that the reserve price was much below the actual price and the property would have fetched more than ₹36 crores in support of which a valuation report is also produced by the Appellant.

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The Ld. Counsel appearing for the Respondent would contend that the proper valuation was made and the valuation report was obtained in compliance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002. It is also stated that the Appellant himself had submitted that the property would hardly fetch ₹3 Crore and he has also offered a settlement by undertaking to pay the ₹1 crore which was never fulfilled. In the impugned order the Ld. Presiding Officer has observed that the Appellant had submitted that the property would fetch above ₹4 crores and hence, an opportunity was granted to the Appellant to produce a buyer to buy the property for a price more than the price mentioned in the sale notice. But no purchasers could be produced by the Appellant, and the property was ultimately sold for a price mentioned earlier. The sale notice states that as of 25.11.2022 the outstanding debt is ₹12,04,53,986/-

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and according to the Ld. Counsel appearing for the Respondent, inclusive interest, the amount due now is ₹13.48 crores.

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The Ld. Counsel appearing for the Appellant submitted that the Appellant has a very good prima facie case and income tax returns have been produced to show that the Appellant has very little income and is therefore, under financial strain. The tax return would indicate that the Appellant has income between ₹13 lakhs to ₹14 lakhs and he has also no other source of income.

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After having heard the rival submissions, I find that the Appellant has raised objections regarding the non-bifurcation or the amount demanded in the notice u/s 13 (2) and also has raised objections regarding the valuation of the property. Even though there are certain materials produced by them to contest the matter, the Ld. Presiding Officer has found that the objection raised is not sustainable for the reason mentioned therein, which would have to be considered while disposing of the appeal on its merits.

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Hence, I do not intend to delve deep into those issued at this moment where we are concerned only with the amount payable by the Appellant towards the pre-deposit u/s 18 (1) of the SARFAESI Act. The Appellant has prayed that the amount may be reduced to a minimum of 25% but considering the entire facts and circumstances, I am not inclined to reduce the deposit to 25 % and the property has since already been sold, and handing over possession to the auction purchaser is awaited. The Appellant is, therefore, directed to deposit a sum of ₹5 Crore as pre-deposit. The Ld. Counsel appearing for the Appellant offers a demand draft for ₹75 lakhs towards the said

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amount today. The balance of ₹4.25 crores shall be paid in three equal instalments as scheduled hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹ 1,45,00,000/-	02.11.2023
2^ndInstalment of₹ 1,40,00,000/-	16.11.2023
3^ndInstalment of₹1,40,00,000/-	30.11.2023

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Since the Appellant has paid a sum of ₹75 lakhs today, the handing over possession of the secured assets shall stand deferred till the next hearing date.

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Default of payment of any of 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.

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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 03.11.2023 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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psa-04

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Mr. Vilas Vasant Gandhe v. Encore Asset Reconstruction Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Mr. Vilas Vasant Gandhe v. Encore Asset Reconstruction Pvt. Ltd.

Case brief

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What did the court decide?

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