Allowed

Maruti Polytex v. Union Bank of India

DRAT8 Dec 2023IA/689/2023

Case brief

AI extract

What is this about?

In appeal challenging SARFAESI measures, the Tribunal clarified the calculation of the pre-deposit threshold by deducting unpaid sale proceeds from the debt due. The Appellants were directed to deposit ₹25 lakhs as pre-deposit within the prescribed timeline.

What did the court decide?

Pre-deposit of ₹25 lakhs to be paid within two weeks; possession proceedings deferred until payment full compliance.

Maruti Polytex versus Union Bank of India — 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. 689/2023 (WoD)

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In Appeal on Diary No. 1649/2023 Between

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M/s. Maruti Polytex & Ors. … Appellant/s V/s. Union Bank of India …Respondent/s

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Mr. Puneet Gogad, Advocate for the Appellants.

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Mr. Nainesh Amin, Advocate for the Respondent.

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The Appellants are in appeal challenging the common order dated 04.08.2023 in Securitization Application (S.A.) No. 608/2022 with the other connected Securitization Applications. The Ld. Presiding Officer declined to grant any protection to the applicants about secured assets which were being proceeded against under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) by the Respondent bank. The Appellants have raised various issues challenging the Sarfaesi measures One of the prime contentions is regarding the classification of the debt as NonPerforming Assets (NPA). It is pointed out that there were three facilities and one of the three facilities was under FITL which according to the Appellants does not have any secured assets and the secure assets are available only concerning the other two facilities. It is also contended that the application u/s 14 for taking physical

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possession of the property of the secured assets filed before the Chief Juridical Magistrate (CJM) does not comply with the requirement of a nine-pointer affidavit.

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It is pointed out that some items of the properties in Plot Nos. 173, 24, and 25 have already been sold and the sale is not challenged. An amount of ₹2,35,32,000/- was realized from the sale of those properties, and towards the debt due in the instant case, a sum of ₹23 lakhs has been adjusted. As per the demand notice issued u/s 13 (2) of the SARFAESI Act which pertains to M/s. Maruti Poyltex proprietorship the demand was for a sum ₹82,97,963.78. According to the Ld. Counsel appearing for the Appellants, the amount due after deducting ₹23 lakhs recovered from the sale of certain items of the properties has to be taken as the threshold amount for calculating the pre-deposit. The Appellants plead that they are under financial strain. The income tax returns of the Appellants have been produced which indicates that apart from the 3^rd Appellant none of the other Appellants have any income at all. The 3^rd Appellant also does not have any substantial income for a couple of years. The Appellants would, therefore, plead that the pre-deposit amount may be confined to the minimum of the 25% exercising jurisdiction of this Tribunal under the 3^rd proviso to section 18 (1) of the SARFAESI Act.

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The Ld. counsel for the Respondent bank vehemently opposed this application stating that none of the grounds challenging the Sarfaesi measures are sustainable. It is also pointed out that the amount due as of date is ₹72,36,695/- after adjusting the amount of ₹23 lakhs which was received for the sale of certain items of the

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properties. It is also pointed out that the balance sheet from the proprietorship indicates that the proprietorship has capital assets that would be sufficient to meet the requirement of the payment of the 50% debt due and hence, no concession need be given to the Appellants.

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The Ld. Counsel appearing for the Appellants relying on precedents submits that the threshold amount should be the amount mentioned in the demand notice u/s 13 (2) because the Appellants are challenging the Sarfaesi measures only up to section 13 (4) of the SARFAESI Act. Moreover, they have also not challenged the sale and hence, the amount received on the sale will have to be deducted from the amount mentioned in the demand notice u/s 13 (2). The Ld. Counsel appearing for the Respondent on the other hand submits that when there is a deduction of the amount received on the sale of certain items of the properties which is not challenged by the Appellants, the amount has to be deducted from not the amount mentioned in the demand notice but from the debt due inclusive of the interest which is calculated up to date.

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After hearing the rival submissions, I find that the submission of the Ld. Counsel appearing for the Respondent about the calculation of the threshold amount has to be accepted because the precedents relied upon by the Ld. Counsel appearing for the Appellants does not contemplate a situation where the sale is not challenged and therefore, the amount has to be adjusted toward the debt due. In case the sale is challenged, then the threshold amount would be the amount mentioned in the demand notice added with

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the accrued interest up to date. Such a situation was not

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contemplated in the judgment of the Hon’ble Apex Court in Sidda Neeltanth vs. Prudent ARC 2023 SCC OnLine 12 . I would therefore, find that when there is an adjustment of the amount received on the sale of the apportion of the secured assets, the amount will have to be adjusted toward the debt due inclusive of the accrued interest and therefore, the threshold amount will have to be taken up as ₹72,36,695/-

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The Appellants have raised certain contentions which need to be considered in the appeal. There is an arguable case for the Appellants but not a very convincing prima facie case. The Appellants have succeeded to a great extent in proving their impecuniosities. The fact that they have capital assets will not do because what is contemplated is the availability of liquid assets to deposit the pre-deposit. Hence, the Appellants are directed to deposit a sum of ₹25 lakhs as pre-deposit for entertaining this appeal. Toward this amount, the Appellants are producing the demand draft for ₹10 lakhs today. The balance of ₹15 shall be deposited in two equal instalments within a gap of two weeks each, as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹7,50,000/-	22.12.2023
2^ndInstalment of₹7,50,000/-	05.01.2024

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Given the deposit of ₹10 lakhs today toward the pre-deposit, taking further possession of the secured assets on 10.12.2023 (Sunday) shall stand deferred till the next date of hearing.

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Default in payment of any of the instalments/amount 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 26.12.2023 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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Maruti Polytex v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Maruti Polytex v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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