Disposed

M/s Nilkanth Cotton Fibers v. Bank of Baroda

DRAT22 Jun 2023IA/72/2023

Case brief

AI extract

What is this about?

The appellate tribunal dismissed an interim application seeking exemption from the pre-deposit requirement under the SARFAESI Act. The court found no prima facie merit in the appellants' challenge against the recovery measures and denied the reduction of the deposit due to unproven financial hardship.

What did the court decide?

Directed appellants to deposit ₹1.5 crores in two instalments.

M/s Nilkanth Cotton Fibers versus Bank of Baroda — Banking and Recovery | 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. 72/2023 (WoD)

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In Appeal No. 88/2023

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Between

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M/s. Nilkanth Cotton Fibers & Ors. … Appellant/s V/s.

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The Authorised Officer,

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Bank of Baroda & Ors.

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…Respondent/s

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Mr Mayur Patel, i/b Mr. A.R.Gupta & Associates, Advocate for the Appellants.

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Mr Nilesh Bamne, i/b M/s. A.R.Bamne & Co., Advocate for Respondent No. 1 Bank.

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-: Order dated: 22/06/2023:-

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The Appellants are in appeal impugning the judgment and order dated 06.01.2023 in Securitisation Application (S.A.) No. 628 of 2019 on the files of the Debts Recovery Tribunal -II, Ahmedabad (D.R.T.) dismissing the S.A. The Appellants have come up with an appeal and they contend that the findings in the impugned order with regard to the Sarfaesi measures are erroneous and hence, not sustainable.

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In consequent to the Sarfaesi measures, seven items of the secured assets were put up for sale by the Respondent Bank and all these items were sold for a sum of ₹7,67,52,530/-. As per the demand notice issued under Sec. 13(2) on 12.07.2019, there was an outstanding amount of ₹7,66,72,199/-. The Appellants do not challenge the sale of 4 items of the properties by sale of which a total sum of ₹5,62,84,005/- has been realised. The challenge is limited to 3 items alone which were sold for ₹2,05,03,250/-. There was an OTS proposal in consequence of which certain amounts were paid and it has been adjusted towards the debt. The outstanding amount, after

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adjusting the amount which has been paid and realised by the sale of 4 items of the properties, according to the Respondent Bank, as of date is ₹4,01,19,969.62.

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The Ld. Counsel for the Appellants contends that they have a strong prima facie case. The Appellants contend that they are facing tremendous hardship and therefore, they are in an extremely precarious financial position and are not able to maintain themselves even for day to day expenses. And therefore, they seek an exemption from payment of the pre-deposit amount. No documents, however, have been produced to prove the impecunious condition of the Appellants.

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The Sarfaesi measures have been challenged on various grounds but in the impugned order, the Ld. Presiding Officer has dealt with all those challenges and found those to be unsustainable. It was also held that there is a waiver of their rights by the Appellants resulting in their being estopped from raising any objections regarding Sarfaesi measures. The Appellants’ claim for a benefit under Sec. 31(j) of the SARFAESI Act has also been disallowed. The challenge raised to the demand notice under Sec. 13(2) as also an order passed by the District Magistrate under Sec.14 was held to be not sustainable.

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On hearing the rival contentions and on going through the available material, I do not find any substance in the arguments raised by the Appellants with regard to the challenge of the Sarfaesi measures, at least prima facie. Since they have also not proved that they are entitled to any indulgence from this Tribunal to get the predeposit amount reduced to the minimum of 25% for reasons of their financial strain, I am not inclined to exercise the jurisdiction of this Tribunal under the third provision to Sec. 18(1) of the SARFAESI Act. Taking the threshold amount at more than four crores, the Appellants are directed to deposit an amount of ₹1.5 crores as predeposit for entertaining the appeal. The said amount shall be paid in

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two equal instalments of ₹75 lakhs each. The first instalment shall be payable within three weeks from today, i.e. on or before 13.07.2023 and the second instalment shall be payable within three weeks therefrom, i.e. on or before 03.08.2023. Failure to pay the instalments within the time stipulated shall entail dismissal of the appeal without any further reference to this Tribunal.

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Since it is submitted by the Ld. Counsel appearing for the Respondent that the possession of the property has already been handed over to the auction purchaser. There is nothing to be stayed.

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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 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 14.07.2023 for reporting compliance regarding the first instalment.

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mks-31

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Sd/Chairperson

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M/s Nilkanth Cotton Fibers v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

M/s Nilkanth Cotton Fibers v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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