Partly allowed

Gogila Textiles and Ors. v. Indiabulls Commercial Credit Limited

DRAT21 Nov 2023IA/760/2023

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal directed the appellants to deposit ₹1.20 crores as pre-deposit to secure an interim stay on SARFAESI measures. The Tribunal applied a Supreme Court decision linking the deposit threshold to the demand notice amount, rejected claims of financial strain, and deferred physical possession transfer until payment compliance.

What did the court decide?

The appellant was permitted to secure an interlocutory stay by depositing ₹1.20 crores as pre-deposit; possession of property was deferred till the next hearing upon payment of ₹15 lakhs.

Gogila Textiles and Ors. versus Indiabulls Commercial Credit… — 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. 760/2023 (WoD)

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In Appeal on Diary No. 2066/2023

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Between

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M/s Goglila Textiles & Ors.

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… Appellant/s

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V/s.

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Indiabulls Commercial Credit Ltd …Respondent/s

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Mr Rajesh Nagory i/b Mr Dhrumit D. Chauhan, Advocate for Appellants.

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Ms Somya Tripathi, i/b M/s T. N. Tripathi & Co., Advocate for Respondent.

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-: Order dated: 21/11/2023:-

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The Appellants are in appeal impugning the order dated 10.11.2023 in Securitisation Application (S.A.) No. 800 of 2023 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) whereby the Ld. Presiding Officer declined to grant any stay with regard to the Sarfaesi measures initiated by the Respondent financial institution to recover the debt due from the Appellants. The Ld. Presiding Officer has not gone into the merits of the contentions raised in S.A. but has opined that no harm would be done to the Appellants because if they have a case, the possession which is intended to be taken could be restored exercising jurisdiction under Sec. 17(3) of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short). It is pertinent to mention here that the jurisdiction under Sec. 17 (3) of restoring possession can only be ordered at the final stage when the S.A. is

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disposed of and not as an interim measure. Therefore, the question of granting an interlocutory injunction should be based on the prima facie case that the Applicants have. The impugned order does not discuss the merits of the case. The Appellants have challenged the Sarfaesi measures on various grounds including the validity of a notice issued under Sec. 13(2) which does not give a break-up of the amount that is allegedly due from the Appellants. The Sarfaesi measures taken under Sec. 14 of the SARFAESI Act also stand challenged for want of a 9-pointer affidavit to be submitted before the District Magistrate. The notice under Sec. 13(2) demanded a sum of ₹3.40 crores and therefore, in view of the latest decision of the Hon’ble Supreme Court in Sidha Neelkanth Paper Industries vs. Prudent ARC Ltd. 2023 SCC OnLine SC 12, the amount demanded in the demand notice under Sec.13 (2) should be the threshold amount for determining the pre-deposit. The Appellants have not produced any documents to indicate that they are under financial strain and therefore, they are definitely not entitled to get the amount reduced to the minimum of 25%. The Appellants would state that they have not produced any Income Tax Returns because they do have not any income, and hence did not file Income Tax Returns.

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Taking the entire facts and circumstances of this case, I direct the Appellants to deposit a sum of ₹1.20 crores as pre-deposit. The Ld. Counsel appearing for the Appellants submits that he is producing a demand draft of ₹15 lakhs today. The balance amount of ₹1.05 crores shall be payable in three equal instalments within a gap of two weeks each as detailed hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹35,00,000/-	05.12.2023
2^ndInstalment₹35,00,000/-	19.12.2023
3^rdInstalment₹35,00,000/-	02.01.2024

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Default in payment of any of the instalments entails in dismissal of the appeal without any further reference to this Tribunal. 4. Taking over physical possession of the property shall stand deferred till the next date of hearing in view of the payment of Rs.15 lakhs deposited today.

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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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7 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 06.12.2023 for reporting compliance regarding the first instalment.

Sd/-

Chairperson

mks-04

Gogila Textiles and Ors. v. Indiabulls Commercial Credit Limited

Case brief

What is this about?

What did the court decide?

Gogila Textiles and Ors. v. Indiabulls Commercial Credit Limited

Case brief

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What did the court decide?

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