Disposed

Dinesh S Deshmukh and Anr. v. Encore Asset Reconstruction Company Pvt. Ltd.

DRAT24 Aug 2023IA/89/2023

Case brief

AI extract

What is this about?

The DRAT addressed an IA for waiver of predeposit to entertain an appeal under the SARFAESI Act. The Bench found no merit for a reduction due to lack of income tax returns proving financial strain and dismissed the plea to waive the deposit.

What did the court decide?

Appellant directed to deposit ₹17 lakhs in two instalments as predeposit; stay granted upon payment of first instalment.

Dinesh S Deshmukh and Anr. versus Encore Asset… — Execution and Attachment | DRAT (2023)

¶1

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

¶2

I.A. No. 89/2023 (WoD) In

¶3

Appeal on Diary No. 168/2023

¶4

Between

¶5

Dinesh S. Deshmukh & Anr. … Appellant/s

¶6

V/s.

¶7

Encore Asset Reconstruction Company Pvt. Ltd. …Respondent/s & Ors.

¶8

Mr K. B. Deshpande, Advocate for Appellant.

¶9

Mr Charles D’Souza along with Mr Archit Virmani and Mr Atul Gupta, i/b Optimus Legal, Advocate for Respondent No. 1.

¶10

Mr Rajesh Nagory, i/b Ms Sanjana Ghogare, Advocate for Respondent No.2.

¶11

This is an application filed under section 18 (1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) for waiver of predeposit to entertain the appeal.

¶12

The Appellants are the Applicants Nos. 1 and 2 in Misc. Application No. 90 of 2022 on the files of the Debts Recovery Tribunal-III, Mumbai (D.R.T.) filed for condoning the delay of 1090 days in filing the Securitisation Application (S.A.) under section 17 (1) of the SARFAESI Act. The Misc. Application was dismissed by the

¶13

¶14

Ld. Presiding Officer vide the impugned order dated 10/01/2023. The Appellants are aggrieved and hence in appeal.

¶15

The facts necessary for the disposal of this application for waiver of deposit, in brief, are thus:

¶16

The Appellants borrowed money from the 2nd Respondent bank with Respondents Nos. 3 and 4 as guarantors, and defaulted payment, in consequence of which, the account was classified as non-performing assets (NPA) and consequently, measures were initiated under the SARFAESI Act for recovery of the amount due. On 18/12/2015, the bank took possession of the flat which is the secured asset under Rule 107 of the Maharashtra Cooperative Societies Act & Rules, 1961. The debt was assigned to the 1st Respondent ARC. It is contended that the ARC took symbolic possession of the secured asset again on 14/11/2018 purportedly under the provisions of the SARFAESI Act. Allegation is that the said act of taking symbolic possession of the property was not in accordance with the Rules. The flat was thereafter sold in public auction for a price much below the actual value of the property assessed in the valuation report. Thereafter, the ARC filed an application as S.A. No. 728/2019 under section 14 of the SARFAESI Act before the Additional District Magistrate, Thane (ADM) for taking physical possession of the flat, and allegedly obtained an order on 18/12/2019. It is contended that the statutory requirements under section 14 were not complied with. The Appellants would contend that they are not wilful defaulters and came to know about the Sarfaesi measures only on receiving notice from the Circle Officer, Kalyan dated 12/02/2020 intimating to them about the order passed by the

¶17

¶18

ADM and the intention to take possession of the flat on 23/04/2022. Due to the onset of the pandemic, a lockdown was imposed with effect from 23/03/2020. The Appellants approached a lawyer seeking legal advice and they were advised to file a civil suit. Suit No. 117 of 2020 was filed on 04/06/2020 before the Civil Judge, Senior Division, Kalyan challenging the order passed by the ADM. During the pendency of the civil suit, the Appellants were advised to approach the Hon’ble High Court and accordingly, Writ Petition No. 14925/2022 was filed challenging the orders of the ADM. The Civil Suit No. 117/2020 was disposed of on 23/08/2021. The Appellants preferred a Civil Revision Application No. 285/2021 before the Hon’ble Bombay High Court challenging the dismissal of the civil suit. The said civil revision was dismissed on 20/05/2022. Consequently, the Writ Petition was withdrawn on 05/12/2022. After futile exercise of approaching the Civil Court and the High Court, the Appellants approached the D.R.T. with the securitisation application and the Misc. Application for condoning the delay contending that the limitation begins to run from the date of knowledge of the impugned order dated 18/12/2019. The Appellants would contend that they were not aware of the legal provisions and had initiated the earlier legal proceedings before the Civil Court and the High Court under advice given by the advocate. It is alleged that they had been prosecuting the proceedings before different forums in good faith relying upon the advice given by the advocate. The delay was caused in filing the S.A. is not intentional and hence prayed that the delay may be condoned.

¶19

¶20

The Respondents vehemently opposed the application for condonation. On consideration of the materials on record and the submissions made by the Counsel appearing for the parties, the Ld. Presiding Officer declined to condone the delay either under section 5 or under section 14 of the Limitation Act, 1963. Hence the Misc. Application was dismissed. The Appellants are aggrieved and hence in appeal.

¶21

Heard both sides. Records perused.

¶22

On anxious consideration of the pleadings and the materials on record, I find that prima facie the impugned order cannot be assailed. However, the merits will have to be gone into while considering the appeal and therefore, I am not delving deep into the merits of the appeal while considering this application for waiver of deposit. The Ld. Counsel appearing for the Appellants submits that the Appellants have a very good prima facie case in challenging the Sarfaesi measures and therefore, a meritorious case may not be thrown overboard on the grounds of limitation alone. It is further contended that the 1 st Appellant has sustained heavy losses in his business during the past several years and that the Applicants are under financial strain without any regular source of income.

¶23

Per contra, the Ld. Counsel appearing for the Respondent ARC submits that the Appellants had availed a housing loan and an overdraft facilities for ₹6,03,07,433/-. As on 18/06/2023, the outstanding amount due with respect to the housing loan is ₹34,37,665/-. It is stated that considering the fact that the Appellants did not challenge the Sarfaesi measures on time and have deliberately

¶24

¶25

delayed the measures initiated by the 1st Respondent, they are not entitled to any indulgence from this Tribunal to get the pre-deposit amount reduced from 50% to a minimum of 25%.

¶26

8^. On an anxious consideration of the entire facts and circumstances, I find that this is not a fit case where the discretion of this Tribunal under the 3rd proviso to section 18 (1) of the SARFAESI Act could be exercised. The Appellants have not produced any income tax returns to prove that they are under financial strain. Hence, the Appellants are directed to deposit a sum of ₹17 lakhs as pre-deposit in two equal instalments. The first instalment of ₹8.50 lakhs shall be payable within three weeks i.e. on or before 14.09.2023 and the second instalment of ₹8.50 lakhs shall be payable within three weeks therefrom i.e. on or before, 05.10.2023. Failure to pay any of the amounts shall entail in dismissal of the appeal without any further reference to this Tribunal.

¶27

On the payment of the first instalment, the Appellants shall be entitled to stay further Sarfaesi measures initiated by Respondent No.1.

¶28

The amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal.

¶29

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.

¶30

With these observations, the I.A. is disposed of. The

¶31

¶32

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

¶33

Post on 15.09.2023 for reporting compliance concerning the first instalment.

¶34

Sd/Chairperson

¶35

mks-1

¶36

Dinesh S Deshmukh and Anr. v. Encore Asset Reconstruction Company Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Dinesh S Deshmukh and Anr. v. Encore Asset Reconstruction Company Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Canara Bank versus Kailash B Gupta and Ors.

Ms Maninder Kaur Maewah & Ors. versus Canara Bank & Ors.

Canara Bank versus Maninder Kaur Marwah, & Ors.

Bank of Baroda versus State Bank of India and Ors.

Hashmi Sayed Nisar Ahmed Sayed Murtuza versus State Bank of India

Mr Manish Mahendrabhai Patel And Anr. versus Authorised Officer Indian Bank