Allowed

M/S. Vnr Enterprises and Ors. v. Union Bank of India

DRAT12 Apr 2023MISC APPEAL/59/2024

Case brief

AI extract

What is this about?

The DRTA allowed an appeal by borrowers against interim relief denial under the SARFAESI Act. Finding the Presiding Officer failed to assess merits, the court granted a stay pending payment of a reduced pre-deposit and stalling further enforcement measures on specific properties.

What did the court decide?

Stay on appeal subject to deposit of ₹4 crores; interim order stalling further SARFAESI measures on challenged properties.

M/S. Vnr Enterprises and Ors. versus Union Bank of India — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 196/2023 (WoD) In Appeal on Dairy No. 470/2023

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Between

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M/s. VNR Enterprises and Ors. … Appellant/s V/s.

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Authorised offic e r, Union Bank of India …Respondent/s Mr. Gaurang Ki n khabwala, Advocate for Appellant. Mr. Nainesh Am i n, Advocate for Respondent.

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-: Order dated: 12/04/2023:-

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The Appellants a re borrowers who had approach e d the D.R.T.-II, Ahmedabad by f iling securitization application S. A . No. 126/2023 on being aggri e ved by the Sarfaesi measures initiated by the Respondent Ban k under the SARFAESI Act. The A ppellants sought interim reliefs ag a inst further Sarfaesi measures initiated by the bank, but vide impugn e d order date 24.03.2023, the praye r was declined. 2. The Ld. Pr e siding Officer declined to grant a ny interim reliefs for the reason that the Appellants had earlier filed a nother S.A. u/s. 17 (1) of the SA R FAESI Act but those facts were not revealed in the present applicati o n and therefore the Ld. Presiding O fficer under the presumption tha t the Appellants have not come w ith clean hands and had not disc l osed the entire facts, rejected the c laim. There is no finding by the L d . Presiding Officer on the merits of the case. To allow or disallo w an interlocutory application for i n terim reliefs the

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orders need to be based on a prima facie case which is put forth by the Applicants. But the Ld. Presiding Officer has not gone into the merits of the prima facie case pleaded by the Applicants in the prayer for interim reliefs.

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The Appellants have challenged the notice u/s. 13 (2) of the SARFAESI Act on the grounds that the amount demanded is not correct and that the rate of interest is not specified. The amount demanded in the demand notice dated 28.04.2021 is ₹ 10,56,16,770.12. Further interest is also due on that amount.

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The Ld. Counsel appearing for the Respondent Bank has filed a reply contending that the Appellant has no case to resist the Sarfaesi measures. It is pointed out that out of the secured assets, eight items of properties have already been taken possession of and one of the properties has been sold. Different orders were also obtained to proceed against the property from the District Magistrate u/s. 14 of the SARFAESI Act. As of 31.03.2023, the outstanding amount is alleged to be ₹ 12,35,65,471.05. The Ld. Counsel appearing for the Respondent submits that the Appellant has to deposit 50% of that amount and he is not entitled to any indulgence of the part of this Tribunal.

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The Ld. Counsel appearing for the Appellant contended that the Appellant firm is running at loss and that they have meagre income, and to support that, the income tax returns of the firm and the partners have been produced. It is also contended that the Appellants have a good prima-facie case. The Ld. Presiding Officer has not gone into the merits of the case and therefore the appeal

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needs to be entertained and the amount to be paid as pre-deposit may be kept at a minimum of 25%.

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After having heard the contentions raised on both sides I, am in agreement that the Ld. Presiding Officer has not gone into the merits of the contentions raised by the Appellants in the S.A. The financial strain has also been established to a great extent and therefore taking the threshold amount due from the Appellants to be ₹ 12,35,65,471.05 without prejudice to the correctness of the amount raised by the Appellant regarding the calculation of the interest, the amount to be paid as pre-deposit is determined to be ₹ 4 crores. The Ld. Counsel appearing for the Appellants is depositing a sum of ₹ 50,00,000/- by way of Demand Draft in the name of Registrar, D.R.A.T. The balance amount shall be paid in two equal instalments. The first instalment of ₹ 1.75 crores shall be payable within three weeks on or before 03.05.2023 and the second instalment shall be payable within three weeks therefrom, on or before 24.05.2023.

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Failure to deposit the amount shall entail the dismissal of the appeal. There shall be a stay in view of the payment of the deposit of ₹ 50,00,000/-. There shall be an interim order stalling further Sarfaesi measures initiated by the Respondents in respect of the properties regarding which the S.A. has been filed.

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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

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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 04.05.2023 for reporting compliance concerning the payment.

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Sd/-
Chairperson

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rm-5

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M/S. Vnr Enterprises and Ors. v. Union Bank of India

Case brief

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M/S. Vnr Enterprises and Ors. v. Union Bank of India

Case brief

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M/S. Vnr Enterprises and Ors. versus Union Bank of India