Allowed

M/S. Gopinath Fashion and Anr. v. Canara Bank

DRAT27 Jan 2023MISC APPEAL/68/2024

Case brief

AI extract

What is this about?

The Tribunal directed the appellants to deposit ₹80 lacs in pre-deposit under Sec. 18(1) of the SARFAESI Act, allowing payment in instalments, and granted an interim stay on handing over the auctioned property pending appeal disposal.

What did the court decide?

Deposited ₹80 lacs towards pre-deposit; granted interim stay prohibiting handing over property possession to auction purchaser till appeal disposal.

M/S. Gopinath Fashion and Anr. versus Canara Bank — 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.15/2023 (WoD) In Appeal on Diary No.04/2023

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Between

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M/s. Gopinath Fashion & Anr. … Appellant/s V/s.

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The Authorised Officer, …Respondent/s Canara Bank

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Ms Sonali Jain, i/b Mr D.D. Chauhan Advocate for Appellants. Ms Vaishali Bhilare, Advocate for Respondent Bank.

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-: Order dated: 27/01/2023:-

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The Appellants are in appeal impugning the interlocutory order of the Ld. Presiding Officer, Debts Recovery Tribunal -II, Ahmedabad (D.R.T.) in Securitisation Application (S.A.) No. 129/2022 dated 23.02.2022 wherein the Ld. Presiding Officer refused to grant any protection to the Appellants during the interregnum period till the disposal of the S.A. The Appellants are aggrieved and hence, in appeal. 2. The Appellants are the borrowers and guarantors. The S.A. is filed challenging the various measures taken under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) right from the classification of the account of the Appellants as Non-Performing Asset (NPA) on 25.03.202 as not being in accordance with the guideline received by Reserve Bank of India and also challenging the

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demand notice under Sec. 13(2) for not complying with the specific provisions of giving a breakup of the amount claimed, under Sec. 13(3) of the SARFAESI Act. That apart, the Appellants have also challenged the Sarfaesi measures being defective for want of compliance with Rule 8(1), 8(2) as well as 8(5), 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002. The proceedings before the District Magistrate, Surat dated 06.03.2022 facilitating the taking over the physical possession of the property under Sec. 14 of the SARFAESI Act also stand challenged in the application.

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The Appellants had sought interim relief from the dispossession of the property. The Ld. Presiding Officer vide the impugned order found no merits or a prima case in favour of the Appellants and hence, declined to grant any relief in favour of the Appellants. The sale has already taken place on 25.02.2022 and was confirmed for a sale amount of ₹87,21,100/- and it is also understood that the entire sale price has been deposited by the auction purchaser. The sale certificate has been issued and registered. The Bank has already taken physical possession of the secured assets in consequence of the orders passed by the District Magistrate and the possession now is intended to be handed over to the auction purchaser in compliance with the sale certificate issued to him.

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The demand notice made under Sec. 13(2) on 16.04.2021 demands a payment of ₹1,19,83,742.30 as of 29.02.2020 due on four facilities granted to the secured debtors as against secured assets. 5. The Ld. Counsel appearing for the Respondent Bank has filed a reply affidavit in which it is stated that the amount due as of the date

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of filing the appeal is ₹1,52,69,144/- but the Ld. Counsel appearing for the Bank submits that one of the facilities was left out and around ₹35 lacs more will have to be added to this amount for which an additional affidavit is being filed. That would make the balance due around ₹1,87,00,000/-. The Ld. Counsel for the Respondent Bank submits that the Appellants have no grounds to maintain the appeal and therefore, the mandatory deposit of 50% may be directed to be made before entertaining the appeal.

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In this application for waiver, the Appellants plead that they have a very good prima facie case to maintain the appeal. It is further contended that they are in severe financial crunches and hardship making it impossible for them to pay 50% of the amount due as required under the second proviso to Sec.18(1) of the SARFAESI Act. 7. The Ld. Presiding Officer has not gone into the merits of the contentions challenging the Sarfaesi measures but on prima facie finding, found that hyper-technical grounds cannot be entertained for nullifying the Sarfaesi measures. Whether the grounds are actually hyper-technical or not has not been considered. The Appellant may, therefore, have an arguable case for entertaining the appeal, but the plea that the Appellants are facing financial crunches has not been supported by any material which enables Tribunal to exercise jurisdiction under the third proviso to Sec. 18(1) to reduce the amount to 25%. Taking the entire facts and circumstances into the consideration, I find that the Appellants are directed to pay a sum of ₹80 lacs towards pre-deposit under Sec. 18(1).

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The Ld. Counsel appearing for the Appellants offers to deposit

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a sum of ₹25 lacs by way of Demand Draft today. The balance amount of ₹55 lacs shall be payable in two equal instalments. The first instalment shall be payable within three weeks from today, on or before 17.02.2023. And, the second instalment shall be payable within two weeks therefrom, on or before 03.03.023. In default, the Appeal shall stand dismissed 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 nationalized bank, initially for 13 months, and thereafter to be renewed periodically.

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On deposit of the amount, there shall be an interim stay prohibiting the Respondent Bank from handing over the possession of the property to the auction purchaser till the disposal of this Appeal.

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With these observations, the I.A. is disposed of. The Respondent Bank is at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 20.02.2023 for reporting compliance concerning the payment of the first instalment.

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Sd/Chairperson

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mks-6

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M/S. Gopinath Fashion and Anr. v. Canara Bank

Case brief

What is this about?

What did the court decide?

M/S. Gopinath Fashion and Anr. v. Canara Bank

Case brief

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