Disposed

M/s Pranav Omprakash Khake Distilleries v. Union Bank of India

DRAT10 Apr 2023

Case brief

AI extract

What is this about?

This order in an interim application addresses the pre-deposit requirement for an appeal under the SARFAESI Act against a securitisation application rejection. The tribunal directed the appellant to deposit ₹45 crores in six instalments to stay further recovery measures, noting that the appellant failed to establish financial strain or a strong prima facie case.

What did the court decide?

Appellants directed to deposit ₹45 crores as pre-deposit in six instalments; interim stay of Sarfaesi measures granted upon payment of first instalment.

M/s Pranav Omprakash Khake Distilleries versus Union Bank of… — Banking and Recovery | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 516/2022(WoD)

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Appeal on Diary No. 986/2022

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Between

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M/s Pranav Omprakash Khake Distilleries Pvt. … Appellant/s Ltd. & Anr.

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V/s.

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Union Bank of India & Anr. …Respondent/s

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Mr Anshul Anjarlekar, i/b M/s. Raval-Shah & Co., Advocate for Appellants.

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Mr Rohit Joshi, i/b Ms N. I. Bakali, Advocate for Respondent No. 1 Bank.

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Ms Sanjana Ghogare, Advocate for Respondent No. 2.

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-: Order dated: 10/04/2023:-

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Appellant No. 1 is a company which is in appeal impugning the dismissal of the Securitisation Application (S.A.) No. 30 of 2018 on 26.08.2022 by the Debts Recovery Tribunal, Aurangabad (D.R.T.). This is an application for the waiver of the deposit under Section 18(1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short). The Appellants seek the indulgence of this court to invoke the discretion under the 3^rd proviso to Sec. 18(1) of the SARFAESI Act to bring the mandatory pre-deposit amount down to 25%. According to the calculation made by the Appellants, the amount due as of the date of appeal would be ₹ 11,90,92,326/- and the

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Appellants are willing to deposit 25% of that amount.

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From the facts as borne out from the application, the impugned judgment and order and also the statement of account produced by the Respondent Bank which (though not a statement of account as contemplated under the Bankers’ Books Evidence Act), the amount demanded under as per notice under Sec. 13(2) of the SARFAESI Act on 16.07.2011 was ₹29,24,17,852/-. There is also an Original Application (O.A.) filed by the Respondent Bank as O.A. No. 37 of 2013 before the very same D.R.T. which was allowed on 31.07.2014 directing the Defendants therein(Appellants) to pay a sum of ₹38,76,90,251/- together with interest @14% per annum with monthly rest from the date of O.A. till realisation. The debt due from the Appellants is, therefore, determined and quantified.

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The amount purportedly paid by the Respondent after receipt of the demand notice under Sec. 13(2) has been taken into account while disposing the O.A. Subsequent interest at the rate awarded will also have to be added up, and according to the calculation made by the Certified Creditor Bank, a sum of ₹119, 53,07,994.99/- is due from the Appellants as of the date of filing the appeal. The secured property was sold for ₹9 crores and that also accounted for calculation of the dues, though in the ordinary course, the Appellants would not be entitled to get that amount deducted in view of the fact that the sale is challenged.

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The grounds on which the S.A. was filed are that the demand notice under Sec. 13(2) of the SARFAESI Act has not been served.

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The symbolic possession under Sec. 13(4) has not been properly executed since notice, as required under the SARFAESI Act, has not been served and the publication of notice as required under Rules 8(1) & (2) of the Security Interest (Enforcement) Rules, 2002 is also not duly complied. Lastly, it is contended that the sale is not proper because 15 days’ notice contemplated for a subsequent auction sale is not served on the Appellants and therefore, the sale would be defective.

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The impugned judgment found all these objections unsustainable for reasons recorded therein. And prima facie, there does not appear to be a strong case in favour of the Appellants. Even if the amount stands determined ₹38,76,90,251/- with 14% interest per annum, by a rough calculation, it would certainly come to more than ₹100 crores. Being an appeal under the SARFAESI Act and the secured assets not being sufficient to satisfy the entire debt due, this Tribunal is of the view that the determination of the exact amount as of date is not of any consequence. However, for the purpose of determining the amount to be paid as pre-deposit under Sec. 18(1) of the SARFAESI Act, it will have to be determined. The Appellants have no prima facie case and the financial strain of the Appellant company also has not been sufficiently established. All that is pleaded is that the Appellant company has no income and that the balance sheets would prove that. Unfortunately, for the Appellants no balance sheets are forthcoming and therefore, the financial strain also is not proven. Taking the threshold amount for calculation of pre-deposit as ₹100

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crores, I direct the Appellants to deposit a sum of ₹45 crores as predeposit which shall be paid in six equal instalments of ₹ 7.5 crores each. The first instalment shall be payable within two weeks on or before 24.04.2023, and subsequent instalments shall be payable within a gap period of two weeks each therefrom. 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 payment of the first instalment within the stipulated time, the Appellants shall be entitled to stay of the further Sarfaesi measures initiated by the Respondent.

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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 25.04.2023 for reporting compliance concerning the payment of the first instalment.

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Sd/Chairperson

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mks-5

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M/s Pranav Omprakash Khake Distilleries v. Union Bank of India

Case brief

What is this about?

What did the court decide?

M/s Pranav Omprakash Khake Distilleries v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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