Dismissed

Jineshkumar Shah v. Bank of India

DRAT8 Feb 2023RA/1/2023

Case brief

AI extract

What is this about?

The Tribunal dismissed a review application regarding the quantum of pre-deposit required before entertaining an appeal under the SARFAESI Act. It held that the 50% of debt due including interest is mandatory, rejecting the borrower's claim for a lower percentage based on the auction being set aside.

What did the court decide?

The review application seeking reduction of the pre-deposit was dismissed.

Jineshkumar Shah versus Bank of India — 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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R.A. No. 01/2023 In

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I.A. No. 574/2022 (WoD) In

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Appeal on Diary No. 588/2022

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Between

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Jineshkumar Jayantilal Shah & Ors. … Appellant/s V/s.

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Bank of India & Ors. …Respondent/s Mr Rishabh Shah along with Mr Harjot Singh, i/b M/s. Raval-Shah & Co., Advocate for Appellant.

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Ms Mital Parikh, i/b M/s. M.V. Kini & Co., Advocate for Respondents. Nos. 1 & 2.

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Mr Kushal Sawant, i/b Ms Abhineeta Chaturvedi & Mr Puneet Gogad, Advocate for Respondent No.4.

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-: Order dated: 08/02/2023:-

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The Applicants in I.A. No. 574 of 2022, had filed an application for waiver of deposit under section 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) seeking the indulgence of this Tribunal to invoke the discretionary jurisdiction under the 3^rd proviso to section 18 (1) and to keep the mandatory pre-deposit at a minimum of 25% of the amount demanded in the notice issued under section 13 (2).

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After considering the rival contentions raised by the Applicants and the Respondents, this Tribunal vide order dated

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09/01/2023 found that the amount inclusive of interest due to the creditors as of the date of appeal is about ₹50 crores. The Appellants were, therefore, directed to deposit a sum of ₹20 crores as pre-deposit for entertaining the appeal.

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Aggrieved by this order, the Applicants have filed the present Review Application contending that the secured assets were sold in auction and DRT had vide the impugned order set aside the sale. Under the circumstances, the Appellants could only have been directed to deposit 25% of the amount demanded in the demand notice which is for a sum of ₹212,882,976/- alone.

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The demand notice was issued claiming the amount due from the Appellants as on 29/10/2011. The contention of the review Applicants that they have not challenged the auction sale and therefore, the pre-deposit amount has to come down is not acceptable because the very contention of the Appellants in the appeal is in challenging the Sarfaesi measures including the notice issued for auction in the property. The fact that the sale has been set aside is not of any consequence while considering the application for waiver of deposit under section 18 (1) of the SARFAESI Act.

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There is no error apparent on the face of the record which calls for interference in review. The learned counsel relied upon a decision of the Hon’ble High Court of Chhattisgarh reported in Shri Mohan Products Private Limited & Ors. vs. State Bank of India & Ors 2020 SCC OnLine Chh 2302 to argue for the possession that the mandatory pre-deposit is to be decided on the amount demanded as per the notice issued under section 13 (2) of the SARFAESI Act

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and that subsequent interest that is accrued, cannot be added to that amount mentioned in the demand notice. The Hon’ble High Court of Chhattisgarh disagreed with the findings rendered by the Bombay High Court in Eskays Construction Private Limited vs. Soma Paper & Industries Ltd. AIR 2017 Bom 10 and Mrb Roadconst Private Limited vs. Rupee Co-op. Bank Ltd. AIR 2016 (NOC 334) 159 (Bom.)

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The Hon’ble Supreme Court had in Sidha Neelkanth Paper Industries Private Limited & Ano vs. Prudent ARC Ltd. & Ors. 2023 SCC OnLine SC 12 agreed with the view taken by the Bombay High Court in the case of Eskays Construction Private Limited (supra) and had also concluded that the borrower has to deposit 50% of the amount of “debt due” as claimed by the bank/financial institution/assigning along with interest as claimed in the notice under section 13 (2) of the SARFAESI Act.

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I do not find any error apparent of the face of record so as to invoke the provisions of reviewing the earlier order passed by this Tribunal. The application for review is, therefore, dismissed.

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Sd/Chairperson

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mks-2

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Jineshkumar Shah v. Bank of India

Case brief

What is this about?

What did the court decide?

Jineshkumar Shah v. Bank of India

Case brief

What is this about?

What did the court decide?

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