M/ S Uninor Infrabuild Pvt. Ltd. versus Union Bank of India

Appeal Dy. No. 1150/2022 Date: 10.01.2023

M/s Uninor Infrabuild Pvt. Ltd. Vs. Union Bank of India

Present: Shri A. K. Pal, Advocate holding brief of Shri Harsh Chopra, counsel for the appellant,

The report of the Registrar dated 21.12.2022 shows that no pre-deposit has been made and as per waiver application being I.A. No. 711/2022, the Bank has auctioned one of the secured assets for Rs. 10,53,00,000/- on 29.04.2022 against the outstanding amount of Rs. 40,43,46,950.01, which is approximately 25% of the debt mentioned in the demand notice. The said report further shows that the I.A. No. 712/2022 has been filed for restraining the respondent-Bank from taking any coercive measures against the immovable property. The urgency application being I.A. No. 710/2022 has been filed on the ground that the Bank is rushing to take physical possession of the secured asset.

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As the matter has been taken up today, therefore, the urgency application being IA No. 710/2022 is disposed off as such.

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Heard the learned counsel for the appellant.

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The present appeal has been filed under section 18 of the SARFAESI Act against the final order dated 16.11.2022 passed by the DRT, Lucknow in S.A. No. 737/2022. As per second proviso of section 18 of the said Act, no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him, as claimed by the secured creditor or determined by the Debt Recovery Tribunal, whichever is less. Further, the third proviso of the said section says that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the

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amount to not less than 25% of the debt referred to in the second proviso.

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In the waiver application being I.A. No. 711/2022, it is stated that the Bank has auctioned one of the secured assets for Rs. 10,53,00,000/- on 29.04.2022 against the outstanding amount of Rs. 40,43,46,950.01, which is approximately 25% of the debt mentioned in the demand notice.

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It has been brought to the notice of this court that the Hon’ble Apex Court in Civil Appeal No. 8969 of 2022- M/s Sidha Neelkanth Paper Industries Private Limited & Another Vs. Prudent ARC Limited & Others has passed the judgment and order dated 05.01.2023, wherein the judgment passed by the Hon’ble Bombay High Court relying upon the judgment passed in Narayan Chandra Ghosh Vs. UCO Bank, (2011) 4 SCC 548 has been considered. In the said judgment, the Hon’ble Bombay High Court has considered in detail section 18 and held that provisions of section 18, more particularly the second and the third proviso thereto are mandatory in nature and that the DRAT has no power to grant full waiver of deposit. Further, the submission on behalf of the borrower that as the bank had already sold the secured assets for a consideration that fully secured their claim and therefore, there was no requirement for the borrower to deposit any amount as contemplated under Section 18 of the SARFAESI Act was not accepted by the Hon’ble High Court on the ground that the money realized by the Bank from the sale of the secured asset could not be used by the borrower to fulfill the condition of pre-deposit under Section 18 of the SARFAESI Act. The Hon’ble Bombay High Court has further held that it would be a different situation, if the sale is accepted and confirmed by the borrower, but the situation would be entirely different when the sale itself is under challenge by the

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borrower. The said judgment was also confirmed by the Hon’ble Apex Court, as the special leave petition preferred impugning the same was dismissed. Therefore, following the decision of the Hon’ble Bombay High Court, the Hon’ble Apex Court has held that it will not be open for the borrower to pray to use the sale proceeds received from the sale of the secured properties to be adjusted/given credit in an application for waiver of pre-deposit.

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In the present case, the appellant has not deposited any amount towards minimum deposit of 25% of the amount due, which is mandatory in nature in view of the third proviso of section 18 of the SARFAESI Act, as the amount realized by the Bank from auction sale of the property of the appellant cannot be taken into consideration towards pre-deposit in view of the judgment passed by the Hon’ble Apex Court in the case referred above.

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In view of the aforesaid, the appellant is directed to deposit minimum 25% of the amount due, which is mandatory in nature by the next date fixed. If the appellant does not deposit the said amount prior to the next date fixed, the appeal shall stand dismissed as not maintainable for want of mandatory pre-deposit without further reference to this court. If the said amount is deposited by the appellant within the stipulated period, list this case on 16.02.2023 for hearing on waiver of the rest 25% of the amount due.

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Justice R. D. Khare Chairperson

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VN Giri

M/ S Uninor Infrabuild Pvt. Ltd. v. Union Bank of India

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M/ S Uninor Infrabuild Pvt. Ltd. v. Union Bank of India

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