Disposed

Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

DRAT10 Apr 2024IA/237/2024

Case brief

AI extract

What is this about?

The Tribunal, while dismissing the Stay Application, constituted the Appellant for the appeal but granted a waiver on the mandatory 25% pre-deposit, permitting installment payments and deferring possession takeover pending compliance.

What did the court decide?

Appeal allowed for filing reply; Stay Application dismissed; Pre-deposit of Rs. 75 lakhs allowed in installments; Possession takeover deferred.

Gulam Nabi Khanyari versus Jammu and Kashmir Bank Limited — Company and Corporate | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 237/2024 (WoD) In

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Appeal on Diary No. 690/2024

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Between

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Gulam Nabi Khanyari … Appellant/s

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V/s.

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The Jammu and Kashmir Bank Ltd.

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Mr. Sidharth Samantaray, i/b M/s. T.N. Tripathi & Co., Advocate for Appellant.

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Mr. J.B. Navlani, Advocate for Respondent.

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The Appellant is in appear impugning the order dated 21.03.2024 dismissing the Securitization Application (S.A.) No. 42/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) The Appellant has filed this application u/s 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) stating that the appeal may be entertained after a waiver of 25% of the pre-deposit amount payable. The Appellant claims to have a strong prima facie case and states that he is under financial strain.

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The Appellant had filed the S.A. raising several challenges to the Sarfaesi action initiated by the Respondent bank under the provision of the SARFAESI Act. It is contended that the demand notice u/s 13 (2) is bad for the reason that the name and description of the

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Authorized Officer are not expressly stated in the notice to affirm that he is authorized to send such notice. It is also contended that the breakup of the principle and the interest of the amount demanded is not given in compliance with sub-section 3 to section 13 of the SARFAESI Act. The other contention raised by the Appellant is that the mortgage that was allegedly created by depositing the title deed is supported by an agreement. Since it is the form of an agreement, it requires mandatory registration, and for want of registration, it cannot be accepted. Thirdly, it is contended that the order passed by the District Magistrate needs to be set aside because it was passed without verifying the facts and recording the satisfaction of the allegation made by the bank. The nine-pointer affidavit is defective for many of the points which are required stated therein in the affidavit have not been stated. It is also submitted that the impugned order of the District Magistrate considered only the two points concerning issuing the notice u/s 13 (2) and that the property is lying within the territorial jurisdiction of the Magistrate.

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It appears that the Ld. Magistrate has not considered, verified and recorded satisfaction regarding the averments made in the ninepointer affidavit. The proviso regarding the filing of the nine-pointer affidavit together with the application u/s 14 was incorporated by a subsequent amendment to the SARFAESI Act, and the District Magistrate having passed the impugned order on 14.10.2022 was under obligation to examine and record the satisfaction on the affidavit filed by the Authorized Officer.

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The demand notice issued u/s 13 (2) of the SARFAESI Act on 01.06.2021 demands a sum of ₹2,90,34,392/-. On receipt of the notice, the Appellant has admittedly paid a sum of ₹20 lakhs directly to the bank but such payment has not been mentioned in the ninepointer affidavit. After filing the S.A. as per order of the D.R.T. the Appellant initially paid a sum of ₹50 lakhs and was given an interim protection for some time. After the expiration of that period, the Appellant applied for an extension of interim order but the Ld. Presiding Officer intended to dispose of S.A. itself and directed the Appellant to deposit a further sum of ₹50 lakhs more, which was also complied with, and ultimately on 21.03.2024 the S.A. was dismissed.

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Aggrieved by dismissal of the S.A. the Appellant is in appeal. It is contended that the Appellant has a good prima facie case based on the submission made above. The income tax returns have been submitted which indicate that he is in financial hardship. Therefore, it is prayed that the 3^rd proviso to section 18 (1) may be invoked and indulgence be shown to keep the mandatory pre-deposit at the minimum of 25% of the debt due. The Ld. Counsel appearing for the Appellant also submits that given the payment of a sum of ₹1.20 crore by the Applicant subsequently toward the amount demanded, it may be deducted while fixing the threshold amount for payment of the predeposit.

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Per contra, the Ld. Counsel appearing for the Respondent submits that there is no infirmity in the application filed u/s 14 since it is supported by the affidavit filed by the Authorized Officer. It is admitted that there are certain typographic errors in the affidavit and

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it is also admitted that the affidavit does not mention the amount due as on the date of applying but it is submitted that the affidavit cannot be read in isolation and has to be read along with the application filed which contains all requirements. Hence, it need not be reiterated in the affidavit. It is also specifically stated in para 2 of the affidavit that the affidavit has to be read along with the application. It is submitted that the Appellant was enjoying an Internet banking facility which would have given all the details of the amount that was due from him as principal and interest. It is also submitted that the Appellant did not raise any objection to the correctness of the amount after the receipt of the demand notice u/s 13 (2) and therefore, it has to be held that the objection now raised for non-compliance of 13 (3) has been waived.

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After having heard the rival submission made by the Ld. Counsel appearing for the parties, I find some relevant points are raised in the argument by the Ld. Counsel for the Appellant in support of the challenge to the Sarfaesi action. The affidavit filed before the District Magistrate is insufficient and the argument of the Ld. Counsel for the respondent that one paragraph of the affidavit states that it has to be read along with the application is not acceptable since the proviso specifically states what is to be mentioned in the affidavit. It is also pertinent to note that the payment of a certain amount by the Appellant cannot be readily taken as the waiver of objection now raised in the S.A. However, since the S.A. has been disposed of, it will have to be considered in the appeal whether the challenges raised to the Sarfaesi action would be sustainable and therefore, on prima facie

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findings, I think that the Appellant is entitled to get certain concession about the payment of the pre-deposit though not be extend of reducing it to a minimum of 25%. The Ld. Counsel appearing for the Respondent submitted that after accounting for the payment made by the Appellant consequent to the receipt of the demand notice and adding up the accrued interest as of the date the outstanding amount would be approximately a sum of ₹2.85 crores. Even if that is taken as the threshold amount, the Appellant will have to deposit a sum of ₹75 lakhs as a pre-deposit for entertaining the appeal. The Ld. Counsel appearing for the Appellant submits that the demand draft of a sum of ₹15 lakhs is being deposited today. The balance amount a sum of ₹60 lakhs shall be paid into two equal instalments a sum of ₹30 lakhs each within the gap of two weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹30 lakhs	24.04.2024
2^ndInstalment of₹30 lakh	08.05.2024

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Given the payment of a sum of ₹15 lakhs toward the predeposit, the taking over possession scheduled on 12.04.2024 shall stand deferred till the next date of hearing

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Default in payment of any of the instalments/amount on time shall entail the dismissal of the appeal without any further reference to this Tribunal.

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The amount shall be deposited in the form of a Demand Draft/RTGS 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 be renewed periodically.

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

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Post on 25.04.2024 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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psa-02

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Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

Case brief

What is this about?

What did the court decide?

Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

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