Disposed

Mr Joseph Alfonso Fernandes and Anr. v. Nkgsb Cooperative Bank Limited

DRAT19 Apr 2024IA/249/2024

Case brief

AI extract

What is this about?

The Tribunal addressed an appeal challenging an order directing a pre-deposit for possession protection. It held that the appellants lacked bonafides due to non-payment and rejected the request for a 25% waiver, directing a specific ₹2 crore deposit schedule.

What did the court decide?

Directed appellants to deposit ₹2 crore as pre-deposit in installments to defer possession; rejected application for 25% waiver.

Mr Joseph Alfonso Fernandes and Anr. versus Nkgsb Cooperative… — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 249/2024 (WoD)

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Appeal on Diary No. 130/2024

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Between

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Joseph Alfonso Fernandes & Anr.

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V/s.

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NKGSB Co-operative Bank Ltd. & Anr.

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An Advocate for the Appellants is present.

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Ms. Dimpli Tejani, i/b M/s. M & S Ventures, Advocate for Respondents.

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-: Order dated: 19/04/2024:-

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The Appellants are in appeal impugning the order dated 27.12.2023 of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) in Interim Application (I.A.) No. 3397/2023 in Securitization Application (S.A.) No. 232/2023 declining to grant any protection to the Appellants in case of failure to deposit total a sum of ₹2.5 crore in three tranches. The Appellants did not pay any amount as directed by the D.R.T. and have now come up with an appeal challenging the order directing the deposit of the amount for protection from dispossession of the property.

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The Appellants are running a business for which they borrowed the money from the Respondent bank. Repayment was defaulted and as a result which demand notice was issued u/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for

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short) demanding a sum of ₹5,06,87,161.90 as of 31.12.2022. The Appellants filed S.A. challenging the Sarfaesi action raising several contentions, the main among which was that the demand notice does not show the bifurcation of the amount that has been claimed. Resulting in the violation of section 13 (3) of the SARFAESI Act. The Appellants have also contended that they were running a hotel business and because of the COVID-19 pandemic, they sustained heavy losses. The Respondent bank did not comply with the guidelines of the RBI and provided any succour to the Appellants to revive their business. Coercive action was taken under the provision of the SARFAESI Act to harass the Appellants.

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In the interlocutory application filed by the Appellants before the D.R.T. the Ld. Presiding Officer has not considered the merits of the contentions raised in the S.A. Since the Appellants were impending dispossession of the secured asset in consequence of the order passed by the District Magistrate, Ponda, Goa, u/s 14 of the SARFAESI Act, the Appellants wanted to be protected and hence, filed the interlocutory application. The Ld. Presiding Officer observed that, as the Appellants were ready and willing to deposit some amount to protect their property and therefore, directed the Appellants to deposit a sum of ₹25 lakhs on or before 29.12.2023 and further amount a sum of ₹25 lakhs was directed to deposit within 15 days therefrom and a sum of ₹2 crore was to be paid by 09.02.2024. The Appellants did not pay any amount. In case of the default of payment, as stated above, the Respondent bank was granted the liberty to take possession of the properties. The

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Appellants are facing dispossession on the 22^nd instant and are approaching this Tribunal with an appeal.

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To entertain the appeal the Appellants will first have to comply with the mandatory provision of section 18 (1) of the SARFAESI Act. The Appellants contended that they are under financial strain. Income Tax Returns have been produced to indicate that their income has drastically fallen consequence of the COVID-19 pandemic. Post the pandemic, the situation is improving gradually, but an opportunity has to be granted to them to revive their business and therefore, the Ld. Counsel appearing for the Appellants submits that the indulgence may be shown by exercising the jurisdiction of this Tribunal under the 3^rd provision to section 18 (1) by waiving 25% of the pre-deposit amount.

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The Ld. Counsel appearing for the Respondent bank has vehemently opposed this application stating that the Appellants have no bonafides in their submissions. They have not paid a dime toward the amount that was due from them despite offering to clear the entire debt. This indicates that the intention of the Appellants is only to protract the proceedings by deploying dilatory tactics. As of today a sum of ₹6,12,98,892/- is allegedly due and payable by the Appellants.

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The Ld. Counsel appearing for the Appellants would content that from the account statement produced it is adequately clear that the penal interest has been capitalized by adding it to the dues every month and claiming interest there upon which is prohibited by precedents set by the Hon’ble Apex Court.

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The correctness of the amount is not of much concern while considering the application under the SARFAESI Act. There is a huge debt due and payable by the Appellants. The property has yet to be put up for sale. Under the circumstances, the amount demanded in the notice u/s 13 (2) of the SARFAESI Act is to be considered as a threshold for payment of the pre-deposit. The fact that the Appellants did not make any earnest attempt to pay toward the debt indicates that their intentions were not bonafide and therefore, they are not entitled to the concession of getting the 25% of the pre-deposit amount waived. The Appellants are, therefore, directed to deposit a sum of ₹2 crore as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the Appellants submits that the demand draft for a sum of ₹50 lakhs is being produced today. The balance a sum of ₹1.50 crore shall be paid in two instalments as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹50 lakhs	03.05.2024
2^ndInstalment of₹1 crore	24.05.2024

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Given the payment of a sum of ₹50 lakhs today, the possession scheduled to take place on 22.04.2024 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 06.05.2024 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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psa-08

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Mr Joseph Alfonso Fernandes and Anr. v. Nkgsb Cooperative Bank Limited

Case brief

What is this about?

What did the court decide?

Mr Joseph Alfonso Fernandes and Anr. v. Nkgsb Cooperative Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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