Disposed

M/s. Almas Traders v. Nagpur Nagarik Sahakari Bank Limited

DRAT10 Jun 2024IA/302/2024

Case brief

AI extract

What is this about?

The Appellate Tribunal directed the appellants to deposit ₹ 20 lakhs as pre-deposit before the appeal could be entertained, rejecting their claim for a 25% waiver due to lack of evidence proving financial strain.

What did the court decide?

Appellants directed to deposit ₹ 20 lakhs as pre-deposit; appeal entertained only upon compliance.

M/s. Almas Traders versus Nagpur Nagarik Sahakari Bank Limited — 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. 302/2024(WoD)

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Appeal on Diary No. 820/2024 Between

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M/s Almas Traders & Ors. … Appellant/s

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V/s.

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Nagpur Nagarik Sahakari Bank Ltd. …Respondent/s Mr. Radhe Agarwal, i/b Ms. Bharti Suvarna, Advocate for Appellants appeared through Video Conferencing.

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Mr. Sanjay Anabhawane, i/b M/s. M & S Legal Ventures, Advocate for Respondent.

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-: Order dated: 10/06/2024:-

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The appellants are in appeal impugning the order dated 28.03.2024 in I.A. No. 706/2023 in S.A. No. 32/2016 on the files of the Debts Recovery Tribunal, Nagpur (D.R.T) declining to grant any interlocutory reliefs to the appellants concerning the action taken by the respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ the SARFAESI Act” for short) for recovery of the debt allegedly due from the appellants.

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The appellants had raised several contentions about the maintainability of the Sarfaesi action. It was alleged that the Sarfaesi action would not lie since, the amount which is sought to be recovered is barred by limitation and therefore, u/s. 36 of the SARFAESI Act no proceedings u/s. 13(4) could have been initiated by the respondent bank.

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The respondent per-contra would contend that the respondent, which is the cooperative bank, had initiated action for recovery

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under the provisions of the RDDB & FI Act as early as in 2004 by filing O.A. No. 112/2004 before the Debts Recovery Tribunal, Nagpur (D.R.T) but the same was returned for want of jurisdiction as per the then prevailing legal position in that co-operative society could not initiate action under the provisions of the RDDB&FI Act.

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On return of the O.A., the respondent filed an arbitration petition before the statutory forum under the Cooperative Societies Act and in 2009 an award was passed on 26.09.2012 for a sum of ₹ 21,88,539/-. The appellants had classified the debt as NPA as early as 14.01.2000. After the arbitration order was passed the respondent issued a demand notice u/s. 13(2) on 19.11.2014 demanding a sum of ₹61,26,085/- from the appellants. Thereafter, symbolic possession was taken on 29.12.2015 after which the appellants filed the present S.A. An order u/s. 14 of the SARFAESI Act has also been obtained from the District Magistrate on 10.03.2023. The question that arises mainly for consideration is whether the SARFAESI Act is barred by limitation.

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The Ld. Counsel appearing for the appellants has relied on the decision of the Hon’ble High Court of Calcutta in Writ Petition No. 16511(W) of 2016, wherein it was held that the filing of a petition under the RDB Act did not save limitation for the bank to take action under the SARFAESI Act and that the limitation under the SARFAESI Act would begin to run from the date on which the debt account was classified as NPA. Per-contra the Ld. Counsel appearing for the respondent relies on the decision of the Hon’ble Madras High Court reported in AIR 2010 Madras 68 M/s. Consolidated Construction Consortium Ltd. V/s. M/s. Indian Bank wherein it was

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observed that debt defined u/s. 2(g) of the RDB Act would also include an arbitration award and decree passed by the Civil Court therefore, the limitation would not run against the respondent bank.

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The fact whether the action is barred by limitation or not is something to be decided by the D.R.T on merits and therefore, I am not entering into the finding regarding the same. The appellants will first have to comply with mandatory provision u/s. 18(1) of getting this appeal entertained. Since the proceedings are still pending u/s. 13(4) the threshold amount for calculating the pre-deposit would be the amount mentioned in the demand notice u/s. 13(2) which is ₹ 61,26,085/-.

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The Ld. Counsel appearing for the appellants would argue that the appellants are under financial strain. The business of the appellants is not running, and that the 1^st appellant firm has been dissolved. It is further submitted that appellant Nos. 1 (a) & (b) lost their 38 years old son to kidney element for which they had to spend more than ₹ 40 lakhs and still could not save his life and therefore, the indulgence of this Tribunal may be shown for reduce the amount to the minimum of 25% of the debt due.

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The appellants have not produced any documents to prove their income. The balance sheet of the account of the firm has not been produced, and the individual income of the appellants has also not been substantiated by income tax returns.

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The fact that the appellants had spent ₹ 40 lakhs for the treatment of the son of the appellant Nos. 1 (a) and (b) will not indicate that they are under financial strain and would only

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substantiate the fact that the appellants could spend ₹ 40 lakhs for the treatment. How they got the amount is not specified there is no evidence of that on record.

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Under the circumstances, the appellants are not entitled to get 25% of the amount waived by applying the third proviso of Sec. 18 (1) of the SARFAESI Act. Taking the entire facts and circumstances under consideration, I direct the appellants to deposit a sum of ₹ 20 lakhs as pre-deposit.

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The Ld. Counsel appearing for the appellants undertakes to pay a sum of ₹ 5 lakhs on or before 12.06.2024 by 5.00 p.m. by way of RTGS in the name of the Registrar of this Tribunal. The balance amount of ₹ 15 lakhs shall be paid in two equal instalments within a gap of three weeks each, as stated hereunder.

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Numbers of Instalments Payment on or before
1^stInstalment₹7.5 lakhs 01.07.2024
2^ndInstalment₹7.5 lakhs 22.07.2024

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On deposit of the 1^st instalment within time as undertaken the taking over a possession of the property shall stand deferred till the next date of hearing. Failure to pay the amount/instalment shall entail dismissal of the appeal.

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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 nationalised bank, initially for 13 months, and thereafter to be renewed periodically.

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