Disposed

Adit Shriniwas Yargop v. Encore Asset Reconstruction Company Private Limited and Ors.

DRAT8 May 2024IA/310/2024

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal examined an appeal challenging a direction for a pre-deposit in SARFAESI proceedings. Finding no prima facie case and the appellant's impecuniosity insufficient for waiver, the Tribunal directed payment but allowed the sale to proceed subject to appeal.

What did the court decide?

The appellant was directed to deposit ₹11 lakhs as pre-deposit; the auction sale is to proceed subject to the appeal decision.

Adit Shriniwas Yargop versus Encore Asset Reconstruction… — Execution and Attachment | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr Justice Ashok Menon, Chairperson

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I.A. No. 310/2024(WoD) In Appeal on Diary No. 960/2024

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Between

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Adit Shriniwas Yargop … Appellant/s

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V/s.

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Encore Asset Reconstruction Company Pvt. Ltd. & Ors. …Respondent/s

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Mr Ronak Shah along with Mr Jay Mehta, Advocate for Appellant. Mr Archit Virmani along with Mr Atul Gupta, Advocate for Respondent ARC.

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-: Order dated: 08/05/2024:-

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The matter is taken up for hearing by way of a praecipe filed by the Appellant for seeking urgent relief.

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The Appellant is in appeal impugning the order dated 05.04.2024 in Interlocutory Application (I.A.) No. 458 of 2024 in Securitisation Application (S.A.) No. 530 of 2023 on the files of the Debts Recovery Tribunal, Pune wherein the Ld. Presiding Officer declined to grant any stay to the auction sale that was scheduled to take place. The Appellant is aggrieved and hence, in appeal.

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The Appellant has raised contentions challenging the demand notice under Sec.13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) and also the action taken under Sec. 14

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of the SARFAESI Act by the Respondent ARC for recovery of the debt due.

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It is pertinent to note that the Appellant had earlier filed the S.A. with a delay challenging the Sarfaesi action and had filed M.A. No.60 of 2019 seeking condonation of a delay of 210 days. While the application for condonation of delay was under consideration, the Appellant entered into a settlement with the secured creditor and agreed to pay the amount which was agreed within a stipulated time and M.A. No. 60 of 2019 was disposed of together with S.A. which was filed. Subsequently, the Appellant failed to comply with the settlement terms as the result of which the Respondent ARC proceeded with the Sarfaesi action and the Appellant has filed a fresh S.A. No. 530 of 2023 before the D.R.T. seeking reliefs challenging the demand notice under Sec. 13(2) and also challenging the action taken under Sec. 14.

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Apparently, the Appellant cannot raise those challenges regarding the demand notice and the action under Sec. 14 for the simple reason that those challenges were raised in the earlier S.A. which has been disposed of following the compromise that was arrived at between the parties. Where there is a settlement arrived at between the parties, and the S.A. has been withdrawn or disposed of, the Appellant cannot raise those challenges all over again and it is deemed to have been waived. Only the fresh subsequent action taken by the creditor to sell the property and the issuance of the sale notice can be challenged. The Appellant has raised certain contentions in this application filed as I.A. No. 458 of 2024 challenging the validity of the

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sale notice. It is pertinent to note that there is no prayer in the S.A. regarding the sale because no action of sale was taken at that time. The Appellant is aggrieved that the Ld. Presiding Officer declined to grant any stay of the sale given the antecedent of the Appellant in not complying with the settlement terms. However, subject to the payment of ₹5 lakhs, the Appellant was granted limited protection till the filing of this appeal. In this appeal also, the Appellant cannot challenge the earlier Sarfaesi action except the action it is taken subsequently for the sale of the property.

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The Ld. Counsel appearing for the Respondent ARC submits that the sale has already concluded, the auction purchaser has deposited the initial deposit of 25% of the sale consideration, and the balance payment is awaited. 6. To entertain the appeal, the Appellant will first have to comply with the mandatory provisions by making a pre-deposit. As of today the amount allegedly due from the Appellant is set to be ₹22,24,702/approximately. The amount which the Appellant has paid to the Respondent has been accounted for.

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Going by the rival submissions made and records available, I find that there is no prima facie case in favour of the Appellant. The Appellant has pleaded impecuniosity by relying on the Income Tax Returns which have been filed together with the application for waiver of pre-deposit. The fact that the Appellant has no sufficient means to pay the amount alone may not be sufficient in the absence of the prima facie case Therefore, I believe that the Appellant could not be granted a waiver of 25% of the pre-deposit amount under Sec. 18(1) exercising

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jurisdiction of the Tribunal under the third proviso to Sec. 18(1) of the SARFAESI Act. The Appellant is directed to deposit a sum of ₹11 lakhs as pre-deposit. The Ld. Counsel appearing for the Appellant submits that ₹5.00 lakhs is being transmitted by way of RTGS today and the balance amount shall be paid within a week i.e. on or before 15.05.2024.

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The sale shall be subject to the ultimate decision of the appeal.

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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 are at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 16.05.2024 for reporting compliance regarding payment.

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Sd/Chairperson

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mks-03

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Adit Shriniwas Yargop v. Encore Asset Reconstruction Company Private Limited and Ors.

Case brief

What is this about?

What did the court decide?

Adit Shriniwas Yargop v. Encore Asset Reconstruction Company Private Limited and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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