Disposed

Mr Bipin Damji Shah and Others v. Smfg India Home Finance Company Limited

DRAT8 May 2024IA/315/2024

Case brief

AI extract

What is this about?

The DRAT entertained the appeal against an order declining protection against dispossession. The Division Bench directed the appellants to deposit ₹45 lakhs as predeposit, accepting ₹10 lakhs immediately. Taking over possession was deferred till the next hearing pending full payment of the balance.

What did the court decide?

Taking over possession deferred pending payment of ₹45 lakhs predeposit; balance payable in two instalments by specified dates; default leads to dismissal.

Mr Bipin Damji Shah and Others versus Smfg India Home… — 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. 315/2024 (WoD) In

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Appeal on Diary No. 994/2024

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Between

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Bipin Damji Shah & Ors. … Appellant/s V/s. ggg

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SMFG India Home Finance Company Ltd. …Respondent/s

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Mr Puneet Gogad along with Mr Sachin Kaikini, Advocate for Appellants.

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Mr R. L. Motwani, Advocate for Respondent Financial Institution.

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

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The Appellants are in appeal impugning the order dated 24.04.2024 in Interlocutory Application (I.A.) No. 840 of 2024 in Securitisation Application (S.A.) No. 140 of 2024 on the files of the Debts Recovery Tribunal-II, Mumbai(D.R.T.) declining to grant protection to the Appellants concerning the taking over of possession of the secured asset, a residential house belonging to the Appellants for recovery of a debt due to the Respondent Financial Institution ( FI) under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short). The Appellants are aggrieved and hence, in appeal.

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The Appellants have filed the S.A. challenging the validity of the

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demand notice issued under Sec. 13(2) of the SARFAESI Act, stating that the name and designation of the authorised officer do not file a place in the notice and therefore, it is not possible to conclude that the notice was issued by a person who is competent to issue that notice. It is further contended that the application filed under Sec. 14 of the SARFAESI Act before the Chief Metropolitan Magistrate has not complied with the mandatory provisions of being accompanied by a nine-pointer affidavit. Without delving into that compliance, an order had been passed under Sec. 14 on 30.09.2023. A notice was received by the Appellants threatening dispossession on 24.04.2024 and that is when the S.A. was filed. The Ld. Presiding Officer by the impugned order stated that the Appellants’ Counsel had argued regarding the insufficiency order under Sec. 14, demand notice, and also proposed that the Appellants intend to settle the entire debt by offering to sell the mortgaged flat and raise amount.

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The FI has opposed this application by stating that the Appellant's contention regarding the challenges to the Sarfaesi action would not lie. The competency of the authorised officer can be produced at any time hearing the proceedings and therefore, there is no infirmity in the notice issued under Sec. 13(2). Moreover, it is also submitted by the FI that there is a CERSAI certificate would substantiate the creation of security interest. The FI admits that there was an OTS proposal made by the Appellants for a sum of ₹80 lakhs which was not acceptable because the debt due even as per the demand notice is ₹1,16,52,948.41 and the property which is worth more than ₹2 crores. Relying on the decision of the Hon’ble High

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Court of Bombay in ASREC India Ltd. vs. Fastgrowth Hospitality & Ano. 2023 SCC OnLine Bombay 174 , the D.R.T held that Appellants will have to deposit the admitted amount to get an interlocutory order against taking over possession. It is also observed in the impugned order that there was no argument advanced for the Appellants regarding the balance of convenience that their irreparable injuries will be caused in case an injunction is not granted.

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The Ld. Counsel appearing for the Appellants strenuously argued that the subject property is a residential flat and the Appellants would be rendered homeless in case they are dispossessed from the flat. It is also submitted that the Appellants have earnestly attempted to clear the debt and a sum of ₹3,60,300/- was paid after service of notice under Sec. 13(2). It is further pointed out that in the impugned order, the Ld. Presiding Office has not delved into the contention challenging the Sarfaesi action raised. Based solely on the decision of Fastgrowth Hospitality LLP (supra), the interlocutory relief was declined. Hence, the Appellants pray that they have a strong prima facie case in this appeal. It is further submitted that the first Appellant is the only earning member who is the proprietor of the third Appellant proprietorship and his business has come to a standstill following the Covid pandemic. From the year 2020- 2021, he does not have any income. The second Appellant is his wife who is a homemaker and has no independent income of her own. Income Tax Returns filed for the Assessment Year 2020-21 indicate that there was a business loss of ₹74,794/-. Subsequent Income Tax Returns are not available for the reason that no Income Tax Returns are being filed as there is no

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income.

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The Appellants do not have a very strong prima facie case because the only contention which has been raised regarding the insufficiency of the demand notice under Sec. 13(2) and the adequacy of the order obtained under Sec. 14. However, considering the entire facts and circumstances of this case and also because the subject property is a residential flat, certain concessions are given to the Appellants. They are directed to deposit a sum of ₹45 lakhs as predeposit for the appeal to be entertained. The Ld. Counsel appearing for the Appellants submits that a demand draft of ₹10 lakhs is being submitted today which shall be accepted towards the pre-deposit amount. The balance amount of ₹35 lakhs shall be paid in two equal instalments within a gap of three weeks and two weeks respectively as stated hereinunder.

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Number of Instalments	Payment on or before
1^stInstalment of₹17.50 lakhs	29.05.2024
2^ndInstalment of₹17.50 lakhs	12.06.2024

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Given the payment of ₹10 lakhs today, the taking over of possession 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,

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

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Post on 30.05.2024 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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mks-05

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Mr Bipin Damji Shah and Others v. Smfg India Home Finance Company Limited

Case brief

What is this about?

What did the court decide?

Mr Bipin Damji Shah and Others v. Smfg India Home Finance Company Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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