Allowed

Mr Anand Gopalrao Jawalkar Proprietor of Ms Geetai Foods and Another v. Shriram City Union Finance Limited

DRAT16 May 2024IA/351/2024

Case brief

AI extract

What is this about?

The DRAT allowed the interim application under a condition requiring the appellants to file a pre-deposit of ₹20 lakhs within two weeks to stall the SARFAESI action and proceed with the appeal, applying Sidha Neelkanth guidelines.

What did the court decide?

The appeal is pending upon deposit of ₹20 lakhs as pre-deposit within two weeks; upon deposit, SARFAESI action shall be stalled.

Mr Anand Gopalrao Jawalkar Proprietor of Ms Geetai Foods and… — 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. 351/2024 (WoD)

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In Appeal on Diary No. 924/2024

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Between

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Anand Gopalrao Jawalkar, Proprietor of M/s. Geetai Foods & Anr. V/s.

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Shriram City Union Finance Ltd. & Anr. An Advocate for the Appellants is present.

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-: Order dated: 16/05/2024:-

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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 21.03.2024 in the Interim Application (I.A.) No. 740/2024 in Securitization Application (S.A.) No. 192/2024 on the files of the Debts Recovery Tribunal, Pune (D.R.T.) declining to grant any protection to the Appellants about the Sarfaesi measures taken by the Respondent Financial Institution for recovery of the amount allegedly due from the Appellants under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short).

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The Appellants have raised several grounds for challenging the Sarfaesi action. The loan was classified as Non-Performing Assets (NPA) while there were regular payments. Hence, the classification was not in according with the RBI guidelines. It is further stated that

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the demand notice u/s 13 (2) of the SARFAESI Act is defective for the reason that no bifurcation of the principal and the interest due is shown in the demand notice. It is further contended that the appellants had sent their objections to the 13 (2) notice as required u/s 13 (3) but no reply whatsoever has been given by the Respondent Financial Institution within the stipulated time as required under 13 (3A) of the SARFAESI Act. It is also contended that the proceedings u/s 14 are not proper and hence, the appellants seek to quash the entire Sarfaesi proceedings.

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The appellants filed the interlocutory application for stalling the Sarfaesi action because they have a prima facie case and irreparable injury would be done in case they are dispossessed from the secured asset.

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The Respondents appeared and vehemently opposed the application stating that none of the contentions would be sustainable. It was contended that the NPA was classified by the RBI guidelines and rules. It is further contended that the demand notice is proper and no objection whatsoever has been received by the respondents which is required to be replied u/s 13 (A). It is also contended that the order passed u/s 14 is not defective and hence, appellants may not be granted any protection.

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After hearing both sides, the D.R.T. vide the impugned order observed that the appellants are not entitled to any protection without payment of some amount and accordingly directed them to deposit the 10% of the amount that was demanded in the notice and also directed to regularize the account by approaching the financial institution to clear the outstanding debt. The appellants are aggrieved

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and hence, in appeal. After the disposal of the I.A., on deposit of a sum of ₹3 lakhs, the appellants were granted a stay till the filing of the appeal and therefore, the appellants are in meanwhile protected from being dispossessed of the property.

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Though the respondents were served, none appeared.

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To entertain the appeal the appellants will first have to comply with the mandatory provision of making a pre-deposit u/s 18 (1) of the SARFAESI Act. The appellants have challenged the Sarfaesi action u/s 13 (2) and 13 (4) and hence, as per the decision of the Hon’ble Supreme Court in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12 , they are liable to deposit 50% of the amount which is demanded in the demand notice u/s 13 (2). The demand notice demands a sum of ₹50,41,303/- and the Appellants have raised certain contentions in the challenge to the Sarfaesi action which would indicate that the appellants have an arguable case. There is no evidence regarding the financial strain of the appellants apart from the contention that they were paying the amount regularly till the COVID-19 pandemic. The appellants are, therefore, entitled to some concession though not to the extent of getting a waiver of 25% of mandatory pre-deposit. To entertain this appeal the Appellants are directed to deposit a sum of ₹20 lakhs as pre-deposit. The said amount shall be deposited within two weeks, i.e. on or before 30.05.2024.

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On deposit of the said amount the Appellants shall be entitled to protection of getting Sarfaesi action stalled 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 are at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 31.05.2024 for reporting compliance regarding the payment.

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psa-02 (SB)

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Mr Anand Gopalrao Jawalkar Proprietor of Ms Geetai Foods and Another v. Shriram City Union Finance Limited

Case brief

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Mr Anand Gopalrao Jawalkar Proprietor of Ms Geetai Foods and Another v. Shriram City Union Finance Limited

Case brief

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