Partly allowed

Dineshchandra S Maheshwari v. Bank of Baroda

DRAT17 May 2024IA/358/2024

Case brief

AI extract

What is this about?

The DRAT set aside the lower court order refusing to entertain an application for protection against dispossession of property. The Tribunal directed the appellants to deposit ₹1.3 crores (with specific installment dates) as a pre-deposit under S. 18(1) of the SARFAESI Act to proceed with the appeal.

What did the court decide?

Appeal against DRT order allowed in principle; appellants directed to deposit ₹1.3 crores as pre-deposit within stipulated time; possession taking deferred pending payment.

Dineshchandra S Maheshwari versus Bank of Baroda — Landlord and Tenant | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 358/2024 (WoD)

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Appeal on Diary No.1081/2024

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Between

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Dineshchandra Maheshwari & Ors. …Appellant/s

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V/s.

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The Authorised Officer, Bank of Baroda …Respondent/s

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Ms. Sunil Humbre, along with Ms. Mumtaz Khan, i/b Mr. Ritesh Patadia, Advocate for Appellants.

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An Advocate for the respondent is present.

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-: Order dated: 17/05/2024:-

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

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The appellants are in appeal impugning order dated 14.05.2024 in S.A. No. 265/2024 on the files of Debts Recovery Tribunal –II, Ahmedabad (D.R.T) declining to grant any protection to the appellants from being dispossessed of their property by the respondent.

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Consequent to the action taken for recovery of debt due from the appellants under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ the SARFAESI Act” for short).

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The appellants are admittedly debtors who had defaulted in payment resulting in the classification of debt as a Non-Performing Asset (NPA) and a demand notice u/s. 13(2) of the SARFAESI Act was issued on 16.05.2023 by the respondent demanding a sum of ₹5,01,45,285/- thereafter symbolic possession of the property was

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taken on 09.08.2023 and the respondent obtained an order u/s. 14 of the SARFAESI Act for taking physical possession. A notice was served by the Court Commissioner on 20.04.2024 intended to take possession of the property on 19.05.2024.

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The Appellants approach the D.R.T on 09.05.2024 for a protection order. The Ld. Presiding Officer without going into the merits of the contentions raised in the application observed that the appellants had approached the D.R.T in the last movement despite being served notice regarding dispossession on 20.04.2024 and since they had the right of being restored with the possession u/s. 17 (3) of the SARFAESI Act. The application was refused to be heard on merits and listed on 27.05.2024. The appellants are aggrieved and hence, in appeal.

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The appellants have produced documents to indicate that consequent to receipt of the notice of Sec. 13(2), they have paid a sum of ₹ 2.5 crores towards the demanded amount on 19.01.2024 and 02.03.2024 and 22.03.2024. The Ld. Counsel appearing for the respondent bank submits that notice was served only today and that instructions have been orally received to the effect that after adjusting the aforesaid amount the balance due as of date would be ₹ 3.21 crores approximately.

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The appellants have challenged the SARFAESI Act on several grounds. It is contended that the demand notice issued u/s. 13(2) does not give a bifurcation of the principal and interest demanded. It is also stated that the demand notice is not signed by the authorized officer. It is further contended that the order passed by the Magistrate u/s. 14 is defective for the reason that satisfaction of the

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nine-pointer affidavit had not been recorded in the order.

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The Ld. Presiding Officer has not gone into those aspects which have been raised by the applicants in the S.A. The only reason for which no protection order was granted was that the appellants had come on the eleven hours seeking a protection order.

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I think that the Ld. Presiding Officer was not justified in not granting any protection order without going into the prima facie case put forth by the appellants on merits. It is true that the order u/s. 17(3) that be passed but only on the ultimate disposal of the S.A. The appellants have a right to protect their property in case they can establish a prima facie case. 9. To entertain this appeal the appellants will first have to comply with the mandatory provisions of making a pre-deposit u/s. 18 (1) of the SARFAESI Act. The amount demanded as per the demand notice is ₹5,01,45,285/-. It is pertinent to note that the Appellants have paid almost half of the amount after receipt of the notice. Subsequent interest would also accrue an ambiguous outstanding amount as on date is ₹3.21 cores. The appellants have pleaded that they are under financial strain and the income tax returns have also been cited to support their contentions.

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Taking into consideration the entire facts and circumstances of this case on hearing the rival arguments. I think that though the appellants are not entitled to get the amount reduced to the bare minimum of 25% they are entitled to some concession and therefore, the appellants are directed to deposit a sum of ₹1.3 crores as predeposit for entertaining this appeal.

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The Ld. Counsel appearing for the appellants submits that the ₹10 lakhs would be transmitted in the name of the Registrar of this Tribunal by way of RTGS today before 5.00 p.m. The balance amount of ₹1.2 crores shall be paid in two equal instalments of ₹60 lakhs each. The 1^st instalment shall be payable within two weeks and the 2^nd instalment shall be payable within three weeks, as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹60,00,000/-	31.05.2024
2^ndInstalment₹60,00,000/-	21.06.2024

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Failure to pay the amount/instalment within the time stipulated alone shall entail dismissal of the appeal. Subject to the payment of ₹10 lakhs today by 5.00 p.m. the taking over possession of the subject property scheduled on the 19^th instant shall stand deferred till the next date of hearing. In default, the Appeal shall stand dismissed, 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 Respondent is at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 03.06.2024 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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rm-27

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Dineshchandra S Maheshwari v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

Dineshchandra S Maheshwari v. Bank of Baroda

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

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