Disposed

Shree Bhadrakali Agro Industries Proprotor Punjsinh v. Chauhan v Bank of Baroda (Dena Bank)

DRAT24 Jun 2024IA/391/2024

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal considered the appellant's application for a waiver of the mandatory 25% pre-deposit under the SARFAESI Act against a special appeal challenging auction measures. While rejecting the request for a full waiver, the Tribunal directed a partial deposit of ₹35 lakhs as a concession.

What did the court decide?

Direction to deposit ₹35 lakhs as pre-deposit for the appeal to be entertained instead of the full 50% demand.

Shree Bhadrakali Agro Industries Proprotor Punjsinh v Chauhan… — 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.391/2024 (WoD)

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In Appeal on Diary No.1193/2024

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Between

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Shree Bhadrakali Agro Industries Proprietor Punjsinh Venusinh Chauhan

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… Appellant/s

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V/s.

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Bank of Baroda (Dena Bank) Through Authorized Officer & Anr.

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…Respondent/s

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Mr H.V. Mekaliya and Mr Anil Mundra, Advocates for Appellant.

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Mr Devang D. Trivedi (through video-conferencing), Advocate for Respondent no.1.

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Mr Ritesh Patadia (through video-conferencing), Advocate for Respondent no.2.

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-: Order dated: 24/06/2024:-

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The appellant is the proprietorship represented by its sole proprietor who is aggrieved by the dismissal of S.A. No.47 of 2024 vide judgment and order dated 28.05.2024 by the Debts Recovery Tribunal-I, Ahmedabad. The appellant has to comply with the mandatory pre-requisite of making the pre-deposit under Sec. 18(1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act,2002 (“SARFAESI Act”, for short) and has therefore, filed this application seeking the indulgence of this Tribunal to grant a waiver of 25% of the pre-deposit exercising jurisdiction under the 3^rd proviso to Sec. 18(1) of the SARFAESI Act.

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The appellant is the mortgagor/borrower who borrowed money from the 1^st respondent bank and defaulted in the repayment resulting in the account being classified as a non-performing asset

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(NPA) on 28.02.2023. A demand notice was issued on 02.03.2023 under Sec. 13(2) demanding the sum of ₹81,24,810.84. The appellant did not pay the amount within the stipulated time of sixty days and in consequence, symbolic possession of the secured asset was taken by the respondent bank on 03.06.2023 and the movables were also taken possession on 16.06.2023. The respondent bank thereafter obtained an order under Sec. 14 of the SARFAESI Act from the Ld. Chief Judicial Magistrate, Gandhinagar on 26.10.2023. Physical possession was taken on 10.12.2023. The property was put up for auction on 13.02.2024 and sold to the 2^nd respondent as the highest bidder. The auction purchaser deposited the entire sale consideration, the sale was confirmed and the sale certificate was issued, registered, and possession of the property handed over to him. The appellant has filed the S.A. raising several contentions regarding the Sarfaesi measures. It is contended that the classification of the account as NPA was not informed to him, and the demand notice under Sec.13(2) was not served. The taking over of the symbolic possession was also not intimidated and the publication of notice as contemplated under Rule 8(2) of the Security Interest (Enforcement) Rules was not complied with. The order of the Chief Judicial Magistrate, Gandhinagar under Sec.14 is defective for the reason that the C.J.M has not observed the due compliance of the requirements under Sec.14. The nine-pointer affidavit is defective and hence the property could not be proceeded against. It is further contended that there was no proper valuation of the property and that it was undervalued. The auction sale was conducted in violation of Rules 8(5) (6) and (7) as well as 9 (1) of the Rules. Thirty days’ notice was not given to the appellant before the sale was conducted. It is also pointed out that the auction purchaser did not deposit 25% of the bid amount as required under Rule 9 (5) of the Rules and hence, the entire SARFAESI action has to be quashed and the property is to be reconvened to the appellant under Section 17 (3) of the SARFAESI Act.

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Per contra, the respondent bank has contradicted all the

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averments in the application. It is stated the demand notice was proper and it contained all the requisites under Sec. 13 (3) and that the classification of the NPA was also proper and it has been intimated by issuing notice under Sec. 13 (2). The allegation that the demand notice was not served is also contradicted by the respondent bank. It is stated that the certificate has been obtained from the postal authorities regarding due service of the notice and that the address mentioned in the notice is also proper and correct. Hence, the presumption under Section 27 of the General Clauses Act is also attracted in the instant case. The allegation regarding symbolic possession being taken without compliance with Rule 8 (2) is also not true. The appropriate publication has been made and due compliance has been made by the authorized officer. The order obtained under Sec.14 of the Ld. Chief Judicial Magistrate, Gandhinagar refers to the due compliance of the measures under Sec.13(2) and Sec. 13 (4) and therefore, there is no defect in the orders of the Ld. C.J.M. The contention regarding under valuation of the property is also to be discarded and the respondent states that all Rules have been appropriately complied with before the property was put up for sale and therefore, there are no grounds for challenging the sale as averred in the application.

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After considering the materials available and the pleadings of the appellant, the Ld. Presiding Officer in the impugned order disagreed with the contentions raised by the appellants and concluded that there is due compliance with all the provisions under the Act as well as Rules and therefore, the S.A. was dismissed. The appellant is aggrieved and hence in appeal. The appellant contends that he has a very good prima facie case. It is further stated that the business is not functioning and that he is running at a loss in the business. The statement of account and the Income Tax Returns are produced to substantiate the impecuniosity of the appellant. The appellant therefore seeks indulgence of this Tribunal to get 25% of the amount waived.

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The respondent has filed an affidavit stating that as of date the amount due from the appellant is ₹95,55,366/- and the Ld. Counsel appearing for the appellant submits that the appellant be directed to deposit 50% of the amount since he does not have a prima facie case and that the financial strain alleged by the appellant is also not appropriately proved and established.

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Taking into consideration and entire facts and circumstances of this case, I find that the impugned order has addressed every aspect of the objections raised by the appellant in challenging the Sarfaesi measures. The notice has been duly served and there is no infirmity found in the service of the notice as well as the proceedings of the Ld. Chief Judicial Magistrate, Gandhinagar. Prima facie, I cannot find any fault with the impugned judgment. The appellant has however succeeded to some extent, by producing the Income Tax Returns indicating that he is not capable of depositing 50% of the debt due as pre-deposit and therefore, the appellant is entitled to some concession though not to the extent of granting a waiver of 25% of the debt due. The appellant is, therefore, directed to deposit the sum of ₹35 lakhs as pre-deposit for the appeal to be entertained. The Ld. Counsel appearing for the appellant submits that he is depositing the demand draft of ₹15 lakhs and the balance ₹20 lakhs shall be deposited in two instalments of ₹10 lakhs each within the gap of two weeks. Since the possession of the property is already been handed over to the 2^nd respondent, he is directed not to create any thirdparty interest.

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Default in payment of any of the 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 amount is deposited, it 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 09.07.2024 for reporting compliance regarding the payment.

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Sd/Chairperson

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Nidhi-07

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Shree Bhadrakali Agro Industries Proprotor Punjsinh v. Chauhan v Bank of Baroda (Dena Bank)

Case brief

What is this about?

What did the court decide?

Shree Bhadrakali Agro Industries Proprotor Punjsinh v. Chauhan v Bank of Baroda (Dena Bank)

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

Coram

Case details

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