Disposed

Yogesh Dhirajlal Shah v. Union Bank of India

DRAT14 Nov 2024IA/399/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal examined an appeal challenging SARFAESI measures. Considering the appellant's financial instability and accepted OTS proposals, the court directed a pre-deposit rather than a waiver, setting the threshold for entertaining the appeal.

What did the court decide?

Appellant directed to deposit Rs. 7 crores in two instalments of Rs. 3,50,00,000 each by 05.12.2024 and 26.12.2024 to entertain the appeal.

Yogesh Dhirajlal Shah versus Union Bank of India — Banking and Recovery | 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.399/2022 (WoD)

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In Appeal on Diary No.492/2021

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Between

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Yogesh Dhirajlal Shah … Appellant/s

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V/s.

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Union Bank of India …Respondent/s

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Mr Rishabh Shah along with Mr Sunil Humbre, Advocates for Appellant.

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Ms O.A. Das along with Ms Sunita Rawat, Advocates for Respondent.

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-: Order dated: 14/11/2024:-

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The appellant is in appeal impugning the order dated 10.12.2018 in Review Application No.06/2018 (R.A.) filed by the appellant before the Debts Recovery Tribunal-II, Mumbai (D.R.T) to review the order dated 27.09.2018 in Securitisation Application No.16/2017 (S.A.) before that Tribunal.

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The dismissal of the S.A. was challenged in the R.A. which was declined. The appellant would contend that he had a very strong prima facie case in respect of the Sarfaesi measures initiated by the respondent bank. It is pointed out that the 13(2) demand notice is defective for the reason that it does not disclose the date of the NPA, the name of the authorized officer and there is no bifurcation of the principal and interest demanding. It is further contended that the notice includes an item of property which was not a security for one

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of the facilities of ₹ 22 lakhs and therefore, that amount could not have been claimed in the demand notice issued under the SARFAESI Act. It is also contended that the appellant had made part payment of about ₹ 36 lakhs subsequently and therefore, the amount demanded would come down drastically.

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To entertain this appeal, the appellant will first have to comply with the directions under Section 18(1) of the SARFAESI Act by making a pre-deposit. The appellant contends that he has a very strong prima facie case and is also under financial strain. To prove the financial strain, the Income Tax Returns of the assessment years 201819 up to 2020-21 are produced which would indicate that he does not have sufficient income. Over and about that, it is submitted that the members of the appellant’s family suffer from various illnesses and he has to spend huge amounts for their treatments and he is the only sole earning member in the family.

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The property has already been sold and therefore, as per the decision of the Hon’ble Supreme Court in M/s. Sidha Neelkanth Paper Industries Private Limited and Another versus Prudent ARC Limited and Others 2023 SCC OnLine SC 12 , the amount of debt inclusive of interest will have to be taken as the threshold amount for calculating the predeposit. The Ld. Counsel appearing for the respondent would submit that after adjusting the amounts paid by the appellant, the debt inclusive interest is ₹ 22,19,47,484/-. It is also submitted by the Ld. Counsel appearing for the respondent that ₹ 2 crores which was an ad hoc facility was settled and that the account has been closed and therefore, there is no demand made concerning that in the 13(2)

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demand notice. Only the debt which has been secured by the property which was sold had been included in the 13(2) demand notice and therefore, there is no infirmity on that account.

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It is further contended by the Ld. Counsel appearing for the respondent that there was an OTS proposal given by the appellant to settle the debt and it was also accepted by the bank. There were repeated OTS proposals given by the appellant and he failed to comply with those OTS proposals given by him. Therefore, the appellant is precluded from challenging the Sarfaesi measures subsequently when he has himself offered OTS proposals and has also failed to comply with them. The Hon’ble Supreme Court has in ARCE Polymers Private Limited versus Alphine Pharmaceuticals Private Limited and Others, (2022) 2 SCC 221 holds that when the OTS proposal is given and the borrower is willing to settle the debt, he cannot thereafter challenge the Sarfaesi measures.

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The Ld. Counsel appearing for the respondent has also pointed out that an appeal from a Review Application is not maintainable given the embargo under Order 47 Rule 7 CPC to which the Ld. Counsel appearing for the appellant has relied on two decisions stating that the provisions under Order 47 Rule 7 CPC cannot be adopted in a proceeding before the D.R.A.T because Section 20 of the RBD Act provides for an appeal which includes the order in a review application. Moreover, Rule 5A of the Procedure Rules, 1994 provides specifically for a provision of review of its order. The order in a review application under rule 5A would therefore be applicable. RBD Act is a complete statute and does not have to rely on the provisions of the

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CPC except on principles.

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Since the appeal will have to be considered on the maintainability also, I am not delving deep into that question at the present moment and that question is relegated to be decided at the time of considering the appeal.

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However, there is no doubt that the ratio in the decision ARCE Polymers Private Limited (supra) would be attracted in this case given the accepted OTS proposals by the appellant, it is doubtful that the appellant has a good prima facie case. The appellant indeed has to a great extent established that he is under pecuniary strain and therefore, though the appellant is not entitled to a waiver of 25%, considering his financial instability, he is entitled to some concession for entertaining this appeal. The appellant is, therefore, directed to deposit the sum of ₹ 7 crores as pre-deposit for entertaining this appeal. The amount shall be paid in two instalments of ₹ 3,50,00,000/- each within a gap of three weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹3,50,00,000	05.12.2024
2^ndInstalment₹3,50,00,000	26.12.2024

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Default in payment of any of the amount/instalment 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. Payment by RTGS shall be communicated to the Registry for verification.

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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 06.12.2024 for reporting compliance of the payment of 1^st instalment.

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Sd/Chairperson

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nrp-02

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Yogesh Dhirajlal Shah v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Yogesh Dhirajlal Shah v. Union Bank of India

Case brief

What is this about?

What did the court decide?

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