Dismissed

Ms Golden Leaf Agrotech India Pvt. Ltd. through Its Directors Mr Altaf Rauf Shaikh and Mrs Samreen Altaf Shaikh v. Karnataka Bank Limited

DRAT20 Jun 2024IA/408/2024

Case brief

AI extract

What is this about?

DRAT fixed Order dated 20/06/2024: appeal for urgent relief; held that pre‑deposit mandatory; dismissed on failure/deposit terms; stayed possession/transfer of possession subject to payment; appeal dismissed if default.

What did the court decide?

Order: deposit ₹ 3 crores in three instalments within three weeks; possession deferred on payment per schedule; appeal dismissed on default.

Ms Golden Leaf Agrotech India Pvt. Ltd. through Its Directors… — 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.408/2024(WoD)

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Appeal on Diary No.1236/2024 Between Golden Leaf Agrotech India Pvt. Ltd & Ors. … Appellant/s V/s. Karnataka Bank Ltd. …Respondent/s Mr. Rahul Motkari, Advocated for Appellants. Mr. Manoj Kumar, Advocate for Respondent.

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-: Order dated: 20/06/2024:-

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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 the dismissal of S.A. No. 31/2023 by the Debts Recovery Tribunal –I, Mumbai (D.R.T) vide order dated 09.05.2024.

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The appellants had filed this S.A. challenging the recovery proceedings initiated by the respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“SARFAESI Act” for short) for recovery of the debt allegedly due.

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The appellants had raised several grounds for challenging the Sarfaesi measures primary among which was that the classification of the account as Non-Performing Assets (NPA) was improper. There are different dates of NPA mentioned in the demand notices and also the letter sent by the bank to the appellants which would indicate that the respondent bank itself was not sure about the exact date on which the amount was classified as NPA.

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The appellants would contend that they are agriculturists dealing in the business of agricultural products across the state of Goa. Because of natural calamities, their business was adversely affected and the appellants suffered heavy losses. The 1^st appellant is a company of which the appellant Nos. 2 and 3 are the directors. Appellants Nos. 4 and 5 are the guarantors for the loan that was availed for the running of the business.

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Consequent to the classification of the account as an NPA demand notice was issued to the appellant on 01.07.2022 demanding a sum of ₹ 7,10,23,555.05/- the appellants have sent their reply to the demand notice expressing their conditions and also raising certain objections. It is contended that in the reply sent by the bank u/s. 13(3A) the objections raised by the appellants were not answered to their satisfaction. It is also contended that the calculation of the interest is improper and that compounding of the interest has been done in violation of the RBI directions.

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It is also stated that the restructuring of debt as requested by the appellants in accordance with the RBI guidelines was not complied with by the bank destroying the appellants' business. The appellants failed to get an interim protection against the Sarfaesi measures from the D.R.T and they had earlier filed an Appeal at Diary No. 2102/2023 challenging the interlocutory orders of the D.R.T in I.A. No. 3000/2023. The appellants were directed to deposit a sum of ₹ 3 crores in three tranches as required u/s. 18(1) of the SARFAESI Act, they could not comply with the direction of this Tribunal resulting in the dismissal of the Misc. Appeal.

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Thereafter, the S.A. was taken up for consideration and vide the impugned order it was dismissed. The appellants would contend that the contention raised by him was not properly addressed by the D.R.T. and the order is confined to only two issues relating to the RBI surplus and the classification of the debt as NPA. The other points which were raised by the appellants were not at all addressed in the impugned order and hence, the appellants are aggrieved.

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To entertain this appeal, the appellants will first have to comply with the mandatory provisions of making the pre-deposit u/s. 18(1) of the SARFAESI Act. It is contended that the appellants had a good prima facie case. It is further submitted that the 3^rd appellant is a cancer survivor while appellant Nos. 4 and 5 who are the guarantor and mortgages are suffering cancer and undergoing treatment, they are also senior citizens without any means to live with. 9. The income tax returns of appellant Nos. 1, 2 and 3 have been produced to indicate that they have little income. The 1^st appellant company is running at a loss. Appellants Nos. 2 and 3 are also not getting income sufficient to pay 50% of the debt due and therefore, it is prayed that the mandatory pre-deposit may be waived according to the law.

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The Ld. Counsel appearing for the respondent has vehemently opposed the application stating that the appellants are not entitled to any concession or indulgence. It is pointed out that the appellants had availed of five loans altogether and defaulted in repayment.

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It is also submitted that there was no violation of the RBI guidelines as alleged and there is also no regulation regarding the classification of the account as NPA. The impugned order has

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addressed all these issues appropriately and there is no infirmity in the impugned order calling for any interference with the order. The appellants are, therefore, liable to pay 50% of the debt due.

¶18

Since the Sarfaesi action is at the stage of u/s. 13(4) of the SARFAESI Act, the threshold amount for calculation of pre-deposit would be the amount mentioned in the demand notice. The appellants have not made any strong prima facie case although they have an arguable case regarding the contentions raised.

¶19

Under the circumstances, they are not entitled to any indulgence regarding getting the mandatory pre-deposit to the minimum of 25%, much less a total waiver of deposit as claimed by them. In the earlier order in the Misc. Appeal filed by them the appellants were directed to deposit a sum of ₹ 3 crores in three equal instalments of ₹ 1 crores each within a gap of three weeks each.

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I find no reason to differ from that earlier order of pre-deposit and hence, the appellants are directed to deposit a sum of ₹ 3 crores in three equal instalments within a gap of three weeks each, as stated

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hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹1 crores	11.07.2024
2^ndInstalment₹1 crores	01.08.2024
3^rdInstalment₹1 crores	22.08.2024

¶23

On payment of the 1^st instalment for ₹ 1 crores, the taking over a possession 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 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.

¶27

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 12.07.2024 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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rm-7

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Ms Golden Leaf Agrotech India Pvt. Ltd. through Its Directors Mr Altaf Rauf Shaikh and Mrs Samreen Altaf Shaikh v. Karnataka Bank Limited

Case brief

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Ms Golden Leaf Agrotech India Pvt. Ltd. through Its Directors Mr Altaf Rauf Shaikh and Mrs Samreen Altaf Shaikh v. Karnataka Bank Limited

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