Disposed

Sachin Jamsingh Rajput and Anr. v. Union Bank of India

DRAT5 Nov 2024IA/439/2024

Case brief

AI extract

What is this about?

The DRAT, Mumbai, addressed an interlocutory appeal arising under the SARFAESI Act. The court directed the appellants to deposit a pre-deposit sum of ₹25 lakhs for availing a stay on possession transfer. The taking of possession was deferred pending full payment compliance.

What did the court decide?

Interim deposit of ₹25 lakhs ordered under instalments with direction to produce proof of payment. Taking of possession deferred until full pre-deposit compliance.

Sachin Jamsingh Rajput and Anr. 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 I.A. No. 439/2024 (WoD) In

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Misc. Appeal on Diary No. 1385/2024

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Between

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Sachin Jamsingh Rajput & Anr. … Appellant/s V/s.

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Union Bank of India …Respondent/s

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Mr. V. B. Shirole, Advocate for Appellants.

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Mr. Yash Jadhav, i/b Ms. Neha Bhosale, Advocate for Respondent No.1

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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 06.06.2024 dismissing the Interlocutory Application Nos. 1048/2024 and 1075/2024 in Securitization Application No. 92/2024 (S.A.) by the Debt Recovery Tribunal, Pune (D.R.T.). The appellants had sought a stay concerning the taking over the possession of the subject property in consequence of to order passed u/s 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 (“SARFAESI Act” for short) by the District Magistrate and I.A. No. 1075/2024 was to prevent the Authorized Officer from issuing the Sale Certificate. The sale certificate has already been issued and the taking of physical possession of the

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property is scheduled on the 7^th instant.

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The appellants had filed the S.A. challenging the Sarfaesi measures starting from the demand notice issued u/s 13 (2) on 16.01.2023 demanding a sum of ₹77,70,707.19. It is contended that the notices were not served on the appellants. The AD cards that were produced by the respondent purporting to be sent by the appellants were not actually signed by them. It is also contended that the symbolic possession purportedly taken by the respondent bank u/s 13 (4) was without the issuance of the notice as required under rule 8 (1) of the Security Interest (Enforcement) Rules 2002. There is no evidence regarding the pasting of notice at the premises. It is further contended that the valuation reports relied upon by the respondent for arriving at the reserved price for the property were not proper. One of the valuation reports is obtained after the issuance of the sale notice which by itself would indicate that the valuation was concocted. There is yet another valuation report containing the very same material by the very same valuer indicating that the reports were prepared four days before the auction notice. These discrepancies indicate that the valuation made was not proper.

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It is also pertinent to note that, the property was put up for sale earlier in 2023 and the reserved price was fixed for a sum of ₹1 crore and there is no evidence regarding any valuation report obtained at that time. The auction notice dated 08.02.2024 is scheduled for the auction to take place on 28.02.2024 with the reserved price a sum of ₹83,86,000/- and the property was sold to the auction purchaser for a sum of ₹84,36,000/-. The sale was confirmed on 28.02.2024. It is

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pointed out that the 25% of the sale amount was paid on time on 29.02.2024 and the balance of 75% which had to be deposited within 15 days was not paid on time and there is no evidence of any written agreement between the auction purchaser and the creditor regarding the extension of time under rule 9 (4) of the Security Interest (Enforcement) Rules 2002. Under the circumstances, it is pointed out that the entire Sarfaesi measures starting from the demand notice u/s 13 (2) till the auction sale are invalid and need to be quashed and set aside.

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Per contra, the Ld. Counsel appearing for the respondent bank submits that there is sufficient evidence regarding the serving of demand notice u/s 13 (2) and the AD cards have been produced. It is only during the trial that the genuineness of the AD cards would be examined and therefore, the allegation of the appellants regarding forgery and non-service of notice cannot be accepted readily at this point in time. The respondent has also produced a photograph to indicate that there was an annexure of notice as required under the rule before taking symbolic possession of the subject property.

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The Ld. Counsel for the respondent also pointed out that the earlier attempts to sell the property failed twice and it was only the 3^rd time that the sale was successful. The valuation report obtained before the successful sale is produced. The dates mentioned in the two notices contradicting each other are only a typographical error and cannot be given much importance. It is mentioned in the valuation report that the inspection of the property was done on 02.02.2024 and the auction notice was issued only on 08.02.2024. One of the reports

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gives the correct date as 04.02.2024 and therefore, there is nothing to doubt about the genuineness of the valuation report. The fact that the sale had failed twice for want of bidders indicates that the reserved price fixed for the property was not below for valuation of the report and therefore, the sale cannot be set aside. The objection regarding the 75% of the sale consideration being deposited out of time is also denied by the respondent bank stating that there was permission granted to the auction purchaser to pay the amount beyond the statutory period which would be proved in the due course before the D.R.T.

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The appellants have produced their income tax returns to indicate that the appellants have no sufficient income to pay 50% of the debt due as required u/s 18 (1). The income tax returns of both appellants for the years 2022-23 and 2023-24 are produced and it would show that each of the appellants have an income of less than ₹5 lakhs per annum for a financial year which has further come down during the last financial year and therefore, it is urged that the 3rd proviso to section 18 (1) be invoked by this Tribunal to waive 25% of the pre-deposit.

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The appellants have pointed out to certain infirmities in the Sarfaesi measures which require further proof to quash the Sarfaesi measures. It may be an arguable case at present, but that can only be confirmed after delving deep into those issues. The appellants have to a certain extent indicated that they are not in a financial position to deposit 50% of the amount and therefore, though appellants are not entitled to get 25% of the pre-deposit amount waived they are entitled

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to a certain concession.

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The respondent has not produced the materials indicating the amount that is due as of on date of filing of the appeal. The sale notice as well as the demand notice indicate the debt due a sum of ₹77,70,707/-. Taking that as a threshold amount, the appellants are directed to deposit a sum of ₹25 lakhs as per deposit. The Ld. Counsel appearing for the appellants submits that a sum of ₹3 lakhs is being deposited today by way of a Demand Draft. The balance amount shall be deposited in two instalments within the gap of two weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹11,00,000/-	19.11.2024
2^ndInstalment₹11,00,000/-	03.12.2024

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The Ld. Counsel appearing for the respondent submits that a

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sum of ₹7.70 lakhs has been deposited with the bank and is lying in no lien account without any interest. The amount has not yet been appropriate toward the debt since the sale has been successful. The said amount is not appropriated toward the debt that shall be produced by the bank before this Tribunal and shall be considered as part of the pre-deposit. Given the deposit being made today, the taking over possession of the property on the 7^th instant shall stand deferred till the next date of hearing.

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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 and intimated to the counsel for the respondent.

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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 Nationalized 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 21.11.2024 for reporting compliance regarding the payment of 1^st instalment.

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Sd/Chairperson

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psa-07

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Sachin Jamsingh Rajput and Anr. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Sachin Jamsingh Rajput and Anr. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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