Partly allowed

Rajesh Satyapal Bajaj v. PNB Housing Finance Limited

DRAT27 Aug 2024IA/496/2024

Case brief

AI extract

What is this about?

The Appeals Tribunal dismissed the appeal challenging the DRT's refusal to grant protection from possession of secured assets. The court held that appellants failed to establish financial strain or a prima facie case, requiring a 25% predeposit to continue the appeal.

What did the court decide?

Appellants directed to deposit 25% predeposit (Rs 15 lakhs); possession taking deferred pending deposit; default leads to dismissal.

Rajesh Satyapal Bajaj versus PNB Housing Finance Limited — 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. 496/2024(WoD)

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Appeal on Diary No.1477/2024 Between

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Rajesh Satyapal Bajaj & Anr. … Appellant/s V/s.

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PNB Housing Finance Ltd.

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…Respondent/s

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Mr. Ashish Killedar, Advocate for Appellants appeared through Video Conferencing.

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Mr Vinay Deshpande, along with Ms. Shobha Chavan, i/b M/s. V. Deshpande & Co., Advocates for Respondent.

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-: Order dated: 27/08/2024:-

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

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The appellants are in appeal impugning the rejection of I.A. No. 1101/2024 in the Securitisation Application (S.A.) No. 195/2022 vide order dated 02.07.2024 by the Debts Recovery Tribunal, Nagpur (D.R.T) refusing to grant any protection to the appellants from taking over possession of the secured assets for recovery of debts allegedly due from them under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (“ the SARFAESI Act” for short). The appellants are aggrieved and hence, in appeal.

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The appellants have raised several contentions in their challenge to the Sarfaesi measures u/s. 17(1) of the SARFAESI Act. It is stated that the demand notice was issued u/s. 13(2) of the SARFAESI Act does not give a breakup of the total amount of ₹ 31,33,928.22. It is also contended that the Non-Performing Asset (NPA) classification done in October 2021 is against the prudential

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norms of the Reserve Bank of India because there is no 90-day default in payment. The appellants would rely on the account statement which indicates that amounts have been paid after the classification of the account as NPA, on 10.11.2021 and 10.12.2021 towards the ECS.

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It is further contended that the appellants have submitted an OTS proposal to pay off the debt for ₹ 27 lakhs and had agreed to make an upfront payment and the balance was agreed to be paid within six months. The OTS proposal was rejected outright by the bank and therefore, no payments were made. The appellants contend that they are under financial strain. The 1^st appellant has a salary of only ₹ 20,000/- per month and the 2^nd appellant is a homemaker without any earnings of her own. The business of the appellants had failed because of the pandemic and they have not revived from there. Therefore, it is stated that the appellants have a good prima facie case challenging the Sarfaesi measures and therefore, 25% of the predeposit may be waived submits the Ld. Counsel appearing for the appellants.

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Per contra, the Ld. Counsel appearing for the respondent has vehemently opposed the application for waiver stating that the appellants have no grounds to challenge the Sarfaesi measures at all. It is pointed out that the demand notice issued u/s. 13(2) as a schedule attached to it and Schedule I gives the breakup of the principal amount and the interest due. Therefore, it cannot be said that there is no break-up given. Regarding the classification of the debt account as NPA, the Ld. Counsel for the appellants points out to the account statement relied upon by the appellants and shows that there has been continued default by nonpayment of the amount.

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Since the amount of ECS paid was all by cheques which were all dishonoured, and therefore, the payment was credited and then debited simultaneously. The last two payments which are relied upon by the appellants are payments made after the classification of the debt as NPA and those payments had come only into the loan account of the appellants without any intimation to the bank and the bank is not in a position to accept those payments consequent to the classification of the account as NPA.

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The Ld. Counsel appearing for the appellants submits that no reply whatsoever has been sent to the demand notice and no objections were raised. The appellants had contended that the symbolic possession of the subject property was taken without complying with Rules 8(1) and 8 (2) of the Security Interest (Enforcement) Rules, 2002 to which the Ld. Counsel appearing for the respondent submits that on instructions that there is sufficient evidence regarding the compliance of Rules 8 (1) and (2) which would be produced before the D.R.T for satisfaction of the Tribunal. Publication was made and notice was served and affixed as stipulated under Rule 8 (1). Therefore, it is submitted by the Ld. Counsel for the respondent that the appellants have absolutely no grounds to sustain an application u/s. 17(1) of the SARFAESI Act.

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On going through the record, I find that the Ld. Presiding Officer has not discussed any of the contentions raised by the appellants to conclude whether those contentions could be accepted or not. It is by a cryptic order that he finds no reason to grant protection to the appellants and thus the application was dismissed. Such a nonspeaking order passed by the Ld. Presiding Officer is deprecated. As regards the contentions raised by the appellants, I do not find that

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prima facie those contentions are acceptable because the demand notice gives a schedule of the breakup of the principal amount and interest and prima facie, there is no violation of Sec. 13(3) of the SARFAESI Act.

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The Ld. Counsel appearing for the appellants would contend that the interest portion includes the penal interest and other charges and a break-up of those is not given. Such an argument would be too pedantic. The classification of the NPA also does not appear to be defective because all the cheques issued by the appellants were dishonoured and the last two payments had come up after the classification of NPA which could not have been accepted by the bank and were unilaterally paid, and would not save the classification of the account as NPA. A settlement by way of OTS was submitted by the appellants but not accepted by the bank and no upfront payment was also made by the appellants, and therefore, the appellants cannot rely on those submissions for sustaining a challenge u/s. 17(1) of the SARFAESI Act.

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As regards financial strain, the appellants contend that their business was affected by the Covid pandemic. The affecting of the business by Covid pandemic is an old story which cannot be repeated as a defence by the borrowers any more. No income tax returns are produced nor any salary certificate produced in support of the contentions regarding the nonpayment of income tax or the receipt of a salary of ₹ 20,000/- only by the 1^st appellant and therefore, it cannot be said that the appellants have succeeded in establishing their financial strain. Under the circumstances, I find that the appellants have not proved their financial strain nor have they succeeded in establishing a prima facie case.

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Under the circumstances, the appellants are not entitled to get any indulgence, or exercising discretion under the third proviso of Sec. 18(1) of the SARFAESI Act. The appellants are directed to deposit a sum of ₹ 15 lakhs as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellants submits that a demand draft of ₹ 5 lakhs is being produced by the appellants. In case the demand draft is produced before 11.00 am tomorrow. The taking over a possession shall stand deferred till the next date of hearing. The balance amount of ₹ 10 lakhs shall be deposited within two weeks on or before 10.09.2024.

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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 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 11.09.2024 for reporting compliance concerning the payment.

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Chairperson

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rm-5

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Rajesh Satyapal Bajaj v. PNB Housing Finance Limited

Case brief

What is this about?

What did the court decide?

Rajesh Satyapal Bajaj v. PNB Housing Finance Limited

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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