Disposed

Adison Granito Private Limited v. Bank of Baroda

DRAT8 Aug 2024IA/530/2024

Case brief

AI extract

What is this about?

In IA No. 530/2024, the DRAT considered an injunction application challenging an order declining protection regarding secured assets. The court accepted the prima facie case, directed a total pre-deposit of ₹21 crores, and stayed further SARFAESI measures until the next hearing upon interim payment.

What did the court decide?

Directs deposit of ₹21 crores as pre-deposit; stays further SARFAESI measures; lists for compliance on 30.08.2024.

Adison Granito Private Limited versus Bank of Baroda — Company and Corporate | DRAT (2024)

¶1

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr. Justice Ashok Menon, Chairperson I.A. No. 530/2024 (WoD)

¶2

¶3

Misc. Appeal on Diary No. 1701/2024

¶4

Between

¶5

Adison Granito Pvt. Ltd. Ors. … Appellant/s V/s.

¶6

Bank of Baroda

¶7

…Respondent/s

¶8

Through its Authorised Officer & Ors.

¶9

Mr. Rajesh Nagory, i/b Ms. Sanjana Ghogare, Advocate for Appellants.

¶10

Mr. B. Sharma, Advocate for Respondents.

¶11

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

¶12

The appeal is filed by the borrowers and the guarantors of the loan sanctioned to them by a consortium of banks led by the Bank of Baroda who are the respondents herein. The appellants challenge the order dated 03.08.2024 in Securitization Application (S.A.) No. 30/2024 on the files of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) declining to grant any protection to the appellants regarding the secured assets.

¶13

It is pointed out that the two separate notices were issued to the borrowers and the guarantors. In the demand notice u/s 13 (3) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for

¶14

¶15

short) issued to the borrowers on 31.07.2023 it demands a total sum of ₹80, 54,51,761.01 whereas the notice issued to the guarantors on the very same date demand total a sum of ₹63,54,50,239.03. The Ld. Counsel appearing for the appellants points out there is a variance in the amount demanded which is not proper. It is further contended that in the demand notice issued to the borrowers, the amount mentioned as ECLGS a sum of ₹23.61 crores is also added which according to the Ld. Counsel appearing for the appellants could not have been added unless there is an agreement to make that also a part of secured debt.

¶16

It is also pointed out that the description of the property which is being proceeded against as secured assets has not been given and specified in the demand notice issued to the guarantors who are also mortgagors. It is also further contended that there is a difference in the dates of classification of the debt as Non-Performing Assets (NPA) as far as the loan of Bank of Baroda and that of Punjab National Bank is concerned. The dates are very as 31.03.2023 and 26.07.2023 respectively. Accordingly to the Ld. Counsel appearing for the appellants, the consortium banks have not arrived at a consensus on the NPA dates which according to him is faulty procedure.

¶17

It is also contended that the notice under rule 8 (1) of the Security Interest (Enforcement) Rules 2002 has not been served on all the parties before taking symbolic possession of the property. The Ld. Counsel appearing for the appellants also finds fault with the order u/s 14 of the District Magistrate which does not record the satisfaction on all the points raised in the accompanying affidavit.

¶18

¶19

The Ld. Counsel appearing for the appellants submits that the appellants have a good prima facie case and the income tax returns of appellant Nos. 1 to 4 and 9 to 12 have been produced to indicate that they do not have sufficient income to pay the mandatory 50% of the pre-deposit u/s 18 (1) of the SARFAESI Act. It is clarified that the appellant Nos.5 to 8 and 13 & 14 do not have independent income and are, therefore, not filing any income tax returns. The 1^st appellant is a company that has been running at a loss for the last three years and therefore, does not have the substantial income to pay the pre-deposit. Hence, the Ld. Counsel appearing for the appellants submits that the 25% of the pre-deposit may be waived invoking the provision of the 3^rd proviso to section 18 (1) of the SARFAESI Act.

¶20

Per contra, the Ld. Counsel appearing for the bank submits that the appellants do not have any prima facie case. He explained that the discrepancy in the demanded amount in the notices issued to the borrowers and the guarantors is because the ECLGS amount a sum of ₹23.61 crores is demanded only from the borrowers and not from the guarantors. Regarding not mentioning the details of the property in the notice issued to the guarantors the Ld. Counsel appearing for the respondents submits that the copy of the demand issued to the borrowers was also annexed with the demand notice issued separately to the guarantors and therefore, such an objection would not lie. Regarding the rest of the averments, it’s submitted that the allegations are not sustainable and that all the Sarfaesi measures are perfectly valid and can be proceeded against.

¶21

¶22

The appellants will first have to comply with the mandatory provision of making the pre-deposit. As per the settled position in the decision of the Hon’ble Supreme Court of India in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12 , the amount mentioned in the demand notice is the threshold amount for calculated the pre-deposit. But in the present case, there are two amounts which are demanded according to the Ld. Counsel appearing for the appellants the separate mortgaged deed or an agreement has to be executed between the borrowers and the creditors for including the amount given during the Covid-19 Pandemic as ECLGS to make that portion also a part of the secured debt and therefore, the amount threshold has to be taken as the amount mentioned in the demand notice issued to the guarantors which is a sum of ₹63,54,50,239.03/-. The Ld. Counsel appearing for the appellants have also submitted that the appellants have pleaded sufficiently a prima facie case in their favour and they are also under financial strain therefore, 25% of the pre-deposit amount may be waived.

¶23

After having applied my mind to the facts and circumstances of this case, I am of the opinion that the appellants have an arguable case which will have to be ultimately decided in the appeal and also in the pending S.A. Justice would be done if the appellants are directed to deposit a sum of ₹21 crores as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellants is coming up with the upfront payment of a sum of ₹2.50 Crores today by way of a demand draft. The balance amount a sum

¶24

¶25

of ₹18.50 Crores shall be paid in two instalments within the gap of three weeks each as stated hereunder.

¶26

Numbers of Instalments	Payment on or before
1^stInstalment of₹9.50 Crore	29.08.2024
2^ndInstalment of₹9 Crore	19.09.2024

¶27

Given the payment made today, the further Sarfaesi measures shall stand stalled till the next date of hearing.

¶28

Default in payment of the balance amount on time shall entail the dismissal of the appeal without any further reference to this Tribunal.

¶29

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.

¶30

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.

¶31

13 With these observations, the I.A. is disposed of. The respondents are at liberty to file a reply in the Appeal with an advance copy to the other side.

¶32

List on 30.08.2024 for reporting compliance regarding the payment of the 1^st instalment.

¶33

Sd/Chairperson

¶34

psa-09

¶35

Adison Granito Private Limited v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

Adison Granito Private Limited v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus Laxmi Construction through its proprietor Radhakishan Waghmare

Ms Shahanaaz Ismail Shaikh versus Bank of Baroda

Bank of Baroda versus Mohammedarif Mohammedumar Qureshi

M/s Innovative Softtech Pvt. Ltd. & Anr. versus State Bank of India

Nitin Vasant Modak versus Cholamandalam Investment and Finance Company Ltd.

Subhash Jaysingh Pawar versus Dombivli Nagari Sahakari Bank Limited