Disposed

Merchant Real Estate Pvt. Ltd. v. Smfg India Credit Company Ltd.

DRAT9 Aug 2024IA/537/2024

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed an interim application where the appellant was directed to deposit Rs. 50 lakhs as pre-deposit under Section 18(1) of the SARFAESI Act to entertain the appeal regarding the taking over of possession of a secured asset.

What did the court decide?

Appellant directed to deposit Rs. 50 lakhs as pre-deposit; taking over of possession deferred till next hearing upon payment of Rs. 25 lakhs.

Merchant Real Estate Pvt. Ltd. versus Smfg India… — Contract and Commercial Disputes | DRAT (2024)

¶1

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

¶2

I.A. No. 537/2024 (WoD) In

¶3

Appeal on Diary No. 1709/2024

¶4

Between

¶5

Merchant Real Estate Pvt. Ltd. V/s.

¶6

SMFG India Credit Company Ltd. (Earlier Fullerton India Credit Co. Ltd.)

¶7

… Appellant/s

¶8

…Respondent/s

¶9

Mr Charles De Souza along with Mr Jayant, i/b Mr Puneet Gogad, Advocate for Appellant.

¶10

An advocate for the Respondent appeared.

¶11

-: Order dated: 09/08/2024 :-

¶12

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

¶13

The appellant is in appeal impugning the order dated 21.03.2024 wherein the respondent was granted the liberty to proceed with the taking over of possession of the secured asset after giving 10 days prior notice to the appellant. The appellant is aggrieved and hence in appeal. There is a delay in filing the appeal for which the application for condonation of delay would be filed. To entertain the appeal, the appellant will first have to comply with the mandatory provision of pre-deposit under Sec. 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) for which he is filed I.A. No. 537 of

¶14

¶15

¶16

The facts in brief are thus: The appellant has raised several contentions challenging the Sarfaesi measures including the validity of the demand notice under Sec. 13(2) of the SARFAESI Act, contending that the proper bifurcation of the dues is not given as required under Section 13(3). It is also stated that the name and designation of the authorised officer are not available in the notice. The appellant had sent an objection to the demand notice on 18.04.2022 to which the bank sent its response on 26.04.2022 without a proper explanation to the query raised by the appellant. Therefore, it is stated that there needs to be proper compliance of Sec. 13(3A) of the SARFAESI Act by the respondent. Symbolic possession was taken. Physical possession of the property is intended to be taken on the 12^th instant and therefore, the appellant has filed this appeal apprehending that he would be dispossessed of the secured asset.

¶17

The facts would indicate that on 28.08.2023 the Debts Recovery Tribunal (D.R.T.) had directed payment of ₹10 lakhs and also 50% of the total amount within 15 days and settle the debt. The protection was granted for a month. The appellants complied with that direction and paid ₹45 lakhs assuming that the account will be regularised. On 28.11.202, the D.R.T observed that the sum of ₹45 lakhs had been deposited and also directed a further amount of ₹10 lakhs to be deposited and directed the bank to maintain status quo and the appellant was directed to settle the dues and thereafter when the matter came up before the D.R.T. on 21.03.2024, the impugned order was passed. The D.R.T. has not gone into the merits of the

¶18

¶19

contentions raised in the securitisation application. It is also pertinent to note that nothing was stated regarding what is a shortfall for regularising the account and it is observed that despite several opportunities granted to the applicant to pay and regularise the account or settle the dues. Therefore, the liberty was granted to go ahead with the taking over of possession of the secured asset. It is pertinent to note that the D.RT. had directed maintaining the status quo which would indicate that it was to maintain the status quo till the dispute was resolved. Without resolving disputes, either regarding the overdue amount or regarding the total amount i.e. due, the status quo order granted by the D.R.T. could not have been vacated. I would rely on the decision of the Hon’ble High Court of Bombay in Govinda Bhagoji Kamable & Ors. vs. Sadu Bapu Kamable & Ors 2004 SCC OnLine Bom. 678 . The appellant apprehended that he would be dispossessed of the property on the 12^th instant. Therefore, seek protection.

¶20

The Ld. Counsel appearing for the respondent submits that no prima facie case has been made out and that the appellants are not entitled to any concession whatsoever. It is also stated that approximately ₹1.60 crores are still due and payable by the appellant. Therefore, they may not be granted any protection.

¶21

The appellant has made out a prima facie case with regard to the insufficiency of the demand notice and they have also produced the Income Tax Returns to indicate that they are under financial strain. Under the circumstances, I find that they need to be given certain concessions more so because they have already paid ₹55 lakhs directly to the bank representing the S.A. Considering these facts and

¶22

¶23

circumstances, the appellants are directed to pay a sum of ₹50 lakhs as pre-deposit for entertaining this appeal.

¶24

The Ld. Counsel appearing for the appellants submits that the demand draft is being produced for ₹25 lakhs today. The same shall be received. The balance amount of ₹25 lakhs shall be paid in two instalments of ₹10 lakhs and ₹15 lakhs within a gap of three and two weeks respectively as detailed hereinunder :

¶25

Number of Instalments	Payment on or before
1 stInstalment of₹10,00,000/-	30.08.2024
2 ndInstalment of₹15,00,000/-	13.09.2024

¶26

Failure to pay the instalment/amount within the time stipulated would entail in dismissal of the appeal without any reference to this Tribunal.

¶27

On the payment of the amount of ₹25 Lakhs today, the taking over of possession on the 12^th instant shall be deferred till the next date of hearing.

¶28

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.

¶29

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.

¶30