Disposed

M/S Shivani Creation And Ors. v. City Union Bank Limited and Ors.

DRAT13 Sept 2024IA/538/2024

Case brief

AI extract

What is this about?

DRAT allowed the I.A. discharge of possession by directing deposit of INR 60 lakhs as pre-deposit for entertaining the appeal against the bank's possession order, citing prima facie case on Section 13(2) and 13(3) defects.

What did the court decide?

In the amount to be deposited INR 60,00,000/- is set as a bond for the temporary discharge of possession pending the disposal of the appeal.

M/S Shivani Creation And Ors. versus City Union Bank Limited… — Banking and Recovery | DRAT (2024)

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

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I.A. No.538/2024 (WoD)

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Appeal on Diary No.1524/2024

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Between

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M/s. Shivani Creation and Ors. … Appellant/s V/s.

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The Authorized Officer, City Union Bank Ltd. & Anr.

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…Respondent/s

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Mr Dhrumit Chauhan, Advocate for Appellants.

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Mr Vinay Deshpande and Ms Shobha Chavan, Advocate for Respondents.

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-: Order dated: 13/09/2024:-

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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 the two proprietorships represented by their proprietors who are the husband and wife challenging the impugned order dated 19.06.2024 in the Securitisation Application (S.A.) 181/2024 on the files on Debts Recovery Tribunal-II, Ahmedabad (D.R.T) wherein for prohibiting the dispossession of the secured assets, the appellants have moved an application for interim protection and the D.R.T. granted protection from being dispossessed subject to deposit of 20% of the demanded amount of the debt due. Aggrieved by that order, the appellants are in Appeal. 2. The appellants had taken three loans, two loans were availed by the husband who owns a proprietorship of the one, Shivani Creations and the one of the facilities was availed by his wife Rinkudevi which is the proprietor of Shivshambu Prints. The proprietors are co-applicants in both the loans which they defaulted in repaying. The accounts were classified as NPA and the demand notice was issued by the bank u/s 13(2) of the SARFAESI Act demanding the total amount of ₹1,28,76,128/- and the appellants

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raised objections to that demand notice stating that there was not any bifurcation of the debt due as required u/s 13(3) of the SARFAESI Act. The name and designation of the authorized officer was not in the demand notice and therefore, his competency to issue the demand notice is questioned by the appellants. To that objection raised by the appellants, the bank has not replied u/s 13(3)A but contended that in the report from the evasive reply to the contentions raised by the appellants, there was no clarification mentioned regarding the bifurcation of the amount due.

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The symbolic possession of the subject property was taken and the respondent bank proceeded to auction sale issuing the auction notice dated 27.03.2024 which was served on the appellants. The appellants have challenged to the sale notice by way of amending to the S.A. The sale was successful but the auction purchaser did not deposit the 75% of the balance consideration within the stipulated time and therefore, the bank cancelled the sale. Thereafter, the bank obtained an order from the Ld. ACJM, Surat u/s 14 of the SARFAESI Act dated 08.04.2024 to take the physical possession of the property. The appellants have now received the notice from the officer of the Court scheduling to taking over the physical possession of the subject property on 15.09.2024. The appellants also have challenged the validity of the order u/s 14 stating that the Ld. Magistrate has not recorded or specified the allegations made in the nine pointer affidavit. It is also contended that the nine pointer affidavit does not disclose the true state of affairs. The reply sent to the demand notice u/s 13(2) and the rejoinder given by the bank are not disclosed in the nine pointer affidavit and therefore, the order obtained u/s 14 is defective and the challenge to the order u/s 14 is also unaccepted in the S.A. by way of amendment.

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In the impugned order, the Ld. Presiding Officer agreed that the challenge raised regarding the validity of the notice u/s 13(2) in the orders and does not give the bifurcation of the principal amount and interest. Regarding the other allegations, there was no discussion in the impugned order. However, considering that the appellants have the prima facie case in their favour, challenging the demand notice u/s 13(2) have been the non-compliance of the Section 13(3). The Ld. Presiding Officer granted the conditional protection to the appellants from being dispossessed from the property subject to the deposit of 20% of the amount demanded. Not being satisfied by that order, the appellants are in Appeal.

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The appellants will have to first comply with the mandatory requisite u/s 18(1) for getting the Appeal entertained. It is prayed that indulgence maybe shown by this Tribunal by invoking the discretion under the 3^rd proviso u/s 18(1) of the SARFAESI Act by giving the waiver of 25% of the debt due.

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The appellants would contend that the infirmity of the demand notice u/s 13(2) is also not recorded by the D.R.T. in its order and also that they have a good prima facie case regarding their challenge to the nine pointer affidavit is also passed u/s 14. The appellants have also challenged the validity of the sale notice which was issued. But since the sale is already failed and stands cancelled. However, in view of the fact that the respondent bank has not given any clarification and the breakup of the principal amount and interest is not given. Even in the reply which they have given to the objections raised by the appellant does not verify that prima facie there is an infirmity in the demand notice u/s 13(2).

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There is also an infirmity in the nine pointer affidavit since the respondent bank has not mentioned that in the objections raised to the demand notice by the borrowers and the replies sent by them u/s 13(3)A and therefore, there is no disclosure of amount in the nine pointer affidavit. I would, therefore, conclude that the appellants have made out the prima facie case in challenging the Sarfaesi measures. Now, the point for consideration would be the financial stand of the appellants. The appellants have produced their Income Tax Returns which indicate that the businesses have failed and they do not have income from the proprietary businesses. However, they have some income from their other businesses as shown in the Income Tax Returns. The appellants have produced the documents that indicate that they have incomes of ₹4 lakhs each. Taking into consideration these circumstances, I find that the appellants are not entitled to get the entire 25% of the debt due under Section 18(4) but they are entitled to certain concession.

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The respondent bank has also issued the sale notice for the total sum of Rs.1,40,11,254/- as per the decision of the Hon’ble Apex Court in Neelkant Paper Industries Pvt. Ltd. and Anr. vs Prudent ARC Ltd. and Ors. 2023 SCC OnLine SC 12 , the sale notice amount will have to be taken as the threshold amount for the payment of pre-deposit. Considering that amount as a threshold amount, I direct the appellants give the deposit of ₹60 lakhs for getting the Appeal entertained. The Ld. Counsel for the appellants has submitted a

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demand draft for ₹10 lakhs today. In view of the payment made, the possession scheduled on the 15^th instant shall stand deferred till the next date of hearing. The balance ₹50 lakhs should be paid in two equal instalments as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹25 lakhs	04.10.2024
2^ndInstalment of₹25 lakhs	18.10.2024

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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 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.

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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 07.10.2024 for reporting compliance.

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Sd/Chairperson

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Nidhi-05

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M/S Shivani Creation And Ors. v. City Union Bank Limited and Ors.

Case brief

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M/S Shivani Creation And Ors. v. City Union Bank Limited and Ors.

Case brief

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