Allowed

Bharat Lekhumal Harwani v. Icici Bank Limited

DRAT1 Feb 2024IA/56/2024

Case brief

AI extract

What is this about?

The Tribunal examined an interim application regarding a pre-deposit requirement for an appeal against SARFAESI measures. While noting the impugned order failed to address merits and the deceased borrower's estate was represented, the Tribunal rejected the request for a 25% concession, directing a deposit of ₹1 crore instead.

What did the court decide?

The appeal was not dismissed; the applicant was directed to deposit ₹1 crore in instalments, and possession taking was deferred to the next hearing date.

Bharat Lekhumal Harwani versus Icici 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. 56/2024 (WoD) In Appeal on Diary No. 156/2024

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Between

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Bharat Lekhumal Harwani … Appellant/s V/s.

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ICICI Bank Ltd. …Respondent/s

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Mr. Puneet Gogad, i/b Mr. S.J. Khera, Advocate for Appellant.

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Mr. Charles D’Souza, i/b Mr. R.L. Motwani, Advocate for Respondent.

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

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The Appellant is in appeal impugning the order dated 04.09.2023 in Securitization Application (S.A.) No. 175/2023 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) whereby direction was given to the Applicant/Appellant to pay a sum of ₹20 lakhs to the Respondent Bank by the next date and another a sum of ₹30 lakhs within three weeks and 60 days protection was granted on the aforesaid compliance. Thereafter, the Respondent was given the liberty to take possession of the secured assets. It is submitted that the copy of the order was not available or uploaded. As a result of which the appeal could be filed only after getting the certified copy of the order.

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The Appellant had paid a sum of ₹20 lakhs as directed vide the impugned order. But the latter part has not complied and therefore, no further payments were made. The Appellant has several contentions in challenging the Sarfaesi measures. It is stated that the 13 (2) notices were issued to the Appellant and others who are the coborrower/mortgagor who were not served with the notice and therefore, they could not respond to that notice as well. Subsequently, a petition u/s 14 was filed before the Chief Metropolitan Magistrate (CMM) for physical possession of the property. A copy of the demand notice was obtained from the CMM and it seems that the notice does not bear the signature of the Authorized Officer nor is there any description of the name or the designation of the Authorized Officer who has allegedly issued the notice. That apart, it is also contended that the Appellant's father who was one of the persons mentioned in the demand notice as well in the application u/s 14 namely, late Lekhumal Hukumatrai Harwani died on 30.03.2021 after the application u/s 14 was filed on 26.10.2020 but the legal representatives of the deceased were never brought on record and impleaded.

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The Chief Metropolitan Magistrate passed the order u/s 14 on 24.02.2023. It is also contended that the mortgage was never created and in the impugned order the Ld. Presiding Officer has not gone into the merits before granting permission to the Respondent Bank to take over the possession after 60 days. The contentions raised by the Appellant in the S.A. were never addressed in the impugned order and therefore, it is stated that the impugned order is prima facie not sustainable. The Appellant also submits that he is under financial strain

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and income tax returns for the two assessment years have been produced which indicates that the income is ₹10.42 lakhs and ₹5.49 lakhs respectively. He is therefore, not in a position to deposit 50% of the amount demanded as per deposit, and therefore, indulgence may be shown to reduce the deposit to a minimum of 25% of the amount demanded.

¶15

The demand notice states that an amount of ₹2,01,84,694/- is outstanding on 06.01.2020. The Ld. Counsel appearing for the Respondent Bank submits that as of date there is an outstanding due sum of ₹3.14 crores approximately, inclusive of interest. This amount is after giving credit to the amount of ₹20 lakhs which was paid as per order of the D.R.T. It is pointed out that there are other legal heirs already on record in the notice as well as the application filed u/s 14 but none has challenged the Sarfaesi measures except the Appellant. The borrower/mortgagor has challenged the Sarfaesi measures by filing S.A.

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The Ld. Counsel appearing for the Respondent also submits that together with the application u/s 14 the evidence regarding the dispatching of the notices to the borrowers by RPAD was produced. Those documents would show that the address of the borrower is that mentioned in the S.A. as well as the Appeal indicates that the notice by registered post was issued at the correct address of the Appellant and others and therefore, the presumption u/s 27 of the General Clauses Act will have to be taken to hold that the service was duly made. The Ld. Counsel appearing for the Appellant also pointed out that notice was issued during the peak of the COVID-19 pandemic,

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and therefore, neither the packets were returned nor were the Acknowledgement cards received, and the Ld. Counsel submits that probably it was not returned because of the Covid-19 pandemic. The Ld. Counsel appearing for the Respondent also submits that the fact that the deceased, one of the borrowers had died was never intimated to the bank.

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It is also stated the submitted that when the estate of the deceased was sufficiently represented by the rest of the borrowers which also includes one of the legal heirs, there would be no abatement. The Ld. Counsel has also relied upon the judgment of the Punjab & Haryana High Court in Shriram Housing Finance Ltd V/s State of Haryana & Ors Writ Petition No.31871/2019 dated 11.03.2022, and the decision of the Hon’ble Supreme Court of India in Shivshankara & Ors. V/s H.P. Vedavyasa Char AIR 2023 SC 1780 to indicate that when there is a sufficient representation of the estate of the deceased party, there would be no abatement and therefore, it cannot be said that the proceeding was against a dead person and would therefore, be rendered infructuous. That apart, the Ld. Counsel appearing for the Respondent submits that the Appellant had sufficient time to challenge the impugned order which was dictated in the opened court on 04.09.2023 even though the copy was not available mentioning that fact could have been filed within time and now the Appellant has come on 11^th hour when the taking over possession of the property scheduled for today.

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Under the circumstance, it is also submitted that the Appellant had offered to settle the entire debt and had even sent an email on

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18.09.2023 to the Respondent Bank stating that he is ready to pay the entire amount due and ready to clear the claim of the sum of ₹1,92,65,000/- which was offered earlier by the Bank. He had sought for not more than 60 days to pay the entire amount but even after that period had expired the payment was not paid by the Appellant which indicates that he has no intention to clear the debt and was only purchasing time when facing dispossession of the secured assets. That apart, it is also argued by the Ld. Counsel appearing for the Respondent that the Appellant has produced income tax returns of the Appellant alone, while there are other borrowers also, which includes the company. The tax returns of the other borrowers also need to be produced to prove that they are under financial strain.

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It is also submitted that the Appellant is only a person who has challenged the Sarfaesi measures while the others who are interested have not come for any challenge to the Sarfaesi measures. Hence, it is prayed that the Appellant may not be given any concession taking into consideration his attitude of protracting the matter and he may by directed deposit the 50% of the amount that is due as of date. as predeposit.

¶24

After hearing the submission of both sides, I find that the Ld. Presiding Officer has not gone into the merits of the contention raised and has not addressed the point raised in the challenge to the Sarfaesi measures. The impugned order only directs the Appellant to deposit a certain amount within a time frame, and the protection of 60 days is granted to the Appellant. Any order of an interlocutory nature granting a protection or injunction to the applicant has to be a well-reasoned

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order which I find in the impugned order is not. Indeed, the injunction should not be granted without making any deposit but the Appellant was directed to deposit a sum of ₹20 lakhs as the first tranche which he has complied, with but failed to comply with the payment of the 2^nd instalment, a sum of ₹30 lakhs. Even if he had complied with that, the protection was granted only for 60 days and thereafter, the Respondent Bank was given the liberty to take possession of the secured assets.

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The Appellant has produced documents to show that he is under financial strain but as submitted by the Ld. Counsel for the Respondent, that the other debtors also who are affected by the Sarfaesi measures initiated against the subject property have not produced evidence of financial strain. Hence, taking into consideration the fact that none of the others who are interested in the challenge of the Sarfaesi measures except the Appellant had contested, the fact of financial strain is not proved. It is possible that because he has the lowest income among the others he has been projected as a person who is affected.

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That apart it is also to the kept in mind that the proceedings would never abate given the decision of the Hon’ble Supreme Court because the estate of the deceased has been substantially represented by one of the legal heirs. It does not seem that the Appellant had at any time addressed the bank regarding the demise of his father. Even in the email dated 18.09.2023, he has not mentioned that fact and therefore, it is not possible that the Respondent bank may know about the demise of one of the borrowers. It is also pertinent to note that at

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the time of issuing notice u/s 13 (2) as also on the date of filing of the application u/s 14 the deceased person was alive. Even if the notice as mentioned by the Appellant was not served upon them, It is pertinent to note that the notice has been published in the newspapers in both vernacular and English and therefore, it is always possible that the Appellant did know about the issuing of the demand notice for the defaulted amount.

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The Appellant, therefore, does not have a very strong prima facie case even though there is an arguable case that needs to be examined further. The impecuniosity of the Appellant alone may not be sufficient to give him a concession to the extent of 25% as claimed. The Appellant is, therefore, directed to deposit a sum of ₹1 crore as pre-deposit. The Ld. Counsel appearing for the Appellant submits that he is producing the demand draft for a sum of ₹15 lakhs today. The balance of ₹85 lakhs shall be paid in three instalments within the gap of two weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹28,00,000/-	15.02.2024
2^ndInstalment of₹28,00,000/-	29.02.2024
2^ndInstalment of₹29,00,000/-	14.03.2024

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Given the payment of the ͅ ₹15 lakhs today, the taking over possession today shall be deferred till the next date of hearing. 15. Default in payment of any of the instalments/amount shall entail in 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 with the Registrar of this Tribunal.

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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 Respondents is at liberty to file a reply in the Appeal with an advance copy to the other side.

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Post on 16.02.2024 for reporting compliance regarding the payment of the 1^st instalment.

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Sd/Chairperson

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psa-08

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Bharat Lekhumal Harwani v. Icici Bank Limited

Case brief

What is this about?

What did the court decide?

Bharat Lekhumal Harwani v. Icici Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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