Appeal against dismissal of an interim application seeking stay on asset sale. Court allowed reduced pre-deposit of Rs 2 crores due to arguable case on statutory notice failure.
Allowed reduced pre-deposit of Rs 2 crores to entertain the appeal; other relief stayed.
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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr. Justice Ashok Menon, Chairperson I.A. No. 818/2024 (WoD) In
Misc. Appeal on Diary No. 2414/2024
Between
M/s. Re Infra, A Partnership Firm & Ors. … Appellant/s V/s.
Central Bank of India …Respondent/s
Mr Puneet Gogad along with Ms Samita Vaviya i/b Mr Pritesh Burad Asso., Advocates for Appellants.
Mr Vilas Dashmani (through video-conferencing), Advocate for Respondent No.1.
Mr Tejas Girap, Advocate for Respondent Nos. 2 & 3.
-: Order dated: 12/12/2024:-
The appellants are in appeal impugning the dismissal of I.A. No. 3191/2024 in Securitisation Application No. 433/2024 (S.A.) on 30.10.2024 by the Debts Recovery Tribunal-III, Mumbai (DRT) declining to grant a stay to the appellants concerning the sale of a portion of the secured asset scheduled on 29.10.2024. The appellants consist of a firm and its partners who had admittedly borrowed money from the respondent bank and defaulted in repayment, in consequence of which, the respondent bank initiated measures under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) for the recovery of the debt due. Demand notices were issued
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u/s 13(2) and thereafter steps were taken u/s 13(4) and the properties comprising four items were put up for sale. Only one of the items was sold in the first attempt. In the second attempt for the sale of the remaining properties, yet another item of property was sold. Two more properties remain to be sold. The main objections raised by the appellants about the sale are that the 2nd notice was issued without granting 30 days’ notice for redeeming the debt and the notice did not comply with the provisions u/s Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. Moreover, the notice under Rule 9(1) was issued before the notice under Rule 8(6) was issued, as is apparent and would invalidate the entire sale. In the impugned order, the DRT has observed that being a 2nd sale admittedly, only 15 days’ notice is required to be served to which the Ld. Counsel appearing for the appellants submits that a notice under Rule 8(6) is to precede a notice under Rule 9(1) and the amendment about the time for the 2nd sale was reduced to 15 days. But no such amendment was incorporated into Rule 8(6) and therefore, Rule 8(6) has to be issued mandatorily giving 30 days for redemption. This particular aspect has not been considered by the Ld. Presiding Officer, DRT.
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payment of the pre-deposit amount. The total income of the firm and its partners will have to be taken into consideration to ascertain the impecuniosity of the appellants and therefore, the appellants are not entitled to the indulgence of bringing the pre-deposit amount down to 25% of the debt due. But because they have a prima facie case, the appellants are directed to deposit a sum of ₹ 2 crores as a pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellants submits that a demand draft of ₹1 crore is being produced today (produced and paid on 13.12.2024). The balance ₹ 1 crore shall be deposited in two equal instalments of ₹ 50 lakhs each within a gap of two weeks each as stated hereunder.
| Numbers of Instalments | Payment on or before |
|---|---|
| 1stInstalment of₹50,00,000 | 26.12.2024 |
| 2ndInstalment of₹50,00,000 | 09.01.2025 |
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Draft/RTGS with the Registrar of this Tribunal. Payment by RTGS shall be communicated to the Registry for verification.
Post on 27.12.2024 for reporting compliance of 1st instalment of payment of pre-deposit.
Sd/Chairperson
nrp- 04
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2 issues framed by the court
Whether mandatory pre-deposit can be reduced below 50% when 30 days notice is not given as required under Rule 8(6).
Whether later issuance of personal notice under Rule 9(1) before the sale notice under Rule 8(6) is a valid ground for objection.
Colour shows how this judgement treated each authority
Celir LLP versus Bafna Motors (Mumbai) Pvt. Ltd. & Ors.Referred¶13
Celir LLP versus Bafna Motors (Mumbai) Pvt. Ltd. & Ors. 2024 2 SSC 1
1 provisions across 1 enactments
M/s. Re Infra, A Partnership Firm & Ors.
Central Bank of India
Ashok Menon
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
