Disposed

Kashmira Gopal Dave Mihir Gopal Dave Gopal Chandulal Dave v. State Bank of India

DRAT12 Dec 2024IA/864/2024

Case brief

AI extract

What is this about?

The Tribunal dismissed an interim application seeking modification of pre-deposit requirements for a SARFAESI appeal regarding debt recovery. While finding no prima facie merit in the appellants' substantive challenges to bank actions, the Court directed a 50% pre-deposit of ₹2 crores instead of the sought 25% waiver, holding that the physical possession remained stayed pending payment.

What did the court decide?

Directed appellants to deposit ₹2 crores as pre-deposit (50% of debt) via Demand Draft/RTGS; took over of possession stayed till next hearing; appeal disposed of without adjudication on merits.

Kashmira Gopal Dave Mihir Gopal Dave Gopal Chandulal Dave… — 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. 864/2024 (WoD) In

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Appeal on Diary No. 2015/2024

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Between

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Kashmira Gopal Dave & Ors. … Appellant/s V/s.

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The Authorized Officer, …Respondent/s State Bank of India

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Mr Sandeep Bhatt, Advocate for Appellants.

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Mr Rony P.J. i/b M/s. Rony & Co., Advocate for Respondent.

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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 in appeal impugning the dismissal of Securitisation Application No. 187/2024 (S.A.) vide judgment dated 12.09.2024 by the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) challenging the Sarfaesi measures initiated by the respondent for recovery of debts allegedly due from the appellants under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short).

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The appellants had challenged the Sarfaesi measures on various grounds. It was contended that the demand notice u/s 13(2) of the SARFAESI Act does not comply with the mandatory requisite of

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giving a bifurcation u/s 13(3) of the SARFAESI Act. It is further contended that the loan account of the appellants was wrongly classified as NPA. The appellants would also contend that the residential house which is now being proceeded against was not a secured property for the loan transaction described as a ‘Suraksha loan’ wherein there is an outstanding amount of ₹ 50,241/- and therefore, the said property cannot be proceeded against to recover the amount due on that loan. After classification of the account as NPA, the appellants state that they have deposited ₹ 77 lakhs with the respondent bank and therefore, there is a challenge to the total amount claimed by the respondent bank. It is also contended that the provisions of Rules 8(1) and 8(2) of the Security Interest Enforcement Rules, 2002 were not complied with while taking symbolic possession of the subject property u/s 13(4) of the SARFAESI Act. The order of the Additional Chief Judicial Magistrate u/s 14 directing the taking over of possession of the subject property is also challenged on the grounds that the order is not sustainable.

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The Ld. Presiding Officer, D.R.T. has gone into all these issues in great detail and has concluded that none of the challenges raised to the Sarfaesi actions are sustainable. The appellants are aggrieved and hence, in appeal.

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The appellants will have to comply with the mandatory requisite u/s 18(1) by making a pre-deposit for entertaining this appeal. The amount demanded as per the demand notice u/s 13(2) was ₹ 7,41,33,714/- as of 26.11.2023. Subsequent interest for more than one year has also accrued. The Ld. Counsel appearing for the appellants

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contend that the appellants have a good prima facie case and that they are under financial strain. The Income Tax Returns of all the appellants have been produced which indicate that apart from the 1^st appellant who has a meagre income, the rest of the appellants do not have any income to pay 50% of the debt due. Hence, the Ld. Counsel appearing for the appellants urges that the discretion under the 3^rd proviso to Section 18(1) of the SARFAESI Act may be invoked to waive 25% of the debt due as pre-deposit.

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The Ld. Counsel appearing for the respondent bank has vehemently opposed this application stating that none of the contentions raised by the appellants were found to be sustainable by the detailed judgment delivered by the D.R.T. It is also contended that the physical possession of the subject property is intended to be taken on 15.12.2024. The appellants do not have any case and therefore, they may be directed to deposit 50% of the debt due.

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Perused the impugned judgment and the records available and heard the Ld. Counsel appearing on both sides. It appears that the Ld. Presiding Officer, D.R.T. has addressed all the contentions raised by the appellants in great detail and has dismissed the S.A. The challenge to the demand notice u/s 13(2) does not appear to be prima facie sustainable since the unapplied accrued interest is also shown separately other than the outstanding dues as of 26.11.2023. The appellants have sent an objection to the demand notice to which the respondent bank had not responded because the objections were raised belatedly and not within 60 days. The Ld. Presiding Officer, D.R.T., has relied upon the decision of the Hon’ble High Court of

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Gujarat to observe that the respondent bank is at liberty to proceed against the property for the entire debt which is due. As regards the classification of the account as NPA and the order u/s 14 also, the appellants did not find favour with, in the impugned judgment. On going through the entire judgment, I find that the appellants have not made out a prima facie case to sustain the challenge to the Sarfaesi action. However, they have succeeded in establishing that they are under financial strain and therefore, the appellants are entitled to some concession though not to the extent of getting the waiver of 25% of the debt due. The amount of debt due is taken as ₹7,41,33,714/-. The appellants are, therefore, directed to deposit the sum of ₹2 crores as pre-deposit for getting this appeal entertained. The Ld. Counsel appearing for the appellants is tendering a demand draft for ₹25 lakhs today towards the pre-deposit amount. The balance amount of ₹1,75,00,000 shall be paid in four equal instalments within a gap of two weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment of₹43,75,000	26.12.2024
2^ndInstalment of₹43,75,000	09.01.2025
3^rdInstalment of₹43,75,000	23.01.2025
4^thInstalment of₹43,75,000	06.02.2025

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Given the payment made today, the taking over of the possession on 15.12.2024 shall stand stayed till the next date of hearing.

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It is made clear that in case of any default in payment of any of

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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 27.12.2024 for reporting compliance of 1^st instalment of payment of pre-deposit.

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Sd/Chairperson

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nrp- 09

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Kashmira Gopal Dave Mihir Gopal Dave Gopal Chandulal Dave v. State Bank of India

Case brief

What is this about?

What did the court decide?

Kashmira Gopal Dave Mihir Gopal Dave Gopal Chandulal Dave v. State Bank of India

Case brief

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