The Tribunal granted a concession on the pre-deposit requirement for an appeal against SARFAESI measures. The Court directed partial payment by instalments and stayed further recovery actions pending compliance.
Pre-deposit of ₹6 crores ordered in instalments; further SARFAESI measures stayed pending payment of first installment.
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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 871/2024 (WoD) In
Misc. Appeal on Diary No. 2542/2024
Between
Mahatma Gandhi Vidyamandir … Appellant/s V/s.
Religare Finvest Ltd. & Ors. …Respondent/s
Mr Charles De Souza (through video-conferencing) i/b M/s. T.N. Tripathi & Co., Advocate for Appellant.
Mr Archit Virmani along with Mr Atul Gupta, Advocates for Respondent No. 1.
-: Order dated: 17/12/2024:-
The matter is taken up for hearing by way of a praecipe filed by the appellant for seeking urgent relief.
The appellant impugns the order dated 30.10.2024 in Securitisation Application No. 229/2024 on the files of Debts Recovery TribunalII, Mumbai (D.R.T.) wherein on a submission made by the respondent that the appellant had submitted an OTS for ₹ 6 crores against an outstanding amount of ₹16 crores, the proposal was objected to and the D.R.T. granted the appellant two months to settle the matter failing which liberty was granted to the respondent financial institution to take appropriate measures under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short). To understand this
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order, an earlier order of the D.R.T. dated 20.08.2024 will have to be perused by which, subject to payment of ₹ 6 crores in instalments, protection was granted to the appellant against the Sarfaesi measures initiated by the respondent and it was also directed that since the appellant was keen on settling the dues, they were directed to make an OTS proposal. The OTS proposal as mentioned in the order dated 30.10.2024 was only for ₹6 crores as against the outstanding amount of ₹ 16 crores and hence was rejected by the respondent which resulted in granting them the liberty to proceed with the Sarfaesi action. It is pertinent to note that neither in the order dated 20.08.2024 nor in the impugned order dated 30.10.2024 did the D.R.T. go into the merits of the contentions raised by the appellant in his challenge to the Sarfaesi action and the applications filed by the appellant pending the S.A. was to seek interlocutory protection till the disposal of the S.A. and they had raised several contentions challenging the Sarfaesi action which were not delved into.
The fact that the appellant did not comply with the directions to settle the dues, is not a reason for withdrawing the protection granted to them. An order of protection to an applicant can be only withdrawn based on the merits of the case and under a change in the circumstances, which I am afraid, has not been adhered to in the impugned order. Hence, as far as the challenge to the impugned order is concerned, the appellant does have a case in this appeal.
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consequence to that, the demand notice was issued for ₹13,40,24,954.78 as of 15.06.2022. After that, there was an OTS proposal made by the respondent on 28.11.2022 which was accepted by the appellant. Therefore, it cannot be said that the challenge to the demand notice or the Sarfaesi action thereafter, would survive given the OTS proposal made and accepted by the appellant. They had agreed to pay a sum of ₹ 9,75,00,000/- as against the then outstanding of ₹ 15,06,68,713/-. After having agreed to pay the amount, the appellant cannot now go back and challenge the Sarfaesi action.
However, to entertain this appeal, the appellant will have to comply with the mandatory requisite of making the pre-deposit u/s 18(1) of the SARFAESI Act. The appellant has pleaded impecuniosity stating that though they have certain income as is seen in the returns and the statements filed by them together with the application for waiver, they have not produced any documents to indicate that they are running short of funds to pay 50% of the demanded amount. Even as per the impugned order, they had agreed to pay ₹ 6 crores towards the settlement of the dues which indicates that they have the money. The Income Tax Returns do not show much income. But the statement which is mentioned together with the application for waiver indicates that there are certain incomes derived from the trust which is been appropriated for the expenses of the institution. The Ld. Counsel appearing for the respondent submits that the appellant has been constantly coming up with OTS proposals to stall the taking over of possession and then again default payment and come up with the application as and when further measures are taken which according
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to the bank indicates that the appellant lacks bonafides in his statements to repay the entire debt that is due.
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nationalised bank, initially for 13 months, and thereafter to be renewed periodically.
Post on 27.12.2024 for reporting compliance of 1st instalment of payment of pre-deposit.
Sd/Chairperson
nrp- 13
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2 issues framed by the court
Whether the appellant was entitled to a waiver or concession in the mandatory pre-deposit for entertaining the appeal.
Whether the condition precedent under Section 18(1) of the SARFAESI Act was satisfied for the admission of the appeal in piecemeal installments.
1 provisions across 1 enactments
Mahatma Gandhi Vidyamandir
Religare Finvest Ltd.
Ashok Menon
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
