Disposed

Prabat Plaza Private Limited and Ors. v. Religare Finvest Limited

DRAT10 Feb 2025IA/250/2024

Case brief

AI extract

What is this about?

The DRAT examined the appellants' application for waiver of pre-deposit under Section 18(1) of the SARFAESI Act. Disregarding the appellants' calculation of dues, the court fixed a pre-deposit threshold of approximately Rs. 9 crores based on the institution's claim and directed the appellants to deposit Rs. 3 crores in three instalments to entertain the appeal.

What did the court decide?

Appellants directed to deposit Rs. 3 crores in three instalments of Rs. 1 crore each to avail the opportunity to present the appeal.

Prabat Plaza Private Limited and Ors. versus Religare… — Company and Corporate | DRAT (2025)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 250/2024 (WoD) In

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Misc. Appeal on Diary No. 1329/2023

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Between

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Prabhat Plaza Pvt. Ltd. & Ors. … Appellant/s

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V/s.

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Religare Finvest Ltd. & Ors. …Respondent/s

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Mr. Rishab Shah along with Ansari, i/b M/s. Vivek Patil & Associates, Advocate for Appellants.

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Mr. Charles D’souza along with Mr. Archit Virmani & Mr. Atup Gupta & Ms. Khushi Agarwal, i/b M/s. Optimus Legal, Advocate for Respondent.

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-: Order dated: 10/02/2025:-

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The appellants are in appeal impugning the order dated 11.07.2023 in Securitisation Application No. 218/2023 (S.A.) by the Debt Recovery Tribunal-III, Mumbai (D.R.T.) delining to grant any protection to them concerning the measures taken by the first respondent financial institution(FI) under the provisions of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002(“SARFAESI Act”, for short) for recovery of a debt due from the appellants, observing that though settlement opportunities were granted to them, they failed to settle the matter. Further adjournment sought by them for settlement therefore could not be granted. The appellants are aggrieved and hence, in appeal.

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The appellants will have to comply with the mandatory requisite of making the pre-deposit as contemplated u/s 18 (1) of the SARFAESI Act for this appeal to be entertained. The appellants have applied for a waiver of pre-deposit stating that after the receipt of the demand notice, substantial payment has been made by them as well as by the purported licensees who are in occupation of the secured assets. A sum of more than ₹5 crores has been thus realized by the financial institution. Hence, the total outstanding dues have come down substantially and therefore, they may be granted a full waiver of the pre-deposit.

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There does not appear much challenge to the Sarfaesi action and it seems that the appellants are more concerned about settling the entire dues and want time for that. Opportunities granted to them were not seized, and they failed to comply with the undertaking and as a result, the D.R.T. refused to grant any further protection to them. There are two purported licensees (status disputed by the FI) in occupation of the properties which were mortgaged and both of them had preferred applications challenging the Sarfaesi measures to protect their possession. On certain conditions, they were permitted to continue on the premises, provided they paid the license fees directly to the FI. As a result, some amount has been realized by the FI by way of license fees collected from the purported licensees in possession. That apart, the appellants have also paid a certain amount.

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The Ld. Counsel appearing for the appellants would contend that after adjusting the amount that has been realized, only a sum of

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₹3,28,82,891/- alone is now due and payable. And therefore, they may be granted a waiver of pre-deposit. The calculation is based on the ground that on account of three facilities granted, there is a principal amount of a sum of ₹7,15,89,782/- dues and on that, the interest as admitted by the respondent in their affidavit is ₹1,66,81,572/- which adds up to ₹8,82,71,354/-. Towards this, a sum of ₹5,53,88,463/- was realised/paid. That would bring the balance due to ₹3,28,82,891/-. Accordingly, the Ld. Counsel appearing for the appellants, they have now paid 62% of the debt due and hence, they may not be asked to pay any amount due toward the pre-deposit as that would be tantamount to payment of the entire dues.

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The Ld. Counsel appearing for the FI submits that the calculation of the appellants regarding arrears due is misconceived. After making adjustments to the amount which have been collected from the purported licensees and the payment made directly by the appellants, they are still liable to pay to the FI a sum of ₹9,00,89,567.70 as of 22.01.2025. The Ld. Counsel appearing for the appellants have taken expectation to the calculation made by the FI for the reason that there are unexplained “other charges” added up totalling up to ₹4.82 lakhs which need to be excluded. The Ld. Counsel appearing for the respondent submits that those charges are legally due and payable by the appellants and the breakup of those amounts has also been given in the account statement. Therefore, there is no reason whatsoever to reduce or deduct those amounts from the total amount due.

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It is relevant to note that this is an appeal preferred by the appellants challenging the order of the D.R.T. declining to grant any

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protection to them in the S.A. which is still pending consideration. The Sarfaesi action is mainly for the recovery of debt which is due based on the demand notice. There is no adjudication of the correctness of the amount that is due but the D.R.T. can while considering the application see whether there are any amounts that have been unreasonably added to the total amount mentioned as due. But in the appeal, I do not find that there is any scope for entertaining the correctness of the amount that is claimed. If the appellants want to get the amount realized consequent to the issuance of the demand notice deducted, they will also have to pay the interest that has accrued subsequently. Hence, the correctness of the other charges that have been claimed by the financial institution cannot be considered at this stage by this Appellate Tribunal and roughly the amount which is now due would come to ₹9 crores. The appellants will have to make the pre-deposit based on this threshold amount. Because the appellants have made a substantial payment toward the debt due after the receipt of the demand notice, and have also made an effort to pay out the debt, they are entitled to some indulgence though they have not proved by way of producing the documents, their financial strain to pay the pre-deposit.

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Hence, considering the entire facts and circumstances, I direct the appellants to pay ₹3 crores toward the pre-deposit for entertaining the appeal. The said amount shall be deposited in three equal instalments of ₹1 crore each within the gap of three weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹1 Crore	03.03.2025
2^ndInstalment₹1 Crore	24.03.2025
3^rdInstalment₹1 Crore	14.04.2025

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The respondent financial institution may also consider the proposals made by the appellants to introduce new licensees subject to the same condition that is now being followed for the existing licensees. That would only further the realisation of the debt

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Default in payment of any instalment on time shall entail the dismissal of the appeal without any further reference to this Tribunal. 10. 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 and intimated to the counsel for the respondent.

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

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List the matter on 04.03.2025 for reporting compliance regarding the payment of the 1^st instalment of pre-deposit.

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psa-02

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Prabat Plaza Private Limited and Ors. v. Religare Finvest Limited

Case brief

What is this about?

What did the court decide?

Prabat Plaza Private Limited and Ors. v. Religare Finvest Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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