Allowed

Shankarrao Pawar Seat Corner v. Fullerton India Credit Company Ltd.

DRAT24 Jan 2025IA/899/2024

Case brief

AI extract

What is this about?

The DRAT directed the appellants to deposit ₹2.50 crore as a pre-deposit of 5% demand amount in two instalments to entertain an appeal against a DR.T. order. The court noted the appellants had not made the payment and rejected their request for concession, invoking the ARCE Polymer decided precedent.

What did the court decide?

Directed appellants to deposit ₹2.50 crore in two instalments by 14.02.2025 and 07.03.2025 to defer SARFAESI action.

Shankarrao Pawar Seat Corner versus Fullerton India Credit… — Banking and Recovery | DRAT (2025)

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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. 899/2024 (WoD) In

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Misc. Appeal on Diary No. 2176/2024

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Between

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Shankarrao Pawar Seat Corner & Ors. … Appellant/s

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V/s.

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Fullerton India Credit Company Ltd. …Respondent/s S.S. Kothiya, Advocate for Appellants. Mr. R.J. Singh, i/b M/s. R.J. Singh & Co., Advocate for Respondent.

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The appellants are in appeal impugning the order dated 27.09.2024 in Interlocutory Application (I.A.)No. 2493/2024 in Securitisation Application (S.A.) No. 400/2022 on the files of the Debt Recovery Tribunal, Pune (D.R.T.) whereby after observing that the respondent financial institution has already sold one out of the three properties which were secured assets, and recovered, a sum of ₹4.92 crores, there is still an outstanding dues payable and therefore, the appellants were directed to pay 5% of the demand notice amount for being protected from the dispossession of the remaining one item of property that is in their possession for two weeks. The appellants were aggrieved and hence, in appeal.

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The appellants have not complied with the direction of making the payment of 5% of the demand notice amount. The appellants had raised contentions regarding the correctness of the amount mentioned 1

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in the demand notice and no other challenge of the Sarfaesi action has been raised. The demand notice dated 17.08.2021 demands a sum of ₹6,65,11,271/-. After that, the one item of property was sold by the respondent. The appellants would state that a sum of ₹4.29 crore was realized by the sale of that property but the Ld. Counsel appearing for the respondent bank submits that a sum of ₹3.30 lakhs alone was recovered by the sale of that item of property. It is submitted by the Ld. Counsel appearing for the respondent bank that after the issuance of the demand notice there was an OTS proposal that was accepted by the bank for total a sum of ₹8.50 crores and it is a consequence of that OTS proposal the one item of property was sold and thereafter, the appellants have also paid a sum of ₹52 lakhs to the bank in accordance with the OTS proposal and after filing the S.A. A sum of ₹5 lakhs was paid by the appellants on 05.08.2022 and a further amount sum of ₹2 lakhs was paid on 08.07.2024 as per the direction of the D.R.T. and thus the total sum of ₹3.92 crores has been realized toward the debt due and the as on 13.01.2025 there is an outstanding due a sum of ₹5,69,47,247.56.

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It is further submitted by the Ld. Counsel appearing for the respondent financial institution that there is yet another loan for which the demand notice has not been issued and that the total amount which is due and payable by the appellants would come to more than a sum of ₹8.96 crore. However, we are only concerned with the demand notice for paying the pre-deposit. The appellants will first have to comply with the mandatory requisite of making the predeposit u/s 18 (1) of the Securitisation and Reconstruction of

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Financial Assets and Enforcement of Security Interest Act of 2002 ( “SARFAESI Act” for short). Since the appellants had accepted an OTS proposal, paid a certain amount and also agreed to sell one item of property which was released from the mortgaged property already sold, the appellants cannot challenge the Sarfaesi action given the decision of the Hon’ble Apex Court in ARCE Polymer Pvt. Ltd. V/c Alphine Pharmaceuticals Pvt. Ltd. & Anr. (2022) 2 SCC 221. After adjusting the amount that was received as a consequence of the sale of one item of property, and the subsequent payments, ₹5,69,47,247.56 would be the amount that is outstanding and payable to the respondent. Hence, that amount is taken as the threshold amount to make the pre-deposit. The appellants have not produced any document to indicate that they are under financial strain. Since there is a challenge to the Sarfaesi action will not also lie, the appellants are not entitled to any concession from this Tribunal to invoke the discretionary power granted under the 3^rd proviso to section 18 (1) of the SARFAESI Act.

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The appellants are, therefore, directed to deposit a sum of ₹2.50 crore as pre-deposit for entertaining this appeal. The amount shall be deposited in two equal instalments within the three weeks each as stated hereunder.

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Numbers of Instalments	Payment on or before
1^stInstalment₹1.25 Crore	14.02.2025
2^ndInstalment₹1.25 Crore	07.03.2025

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On the payment of the 1^st instalment on time, the appellants shall be entitled to get the Sarfaesi action deferred till the next date of

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hearing.

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Default of payment of any instalment on time shall entail the dismissal of the appeal without any further reference to this Tribunal. 7. 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 respondents.

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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 17.02.2025 for reporting compliance regarding the payment of 1^st instalment of pre-deposit.

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psa-04

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Sd/Chairperson

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Shankarrao Pawar Seat Corner v. Fullerton India Credit Company Ltd.

Case brief

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What did the court decide?

Shankarrao Pawar Seat Corner v. Fullerton India Credit Company Ltd.

Case brief

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