Partly allowed

Sri Nataraja Modern Rice Mill v. Debts Recovery Appellate Tribunal

Madras HC6 Dec 2019WP/34186/2019

Case brief

AI extract

What is this about?

The Madras High Court reviewed the mandatory pre-deposit order of the Debts Recovery Appellate Tribunal under the SARFAESI Act. Noting the petitioner's financial difficulty and partial compliance during pendency of earlier appeals, the Court modified the Tribunal's order by reducing the required pre-deposit to Rs. 75 lakhs over nine weeks, which must be met for the appeal to be entertained.

What did the court decide?

The impugned order of the Debts Recovery Appellate Tribunal is modified; the petitioner is directed to deposit Rs. 75 lakhs in three installments of Rs. 25 lakhs within nine weeks; upon compliance, th

Sri Nataraja Modern Rice Mill Vs Debts Recovery… — Company and Corporate | Madras HC (2019)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 06.12.2019

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CORAM

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THE HONOURABLE MR.JUSTICE M.SATHYANARAYANAN AND THE HONOURABLE MRS.JUSTICE R.HEMALATHA

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W.P.No.34186 of 2019

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Sri Nataraja Modern Rice Mill Rep. by its Partner Sri T.Gunasekaran No.23, Gandhi Road Kallakurichi 606 202 Villupuram District .. Petitioner -vs1. Debts Recovery Appellate Tribunal 4th Floor, Indian Bank Circle Office 55, Ethiraj Salai Chennai 600 008 2. Debts Recovery Tribunal -1 Spencer Tower 770-A, Anna Salai Chennai 600 002 3. Indian Bank Rep. by its Authorised Officer Kallakurichi Branch Kallakurichi .. Respondents

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Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the records of the first respondent in respect of the order passed in AIR No.348 of 2019 dated 28.11.2019 and quash the same.

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For Petitioner :: Mr.M.D.Thirunavukkarasu For Respondents :: Mr.M.Praveenkumar for Mr.P.V.Murlidhar for R3

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ORDER

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(Order of the Court was made by M.SATHYANARAYANAN, J.)

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The petitioner had availed credit facilities from the third respondent Bank to the tune of Rs.530.89 lakhs as OCC, MTL I, II, III, FITL I, FITL II and on account of the non-payment/non-settling of debts, the said accounts were classified as 'Non Performing Asset' (NPA) on 31.10.2018 and a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (for short, “the SARFAESI Act”) was issued on 5.11.2018. According to the third respondent Bank, within sixty days time frame/window granted to the petitioner, he did not take any steps to regularise the accounts and accordingly, possession notice was issued under Section 13(4) of the SARFAESI Act on 19.1.2019. The petitioner filed SARFAESI Appeal in S.A.No.75 of 2019 on the file of the Debts Recovery Tribunal-I at Chennai, challenging the legality of the said notice, in which the third respondent Bank has filed a counter affidavit. The petitioner also filed S.A.No.176 of 2019 against the sale notice dated 6.3.2019, which was published on 8.3.2019, with a delay of 17 days in filing the application.

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S.A.No.75 of 2019 filed by the petitioner, challenging the possession notice dated 19.1.2019, came to be dismissed vide order dated 26.6.2019 by the Debts Recovery Tribunal-I, Chennai and the said Tribunal had also dismissed S.A.No.176 of 2019 vide order dated 24.9.2019, which was preferred against the sale notice. The petitioner, aggrieved by the dismissal of S.A.No.176 of 2019, filed A.I.R.No.348 of 2019 before the Debts Recovery Appellate Tribunal, Chennai and filed I.A.No.995 of 2019 praying for complete waiver of the mandatory deposit of 50% of the outstanding dues to the respondent Bank and also filed yet another interlocutory application for stay of the proceedings. The Debts Recovery Appellate Tribunal vide proceedings dated 28.11.2019, had taken note of the relevant statutory provisions and directed the petitioner/appellant therein to make the pre-deposit of Rs.1.20 crores with the Registrar of the Tribunal in two installments, out of which the first installment of Rs.60 lakhs, has to be deposited within a period of four weeks from the date of the order and the second installment of Rs.60 lakhs, has to be deposited in next four weeks thereafter with the default clause and challenging the legality of the said order dated 28.11.2019, the present writ petition is filed.

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The learned counsel for the petitioner would submit that during the pendency of the S.A.No.176 of 2019, a conditional order of status quo was granted and accordingly, the petitioner has deposited a sum of Rs.64 lakhs in compliance of the same and it was also further directed to deposit another sum of Rs.50 lakhs, towards which, the petitioner had paid a sum of Rs.14 lakhs, aggregating to a sum of Rs.78 lakhs, despite great difficulty and financial hardship, and therefore, the impugned conditional order passed by the Tribunal, requires some modification.

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The Court heard the submissions of the learned counsel for the third respondent Bank also stating that since the petitioner did not comply with the order, steps have already been taken to take possession of the secured assets by invoking Section 14 of the SARFAESI Act.

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Section 18 of the SARFAESI Act deals with an appeal to the Appellate Tribunal and as per the second proviso, no appeal shall be entertained unless the borrower has deposited to the Appellate Tribunal 50% of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less and as per the third proviso also, that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than 25% of debt referred to in the second proviso. In the light of the submissions made in paragraph-5 of the affidavit filed in support of the writ petition as well as paragraph-5 of the interlocutory application filed for waiver of pre-deposit and other facts and circumstances, this Court modifies the impugned order of the Debts Recovery Appellate Tribunal, as follows:-

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“The petitioner is directed to deposit a sum of Rs.25 lakhs to the credit of the A.I.R.(SA) No.348 of 2019 on the file of the Debts Recovery Appellate Tribunal within a period of three weeks from the date of receipt of a copy of this order and another sum of Rs.25 lakhs within three weeks thereafter and a further sum of Rs.25 lakhs within three weeks thereafter (Rs.75 lakhs totally in nine weeks time) and on compliance of the said conditions, the Debts Recovery Appellate Tribunal may entertain the appeal and give a disposal. It is also made clear that if the petitioner/appellant before the Appellate Tribunal fails to comply with any one of the above stipulated

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conditions, the appeal stands dismissed and the order passed by the Tribunal vide impugned order would stand restored.”

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The writ petition stands disposed of, accordingly. Consequently, W.M.P.Nos.34816 & 34818 of 2019 are closed. No costs.

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Sd/Assistant Registrar(CS)

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//True Copy//

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Sub Assistant Registrar
ss
To
1. The Registrar
Debts Recovery Appellate Tribunal
4th Floor, Indian Bank Circle Office
55, Ethiraj Salai
Chennai 600 008
2. The Registrar
Debts Recovery Tribunal -1
Spencer Tower
770-A, Anna Salai
Chennai 600 002
3. The Authorised Officer
Indian Bank
Kallakurichi Branch
Kallakurichi
+1cc to Mr.M.D.Thirunavukkarasu , Advocate SR.No. 102483
+1cc to Mr.P.V.Murlidhar , Advocate SR.No. 102817
W.P.No.34186 of 2019

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A.SK(11/12/2019)

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https://hcservices.ecourts.gov.in/hcservices/

Sri Nataraja Modern Rice Mill v. Debts Recovery Appellate Tribunal

Case brief

What is this about?

What did the court decide?

Sri Nataraja Modern Rice Mill v. Debts Recovery Appellate Tribunal

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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