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BEFORE THE DEBTS RECOVERY
APPELLATE TRIBUNAL, AT: MUMBAI
Present: Mr. Justice Ashok Menon, Chairperson I.A. No. 834/2024 (WoD)
In
Misc. Appeal on Diary No. 2502/2024 Between
Jigyna Manish Naik & Anr. … Appellant/s V/s.
The Authorised Officer,
State Bank of India
…Respondent/s
Mr. Dhrumit Chauhan, i/b Ms. Kanjani Trivedi, Advocate for Appellants.
An Advocate for the Respondent is present.
-: Order dated: 28/11/2024:-
The matter is taken up for hearing by way of a praecipe filed by the appellants for seeking urgent relief.
The appellants are borrowers who challenge the order dated 22.11.2024 in Securitisation Application No. 519/2024 (S.A.) declining to grant any protection to the appellants by the Debt Recovery Tribunal (D.R.T.)-II, Ahmedabad concerning the measures taken by the respondent bank for recovery of the debt allegedly due from the appellants under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 ( "SARFAESI Act" for short).
2. To entertain this appeal the appellants will have to comply with the mandatory provision u/s 18 (1) by making the pre-deposit. To get
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the part of the pre-deposit amount waived by this Tribunal exercising jurisdiction under the 3rdproviso to section 18 (1) of the SARFAESI Act. the appellant will have to prove a good prima facie case as well as financial strain. The appellants are admittedly
borrowers/guarantors/mortgagors and had borrowed the money from the respondent bank which they defaulted in repayment. Resulting in the issuance of the demand notice u/s 13 (2) of the SARFAESI Act on 03.01.2024 demanding a sum of ₹50,84,942.11.
3. The appellants sent their objections u/s 13 (3) of the SARFAESI Act stating that the name and the designation of the Authorised Officer who has issued the notice are not mentioned in the demand notice. It also states that the mandatory provisions of Rule 8 (1) & (2) of the Security Interest (Enforcement) Rules, 2002 have not been complied with. It is further stated that there is no bifurcation of the principal and interest and other charges payable by the appellants. The respondent bank has sent the reply to the objections as required u/s 13 (3-A) within the stipulated time and the name and authority of the person who has issued the demand notice was disclosed. It is also stated that they have complied with all other requisites for proceeding under the SARFAESI Act and Rules.
4. The Ld. Counsel appearing for the appellants contended that the appellants were earlier served with two notices u/s 13 (2) and therefore, the third notice could not have been issued and the bank should have proceeded based on the earlier notices. The demand notice issued u/s 13 (2) on 03.01.2024 specifically states that the earlier demand notices were recalled and that the latest notice is being issued
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in supersession of the earlier notices. It is also shown that the aggregate amount sum of ₹50,84,942.11 consists of a principal amount and interest as indicated attached to the demand notice.
5. The appellants also contended that no notice as required under Rules 8 (1) & (2) have been complied with before taking physical possession of the subject property. It is further submitted that the nine-pointer affidavit accompanying the application u/s 14 of the SARFAESI Act is faulty for the reason that he does not mention the amount that was due and payable as of the date of the filing of the appeal and therefore, section 14 (1-A) has not been complied with.
6. The Ld. Presiding Officer considered all these objections raised and found that there is no substance in objections raised by the appellants and therefore, declined to grant any protection for the reason that there is no prima facie case in favour of the appellants to stall the taking over possession of the subject property.
7. After hearing both sides and perusal of the record available, I see that there are no prima facie defects in the demand notice u/s 13
(2) because of the breakup of the amount demanded as is required u/s 13 (3). Indeed, the name and designation of the authorised office are not mentioned in the notice but in the reply sent by the bank to the objections raised by the appellants which specifically states that the undersigned is the person who is competent to issue the notice his name and designation are also mentioned and therefore, that defects have been substantially closed. Regarding the noncompliance of Rules 8 (1) & (2) it is submitted by the Ld. Counsel appearing for the respondent bank that publication has been made and the personal
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notice has been served and that what is contemplated under Rule 8 (1) is not issuing a notice by registered post with acknowledgement due and the personal notice would be supposed and therefore, the non- production of the RPAD is not of any consequence. The respondent bank has sufficient time during the trial of the S.A. to produce evidence regarding the compliance of Rule 8 (1) and therefore, it cannot be taken as a lacuna at this stage of hearing the interlocutory application. It is also to be considered whether the provisions under Rule 8(1) and (2) need to be complied with at all when the possession is being taken under Sec. 14 of the SARFAESI Act through the District Magistrate given the decision of the Hon'ble Apex Court in Standard Chartered Bank vs. V. Noble Kumar & Ors. (2013) 9 SCC 620.
8. The Ld. Presiding Officer has also observed that there is no dichotomy between symbolic possession and physical possession and there could be no embargo in the creditor misleading to take the physical possession instead of symbolic possession by moving District Magistrate u/s 14 of the SARFAESI Act.
9. As regards the nine-pointer affidavit it is noted that the amount that was advanced as well as the amount due as on the date of notice which is 03.01.2024 is specifically mentioned. The fact that the exact amount inclusive of interest as of the date of filing of the application is not mentioned may not be a lacuna which would affect the entire proceedings and therefore, these arguments of the Ld. Counsel appearing for the appellants is not acceptable.
10. On the whole, I find that the appellants have not succeeded and establishing a prima facie case. They have produced their income tax
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returns to indicate that they are under financial strain and have little income to pay 50% of the debt due. As per the decision of the Apex Court of India in M/s. Sidha Neelkanth Paper Industries Pvt. Ltd. & Anr. Vs Prudent ARC Ltd. & Ors. 2023 SCC OnLine SC 12, the appellants have to pay 50% of the amount mentioned in the demand notice and therefore, a sum of ₹50,84,942.11 is taken as a threshold amount for payment of the pre-deposit. The appellants are directed to deposit a sum of ₹22 lakhs as a pre-deposit for entertaining the appeal.
11. The Ld. Counsel appearing for the appellants submitted a demand draft for a sum of ₹5 lakhs is being produced today and the balance amount shall be paid into two equal instalments within the gap of two weeks each as stated hereunder.
Numbers of Instalments Payment on or before
1stInstalment ₹ 8,50,000/- 12.12.2024 2ndInstalment ₹ 8,50,000/- 26.12.2024
12. Given the payment made today, the taking over physical possession schedule on 01.12.2024 shall stand deferred till the next date of hearing.
13. Default in payment of any of the amount/instalment on time shall entail the dismissal of the appeal without any further reference to this Tribunal.
14. 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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15. 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.
16. 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.
List on 13.12.2024 for reporting compliance regarding the payment of the 1stinstalment of pre-deposit.
Sd/-
Chairperson
psa-06
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