M/s. Repute Foods Pvt. Ltd. & Ors Vs Central Bank of India

Ashok Menon, Chairperson

1. The appellants are in appeal impugning the order dated 21.03.2024 in S.A. No. 879/2023 on the files of the Debts Recovery Tribunal – II, Ahmedabad (D.R.T) declining to grant any interim protection from the action taken by the respondent bank against them under the provisions of the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (“SARFAESI Act”, for short) for want of a prima facie case and that there is no balance of convenience in favour of the appellants. The appellants are aggrieved and hence, in appeal.

2. The appellants would contend that they have a very good prima facie case because the account was classified as a non-performing asset (NPA) without there being a default in payment for 90 days, contrary to the guidelines given by the RBI, and therefore, the entire proceedings including the demand notice, the symbolic possession taken and the intended Sarfaesi action will have to fail.

3. The appellants are liable to pay a total sum of ₹20,75,06,810/-as per the demand notice issued u/s. 13(2) of the SARFAESI Act. The Ld. Counsel appearing for the appellants argues that all the appellants are not liable to pay the amount as per the demand notice, Since it is on different facilities, the liabilities of the different appellants are confined only to a certain extent, and therefore, the demand for the entire amount from all the respondents is not sustainable. It is also contended that the demand notice does not give a bifurcation of the amount that is due as required u/s. 13(3) of the SARFAESI Act.

4. It is further submitted that the objection raised by the appellants under u/s 13(3A) of the SARFAESI Act has not been properly addressed by the bank. The Ld. Counsel appearing for the appellants also submits that the respondent bank has admitted that there were some defects in their system which led to certain discrepancies in the calculation of the amount, and hence, the appellants have a strong prima facie case to get the Sarfaesi action stalled.

5. It is submitted that the appellants are under financial strain. The income tax returns and balance sheet of the appellants have been produced to substantiate the arguments that the appellants are facing a financial crisis and therefore, it is prayed that 25% of the mandatory pre-deposit may be waived and the appellants be permitted to get the appeal entertained on deposit of just 25% of the debt due

6. The Ld. Counsel appearing for the respondent submits that the appeal has become infructuous because the appellants wanted the taking over possession of the property to be stalled which was declined by the D.R.T. Subsequently, the possession of all the properties was taken but possession of certain items of properties was restored and they would be again taken possession of only following due process of law, and therefore, the apprehension of the appellants that they would be dispossessed of the properties illegally is totally out of place and since two items of property have already been taken possession of the appellants cannot get any reliefs in this appeal and hence, the appeal itself has to be dismissed.

7. Since the possession of certain items has already been taken by the respondent bank, the rest of the items would be proceeded against. Hence, the Ld. Counsel appearing for the respondent submits that those items would be taken possession of again only as per due process of law. In that event, the appellants are at liberty to approach the D.R.T. again for relief in case action is taken to take possession of those items of properties in violation of law.

8. The Ld. Counsel appearing for the appellants submits that none of the properties have been taken possession of by the respondent bank and that they continue in possession. If that be so, then the appellants need not worry about anything because the action to take possession would be taken only in accordance with the law.

9. After hearing the rival arguments of both sides, I find that the appellants are entitled to some concession but not to the extent of 25% as prayed for. The appellants are, therefore, directed to deposit a sum of ₹ 9 crores as pre-deposit for getting the appeal entertained. The said amount shall be deposited in two tranches of ₹ 4.50 crores each within a gap of two weeks each as stated hereunder.

10. 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.

11. 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.

12. As and when the said amount is deposited, it 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.

13. With these observations, the I.A. is disposed of. The respondents are at liberty to file a reply in the Appeal with an advance copy to the other side.

List on 30.07.2024 for reporting compliance regarding the payment of the 1st instalment.