M/s. Iswar Vanmalidas Prajapati & Ors Vs ICICI Bank Ltd

Ashok Menon, Chairperson

1. The Appellants are in appeal impugning the dismissal of the Securitization Application ( Diary ) No. 172/2022 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) vide order dated 21.12.2023 based on a pursis which was filed by the Appellants’ Counsel giving the liberty to the D.R.T. to take an appropriate decision in the application for condonation of delay in filing the S.A.

2. The Appellants had availed a loan from the Respondent bank which was defaulted leading to the classification of the account as Non-Performing Asset (NPA) on 31.10.2020. A demand notice u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) was issued on 23.06.2021 demanding a sum of ₹57,30,873/- as of 08.06.2021. The Appellants had opposed the demand by sending a reply and it is also contended that the bank did not answer to that objection raised by the Appellants and thereby violated the mandatory provision of section 13(3A) of the SARFAESI Act and proceeded to take symbolic possession of the secured assets of 11.10.2021. The Appellants approached the D.R.T. with an application u/s 17 (1) of the SARFAESI Act on 08.01.2022. There was a delay of 54 days which was sought to be condoned by filing the Miscellaneous Application. The secured creditor thereafter, obtained the order u/s 14 from the District Magistrate of 15.02.2023 empowering them to take the physical possession of the secured assets.

3. The Appellants had filed the pursis 18.12.2023 based on which the S.A. was disposed of. The possession of the secured assets is intended to be taken on 18.02.2024 and hence, the Appellants moved this appeal and sought protection from being dispossessed of the secured assets. To entertain the appeal the Appellants are first will have to comply with the mandatory provision of the u/s 18 (1) of the

4. The Ld. Counsel appearing for the Appellants submitted that the Appellants are under financial strain. It is also pointed out that the dismissal of the S.A. based on the decision of the Madras High Court was not justified. Although the Counsel for Appellants had filed a pursis giving the liberty to the Ld. Presiding Officer to take appropriate action based on the decision of the Madras High Court, The Ld. Counsel for the Appellants submits that the Hon’ble Supreme Court had not confirmed the decision of the Madras High Court as stated by the D.R.T. but had refused to entertain the SLP which did not anyway indicate that the decision of the Madras High Court has been confirmed on merits. That apart, it also pointed by the Ld. Counsel for the Appellants that the Hon’ble High Court of Bombay as in UCO Bank, Mumbai V/s. Kanji Manji Kothari & Co., Mumbai & Ors 2008 (4) Mh.L.J424 held that the D.R.T. is empowered to condone the delay in applying u/s 17 of the SARFAESI Act. The Gujarat High Court has also held that the D.R.T. was empowered to condone the delay in applying u/s 17.

5. Under the circumstances, the Ld. Counsel appearing for the Appellants submits that the Appellants have a prima facie case for the appeal to be entertained. They are under financial strain as evidenced by the income tax return filed by the Appellants which would indicate that the 1^st Appellant is not having sufficient income to make the mandatory deposit of 50% and therefore, the Ld. Counsel prayed that the exercising the Jurisdiction of this Tribunal under the 3^rd proviso to section 18(1) of the SARFAESI Act, the mandatory pre-deposit may be limited to only 25% of the debt due.

6. The Ld. Counsel appearing for the Respondent bank submits that the Madras High Court decision has not been interfered with by the Hon’ble Supreme Court despite the SLP being filed, which would indicate that the ratio stated in the Madras decision would prevail. That apart, the Ld. Counsel appearing for the Respondent also relied on the decision of the Hon’ble Supreme Court in Bank of Baroda & Anr. V/s. Parasaaldilal Tulshiram 2022 SCC OnLine SC 1006 wherein it was observed by the Hon’ble Supreme Court that the reason for providing the  time  limit  of  45  days  in  filing  an  application  u/s  17  of  the SARFAESI Act can easily be inferred from the purpose and the object of the enactment and that the SARFESI Act is enacted for the enforcement of the security expeditiously, and therefore, the decision of the D.R.T. in the instant case dismissing the S.A. for having being filed beyond prescribed time limit of 45 days was not interfered with. Under the circumstances, it is submitted that there is no merit in challenging the decision of the S.A. which was filed out of time.

7. The Ld. Counsel appearing for the Respondent also submits that under section 20(2) of the Recovery of Debts And Bankruptcy Act, 1993 (“RDB “Act” for short), there is an embargo in entertaining the appeal over an order which has been passed by consent of parties. The Ld. Counsel relied on the decision of the Hon’ble High Court of Bombay in Deepak Kochhar & Anr. V/s. HDFC Bank., Mumbai & Ors. 2006 SCC OnLine Bom 358 wherein it is held that where an order has been passed based on consent the appeal would not be maintainable.

8. The maintainability of the appeal will have to be considered in detail in case the appeal is entertained. The challenge to the order passed by the Ld. Presiding Officer dismissing the S.A. by refusing the condone the delay will also have to be examined in detail considering the various decisions of High Courts which are contrary to each other. However, I find that there is an arguable case for the Appellants. The amount demanded in demand notice u/s 13 (2) is a sum of ₹57,30,873/- and as per the decision of the Hon’ble Supreme Court of India in Sidha Neelkanth Paper Industries Pvt. Ltd. & Ano. vs. Prudent ARC Ltd & Ors., 2023 SCC OnLine SC 12, the Appellants are excepted to deposit the 50% amount that is demanded in case the challenge is to the measures taken u/s 13 (4). On an anxious consideration of the facts and circumstances, I am not inclined to grant a concession to the tune of reducing the pre-deposit to 25%. The Appellants are, therefore, directed to deposit a sum of ₹26 lakhs as pre-deposit. The Ld. Counsel appearing for the Appellants submits that a sum ₹5 lakhs has already been deposited by way of RTGS and there was one day's delay in depositing that amount, which may be condoned. The further amount of ₹3 lakhs is being deposited today by way of RTGS. today. The balance a sum of ₹18 lakhs shall be paid in two equal instalments within the gap of two each as stated hereunder.

9. Given the deposit of a sum ₹5 lakhs, and subject to further deposit of ₹3 lakhs by RTGS today itself, the taking over of possession of the property scheduled on 18.02.2024 shall stand deferred till the next date of hearing.

10. Default in payment of any of the instalments/amount on time shall entail in dismissal of the appeal without any further reference to this Tribunal.

11. The amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal.

12. 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.

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

Post on 27.02.2024 for reporting compliance regarding the payment of the 1st instalment.