The DRAT granted conditional protection from dispossession and directed a pre-deposit of ₹60 lahk for the appeal under the SARFAESI Act.
The Debts Recovery Appellate Tribunal (DRAT), Mumbai Bench headed by Justice Ashok Menon (Chairperson) addressed an appeal and upheld the conditional protection granted by the DRT from dispossession, requiring the appellants to deposit 20% of the demanded debt, while also directing a ₹60 lakh deposit to entertain the appeal, considering the appellants' financial circumstances and the need for compliance with the SARFAESI Act’s pre-deposit requirements.
The appellants, proprietors of two businesses, challenged the order dated 19.06.2024 passed by the Debts Recovery Tribunal (D.R.T.) in Securitisation Application (S.A.) 181/2024, which granted them conditional protection from dispossession of the secured assets upon depositing 20% of the total demanded debt amount. The appellants had taken three loans, two of which were availed by the husband and one by the wife, both proprietors of separate businesses. The loans defaulted, and the bank issued a demand notice under Section 13(2) of the SARFAESI Act, seeking ₹1,28,76,128/- from the appellants. The appellants raised objections to the demand notice, claiming non-compliance with the bifurcation requirement of the debt and questioned the competency of the authorized officer issuing the notice. The bank failed to address these objections in its response.
Subsequently, symbolic possession was taken over by the bank, which issued an auction notice. The auction sale was cancelled due to a non-deposit of 75% of the consideration by the purchaser. The bank then obtained an order under Section 14 of the SARFAESI Act for taking physical possession of the property. The appellants contested the validity of this order, claiming the affidavit filed by the bank under Section 14 did not disclose critical information regarding the demand notice objections. The D.R.T. partially upheld their contention, granting conditional protection from dispossession, subject to the deposit of 20% of the demanded amount. The appellants, dissatisfied with this order, filed an appeal, challenging the failure of the D.R.T. to consider the infirmities in the demand notice and the nine-pointer affidavit.
In their appeal, the appellants requested a waiver of 25% of the debt under Section 18(1) of the SARFAESI Act, citing their financial difficulties. They submitted income tax returns indicating low income from their businesses. The Tribunal considered the financial situation of the appellants and, while granting some concession, directed that a deposit of ₹60 lakhs be made for the appeal to be entertained, with ₹10 lakhs paid upfront and the balance of ₹50 lakhs to be paid in two instalments. Failure to pay the instalments on time would result in the dismissal of the appeal. The amounts deposited were to be invested in a term deposit in the name of the Registrar of the DRAT, Mumbai. The Tribunal disposed of the interim application, allowing the respondent bank to file a reply in the appeal, and scheduled the next hearing for 07.10.2024 for reporting compliance.
Mr. Dhrumit Chauhan, Advocate represented the Appellant.
Mr. Vinay Deshpande and Ms Shobha Chavan, Advocates appeared for the Respondent.
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