M/s. Bhavani Enterprises & Ors. v. Saurashtra Gramin Bank

…Appellant

Saurashtra Gramin Bank

…Respondent

Case No: Appeal on Diary No.1634/2023

Date of Judgement: 26/09/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr. Dhrumit Chauhan, Advocate.

For Respondent: Mr. Prashant Pandit, along with Mr. Jay Pandit, Advocate.

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Facts:

Arguments by the Parties:

The Appellants prayed for a reduction of the mandatory pre-deposit to a minimum of 25%, exercising the jurisdiction of the Tribunal under the third proviso of Section 18(1) of the SARFAESI Act. The Appellants challenged the notice under Section 13(2), stating that there was no bifurcation of the amount claimed from them by the Respondent Bank for various facilities granted. The Appellants argued that the application filed by the Respondent Bank under Section 14 of the SARFAESI Act before the District Magistrate was defective as it was not accompanied by a 9-pointer affidavit as required, and the details of the objection filed by the Appellants to the demand notice and the reply received from the bank were not stated in detail. The Appellants claimed to have a strong prima facie case to maintain an application under the SARFAESI Act and cited financial strain as the reason for their inability to deposit 50% of the demanded amount. To prove their financial strain, the Appellants produced income tax returns of Appellant Nos. 2 and 6.

The Respondent Bank vehemently opposed the application, stating that the Appellants had no prima facie case. The Respondent Bank argued that the financial strain had not been sufficiently proven because the tax returns of all the Appellants had not been produced. Since the Appellants were jointly and severally liable to repay the debt as mortgagors/guarantors, the financial strain of all the Appellants needed to be established to get the benefit under the third proviso of Section 18(1).

Cases Cited:

M/s. Shree Rajmoti Industries V/s The Authorized Officer, Union Bank of India R/Special Civil Application No. 9564/2022

Sections and Laws Referred:

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

    • Section 13(2) (Demand Notice)
    • Section 14 (Application to District Magistrate)
    • Section 18(1) (Mandatory Pre-deposit)

Third proviso of Section 18(1) of the SARFAESI Act (Power of the Tribunal to reduce the pre-deposit amount)