M/s Eco Tread Reclaimed Rubber (I) Pvt. Ltd. v. State Bank of India & Anr.
M/s Eco Tread Reclaimed Rubber (I) Pvt. Ltd.
…Appellant
…Respondent
Case No: Misc. Appeal No. 96/2022
Date of Judgement: 20/11/2023
Judges:
Mr Justice Ashok Menon, Chairperson
For Appellant: Mr Puneet Gogad, Advocate.
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Facts
This order is passed by the Debts Recovery Appellate Tribunal (DRAT), Mumbai in a Miscellaneous Appeal filed by M/s Eco Tread Reclaimed Rubber (I) Pvt. Ltd. (Appellant) against the order dated 25/05/2022 of the Debts Recovery Tribunal (DRT), Pune in Misc. Application No. 30/2021. The Appellant is an auction purchaser aggrieved by the rate of interest (9% per annum) allowed by the DRT on the refund of sale consideration, consequent to the setting aside of the auction sale. The Appellant had purchased the mortgaged property of the borrower (2nd Respondent) from the State Bank of India (1st Respondent) through an auction on 08/11/2011 for ₹1,46,25,000/- plus ₹1,36,862/- for delayed payment. The 2nd Respondent (borrower) filed Securitisation Application No. 26/2012 challenging the sale. Vide order dated 02/06/2018, the DRT allowed the application and set aside the sale and sale certificates. Despite requests, the Respondent Bank did not refund the sale consideration to the Appellant. The Appellant filed M.A. No. 30/2021 seeking refund with 18% interest and other charges. The DRT directed refund of the sale consideration with 9% interest from the date of filing the M.A. and declined security and legal charges claimed by the Appellant.
Arguments by the Parties
The Appellant argued for 18% interest, citing cases where higher interest rates were awarded to auction purchasers on refund of sale consideration. The Respondent Bank contended that the interest rate of 9% allowed by the DRT was reasonable, considering the current market rates.
Interest Rate
Deduction for Removal of Movables
The DRAT noted that the Appellant had admittedly removed some movable scrap worth ₹2,69,000/- from the property before the status quo order. As per the Respondent Bank, the value of movables as per the Sale Certificate was ₹65,56,000/-. In the absence of evidence regarding removal of all movables, the DRAT held that the refund amount of ₹1,47,61,862/- should be reduced by ₹2,69,000/- being the value of scrap removed by the Appellant as admitted.
Security Charges and Legal Expenses
Restoration of Possession
The DRAT directed that after assessing the value of movables as per the Sale Certificate, the possession of both movable and immovable secured assets shall be restored to the Respondent Bank/borrower after deducting the said value from the refund amount payable to the Appellant.
Conclusion
The DRAT allowed the appeal in part and directed the Respondent Bank to: a) Refund ₹1,44,92,862/- (₹1,47,61,862/- minus ₹2,69,000/-) to the Appellant. b) Pay interest at 9% per annum on the refund amount from the date of deposit till realization. c) Deposit the refund amount with interest before the DRT. d) The DRT shall disburse the refund amount to the Appellant after assessing and deducting the value of movables to be restored to the Bank/borrower as per the Sale Certificate valuation.
Sections and Laws Referred
Cases Cited
Facts
This order is passed by the Debts Recovery Appellate Tribunal (DRAT), Mumbai in a Miscellaneous Appeal filed by M/s Eco Tread Reclaimed Rubber (I) Pvt. Ltd. (Appellant) against the order dated 25/05/2022 of the Debts Recovery Tribunal (DRT), Pune in Misc. Application No. 30/2021. The Appellant is an auction purchaser aggrieved by the rate of interest (9% per annum) allowed by the DRT on the refund of sale consideration, consequent to the setting aside of the auction sale. The Appellant had purchased the mortgaged property of the borrower (2nd Respondent) from the State Bank of India (1st Respondent) through an auction on 08/11/2011 for ₹1,46,25,000/- plus ₹1,36,862/- for delayed payment. The 2nd Respondent (borrower) filed Securitisation Application No. 26/2012 challenging the sale. Vide order dated 02/06/2018, the DRT allowed the application and set aside the sale and sale certificates. Despite requests, the Respondent Bank did not refund the sale consideration to the Appellant. The Appellant filed M.A. No. 30/2021 seeking refund with 18% interest and other charges. The DRT directed refund of the sale consideration with 9% interest from the date of filing the M.A. and declined security and legal charges claimed by the Appellant.
Arguments by the Parties
The Appellant argued for 18% interest, citing cases where higher interest rates were awarded to auction purchasers on refund of sale consideration. The Respondent Bank contended that the interest rate of 9% allowed by the DRT was reasonable, considering the current market rates.
Interest Rate
Deduction for Removal of Movables
The DRAT noted that the Appellant had admittedly removed some movable scrap worth ₹2,69,000/- from the property before the status quo order. As per the Respondent Bank, the value of movables as per the Sale Certificate was ₹65,56,000/-. In the absence of evidence regarding removal of all movables, the DRAT held that the refund amount of ₹1,47,61,862/- should be reduced by ₹2,69,000/- being the value of scrap removed by the Appellant as admitted.
Security Charges and Legal Expenses
Restoration of Possession
The DRAT directed that after assessing the value of movables as per the Sale Certificate, the possession of both movable and immovable secured assets shall be restored to the Respondent Bank/borrower after deducting the said value from the refund amount payable to the Appellant.
Conclusion
The DRAT allowed the appeal in part and directed the Respondent Bank to: a) Refund ₹1,44,92,862/- (₹1,47,61,862/- minus ₹2,69,000/-) to the Appellant. b) Pay interest at 9% per annum on the refund amount from the date of deposit till realization. c) Deposit the refund amount with interest before the DRT. d) The DRT shall disburse the refund amount to the Appellant after assessing and deducting the value of movables to be restored to the Bank/borrower as per the Sale Certificate valuation.
Sections and Laws Referred
Cases Cited