M/s. U Tech Agro Industries & Ors. v. Dombivli Nagari Sahakari Bank Ltd. & Anr

…Appellant

…Respondent

Case No: Appeal on Diary No. 555/2021

Date of Judgement: 15/03/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr Puneet Gogad, Advocate.

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Facts:

The Appellants are the Applicants in the aforementioned S.A. filed under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

The 1st Appellant is a partnership firm and the principal borrower. Appellants 2 and 3 are partners of the firm, while Appellants 4 to 7 are guarantors/mortgagors for the loan availed by the 1st Appellant firm.

The 1st Appellant firm had availed five financial assistances from the 1st Respondent bank, consisting of a cash credit facility, three term loans, and a vehicle loan. Due to losses, the 1st Appellant firm stopped functioning, and the Respondent bank classified its account as a Non-Performing Asset (NPA) on 31/03/2018.

Subsequently, the Respondent bank issued a demand notice under Section 13(2) of the SARFAESI Act on 14/07/2018, demanding payment of ₹2,00,75,260.81 from the Appellants. Alleging that the Appellants failed to clear the debt, the Respondent bank initiated steps under Section 13(4) of the SARFAESI Act by issuing a possession notice dated 14/09/2018. The 1st Respondent then filed an application under Section 14 of the SARFAESI Act before the Additional District Magistrate for physical possession of the secured assets.

Consequently, the Appellants approached the DRT with an application under Section 17(1) of the SARFAESI Act.

Arguments by the Appellants:

Arguments by the Respondent Bank:

Order:

The Appellants have already deposited ₹51 lacs (₹5.1 million). The balance of ₹74 lacs (₹7.4 million) shall be paid in two equal installments of ₹37 lacs (₹3.7 million) each. The first installment shall be payable on or before 29.03.2023, and the second installment shall be payable on or before 19.04.2023. In default, the Appeal shall stand dismissed without any further reference to the Tribunal. The amounts shall be deposited in the form of a Demand Draft with the Registrar of the Tribunal and invested in term deposits in the name of the Registrar, DRAT, Mumbai, with any nationalized bank, initially for 13 months, and thereafter to be renewed periodically. Upon payment of the first installment within the stipulated time, the Appellants shall be entitled to a stay of further SARFAESI measures initiated by the Respondents. The Respondent Bank is at liberty to file a reply in the Appeal with an advance copy to the other side. The matter is posted on 30.03.2023 for reporting compliance concerning the payment of the first installment.

Cases Cited:

MRB Roadconst. Pvt. Ltd. v/s Rupee Co-operative Bank Ltd. (2016) 3 Mah. LJ. 589

Relied upon by the Respondent Bank, insisting on the deposit of the amount demanded under the notice contemplated under Section 13(2) of the SARFAESI Act and subsequent interest accrued till the date of filing the appeal.

Sections and Laws Referred:

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

• • Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act)