Matrukrupa Calcin Industry and Ors. v. ICICI Bank Ltd & Anr.

Facts:

Arguments by Appellants:

The appellants have challenged the SARFAESI measures initiated by the respondent bank under Sections 13(4) and 14 of the Act. It is argued that the notice contemplated under Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules has not been complied with by the bank. In the application filed under Section 14, the nine-pointer affidavit has not been filed by the bank. The name and designation of the authorized officer have also not been specified by the bank. The appellants state that they have a strong prima facie case to sustain the S.A. filed before the DRT. It is pleaded that the 1st appellant is a proprietorship owned by the 2nd appellant, who has filed income tax returns showing insufficient income to deposit 50% of the debt amount. The remaining appellants do not have any source of income and have not filed any income tax returns. Hence, the appellants seek indulgence under the third proviso of Section 18(1) to reduce the pre-deposit amount to 25% of the debt demanded under Section 13(2) notice.

Arguments by Respondent Bank:

The Court observed that while the appellants may not have a strong prima facie case, it is sufficiently proven that they are under financial strain. There is no business being conducted by the appellants currently, and most of them do not have any income source. Considering the entire facts and circumstances, the Court directed the appellants to deposit a sum of Rs. 25,00,000/- as pre-deposit under Section 18(1). The appellants offered to deposit Rs. 10,00,000/- by way of demand draft on the same day (19.10.2023). For the balance amount of Rs. 15,00,000/-, the Court granted time till 09.11.2023 to the appellants. In view of the part payment of Rs. 10,00,000/- on 19.10.2023, the taking over of possession scheduled for 22.10.2023 by the bank under Section 14 shall stand deferred till the next hearing date. The Court made it clear that in default of payment of the remaining pre-deposit amount of Rs. 15,00,000/- by 09.11.2023, the appeal shall stand dismissed without any further reference. The pre-deposit amounts are to be deposited by way of demand drafts with the Registrar of DRAT, Mumbai. Once deposited, the amounts shall be invested by the Registrar in term deposits with any nationalized bank for 13 months initially, and thereafter renewed periodically. The respondent bank was granted liberty to file a reply in the appeal by serving an advance copy to the appellants. The matter was posted for next hearing on 10.11.2023 to report compliance regarding payment of the remaining pre-deposit instalment.

Sections and Laws Referred:

No specific cases were cited by the Court in this order.

The Court has adjudicated the issue of pre-deposit payable by the appellants by considering the relevant facts, arguments of both sides, financial capacity of the appellants, and applicable legal provisions under the SARFAESI Act. A reasoned and balanced order has been passed, granting some leeway to the appellants while ensuring compliance with the statutory pre-deposit requirement.