Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Guj) 917

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, J.
M/S NEWTON ENGINEERING AND CHEMCIALS LTD. THROUGH ITS
DIRECTOR N. VIJAYALAKSHMI NIDADAVOLU – APPELLANT
Versus
DEBTS RECOVERY APPELLATE TRIBUNAL, MUMBAI – RESPONDENT
SPECIAL CIVIL APPLICATION NO. 13420 of 2021 With CIVIL APPLICATION (FOR EXTENSION OF TIME) NO. 1 of 2021
Decided on : 25-10-2021

Advocates Appeared:
For the Appellant : MR SHAKTI S JADEJA, MR SP MAJMUDAR
For the Respondent: BHASKAR SHARMA, GAURAV D NANAVATI, JUHI D CHAVDA, KHYATI A CHUGH

Point of Law- On perusal of the above provisions of section 18 of SARFAESI Act, more particularly, second proviso which provides that the appeal can be entertained only when borrower has deposited with the Tribunal, 50% of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal whichever is less, the debts due from the borrower means the debt as per section 2(g) of the RDB Act which means liability inclusive of interest which is claimed by the secured creditors which means liability of the borrower to be recovered by the secured creditor.

Headnote:
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - section 18, 18(1), 13(2), 17, 2(ha), 13(4) - Recovery of Debts and Bankruptcy Act, 1993 - section 2(g) - Banks and Financial Institutions Act, 1993 – Debt - Applicants have prayed for extension of time to deposit amount of Rs.1,25,00,000/- as per order passed by this Court - Whether secured or unsecured, or assigned - Whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, date of application.
Findings of the court – Section 18 of SARFAESI Act, more particularly, second proviso which provides that appeal can be entertained only when borrower has deposited with Tribunal, 50% of amount of debt due from him, as claimed by secured creditors or determined by Debts Recovery Tribunal whichever is less, debts due from borrower means debt as per section 2(g) of RDB Act which means liability inclusive of interest which is claimed by secured creditors which means liability of borrower to be recovered by secured creditor - It cannot be amount referred to in notice under section 13(2) of SARFAESI Act because amount which is referred to in notice under section 13(2) of the Act is amount which is outstanding as on date when such notice was issued when account has become Non Performing Asset (NPA) account which is not debt as defined under section 2(g) of RDB Act - Debt which is defined under section 2(g) of RDB Act is liability inclusive of interest which is claimed by bank - Claim of bank would be debt which petitioners are required to pay means outstanding dues as per accounts with bank and not as per the notice issued by the bank under section 13(2) of the SARFAESI Act - In such circumstances, amount which is outstanding as per the accounts of bank would be material which can be claimed by bank against petitioners and therefore, Tribunal has rightly directed petitioners to deposit 25% of the amount of the outstanding shown in bank account amounting - In view of the above position of law and interpretation of mandatory statutory provisions, petitioners cannot be given any reduction in deposit of amount less than 25% of total outstanding amount claimed by petitioners i.e. 25% - petitioners have failed to deposit the entire amount of Rs.1,25,00,000/- within time limit granted by this Court on 16th September, 2021 during course of considering position of law as well as opportunity of hearing to be granted to respondent bank, petitioners cannot be granted further indulgence in this proceeding.
Result - Petition disposed of

ORDER :

1. Heard learned advocate Mr. S.P. Majmudar for the petitioners assisted by learned advocate Mr. Shakti S. Jadeja, learned advocate Mr. Bhaskar Sharma for respondent no.2 and learned advocate Ms. Khyati Chugh for respondent no.3.

2. By this Civil Application, the applicants have prayed for extension of time to deposit amount of Rs.1,25,00,000/- as per the order passed by this Court on 16th September, 2021.

3. Learned advocate Mr. Majmudar appearing for the applicants submitted that the applicant could deposit only Rs. 25 lakhs out of Rs.1,25,00,000/- to be deposited and, therefore, this application is preferred with a prayer to extend the time to deposit the remaining amount of Rs. 1,00,00,000/- on or before 12th November, 2021.

4. Mr. Majmudar has also tendered an additional affidavit on behalf of the petitioners filed on behalf of the petitioners, wherein following averments are made :

“(1) It is submitted that vide order dated 16.09.2021, this Hon’ble Court has been pleased to issue ‘Notice’ upon respondents making it returnable on 20.10.2021 and has further been Pleased to direct the parties to maintain ‘status quo’ with regard to the properties of petitioners and with regard to further proceedings before the Hon’ble DRAT, Mumbai on condition that the petitioners shall deposit an amount Rs.1,25,00,000/- before the DRAT, Mumbai within Four Weeks.

(2) It is submitted that inspite of intensive efforts, petitioners could gather and arrange for an amount of Rs.25,00,000/- only out of Rs.1,25,00,000/ and the said amount of Rs.25,00,000/-has been deposited with Registry of Hon'ble DRAT, Mumbai on 13.10.2021.

(3) It is submitted that because of extreme financial crunch on the part of the petitioners and inspite of various efforts of petitioners, the petitioners could not raise remaining funds from their sources and therefore, the petitioners have preferred Civil Application No.1 / 2021 before this Hon'ble Court requesting to grant extension of time upto 12.11.2021 to petitioners to deposit remaining amount of Rs.1,00,00,000/- with registry of Hon'ble DRAT, Mumbai.

(4) It is submitted that the petitioner no.1-Company is to receive amount after deducting applicable taxes from Rs.1,75,75,597/- from M/s. GAIL (India) Limited through conciliation process which resulted in a mutual settlement agreement dated 17.09.2021 and the same is pending for the Board Approval of M/s. GAIL (India) Ltd. It is submitted that in recent follow-up on 21.10.2021 with the concerned officials of GAIL, the petitioners are informed that the exact date of disbursement of amount from GAIL is uncertain, but the funds would be released by December, 2021 and therefore, the petitioners have started their best efforts to raise funds through private finance so as to meet with the deadline of 12.11.2021 as requested for by petitioners in their Civil Application No.1/2021. The’ petitioners shall deposit remaining amount of Rs.100,00,000/- with the Registry of Hon'ble DRAT, Mumbai on or before 12.11.2021 by raising funds through private finance.

(5) It is submitted that the petitioners have also sought private financial assistance from their nearby relatives from Andhra Pradesh and are expecting some funds from them.

(6) The petitioners shall deposit additional amount of Rs.25,00,000/- by 31.12.2021. Therefore, the petitioners would be depositing total amount of Rs.1,50,00,000/- instead of Rs.1,25,00,000/-as directed vide order dated 16.09.2021 passed by this Hon’ble Court.”

5. Referring to the above averments, it was submitted that the applicant shall deposit a further sum of Rs. 1,00,00,000/- before 12th November, 2021 and additional amount of Rs. 25,00,000/- before 31st December, 2021.

6. Learned advocate Mr. Majmudar relied upon the decision of the Division Bench of Chhattisgarh High Court at Bilaspur in Writ Appeal No.362/2019 dated 18th May, 2020 in case of Shri Mohan Products Pvt. Ltd. v. State Bank of India and another to submit that as held by the Chhattisgarh H

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