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2024 Supreme(Online)(GUJ) 17235
HIGH COURT OF GUJARAT
MR. JUSTICE HEMANT M. PRACHCHHAK, J
ARTISTON APPARELS PVT LTD. – Appellant
Versus
TAMILNAD MERCANTILE BANK LTD – Respondent
R/SPECIAL CIVIL APPLICATION NO. 7541 of 2024
The court upheld the Debt Recovery Appellate Tribunal's order requiring a 50% deposit of the debt as a prerequisite for appeal under the SARFAESI Act, emphasizing adherence to statutory requirements.
Headnote:(A) SARFAESI Act, 2002 - Section 18 - Recovery of Debts and Bankruptcy Act, 1993 - Sections 2(g) and 2(ha) - Petition challenging order of Debt Recovery Appellate Tribunal directing deposit of Rs.1.35 Crores in installments - Tribunal's indulgence in allowing installment payments noted - Petitioners failed to show prima facie case for review - Court upheld DRAT's order as just and proper. (Paras 1, 3, 4, 6)
(B) Appeal - Pre-requisite deposit - No appeal entertained unless 50% of debt due is deposited - Court emphasized adherence to statutory requirements for appeals under SARFAESI Act. (Paras 4, 5)
Facts of the case:
The petitioners challenged the DRAT's order requiring them to deposit Rs.1.35 Crores in three installments, citing inability to pay the remaining amount after the first installment. The DRAT had previously shown indulgence by allowing installment payments.
Findings of Court:
The DRAT's order was deemed just and proper, reflecting settled legal principles.
Issues: The main issues included the petitioners' ability to meet the deposit requirements and the appropriateness of the DRAT's order.
Ratio Decidendi: The court ruled that the DRAT's order was consistent with legal principles and that the petitioners did not demonstrate a prima facie case for review.
Result: Petition dismissed.
1. The present petition is filed by the petitioner challenging the order dated 11.03.2024 passed by the Debt Recovery Appellate Tribunal (DRAT), Mumbai, in IA No.181 of 2024 in Appeal on Diary No.153 of 2024, whereby, the petitioners were directed to deposit a sum of Rs.1.35 Crores in three installments within a gap of three weeks each i.e. 1st installment of Rs.35,00,000/- to be paid on or before 01.04.2024, 2nd installment of Rs.50,00,000/- to be paid on or before 22.04.2024 and 3rd installment of Rs.50,00,000/- to be paid on or before 13.05.2024 and the matter was ordered to be posted on 02.04.2024.
2. Heard learned advocates appearing for the respective parties.
3. It appears that the Tribunal had shown indulgence to deposit the pre-requisite 50% of the due in three installments, however, after depositing the 1st installment, the petitioners had moved an application for review of the order passed by the DRAT as the petitioners were not in a position to deposit the remaining amount, which came to be dismissed by the DRAT observing that the petitioners are unable to show prima facie case since they have not produced copy of the It returns.
Therefore, again the petitioners had moved an application for extension of time and for filing that application, the petitioners had further deposited Rs.20,00,000/- instead of depositing the 2nd installment of Rs.50,00,000/-. Even thereafter, the petitioners had moved an application before the DRAT and the subsequent order was passed on 23.04.2024, which the petitioners have not placed on record of the present petition, which shows the conduct of the petitioners. While passing the order, the DRAT has shown sufficient indulgence in favour of the petitioners by granting installments to deposit 50% as pre- requisite to challenge the appeal under Section 18 of the SARFAESI Act before the DRAT.
4. Learned advocate for the petitioner has referred and relied upon the decision of this Court passed in Special Civil application No.9564 of 2023 dated 30.06.2023. Infact, the Hon’ble Apex Court has decided the very same issue with regard to pre-requisite deposits at the time of filing of an appeal under Section 18 of the SARFAESI Act in case of M/s.
Sidha Neelkanth Paper Industries Private Limited and Another Vs. Prudent ARC Limited and Others, reported in AIR 2023 SC 368 , wherein, it has been observed and held in paragraph 12 as under :
- “12. While considering the aforesaid issues/questions, Section 18, & 2(ha) of the SARFAESI Act and section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993, which would have a direct bearing are required to be referred to. The said provisions read as under:
18. Appeal to Appellate Tribunal.—(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal [under section 17, may prefer an appeal along with such fee, as may be prescribed] to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.
[Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:] [Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
- Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent. of debt referred to in the second proviso.](2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of
1993) and rules made thereunder. 2(ha) “debt” shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and includes— (
