Sharif Yasin Padiyar vs Bank Of India & Ors

Ashok Menon, Chairperson

The matter is taken up for hearing by way of a praecipe filed by the appellant for seeking urgent relief.

The appellant is the guarantor of a loan availed by the 2nd respondent company of which the 4th respondent is the director. The subject property was offered as the mortgage for the debt by the appellant who is the co-owner of the property along with his wife who is the 3rd respondent. The repayment of the debt was defaulted. As a result, a demand notice was issued u/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 ( “SARFAESI Act” for short) on 22.06.2015 demanding a sum of ₹60,33,177/-as of 28.05.2015. The appellant claimed that a certain amount was paid, but the entire debt was still not cleared. Consequently, further steps u/s 13 (4) were taken.

It is contended that the notice issued for taking possession was affixed on the premises but was not served personally on the appellant and is, therefore, defective. The respondent bank subsequently obtained an order from the Chief Metropolitan Magistrate (CMM) u/s 14 of the SARFAESI Act. The possession of the property was intended to be taken in pursuance of the order.

The appellant approached the D.R.T. by filing the S.A. and an application was also filed for interim protection as I.A. No. 2150/2024. The Debt Recovery Tribunal-I, Mumbai (D.R.T.) vide order dated 22.10.2024 granted protection subject to a deposit of 10% of the demanded amount by 3 PM on that date and a further 15% within two weeks and then approached the bank with an OTS proposal. The appellant paid 10% of the demanded amount on the date of the order but 15% of the amount was not paid within two weeks but was paid belatedly in December. Therefore, the respondent bank issued a fresh notice for taking possession of the subject property and the appellant filed the present application as I.A. No.19/2025 for protection, and the D.R.T. declined to grant any relief vide order dated 08. 01.2025 and hence, the appellant is aggrieved and in appeal.

A copy of the order has not been produced because it was only pronounced yesterday. It is submitted that it is not a detailed order and protection was not granted because the OTS proposal given by the appellant was rejected by the bank and there was also a delay in payment of the amount that was earlier directed to be paid.

To entertain this appeal, the appellant will have to comply with the mandatory requisite of complying with section 18 (1) of the SARFAESI Act and make a pre-deposit. The demand notice was issued in 2015 and thereafter, there have been certain payments but interest has also accrued and the Ld. Counsel appearing for the respondent bank submits that as of date there is an outstanding due of ₹76 lakhs. The said amount is taken as the threshold amount for calculating the pre-deposit.

The ground on which the appellant has challenged the Sarfaesi action is that personal notice as required by Rule 8 (6) of the Security Interest (Enforcement) Rules, 2002 has not been served on him. The bank has denied that and seeks time to produce evidence regarding compliance with the rules.

It is also contended that the nine-pointer affidavit is not properly complied with while applying u/s 14 of the SARFESI Act. This also will have to be scrutinized in the S.A. The appellant does not have a very strong prima facie case. There is also no documentary evidence regarding the financial strain of the appellant. The appellant contends that he is 86 years old and he is not in a position to pay the amount and he is not paying any income tax also. The company is made a respondent but the returns and balance sheet of the company or its directors are not produced. The liability to pay the debt is jointly upon the company and also the director and therefore, the financial status of the company as well as the director is important. The appellant is not alone responsible for repaying the debt. The documents produced may not suffice to get the benefit of getting 25% amount of the pre-deposit waived. The appellant is therefore, not entitled to get a waiver of 25% though I am inclined to grant certain concessions so that the appellant who gets an opportunity to submit his pleadings in the appeal and therefore, the appellant is directed to pay a sum of ₹32 lakhs as pre-deposit for entertaining this appeal. The Ld. Counsel appearing for the appellant submits that the amount would be paid in two instalments. The appellants may be paid as stated hereunder:

Numbers of Instalments

Payment on or before

1st Instalment ₹ 16 lakhs

23.01.2025

2nd Instalment ₹ 16 lakhs

06.02.2025

Subject to payment of 1st instalment, the possession shall stand deferred till the next date of hearing.

In default in payment of any of the amount/instalment on time shall entail the dismissal of the appeal without any further reference to this Tribunal.

The amount shall be deposited in the form of a Demand Draft/RTGS with the Registrar of this Tribunal. Payment by RTGS shall be communicated to the Registry for verification and intimated to the counsel for the respondents.

As and when the said amounts are deposited, they shall be invested in term deposits in the name of Registrar, DRAT, Mumbai, with any Nationalised bank, initially for 13 months, and thereafter to be renewed periodically.

With these observations, the I.A. is disposed of. The Respondent is at liberty to file a reply in the Appeal with an advance copy to the other side.

List the matter on 24.01.2025 for reporting compliance regarding the payment of the 1st instalment of pre-deposit.