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2021 (10) TMI 1444 - HC - Indian LawsSeeking reduction of amount of deposit with regard to the stay granted by the DRAT by impugned order - HELD THAT - The DRAT applied the second proviso of section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and has directed the petitioners to deposit the amount claimed by the secured creditor on 19th June, 2021 i.e. Rs. 11,46,43,271.91. In facts of the case, it is an admitted fact that the debt claimed by the secured creditor is Rs. 11,46,43,271.91, therefore, it cannot be said that the DRAT has committed any error in directing the petitioners to deposit 25% of the said amount so as to entertain the appeal and to grant status-quo order, if any, on deposit of such amount. On analysis of provisions of section 2(ha) of the SARFAESI Act read with section 2(g) of the RDB Act as well as the provisions of section 18 of the SARFAESI Act, it would be necessary to refer to the decision of the Supreme Court in case of Parsn Medicinal Plants Private Limited and others v. Indian Bank and others 2011 (2) TMI 1632 - SUPREME COURT which is also considered by the Chhattisgarh High Court wherein the Apex Court on concession being given by the bank, permitted the Appellate Tribunal to hear the matter on merits on all the questions of law after giving credit of the amount realised by the bank on sale of the assets from the total outstanding dues. In the facts of the case, therefore, it would be in the interest of the petitioners to consider the amount outstanding as on the date when the petitioners filed the appeal before the DRAT, as only dispute is with regard to the debit of unapplied interest to the tune of Rs. 6,57,94,643.25 by the respondent bank after giving credit of the amount realised on sale proceeds of more than Rs. 12 crores from the outstanding dues payable by the petitioners. The debts due as claimed by the bank or financial institutions would be the amount outstanding to be paid by the borrower at the time of filing of the appeal before DRAT. On perusal of the 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 - it cannot be the amount referred to in the notice under section 13(2) of the SARFAESI Act because the amount which is referred to in notice under section 13(2) of the Act is the amount which is outstanding as on date when such notice was issued when the account has become Non Performing Asset (NPA) account which is not the debt as defined under section 2(g) of the RDB Act. The debt which is defined under section 2(g) of the RDB Act is the liability inclusive of interest which is claimed by the bank. The claim of the bank would be the debt which the petitioners are required to pay means the outstanding dues as per the accounts with the bank and not as per the notice issued by the bank under section 13(2) of the SARFAESI Act. Thus, the amount which is outstanding as per the accounts of the bank would be material which can be claimed by the bank against the petitioners and therefore, the Tribunal has rightly directed the petitioners to deposit 25% of the amount of the outstanding shown in the bank account amounting to Rs. 11,46,43,271.91. The petition is required to be rejected and is accordingly rejected.
Issues Involved:
1. Request for extension of time to deposit a specified amount as per court order. 2. Determination of the correct amount to be deposited under Section 18 of the SARFAESI Act. 3. Interpretation of "debt" under Section 2(g) of the RDB Act and its application in the context of the SARFAESI Act. 4. Petitioners' financial constraints and efforts to raise funds. 5. Legal correctness of the DRAT's order regarding the deposit requirement. Detailed Analysis: 1. Request for Extension of Time: The petitioners sought an extension to deposit Rs. 1,25,00,000/- as ordered by the court on 16th September 2021. They had only managed to deposit Rs. 25 lakhs due to financial constraints and requested an extension to deposit the remaining Rs. 1,00,00,000/- by 12th November 2021. They also committed to depositing an additional Rs. 25,00,000/- by 31st December 2021, thus exceeding the originally mandated amount. 2. Determination of the Correct Amount to be Deposited: The petitioners challenged the DRAT's order requiring them to deposit 25% of Rs. 11,46,43,271.91, arguing that the amount included unapplied interest which should not have been considered. They contended that the deposit should be based on the amount due as per the notice under Section 13(2) of the SARFAESI Act, which was Rs. 14,68,58,662.66 minus the amount realized from the auction of their property. 3. Interpretation of "Debt" under Section 2(g) of the RDB Act: The court analyzed the definition of "debt" under Section 2(g) of the RDB Act, which includes any liability claimed by a bank or financial institution, inclusive of interest. The court concluded that the debt referred to in the SARFAESI Act pertains to the outstanding liability as claimed by the bank at the time of filing the appeal before the DRAT, not the amount stated in the Section 13(2) notice. 4. Petitioners' Financial Constraints and Efforts to Raise Funds: The petitioners cited financial difficulties and ongoing efforts to secure funds through private finance and assistance from relatives. They highlighted a pending settlement with M/s. GAIL (India) Limited, expected to release funds by December 2021, as part of their strategy to meet the deposit requirement. 5. Legal Correctness of the DRAT's Order: The court upheld the DRAT's order, affirming that the petitioners were required to deposit 25% of the outstanding amount of Rs. 11,46,43,271.91 as per the bank's statement. The court referenced the mandatory provision under Section 18 of the SARFAESI Act, which requires a minimum deposit of 25% of the debt for the appeal to be entertained, and found no error in the DRAT's directive. Conclusion: The court rejected the petition for further reduction in the deposit amount, emphasizing the statutory requirement under the SARFAESI Act. The petitioners' failure to deposit the full amount within the initially granted timeframe led to the dismissal of the petition. However, the court extended the deadline for depositing the amount as directed by the DRAT by an additional eight weeks, allowing the petitioners more time to comply with the order.
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