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R.H. Agro Overseas Pvt. Ltd. and Others V/S State Bank of India and Others.

    Misc. Appeal No. 473 of 2016

    Decided On, 16 October 2017

    At, Debt Recovery Appellate Tribunal At Delhi


    For Petitioner: Rajeeve Mehra, Sr. Advocate, K.R. Chawla, Ravi Data, Rajesh Sharma, Aditya Malhotra and Shruti Aggarwal, Advocates And For Respondents: Rakesh Gupta, Advocate

Judgment Text

1. The appellant Company after having availed of financial facilities of cores of rupees sanctioned in its favour by a consortium of Banks failed to repay the same as per the terms and conditions of the grant of loan facilities resulting in declaration of its accounts as NPAs. Despite that the appellant did not liquidate its liabilities by making payment within the statutory period of sixty days from the date of receipt of demand notice under Section 13(2) of the SARFAESI Act, The dues recoverable from the borrowers/guarantors/mortgagors is claimed by the respondent Bank, which was one of the members of the consortium to be over 100 crores. When measures were taken by the Banks to take over physical possession of the properties mortgaged by the borrower the borrower/appellants approached Debts Recovery Tribunal with a petition under Section 17(1) of SARFAESI Act and in that petition interim relief was also claimed against the dispossession of mortgaged assets. That relief was declined and the Bank took over the possession of the mortgaged property and sold it also. Applications were filed before the DRT to amend the S.A. so as to incorporate the subsequent event of sale of the mortgaged property and grounds of challenge to the action and also for impleadment of the purchaser as also one Baba Ram Dev and Shri Bal Kishan, both of whom were in fact being claimed by the appellants to be the real persons behind the purchase of the property in question though in the forefront one Company, which according to the appellants belonged to them, was put up to buy the property at a throwaway price fixed by the Bank. This was done by these two persons since they were earlier negotiating privately with the appellants to purchase the same property at a price which was more than 100 crores which sale consideration was much more than what was fixed by the respondent Bank. The DRT allowed the amendment application as also the prayer for impleadment of the purchaser but declined to implead the above-named Baba Ram Dev and Shri Bal Kishan. Since the appellants were equally keen to have Baba Ram Dev Ram and Shri Bal Kishan also impleaded in the S.A. they filed the present appeal against the impugned order of the DRT.

2. Since no appeal can be entertained unless the borrower filing an appeal against 'any' order passed by the DRT makes a deposit with the appellate Tribunal to the extent of 50% of the amount of debt which was being claimed by the secured creditor in its demand notice under Section 13(2) of the SARFAESI Act the appellant had also filed an application for waiver of the requirement of pre-deposit though the Appellate Tribunal cannot grant full waiver and for reasons to be recorded waiver of only 25% of the amount in question can be granted.

3. When the stage came for the compliance of the condition of pre-deposit the appellant started claiming at the time of hearing, though not pleaded in the waiver application, that since this appeal was against only two miscellaneous orders and the property mortgaged stood already sold the condition of pre-deposit for the entertainment of this appeal does not get attracted. This plea was pressed into service at the time of arguments despite the fact that a Division Bench of Hon'ble Delhi High Court, which is the jurisdictional High Court of this Tribunal, in its judgment given on the same controversy, reported as : 2015 (147) DRJ 617 (DB), Satnam Agri Products Ltd. & Ors. v. Union of India & Ors., has already held that condition of pre-deposit has to be complied with by the appellant filing any appeal irrespective of the fact whether appeal filed is against a final order of DRT or any interim order. This is becoming a trend to make an attempt to persuade the Appellate Tribunal to accept that this judgment of High Court is distinguishable when in fact there is no reason to accept that argument. Therefore, reliance placed on behalf of the appellants during the course of hearing in the decision of my learned predecessor in Misc. Appeal No. 226/2009, decided on 12.11.2009, B.L. Gupta Construction (P) Ltd., New Delhi & Ors. v. Vijaya Bank, Bangalore, is misplaced as that decision was rendered before the decision of the Hon'ble Delhi High Court in Satnam Agri's case (supra).

4. On behalf of the appellants, some judgments of different High Courts were also cited in support of the submission (which was also not pleaded in the waiver application) that the appellants are even otherwise entitled to claim benefit of the auction proceeds of the property sold by the Bank towards compliance of the condition of pre-deposit. However, this aspect has been dealt with by the Hon'ble Supreme Court in the case of Indian Bank v. Blue Jaggers Estates Ltd. & Ors., : III (2010) BC 694 (SC) : VI (2010) SLT 26, wherein it has been held that the auction proceeds cannot be taken into consideration towards the compliance of the requirement of pre-deposit if the auction has not attained finality and is under challenge. In this respect, I may refer to the following judgments of the Hon'ble Supreme Court wherein it had been held that if an auction is under challenge before a Court, it will attain finality only if the litigation comes to an end finally and till then the fate of the auction will remain in nebulous state:

(i) Kharaitilal v. Raminder Kaur, : III (2000) SLT 15, Appeal (Civil) Nos. 2126-27 of 2000, decided on 15.3.2000.

(ii) V.K. Palaniappa Chettiar v. Ramasami Gounder, : III (2001) SLT 435 : II (2001) CLT 190 (SC), Appeal (Civil) No. 5073 of 1993, decided on 17.4.2001.

In the present case, as noticed already, the appellants have challenged the validity of the auction and in case they succeed in that challenge, the auction proceeds will have to be ordered to be returned to the auction purchaser, which is mandatory. The Hon'ble Supreme Court has also held in the case of Axis Bank v. SBS Organics (P) Ltd.,: III (2016) SLT 341, Civil Appeal No. 4379/2016, decided on 22.4.2016, that the amount of pre-deposit has to be returned to the depositor only even if the appeal is decided against the depositor. However, if the argument of the appellants that auction proceeds should be adjusted towards the compliance of the condition of pre-deposit, then there will be nothing to be returned to it after final disposal of the appeal, either in their favour or against them. These aspects thus make the judgments citied by t

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he learned Senior Counsel for appellants to be of no assistance to the appellants. 5. In view of the aforesaid, the wavier application is dismissed. The appellants are directed to comply with the requirement of the second proviso to Section 18(1) of the SARFAESI Act within three weeks in the form of Bank Draft in favour of Registrar, DRAT, Delhi. In case deposit is made, Registrar shall invest the amount in a Fixed Deposit with a nationalized Bank for a period which would earn maximum interest. List this appeal for hearing on 16.11.2017, if the condition of pre-deposit is complied with within the given time as otherwise it will be liable to be dismissed for non-compliance of the condition of pre-deposit.