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United Hotel & Resort & Others v/s State Bank of India & Others

    Appeal No. 316 of 2017
    Decided On, 10 September 2018
    At, Debts Recovery Appellate Tribunal at Delhi
    For the Appellants: Pallav Saxena, Umang Chopra, Sandeep Joshi, Advocates. For the Respondents: R1, S.N. Relan, Alok Jagga, Advocates.

Judgment Text
P.K. Bhasin, Chairperson:

1. The appellants who are not disputing that in order to maintain this appeal they are supposed to comply with the mandatory requirement of making a pre-deposit of 50% of the amount of debt demanded from them by respondent No. l Bank, a secured creditor, with this Tribunal are however trying to persuade this Tribunal to give them the benefit of the sale proceeds of their mortgaged property which the Bank has been able to sell, though illegally, while calculating the amount of pre-deposit. This prayer is being made despite the learned Counsel for the appellants being fully conscious of the fact that this very Tribunal has already formed a view in other cases that the amount of sale proceeds received by the Bank by auctioning the secured asset, which is a hotel in Kufri, Himachal Pradesh, cannot be taken into consideration by any aggrieved litigant approaching the Appellate Tribunal with an appeal against some order passed by the Debts Recovery Tribunal (DRT).

2. The view which this Tribunal has already taken is based on the judgment of the Hon'ble Supreme Court in the case of Indian Bank v. Blue Jaggers Estates Ltd., III (2010) BC 694 (SC)=VI (2010) SLT 26=2010(3) Bankers' Journal 9 (SC), in which it was held that if auction sale is yet to be confirmed the sale proceeds cannot be permitted to be taken into consideration while calculating the pre-deposit amount. In the present case, learned Counsel for the appellants had submitted that the appellants are challenging the auction sale of their property and they have very strong case in their favour and they are hopeful that they will be able to persuade the Tribunal that the auction sale was illegal and so liable to be set aside. If that be so, it means that the auction already conducted by the Bank is in a nebulous stage and not confirmed and in case the appellants actually succeed in getting a decision in their favour and the auction is set aside the Bank will have to return the auction money to the auction purchaser and the appellants would have succeeded in getting their appeal decided without any pre-deposit which situation, according to my firm view already formed and which I am not inclined to change since it has not been set aside by any higher Court, cannot be allowed to reach. The amount or pre-deposit is liable to returned to the depositor irrespective of the fate of the appeal but if the appellants have not even deposited any money with this Tribunal as pre-deposit and auction money has to be returned to the auction purchaser in the event of the appellants succeeding in their challenge to the legality to the auction of their property then there will be nothing to be refunded to them. In order to avoid such a contingency the appellants have to make the pre-deposit from their own funds. This is the view which I have already taken and no judgment was brought to my notice from the side of the appellants in which this aspect was considered by any superior Court.

3. Learned Counsel for the Bank submitted in his oral submissions as well as written submissions that the sale proceeds of auctioned property cannot be taken advantage of by the appellants and they cannot maintain their appeal on the money paid to the Bank by the auction purchaser because the auction sale itself is under challenge at the instance of the appellants and in case they succeed the auction purchaser will have be refunded the money paid by him. Learned Counsel for the auction purchaser Mr. Alok Jagga also took the same stand and while submitting that the auction money cannot be taken into consideration while calculating the pre-deposit amount had cited the following judgments which do support the said stand of the Bank as well as the auction purchaser and above all the view which this Tribunal has already taken in this regard:

1. Eskays Construction Pvt. Ltd. v. Soma Papers & Industries Ltd., I (2017) BC 461 (DB) (Bom.)=AIR 2017 Bom. 10.

2. Sarla Devi Mishra (Smt.) v. Authorised Officer, State Bank of India & Ors., IV (2015) BC 44 (DRAT)=2015 (3) Bank (J) 165.

3. Forum Diamonds & Ors. v. Bank of Baroda & Ors., II (2010) BC 585 (DB)=2010 (1) BCR 378.

4. Nathi Lal Rathore v. The Debts Recovery Appellate Tribunal and Others, I (2017) BC 684 (All.)=2017(1) All.LJ 39.

5. Saroj Kumar Samantra & Another v. Indian Bank & Others, IV (2009) BC 17 (DRAT)=2009 (3) Bank J. 366.

6. Bank of India and Anr. v. Registrar, Debts Recovery Appellate Tribunal, Chennai and Ors., IV (2011) BC 336 (DB)=AIR 2011 AP 97.

4. Since the learned Counsel for the appellants had claimed during oral submissions and also in the written submissions waiver of the compliance of the pre-deposit only on the ground that auction money should be considered towards com-pliance of the condition of pre-deposit, which cannot be accepted, the waiver appli-cation is consequently dismissed. The appellants are now directed to comply with the mandatory

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requirement of making pre-deposit of 50% of the amount of debt demanded from them by the respondent Bank in its demand notice under Section 13(2) of SARFAESI Act by submitting in the Registry of DRAT Bank draft in the name of Registrar, DRAT within a period of four weeks. In case the deposit is made the money shall be kept in a fixed deposit with a nationalised Bank for a period of one year at first instance. 5. The appeal shall now be taken up for hearing on 16.10.2018 provided by that time pre-deposit stands made by the appellants.