Bombay High Court
Sign Design Private Limited And ... vs State Bank Of India And 5 Ors on 20 July, 2017
Bench: B.R. Gavai
917-WPL-1832-2017.DOC
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 1832 OF 2017
1. Sign Design Private Ltd.
A limited company incorporated under the
Companies Act, 1956 and having its
registered office at 4 Shree Industrial
Estate, 2nd Hasanabad Lane, Santacruz
(W), Mumbai 400 054.
AND At
Mehta Niwas, Main Kasturba Road, New
Mahabir Jewellers, Borivali (East),
Mumbai 400 066. ...Petitioners
Versus
1. State Bank of India
A banking Corporation constituted under
the provisions of State Bank of India
(Subsidiary Banks) Act, 1959 having its
Bellard Estate Branch office at 265, Sant
Niwas, SBS Road, Ballard Estate,
Mumbai - 400 038.
2.Mr. Narendra H. Mehta
of Mumbai Indian inhabitant Address at
Flat No. 102 'B' Wing, 1st Floor, Navratna
CHS Ltd., Ashra Colony, Dattapada,
Borivali (East), Mumbai 400 066.
3. Mr. Hukmichand Mehta
R/at Flat No. 101, B Wing, 1st Floor,
Navratna CHS Ltd., Ashra Colony,
Dattapada, Borivali (East), Mumbai 400
066.
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4. Mr. Mithalal H Mehta
R/at. Flat No. 102, B Wing, 1 st Floor,
Navratna CHS Ltd., Ashra Colony,
Dattapada, Borivali (East), Mumbai 400
066.
5. Mrs. Pushpa J Mehta
R/at. Flat No.101, B Wing, 1st Floor,
Navratna CHS Ltd., Ashra Colony,
Dattapada, Borivali (East), Mumbai 400
066.
6. Mr. Sanjay Agarwal
Adult, Indian, Office at B-6, 402, Kalash
Co-Op Hsg. Soc., Sundervam, Opp. New
Link Road, Andheri (W), Mumbai 53. ...Respondents
Mr. Chetan Kapadia, with Mr. Sunil Anant Humbre for the
Petitioner.
Mr. Nikhil Salvi, i/b Mr. R.J. Singh Respondent No.1.
Mr. Mayur Khandeparkar, with Mr. Yohann Cooper, i/b Mr.
Puneet K. Gogad for the Respondent No.6.
CORAM: B.R. GAVAI AND
RIYAZ I. CHAGLA, JJ.
DATED: 20th July 2017
PC:-
J U D G M E N T :- (Per Riyaz I. Chagla J.)
1. The Petitioner by present Petition is challenging the
impugned order dated 9th June 2017 passed by Debts
Recovery Appellate Tribunal ("DRAT"). By the impugned
order the DRAT had directed the Petitioner to deposit the sale
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917-WPL-1832-2017.DOC
amount of the secured property viz. Rs.3.51 Crores within six
weeks as condition to entertain the appeal.
2. The Petitioner is a borrower from the Respondent No1
bank. The Respondent No.1 had filed a original application
before Debts Recovery Tribunal ("DRT-I"), Mumbai bearing
O.A. No. 67 of 2010 for recovery of the dues against the
Petitioner. The recovery certificate was issued pursuant to
which the demand notice was issued on 18th June 2013. An
order for attachment in respect of the immovable properties
of Petitioner No.1 was passed by the DRT. The Petitioner had
submitted an OTS proposal for Rs.3.30 Crores for settlement
of dues with Respondent No.1. The OTS was accepted by
Respondent No.1 bank and time was granted till 10th
November 2015 for the Petitioner to pay settlement amount in
four instalments and in any event the time would be extended
maximum till 10th February 2016 subject to payment of
interest. The Petitioner failed to pay amount under OTS and
the Respondent No.1 bank approached the District
Magistrate to take physical possession. The auction sale was
conducted on 5th November 2015 and Respondent No.6 was
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declared successful bidder for the property for an purchase
amount of Rs.3.51 Crores. The Petitioner No.1 had made an
application to set aside the sale on 30th November 2015. The
recovery officer rejected the application on 30th December
2015 and granted the extension of time on the request of the
auction purchaser subject to payment of 18% interest. The
Petitioner filed Appeal No. 1 of 2016 before the DRAT against
the order dated 30th December 2015. Interim stay was
granted by DRAT on 18th January 2016. The Respondent
No.6 thereafter made payment on 20th January 2016 along
with payment of 18% interest for the period and deposit the
same with learned Recovery Officer on 20th January 2016.
The Appeal No. 1 of 2016 was dismissed by the DRT on the
ground that the Petitioner failed to deposit the entire amount
as per Rule 61 of the second schedule of the Income Tax
Rules. The Petitioner filed an appeal before the DRAT against
the said order. As the DRAT was vacant, the Petitioner filed
Writ Petition No. 1072 of 2016 before this Court. Since the
DRAT, Mumbai was resuming, the Court was pleased to
extent the stay by six weeks and directed the DRT to decide
the appeal in accordance with SARFAESI Act and accepted
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the Appeal. The learned Chairperson of the DRAT disposed
of the waiver application No. 317 of 2016 and directed the
Petitioners to deposit the sum of Rs.3.51 Crores in six weeks.
3. The Petitioner being aggrieved by the impugned order
has filed this Petition.
4. Shri Chetan Kapadia the learned counsel for the
Petitioner has submitted that the impugned order has
directed the Petitioner to deposit a large amount of Rs.3.51
Cores which was entire sale consideration of the secured
property. Shri Kapadia has submitted that the DRT had
deviated from the provisions of the Rules i.e. 57 and 58 of the
Income Tax Rules. Shri Kapadia has submitted that the
Rules 57 & 58 provided that in the event of auction purchaser
failing to comply with the payment terms, the Recovery
Officer has no authority and / or jurisdiction to extend time for
payment by the purchaser. Rule 57 & 58 also suggest that in
the event of the default by the purchaser, the sale ought to be
declared as null and void and hence Rule 61 would not be
attracted. Shri Kapadia submitted that the Recovery Officer
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as well as DRT have erroneously invoked the provisions of
Rule 61 and that the said order ought to be set aside.
5. Shri Khandeparkar, learned counsel appearing for
Respondent No.6 opposed the Petition. Shri Khandeparkar
has contended that the DRT has observed that the amount in
the proclamation of sale / terms and conditions as on date of
sale is Rs.8,13,90,521/- inclusive of interest and costs for
recovery of the amount of secured property sold and that it
was auction for Rs.3.51 Crores. Shri Khandeparkar has
submitted that the Petitioner will not be caused any prejudice
by depositing the amount of Rs.3.51 Crores as directed by
the DRAT in the impugned order. Shri Khandeparkar
accordingly submitted that, the present Petition ought to be
dismissed by this Court.
6. We are of the considered view that there is no infirmity
in the impugned order and that an amount of
Rs.8,13,90,521/- is the amount which has been mentioned in
the proclamation of sale / terms and conditions on the date of
sale as observed in the impugned order and that the property
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was sold for Rs.3.51 Cores. We are of the view that the
Petitioner has only been made to deposit the amount of
Rs.3.51 Cores as condition to entertain the Appeal and that is
not even 50% of the amount of Rs.8,13,90,520/-. We are of
the considered view that no prejudice will be caused to the
Petitioner in making the said deposit. We are also of the
considered view that the Section 18 of the SARFAESI Act is a
mandatory provision and that the Petitioner is obliged to
comply with the impugned order passed by the DRAT and
can make no grievance of the same.
7. We accordingly dismiss the Petition. There shall be no
order as to costs.
(RIYAZ I. CHAGLA J.) ( B.R. GAVAI J.)
20th July 2017
