Allowed

Punjab National Bank v. Schamka technology Ltd. & Ors.

DRAT14 Sept 2022MISC APPEAL/18/2022

Case brief

AI extract

What is this about?

The Appellant Bank appealed against an order imposing compensation for withdrawing SARFAESI measures. The tribunal held the Appellant entitled to withdraw and abandoned the prejudicial measures, setting aside the compensation order as unreasonable.

What did the court decide?

The impugned order directing the Appellant Bank to pay a compensation of ₹1,25,000 is set aside.

Punjab National Bank versus Schamka technology Ltd. & Ors. — Company and Corporate | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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Misc. Appeal No. 18/2022

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Between

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Punjab National Bank. … Appellant/s V/s.

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M/s Schamka Technology Ltd. & Ors. …Respondent/s

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Ms. Asha Bhuta, M/s. Bhuta & Associates, Advocate for the Appellant.

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-: Order dated: 14/09/2022:-

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This is an Appeal filed under Sec. 18 of the SARFAESI Act impugning the order dated 13.01.2021 of the learned Presiding Officer, D.R.T.-I, Ahmedabad in S.A. No. 283/2019 for having imposed a compensation of ₹1,25,000/- on the Appellant Bank.

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The Respondents were served but none appeared and hence, they are called absent and set ex-parte.

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Heard the Ld. Counsel appearing for the Appellant Bank. Perused the documents and also the impugned order.

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The Appellant Bank had issued a notice under Sec. 13(2) of the SARFAESI Act to the Respondents claiming a sum of ₹10,16,07,409/- as of 02.08.2016. Thereafter, Sarfaesi measures were initiated under Sec. 13(4) and symbolic possession was taken on 09.11.2016. Consequent to that, an order was also obtained under Sec. 14 of the SARFAESI Act from the Court of the Chief Metropolitan Magistrate, Ahmedabad for physical possession, which

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was scheduled to be taken on 16.12.2019, and a notice was also issued to auction the properties on 20.12.2019. At this juncture, the Respondents approached the D.R.T.-I, Ahmedabad with S.A. No. 283/2019 on 23.11.2019. An interim order was obtained stalling the further proceeding under the SARFAESI Act. The proceeding before the D.R.T. was thus protracted and was not getting ready for hearing. Consequently, on 30.01.2021, the demand notice issued under Sec. 13(2) on the basis of which the Sarfaesi measures were initiated, was withdrawn by the Appellant Bank.

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The Securitization Application was filed challenging that the classification of debt as non-performing assets (NPA) was improper. Consequent measures under Sec. 14 and also the auction notice and the intended taking over physical possession of the secured assets were also challenged by the Respondents.

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Under these circumstances, the S.A. is rendered infructuous because the Demand Notice issued by the Appellant Bank was withdrawn. All consequent Sarfaesi measures based on that notice have also failed. The Respondents/Applicants, therefore, requested for withdrawal of the pending S.A. No. 283/2019.

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While considering the application for withdrawal, the Ld. Presiding Office observed that the Respondent Bank shall credit a sum of ₹1,25,000/- in the account of the borrower to compensate them with regards to the court fee and expenses incurred thereon because the Respondent Bank by its own motion and conduct and withdrawn the Sarfaesi process. The Ld. Presiding Officer also took

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into consideration the submission made by the Ld. Counsel appearing for the Applicants that he has received a fee of approximately ₹4.00 Lakhs from the Applicants. Considering the expenses incurred by the Applicants for initiating the application under Sec. 17 of the SARFAESI Act, it was deemed appropriate by the Ld. Presiding Officer to compensate the Applicants for purported loss sustained by them.

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It is pertinent to note that the Appellant Bank had not conceded the insufficiency of the Sarfaesi measures taken by them. It was being contested. The Securitization Application was not dealt with on its merits. The contention raised by the Appellant Bank in their reply to the Securitization Application was not found to be unsustainable on its merits. Under the circumstances, the fact that the Appellant has withdrawn the demand notice and the consequent Sarfaesi measures midway is no reason to find that they did not have any merits in the measures taken or that it was inappropriately taken. A secured creditor is at liberty to initiate the Sarfaesi measures, abandon them and initiate Sarfaesi measures afresh. There is no embargo on that. Withdrawal of the demand notice under Sec. 13(2) by the Appellant Bank was favourable to the debtor and it is under such circumstances that the debtor had decided to withdraw the Securitization Application which had become infructuous. Saddling the Appellant with a cost of ₹1,25,000/- for abandoning the Sarfaesi measures midway appears to be most unreasonable. I could understand if the contention raised by the Appellant Bank was found to be frivolous and untenable had the S.A. been disposed of

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on merits in favour of the Applicant, there was meaning in imposing the cost or compensation. When an application is withdrawn for the reason it being infructuous, there is no rhyme or reason for the Ld. P.O., to impose compensation on the Respondent Bank. I find that the order of the Ld. Presiding Office is most unreasonable, perverse and therefore, unsustainable. The Appeal is, therefore, allowed and impugned order with regard to imposing compensation of ₹1,25,000/ on the Appellant is, therefore, set aside.

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The Appeal is allowed.

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Sd/Chairperson

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mks-11

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Punjab National Bank v. Schamka technology Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Schamka technology Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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