Dismissed

K C Mathai And Another v. Chief Manager PNB & Ors.

DRAT22 Dec 2022REGULAR APPEAL/187/2017

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed an appeal against the DRT's order in a securitisation application. The appellants challenged a possession notice and the subsequent sale of mortgaged land, alleging violations of the SARFAESI Act. The Tribunal found that the Appellants had defaulted on High Court-ordered instalments and failed to plead or challenge the sale notice when it was issued. The appeal was dismissed with no grounds for interference.

What did the court decide?

Appeal RA (SA) 187/2017 dismissed; costs borne by both parties; pending Interim Applications closed.

K C Mathai And Another versus Chief Manager PNB & Ors. — Banking and Recovery | DRAT (2022)

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RA (SA) 187/2017

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 22^nd of December, 2022

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar

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CHAIRPERSON

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RA (SA) 187/2017

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[SA 272/2010 on the file of DRT, Ernakulum)

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Between

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K.C. Mathai,

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S/o Late Chacko, Proprietor,

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M/s. Embee Traders,

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Karayamparambu

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P.O. Karukutty, Angamaly,

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Ernakulam - 683 576, Kerala.

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A.P. Varghese,

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S/o Late Paulose,

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Pynadath Ayyampillil,

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House No.86, Priya Nagar House Colony,

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Angamaly,

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Ernakulam – 683 592 , Kerala.

….Appellants

And

RA (SA) 187/2017

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The Chief Manager, (Authorised Officer), Punjab National Bank, Angamaly Branch, ARMB, Market Road, Ernakulam District- 682 011, Kerala.

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Sameer Shah, S/o Nabeen J. Shah, Daga Building, Gujarati Road, Kochi – 682 002, Kerala.

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Vanasuma Dholakia, W/o Rajeev Dholakia, 13/1100, Star Bright, Chullikkal, Kochi – 682 005, Kerala.

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….. Respondents

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Counsel for Appellants : Mr. R. Gowthama Narayanan for Mr. D. Senthilkumar Counsel for Respondent No.1 : Mr. M.L. Ganesh Respondent Nos. 2 and 3 ; Remained ex parte

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RA (SA) 187/2017

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ORDER

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This Appeal is against Order dated 25.04.2016 of DRT, Ernakulam in Securitisation Application No. 272/2010.

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Brief facts leading to this Appeal are as follows:-

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Appellants herein filed above referred Securitisation Application challenging Possession Notice dated 08.03.2010 as illegal and in contravention of provisions of SARFAESI Act and Rules made thereunder and to declare whole proceedings and Sale Notice, as illegal and unsustainable. According to Appellants, they availed Cash Credit loan of Rs.15 Lakhs for Cable Distribution Agency, by giving land in Survey No. 98/4B and 98/3 of Koothattukulam Village, to an extent of 194 cents and land in Survey Nos. 173/3/1 and 173/3/2 to an extent of 24 acres 20 cents of same village, for securing debt. According to Appellants, they borrowed this amount from Nedungadi Bank Ltd., which is subsequently merged with Punjab National Bank,

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RA (SA) 187/2017

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and thereafter, Punjab National Bank reorganized loan and Appellants made proper payments till 2005, and thereafter, instalments could not be paid due to injury sustained by 1^st Appellant, and 1^st Respondent Bank issued Demand Notice, and thereafter, Appellants approached Hon’ble High Court of Kerala and filed Writ Petition (C) No. 34286/2007, wherein Hon’ble High Court granted eight instalments for repaying the amount, out of which, Appellants paid six instalments, and 1^st Respondent Bank, in spite of letter from Appellants, requesting them to provide the details of outstanding amount, Bank did not provide necessary information, but issued Possession Notice dated 08.03.2010, which is in violation of provisions of SARFAESI Act, 2002. According to Appellants, Authorised Officer of 1^st Respondent Bank did not mention the details as required in Appendix IV, in Possession Notice, and on that ground, Notice has to be set aside. Appellants also contended that Authorised Officer of 1^st Respondent Bank issued Sale Notice, without considering One Time Settlement (OTS) proposal of Appellants, and proposed for sale of all lands though one

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RA (SA) 187/2017

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item, is sufficient to make outstanding, thereby contravened Securitisation Rules.

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First Respondent Bank disputed contentions of Appellants, and contended that, Authorised Officer strictly followed provisions and rules of SARFAESI Act, 2002, and as Appellants failed to pay eight instalments granted by Hon’ble High Court, 1^st Respondent Bank proceeded further as the very same Order authorizes Bank to take further steps in case of default. First Respondent Bank also contended, though Notice was issued for both items, only one item consisting of 194 cents alone is sold, and as the amount realized was sufficient, Authorised Officer has not proceeded further with sale of second item, therefore, contentions of Appellants are not tenable.

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On a consideration of contentions and rival contentions of both parties, Tribunal below recorded a finding that Authorised Officer of 1^st Respondent Bank followed all the requirements of SARFAESI Act and Rules made thereunder, and Applicants are

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RA (SA) 187/2017

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disentitled for any of the reliefs made in Securitisation Application, and dismissed Securitisation Application; aggrieved by which, present Appeal is preferred.

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Heard both sides. Both Advocates filed Written

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Submissions supporting contentions of their respective clients.

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Advocate for Appellants submitted that Securitisation Application is filed questioning Possession Notice and Sale, and there is no clear 30 days in between Sale Notice and Sale. He further submitted that as per Orders of Hon’ble High Court in their Writ, Appellants paid six instalments and as Bank did not give details relating to outstanding, remaining instalments could not be paid, but Tribunal below, failed to consider this aspect. It is further submitted that first Appellant is borrower, second Appellant is surety, and property sold in auction, which is 194 cents, belongs to first Appellant, whereas remaining property belongs to second Appellant. He further submitted that when specific violations are shown, particularly, sale

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RA (SA) 187/2017

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conducted in pursuance of Sale Notice, without observing 30 days clear Notice, Learned Presiding Officer recorded a finding that, Rules are followed, which is per se incorrect, therefore, findings have to be treated as perverse. It is further submitted that sale was conducted on 10.01.2011, which is not a notified date, and as per Sale Notice, sale was to be held on 28.12.2010, but Authorised Officer, without any authority or power, arbitrarily adjourned sale to 10.01.2011, and on that ground itself, sale has to be set aside.

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On the other hand, Advocate for 1^st Respondent Bank

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submitted that, entire arguments of Advocate for Appellants with regard to sale, is without any prayer and pleading. He submitted, eight months after filing SA, Sale Notice was issued and proceeded with, in spite of that, Appellants have not amended their SA, and they only stick on to challenge Possession Notice, and there is no violation of provisions of SARFAESI Act and Rules made thereunder in respect of Possession Notice, and Tribunal below was right in dismissing

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RA (SA) 187/2017

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Securitisation Application. He further submitted that when Hon’ble High Court directed Appellants to discharge their outstanding in eight instalments, and that Order is subsequent to issuance of Demand Notice under Section 13(2) of SARFAESI Act, 2002, in which, outstanding is indicated, request of Appellants to furnish outstanding, is only to protract the proceedings. He further submitted that if really Appellants are prudent and interested in discharging loan amount, they should have first divided the amount claimed in Demand Notice issued under Section 13(2) of SARFAESI Act, 2002, into eight equal instalments, and ought to have paid them, and thereafter, ought to have forwarded their requests to 1^st Respondent Bank to furnish details of outstanding remaining. But, payment of six instalments is never met the quantum, and as Hon’ble High Court permitted Bank to proceed with, in case of default, Authorised Officer of 1^st Respondent Bank took further steps, therefore, there is nothing wrong in conducting auction and realizing outstanding. He further submitted that Bank filed Writ Petition before Hon’ble High Court in which Hon’ble High Court upheld Sale Certificate, and Appellants filed Writ Petition

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RA (SA) 187/2017

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against that, and same is dismissed, in view of that, all contentions of Advocate for Appellants with regard to sale, cannot be countenanced. He further submitted, Tribunal below passed a well reasoned Order touching every aspect, and there are absolutely no grounds to interfere with the same. He further submitted that decision relied on by Appellants is in relation to service matter, and that has no application to the case on hand.

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I have perused material papers including Written Submissions of both parties. As rightly pointed out by Advocate for 1^st Respondent Bank, main SA is filed challenging Possession Notice dated 08.03.2010 issued under Section 13(4) of SARFAESI Act, 2002, contending that it is defective and illegal. As seen from Securitisation Application, the grounds on which Possession Notice is challenged are referred to in para ‘C’ of Application. According to Appellants, Notice dated 08.03.2010 is defective and Bank failed to incorporate name and address of borrowers, and it is not in compliance with

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RA (SA) 187/2017

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Appendix IV of Securitisation Rules. As seen from Notice, it contains all the details required to be mentioned in the Format shown in Rules. Though, this aspect is not specifically clarified by Tribunal below, but the fact remains that requirements of Rules are met, and that is the main and sole ground on which Annexure VI to Securitisation Application, namely Possession Notice dated 08.03.2010 is challenged and prayer is to set aside the same. As rightly pointed out by Advocate for 1^st Respondent Bank, Appellants filed Writ Petition (C) No. 34286/2007 challenging Demand Notice. Writ Petition was disposed of on 21.02.2008 wherein it is clearly stated irrespective of controversy prevailing between the parties as Petitioner is seeking an instalment facility to discharge the liability, the same can be considered, and directed Petitioner to pay the amount due to Bank in eight equal instalments and first instalment shall be paid in first week of March, 2008, and subsequent instalments shall be paid in first week of every succeeding month. It is also clarified, in case, Petitioner commits default, Respondent Bank will be free to continue action that is already initiated. So, it is very clear from Order of Hon’ble High Court

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RA (SA) 187/2017

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that, Appellants are directed to pay amount due to Bank in eight equal monthly instalments. It is the contention of Appellants that pursuant to said Order, they addressed the Bank to furnish outstanding. But, when Writ itself is filed challenging Demand Notice, in which 1^st Respondent Bank indicated outstanding at Rs.16,16,550/-, as on 01.09.2007, and the very same Notice is challenged in Writ. As rightly contended by Advocate for 1^st Respondent Bank, Rs.16,16,550/- has to be divided into eight equal instalments, and Appellants are expected to pay first intalment in first week of March, 2008. If Rs.16,16,550/- is equated into eight equal instalments, monthly instalment would come to Rs.2,02,068.75p. As per Hon’ble High Court Order, Appellants have to pay this amount. As per own version of Appellants, they paid Rs.2.10 Lakhs on 07.03.2008, Rs.1.40 Lakhs on 07.04.2008, Rs.1.75 Lakhs on 05.05.2008, Rs.1.75 Lakhs on 09.06.2008, Rs.1.75 Lakhs on 04.07.2008 and Rs.1 Lakh on 07.08.2008. So, out of these six instalments, only first instalment matches the amount that is payable as per Order of Hon’ble High Court of Kerala, and all other instalments are far less in quantum to be paid in terms of

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RA (SA) 187/2017

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Order of Hon’ble High Court. Tribunal below took this conduct of Appellants into consideration while considering allegations made against 1^st Respondent Bank, particularly, for not providing outstanding details.

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As seen from records, when Hon’ble High Court permitted Bank to continue action which is already initiated in case of default, Bank is absolutely right in proceeding further by issuing Sale Notice, and thereafter conducting sale. Though much is argued about Sale Notice and procedure of sale, as rightly pointed out by Advocate for 1^st Respondent Bank, these arguments are, without any pleadings and without any relief. Though during pendency of Securitisation Application, Sale Notice is issued and sale is conducted, Appellants have not challenged those actions, either by way of a separate Securitisation Application or by amending pending Securitisation Application. Therefore, it is not now open to Appellants to harp upon the alleged defects in initiating Sale Notice and conducting of sale.

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RA (SA) 187/2017

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As rightly pointed out by Advocate for 1^st Respondent Bank, Tribunal below considered each and every aspect, and answered them with cogent and convincing reason. I do not find any wrong in the approach and findings of Tribunal below, and all grounds raised in the Appeal questioning impugned Order are without any material support.

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As rightly pointed out by Advocate for 1^st Respondent Bank, decision referred to by Advocate for Appellants in the case of Dr.Suresh Chandra Verma & Ors. Vs. The Chancellor,

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Nagpur University and Ors. reported in AIR 1990 SC 2023, is a service matter with regard to percentage of reservation, where the issue was whether resolution of Government for the percentage of reservation, will have retrospective effect or prospective effect, and that decision has no way relevant for the issue before us. Even otherwise, when Appellants have not filed separate Securitisation Application nor amended the

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RA (SA) 187/2017

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existing Securitisation Application, questioning Sale Notice and sale, any length of arguments, cannot be countenanced.

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In view of foregoing observations and reasons, I am of the considered view that, Tribunal below is perfectly right in dismissing Securitisation Application and there are absolutely no grounds to interfere with the well reasoned Order.

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In the result, Appeal RA (SA) 187/2017 is dismissed. Both parties shall bear their own costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 22^nd of December, 2022]

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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K C Mathai And Another v. Chief Manager PNB & Ors.

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K C Mathai And Another v. Chief Manager PNB & Ors.

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