Allowed

Uco Bank v. M/s Jaldhaka Cold Storage Pvt. Ltd.

DRAT4 Aug 2023MISC APPEAL/6/2023

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal, Kolkata, allowed the appeal by setting aside an order of the DRT that had allowed an application under Section 14 of the SARFAESI Act, 2002, finding the District Magistrate's order satisfied statutory requirements.

What did the court decide?

The order dated 10th April, 2023 passed by the Learned DRT, Siliguri setting aside the impugned order, and restoring the matter to decide afresh.

Uco Bank versus M/s Jaldhaka Cold Storage Pvt. Ltd. — Banking and Recovery | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 06 of 2023 (Arising out of S.A. 25 of 2021 in DRT, Siliguri)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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04.08.2023	UCO Bank	… Appellant
	-Vs-
	M/s. Jaldhaka	Cold Storage
	Private Limited &	3 Others
		… Respondents

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Mr. Santosh Kumar Ray with Ms. Sonal Agarwal, Learned Counsel for Appellant

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THE APPELLATE TRIBUNAL :

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Affidavit-of-Service filed be taken on record. Respondents are served but not represented.

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Heard the Learned Counsel for Appellant and perused the record.

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Instant appeal arises against an order dated 10^th April, 2023 passed by Learned DRT, Siliguri allowing I.A. 130 of 2023 with liberty to Bank to decide afresh in accordance with law under Section 14 of the SARFAESI Act.

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Feeling aggrieved, the appeal is preferred.

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Learned Counsel for Appellant submits that the Learned DRT erred in holding that the District Magistrate has not applied his mind about the nine points as provided under Section 14 of the SARFAESI Act, 2002. Accordingly, it is specifically submitted that the order of the District Magistrate itself shows that all the points as well as material on record were considered and thereafter an order under Section 14 of the SARFAESI Act was passed.

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Reliance is placed upon Balkrishna Rama Tarle -vsPhoenix Arc Private Limited & Others, [(2023) 1 SCC 662] wherein reliance is placed upon judgment of the Hon’ble Apex Court in NKGSB Co-operative Bank Limited -vs- Subir Chakravarty, [(2022) 10 SCC 286] and R.D. Jain & Company -vs- Capital First Limited, [(2023) 1 SCC 675]. It was held by the Hon’ble Apex Court in paragraph 18 that:

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“18. Now so far as the powers exercisable by DM and CMM under Section 14 of the SARFAESI Act are concerned, Statement of Objects and Reasons for which the SARFAESI Act has been enacted reads as under:

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The financial sector has been one of the key drivers in India's efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of nonperforming assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on 21-6-2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise long-term assets, manage

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problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction."

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Perusal of the order of the District Magistrate shows that he has recorded his satisfaction that pre requisite for assessment of secured creditor to take possession have been duly complied. That shows that District Magistrate has applied his mind to the materials placed before him thereafter he passed the order under Section 14 of the SARFAESI Act, 2002. It is not necessary that all the ingredients of Section 14 of the Act should have been copied in verbatim by the District Magistrate. Accordingly, I am of the view that the compliance of Section 14 of the SARFAESI Act was duly made by the District Magistrate. Impugned order suffers from material illegality and is liable to be set aside. Accordingly, the appeal deserves to be allowed.

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O R D E R

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The appeal, is allowed. Impugned order 10^th April, 2023 passed by Learned DRT, Siliguri is set aside.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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File be consigned to Record room.

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Order dictated, signed, dated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson