Appellants challenging SARFAESI recovery proceedings as guarantors after personal death of borrower partners. Tribunal upheld DRAT order, holding no need to impleAD legal representatives and confirming bank's right to reject settlement.
Appeal dismissed with no interference in impugned order of DRAT.
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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson
Appeal No. 14/2021
Between
Pandiyan Nallakannu Naidu & Anr. … Appellant/s V/s.
The Authorised Officer, …Respondent/s Punjab National Bank & Anr.
Mr Rajesh Nagory, i/b Ms Sanjana Ghogare, Advocate for Appellants.
Ms Asha Bhuta, i/b M/s. Bhuta & Associates, Advocate for Respondent No. 1.
-: Order dated: 09/03/2023:-
Aggrieved by the dismissal of S.A. No. 5 of 2020 on the files of Debts Recovery Tribunal-I, Ahmedabad (D.R.T) vide order dated 28.12.2020, The Applicants therein are in appeal.
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never served upon the legal representatives of the borrowers. Hence, the notice is faulty. The Respondent Bank after that took physical possession of the secured assets belonging to the Appellants on 11.03.2019 without issuing any notice in compliance with Rules 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002 (‘Rules’ for short). Thereafter, an application was filed under Sec. 14 of the SARFAESI Act before the court of the Chief Metropolitan Magistrate, Ahmedabad, and the same was allowed vide order dated 03.09.2020. The proceeding is also bad for noncompliance with the mandatory affidavit in compliance with Sec. 14 (1) (i) to (ix) of the SARFAESI Act.
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an erroneous finding. The non-acceptance of the OTS proposal by the Respondent Bank displays the high-handed manner in which they have handled the situation. The Ld. P.O. also failed to notice that the classification of the account as NPA was defective. The demand notice under Sec. 13(3) of the SARFAESI Act requires a break-up of the amount demanded. Default in doing so would render the notice invalid. The entire Sarfaesi measures should, therefore, fail.
borrowers is no reason to hold the notice invalid. There is no adjudication taking place in the Sarfaesi proceedings. Only when an adjudicatory proceeding like an original application filed under the provisions of the Recovery of Debts and Bankruptcy Act, 1993 is initiated, the need for proceeding against the legal representatives would arise. The contention that the legal representatives of the borrowers should have been made a party to the proceedings under section 14 of the SARFAESI Act is also not sustainable for the reasons stated above. There is no doubt that the property which is being proceeded against in the instant case belongs exclusively to the Appellants. Under the circumstances, I do not find it necessary to bring the legal representatives of the deceased partners of a partnership firm on record in a Sarfaesi proceeding. I find that the Ld. Presiding Officer was justified in not accepting the contentions of the Appellants. I am in agreement with the findings in the impugned order to the extent that the Appellants failed to challenge the Sarfaesi action within the stipulated time of limitation. Moreover, it is also pertinent to note that the Appellants had voluntarily surrendered the possession of the secured assets.
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the cases. (See The Bijnor Urban Co-Operative Bank Ltd. Bijnor & Ors. Vs. Minal Agarwal & Ors. AIR 2022 SC 56 ). Hence there is little scope for this Tribunal to intervene in a matter where the OTS proposal was not accepted by the bank.
In the result, I find no reason whatsoever to interfere with the impugned judgment of the D.R.T. The appeal has no merits and hence, it is dismissed.
Sd/Chairperson
mks-1
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3 issues framed by the court
Whether the debtor can challenge recovery proceedings on the ground that notice was not served on deceased borrower's legal representatives.
Whether the bank was justified in rejecting the one-time settlement proposal after receiving partial payment.
Whether the appellate court should interfere with the DRAT order dismissing the SARFAESI appeal.
Colour shows how this judgement treated each authority
The Bijnor Urban Co-Operative Bank Ltd. Bijnor & Ors. Vs. Minal Agarwal & Ors.Referred¶21
The Bijnor Urban Co-Operative Bank Ltd. Bijnor & Ors. Vs. Minal Agarwal & Ors. AIR 2022 SC 56 · Who else cites this
4 provisions across 2 enactments
Pandiyan Nallakannu Naidu & Anr.
The Authorised Officer, Punjab National Bank & Anr.
Ashok Menon
As recorded by the court registry
12 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
