Dismissed

Syed Abbas v. Uco Bank

DRAT17 Apr 2023REGULAR APPEAL/27/2022

Case brief

AI extract

What is this about?

In RA(SA) 27/2022, the Appellate Tribunal dismissed an appeal filed under Section 18 of the SARFAESI Act challenging an order of the Chief Metropolitan Magistrate. The Court held that the appeal was not maintainable as the relief to set aside the CMM judgment was not provided under Section 17(4)(A) of the SARFAESI Act.

What did the court decide?

The appeal was dismissed with no order as to costs. All pending IAs were closed.

Syed Abbas versus Uco Bank — Banking and Recovery | DRAT (2023)

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RA(SA) 27/2022

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 17^th of April, 2023

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

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RA (SA) 27/2022

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( SA 44/2021 on the file of DRT-I, Chennai)

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Between

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Mr. Syed Abbas S/o Zindha Ibrahim, No.110b, Quaida Millath 1^st Street, Palavakkam, Chennai 600 041.

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Mr. A. Gajendhran, S/o Asamogu, 15/8, Appavoo Street, Alanthur, Chennai 600 016.

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……Appellants

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And

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The Authorised Officer, UCO Bank, Asst Management Branch, 328, Thambu Chetty Street, Chennai 600 001.

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R.S. Exports, Represented by its Partner Mr. M. V Rajendra Prasad

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Mr. M.V. Rajendra Prasad

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Mrs. R. Shobana, W/o Mr. Rajendra Prasad

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RA(SA) 27/2022

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Respondents 2 to 4 are at:

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“WVN” Manor, No.62/138, Santhome High Road, Chennai 600 004.

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….. Respondents

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Counsel for Appellants : M/s D. Durairaj Counsel for Respondent No.1 : M/s O. Padma Prakash & Co.

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R2 to R4 are given up.

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ORDER

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This Appeal is preferred under Section 18 of the Securitization and

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Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) against order dated 22.6.2022 of DRT-I, Chennai in SA 44/2021. Brief facts leading to this appeal are as follows.

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Appellants herein filed SA 44/2021 invoking Section 17 of SARFAESI Act, challenging order of CMM, Egmore, Chennai in Crl.M.P. 5873/2020 dated 29.12.2020 contending that first respondent bank has not followed SARFAESI provisions and order of CMM is contrary to the provisions of the Act. First respondent bank resisted the said application and on a consideration of contentions and rival contentions, Tribunal below dismissed SA, holding it is lack of merits. Aggrieved by the same, present Appeal is preferred.

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Heard both sides.

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RA(SA) 27/2022

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Advocate for appellants submitted that appellants herein filed SA 44/2021

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contending that they are tenants of secured asset and first respondent bank obtained an order from Chief Metropolitan Magistrate, Egmore, Chennai behind their back and first respondent bank issued Possession Notice without following Rule 8(1) of Security Interest (Enforcement) Rules, 2002 and without considering possession of appellants as tenants, has obtained order from Ld. CMM and on this ground prayed to set aside order of Ld. CMM, Egmore, Chennai dated 29.12.2020 passed under Section 14 of SARFAESI Act in Cr.M.P.No.5873/2020.

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Advocate for auction purchaser, Shri Vijaya Mehanathan submitted that during pendency of SA, appellant used to pay rent but after disposal of SA, rent has not been paid to auction purchaser but deposited with the first respondent bank and auction purchaser having purchased the property in the year 2019 is not able to enjoy the fruits of sale certificate on the ground of pendency of these proceedings.

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Advocate for first respondent bank submitted that SA 44/2021 as filed is

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not maintainable and Tribunal below rightly dismissed the application holding that it lacks any merits.

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When this appeal is taken up and when it is put to advocate for appellants

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under what provision Tribunal below can set aside the order of Ld. CMM

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RA(SA) 27/2022

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passed under Section 14 of SARFAESI Act, Ld. Advocate submitted that under

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Section 17(4)(A), appellants are entitled to file that application. Therefore, it is

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relevant to examine the said provision, which reads as follows:

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“ Section 17(4)(A):

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(i) Any person, in an application under sub-section (1) claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy –

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(a) Has expired or stood determined ;or

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(b) In contrary to Section 65A of the Transfer of Property Act, 1882 (4 of 1882) ; or

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(d) Is created after the issuance of notice of default and demand by the Bank under sub-section (2) of Section 13 of the Act; and

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(ii) The Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or subclause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery tribunal may pass such order as it deems fit in accordance with the provisions of this Act. “

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A bare reading of the above provision would indicate that a person in occupation of secured asset as tenant has right to file application under Section 17 and if Tribunal is satisfied that tenancy right or lease hold rights as claimed in the secured asset are established, then, notwithstanding anything to the contrary contained in any other law for the time being in force, DRT may pass such order as

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it deems fit in accordance with provisions of SARFAESI Act. That means, if tenancy rights are established, then, that has to be recorded and secured creditor has to proceed against secured asset subject to lease hold rights of that party. But, here,

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RA(SA) 27/2022

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the very prayer is to set aside order of Ld. CMM, which is not provided under

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Section 17(4)(A), as submitted by Ld. Advocate for appellants.

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I do not find any wrong in the order of Tribunal below when the very relief claimed is not maintainable, entertaining Securitisation Application challenging order of CMM under the SARFAESI Act, in my view, is not correct. Even otherwise, on merits also, Tribunal below rightly dismissed SA 44/2021 and I do not find any

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grounds to interfere with the same.

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For these reasons, Appeal RA (SA) 27/2022 is dismissed with no order as

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to costs.

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11. All pending IAs, if any, stand closed.

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[Dictated to Steno(SN), transcribed by him, corrected, signed and pronounced by me in open court, this 17^th April, 2023)

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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Syed Abbas v. Uco Bank

Case brief

What is this about?

What did the court decide?

Syed Abbas v. Uco Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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