Allowed

State Bank of India v. M/S Arihant Industries

DRAT26 Apr 2023REGULAR APPEAL/52/2022

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed an appeal challenging a Lower Tribunal order that suspended an enforcement action due to alleged delay in serving a notice under Rule 4(2A) of the Security Interest (Enforcement) Rules 2002. The Tribunal held no 7-day limit exists for movable assets.

What did the court decide?

Impugned order setting aside enforcement action due to alleged violation of Rule 4(2A) is set aside.

State Bank of India versus M/S Arihant Industries — Insolvency and Bankruptcy | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson Appeal No. 52/2022

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Between

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State Bank of In d ia … Appellant/s V/s. M/s. Arihant In d ustries …Respondent/s

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M/s. Arihant In d ustries …Respondent/s Shrey Sancheti, i / b M/s. Theba & Associates, Advocate for Appellant.

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Mr. Hitesh G, A d vocate for Respondent.

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-: Order dated: 26/04/2023:-

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The credit o r bank is the Appellant is the c reditor which is aggrieved by the interlocutory order dated 15.12.2 0 18 passed by Ld. Presiding Office r , D.R.T.- II, Ahmedabad in S. A . No. 95/2018 wherein the ste p s taken by the Appellant with r e gard to movable assets belonging t o the borrower was put on hold f o r the reason that the punchnama a n d the inventory prepared after ta k ing possession of the movables assets was not handed over to the b orrower within 7 days as require d under Rule 4 (2A) of the Security Interest (Enforcement) R u les 2002, and hence, in appeal.

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The R espondent appeared in person and has filed a detailed reply t o this appeal. He has raised se v eral contentions regarding the S arfaesi measures starting fro m the improper declaration of N P A by the Bank. He has also alle g ed fraud on the part of Bank Off i cials and it is also stated that the i n ventory prepared by the officials are false and unsustainable.

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The scope of this appeal is very l i mited. The Ld. Presiding Office r has in the impugned order stated that there is violation of Rule 4 (2A) of the Rules. The perusal o f the Rules would

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indicate that it pertains to taking over possession of movable properties and 2A states that the borrower shall be intimated by a notice enclosing the punchnama drawn in Appendix – I and the inventory made under Appendix – II. Nowhere in the Rules is it stated that the said notice has to be served on the borrower within 7 days as observed by the Ld. Presiding Officer in the impugned order.

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Probably, the Ld. Presiding Officer got confused with the provisions of Rule 8 of the Rules which indicates that the possession notice referred to in Sub Sec. 1 states that it shall also be published as soon as possible but in any case not later than 7 days from the date of taking possession. Rule 8 pertains to taking over possession of immovable properties and not to movable assets. Since there is no time limit prescribed under Rule 4 (2A) to serve the notice on the borrower within a period of 7 days. The action taken by the Appellant in serving the notice within six months cannot be found to be in violation of Rule 4(2A).

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Hence, the impugned order is apparently unsustainable and requires to be set aside. The S.A. is still pending and all other contentions regarding the improper classification of the debt as NPA as also the improper preparation of the inventory etc; shall be considered by the Ld. Presiding Officer while disposing of the S.A. The S.A. shall be disposed of as expeditiously as possible. With the above observation, the appeal is disposed of.

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rm-30

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State Bank of India v. M/S Arihant Industries

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/S Arihant Industries

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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