Allowed

State Bank of India v. Smt Sanjukta Debta

DRAT8 Oct 2024REGULAR APPEAL/126/2023

Case brief

AI extract

What is this about?

Appeal by State Bank of India challenging a DRT order allowing a borrower's Section 17 application filed after limitation. DRAT quashed the DRT judgment for exceeding jurisdiction in dictating settlement terms and dismissed the underlying Section 17 application as time-barred.

What did the court decide?

Impugned judgment dated 04.12.2019 cleared; S.A. 113 of 2019 dismissed. Limitation sustained; DRT's direction on settlement terms set aside.

State Bank of India versus Smt Sanjukta Debta — Banking and Recovery | DRAT (2024)

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Reportable/Non-Reportable

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Appeal No. 126 of 2023-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 126 of 2023

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(Arising out of S.A. 113 of 2019 in DRT, Cuttack)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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State Bank of India, a body corporate constituted by and under the State Bank of India Act, 1955, carrying on business, inter alia, from State Bank of India (Local Head Office), III - Pandit Jawaharlal Nehru Marg. Unit-III, Bhubaneswar - I, Odhissa;

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Authorised Officer, State Bank of India having office at Rajgangpur Branch situated at Rajgangpur, P.I.N. - 770 017, District: Sundargarh, Odhissa;

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Branch Manager, State Bank of India having office at Rajgangpur Branch situated at Rajgangpur, P.I.N. - 770 017, District: Sundargarh, Odhissa.

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… Appellants

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-Versus-

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Smt. Sanjukta Debta, residing at Kantiamura, P.O./P.S. Bargaon, District: Sundargarh, Odhissa, P.I.N. - 770 016.

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… Respondent Counsel for Appellants … Mr. Soumya Roy Mr. Santosh Mahato Counsel for Respondent … None JUDGMENT : 8^th October, 2024

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THE APPELLATE TRIBUNAL :

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1. Instant appeal has arisen against judgment and order dated 04.12.2019, passed by Learned DRT, Cuttack, allowing S.A. 113 of 2019 (Smt. Sanjukta Debta -vs- State Bank of India).

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2. As per the pleadings of the parties, Securitisation Application under Section 17 of the SARFAESI Act (hereinafter referred to as the Act) was filed by the Respondent with the assertion that the Respondent has availed two loan facilities from the Appellant Bank by

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Appeal No. 126 of 2023-DRAT-Kolkata creating equitable mortgage by deposit of title deeds. Payment of instalments became irregular and the account /s was classified as N.P.A. on 18.8.2017. Thereafter, notice under Section 13 (2) of the Act was issued on 27.3.2018 while notice under Section 13 (4) of the Act was issued on 01.6.2018. A Writ Petition, W.P. 10299 of 2018, was filed by the Respondent wherein an order was passed by the Hon’ble High Court of Orissa directing the Respondent to approach the Bank to deposit the actual overdue amount along with an application for regularization of the loan accounts. It was further directed that Bank should take a decision thereon. Further it was directed that if the Respondent deposited the actual overdue amount with interest, the Bank shall consider and dispose of the same granting regularisation thereof. In compliance of the order of the Hon’ble High Court an Application No. 9.7.2018 was filed by the Respondent which was not responded but eviction notice was served upon the Respondent. Respondent is residing in the house with her old parents. Bank is trying to evict the Respondent. In the meantime, an O.A. 389 of 2019 is also filed by the Bank under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. 3. Appellant Bank opposed the prayer with the assertion that the Securitisation Application under Section 17 of the Act is barred by limitation. No cause of action has arisen in favour of the Respondent. Respondent has not challenged the Possession Notice under Section 13 (4) of the Act which was received by her on 01.6.2018. Respondent is trying to

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Appeal No. 126 of 2023-DRAT-Kolkata take advantage of the letter dated 07.11.2019 but the Application under Section 17 of the Act is beyond time. It is further stated that the Respondent has not complied the directions of the Hon’ble High Court passed in W.P. (C) 10799 of 2018. Another Writ Petition, W.P. 5026 of 2019 was filed by the Respondent which was dismissed for nonprosecution.

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4. Respondent is a defaulter. Account was rightly classified as N.P.A. on and from 13.3.2018. Notices under Section 13 (2) and 13 (4) of the Act were duly accepted by the Respondent but no challenge was made. No representation under Section 13 (3A) of the Act was made. Accordingly, the SARFAESI Application, filed under Section 17 of the Act, is liable to be dismissed. 4. Learned DRT after hearing the Learned Counsel for the parties has gone beyond the pleadings. Reliance is placed upon Article 300A of the Constitution of India. It is asserted that the SARFAESI Application is filed within time. Accordingly, Learned DRT allowed the SARFAESI Application with a direction to the SARFAESI Applicant to deposit Rs.2.00 lac within ten days from the date of the order. Direction was made to the Bank to accept the amount of Rs.2.00 lac. Thereafter, Bank shall handover the possession to the SARFAESI Applicant within two days after receipt of the amount of Rs.2.00 lac. Further direction was made to provide detailed Statement of Account and one month time was granted for the same. SARFAESI Applicant was further allowed to make the payment through EMI. Feeling

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Appeal No. 126 of 2023-DRAT-Kolkata aggrieved by the impugned judgment, Appellant Bank preferred the appeal.

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6. Notices were issued to the Respondent which were duly served but the Respondent is not represented. I have heard the Learned Counsel for Appellant as well as perused the record.

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7. At the very outset, Learned Counsel for Appellant would submit that the Learned DRT has erred in passing the impugned judgment. Learned DRT had travelled beyond its jurisdiction in settling the terms of settlement which is against law. It is further submitted that the SARFAESI Application under Section 17 of the Act is barred by limitation. Bank has proceeded in accordance with law.

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8. As far as issue of limitation is concerned, admittedly, notice under Section 13 (4) of the Act was served upon the SARFAESI Applicant, Respondent herein, on 01.6.2018 but it was not challenged by moving an application under Section 17 of the Act. A writ petition, W.P. (C) 10299 of 2018, was filed before the Hon’ble High Court wherein orders were passed but it appears that those directions of the Hon’ble High Court were not complied by the SARFAESI Applicant. Thereafter, SARFAESI Applicant sought limitation from the date of issuance of letter dated 07.11.2019. It was simply an intimation for taking possession while notice under Section 13 (4) of the Act had already been served upon the SARFAESI Applicant on 01.6.2018. Admittedly, there was delay of one year five months and ten days in filing the SARFAESI Application under Section 17 of the Act but no

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Appeal No. 126 of 2023-DRAT-Kolkata sufficient cause is shown. Accordingly, the delay cannot be condoned. Further, the SARFAESI Application under Section 17 of the Act was filed beyond time.

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9. Learned DRT is re-writing the terms of settlement by directing to pay amounts on different intervals with a direction to the secured creditor to accept the same. Such type of terms could not be issued by the DRT. It was held by the Hon’ble Apex Court in the case of The Bijnor Urban

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Cooperative Bank Limited & Others -vs- Meenal Agarwal & Others [(2023) 2 SCC 805] that :

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“11. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/ bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/ financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the Bank/ financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/ secured property, either from the loanee and/ or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the Bank whose amount is involved and it is always to be presumed that the financial institution/ bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove.

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12. In view of the aforesaid discussion and for the reasons stated above, we are of the firm opinion that the High Court, in the present case, has materially erred and has exceeded in its jurisdiction in issuing a writ of mandamus in exercise of its powers under Article 226 of the Constitution of India by directing the appellant Bank to positively consider/grant the benefit of OTS to the original writ petitioner. The Impugned judgment and order passed by the High Court is hence unsustainable and deserves to be quashed and set aside and is accordingly quashed and set aside."

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10. Further the Hon’ble Apex Court in the case of State Bank of India -vs- Arvindra Electronics Private Limited

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[(2023) 1 SCC 540] held that the terms of settlement

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Appeal No. 126 of 2023-DRAT-Kolkata could not be drawn by the Courts. It is the prerogative of the secured creditor to settle the account as per the terms and conditions of the agreement.

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11. Learned DRT has settled the terms and conditions of the loan account which is beyond the jurisdiction of the DRT, I am of the view that the Learned DRT has erred in passing the impugned judgment which is liable to be set aside.

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O R D E R

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Appeal is allowed. The impugned judgment and order dated 04.12.2019, passed by Learned DRT, Cuttack, allowing S.A. 113 of 2019 (Smt. Sanjukta Debta -vs- State Bank of India), is set aside.

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S.A. 113 of 2019 (Smt. Sanjukta Debta -vs- State Bank of India), pending before DRT, Cuttack, stands dismissed.

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No order as to costs.

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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 signed, dated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson