Allowed

Asrec(India) Limited v. Keshavdayal S. Jadwani & Ors.

DRAT19 Apr 2024REGULAR APPEAL/165/2015

Case brief

AI extract

What is this about?

ASREC (India) Ltd. appealed against the Debts Recovery Tribunal's order quashing SARFAESI measures due to alleged notices irregularities and procedural errors. The Tribunal found defects in the demand notice and sale process. The Appellate Tribunal held that respondents waived challenges by failing to act within 45 days and noting prior property sale, allowing the bank's appeal and setting aside t

What did the court decide?

The impugned order allowing Securitisation Application No. 63 of 2014 by the D.R.T. is quashed and set aside, and the S.A. is dismissed.

Asrec(India) Limited versus Keshavdayal S. Jadwani & Ors. — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson Appeal No. 165/2015

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Between

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ASREC (India) Ltd. … Appellant/s

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V/s.

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Keshavadayal S. Jadwani & Ors. …Respondent/s

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Mr Chetan Mhatre, i/b Mr Nainesh N Amin., Advocate for Appellant.

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The State Bank of India(SBI) (substituted by ASREC (India) Ltd.) is the Appellant aggrieved by the quashing and setting aside the Sarfaesi measures initiated by the bank against the Respondents for recovery of the debt under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (‘SARFAESI Act’, for short) vide order dated 13.05.2015 in Securitisation Application (S.A.) No. 63 of 2014 by the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.).

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The facts and brief are thus:

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The Respondents availed the credit facilities from the bank in 2010 and defaulted repayment resulting in the classification of the account as a non-performing asset (NPA) on 26.12.2011. A demand notice was issued under Sec. 13(2) of the SARFAESI Act. Further measures were initiated under Sec. 13(4).

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The Respondents filed S.A. before the D.R.T. challenging the

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measures initiated by the SBI. Various averments were raised in their application. It was contended that the amount mentioned in the demand notice does not match with the sanction letter. The rate of interest charged was neither mentioned in the sanction letter nor the demand notice. It was also contended that the classification of the account as NPA was not by the guidelines of the RBI. The demand notice was not served on all the borrowers. The auction notice published by the SBI was also not as per the Rules and was also not served on the borrowers. The property was undervalued. Hence, it was prayed that the Sarfaesi measures be quashed under Sec. 17(1) of the SARFAESI Act.

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The Appellant bank contested the S.A. and countered all the allegations made against it. The contention regarding the irregularity in the demand notice, the allegation of non-service of notice, and the wrongful classification of the account as NPA were all specifically denied.

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On appreciation of the materials placed, the D.R.T. found that the SBI had classified the account as NPA before the expiry of 90 days of continuous default by the borrowers. The D.R.T. also found that there was a discrepancy in the amount mentioned in the demand notice and the account statement. Further, it was observed that the details of the amount due as required under sub-Sec. 3 of Sec. 13 has not been mentioned in the demand notice which would render the demand notice defective. It was also held that the sale notice dated 11.05.2014 was not affixed on the property as required under Rule 8(7) of the Security Interest (Enforcement) Rules, 2002. Thus, the S.A. was

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allowed and the Sarfaesi measures initiated by the Appellant bank were quashed and set aside. The bank was also directed to restore the physical possession to the Applicant within 15 days. The Appellant is aggrieved and hence in appeal.

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It is pointed out that the SBI had obtained an order under Sec. 14 of the SARFAESI Act from the Chief Metropolitan Magistrate, Ahmedabad (CMM) on 23.10.2013 and the S.A. was filed only on 04.06.2014 beyond 45 days of taking physical possession of the secured asset. The S.A. is, therefore, barred by limitation and the issuance of the notice as also the steps taken under Sec. 14 could not have been challenged while challenging the auction notice dated 11.05.2014. The D.R.T. was, therefore, not justified in quashing the measure taken before the publication of the auction notice. It is also pointed out that the D.R.T. failed to appreciate the fact that Original Applications Nos. 220 to 222 of 2012 filed against the Respondents for the realisation of money due from them was already allowed by the very same D.R.T. and a Recovery Certificate was issued concerning the mortgaged properties in favour of the bank. Consequent to the issuance of the Recovery Certificate, the property was already sold and possession was handed over to the auction purchaser.

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The Respondents did not appear to contest the appeal. The Ld. Counsel appearing for the Appellant was heard and records perused.

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It is pertinent to note that the Respondents did not challenge the Sarfaesi action within 45 days as required by the statute. The possession was taken much earlier in consequence of an order under Sec. 14. The challenge comes up only on publication of the auction

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notice. It has to be assumed that the Respondents had waived their challenge to notice under Sec. 13(2) as also the taking over of possession under Sec. 14. Since the O.A. was allowed by the very same D.R.T. vide judgment dated 26.03.2015 creating a charge over the secured assets and also crystalising the amount due, the variation of the amount in the demand notice under Sec. 13(2) has no significant bearing. The property has already been sold and there is no challenge to the sale. Hence, I find that the D.R.T. was in error allowing the S.A.

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In the result, the appeal is allowed and the impugned order allowing the S.A. No. 63 of 2014 by the D.R.T. is quashed and set aside and the S.A. is dismissed.

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Sd/Chairperson

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mks-02

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Asrec(India) Limited v. Keshavdayal S. Jadwani & Ors.

Case brief

What is this about?

What did the court decide?

Asrec(India) Limited v. Keshavdayal S. Jadwani & Ors.

Case brief

What is this about?

What did the court decide?

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