Dismissed

Kailash Chand Srivastava v. Canara Bank and Anr.

DRAT6 Sept 2024REGULAR APPEAL/287/2018

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal rejected an appeal challenging a District Recovery Tribunal's dismissal of a security application. The appellate court examined allegations regarding improper service of demand and possession notices under the SARFAESI Act. The court found the borrower service valid via registered post and new address complaints untenable, dismissing the appeal without costs.

What did the court decide?

Appeal dismissed with no order as to costs.

Kailash Chand Srivastava versus Canara Bank and Anr. — Banking and Recovery | DRAT (2024)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Appeal Dy. No. 287/2018

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Kailash Chand Srivastava, S/o Sri Uma Shanker Srivastava, Proprietor of M/S K.D. Car Shoppe, House No. 4/256 A, Baluganj, Agra. Present Address- House No. 4/55 Gwalior Road, Baluganj, Agra- 282001

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……….....……………………...………………………………………………..Appellant

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Versus

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Canara Bank through its Branch Manager, BranchShastripuram, District- Agra- 282001

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Canara Bank through its Authorized officer, Divisional Office, S.M.E Sulabh, District- Agra-282001.

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….……….………….…….………………………………………………….Respondents

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Advocates who appeared in this case:

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For the appellant Shri Arif Iqbal, Advocate

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For the respondents-Bank Shri Himanshu Tiwari, Advocate

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JUDGMENT

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Date of Decision: 06.09.2024

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JUSTICE R. D. KHARE, CHAIRPERSON

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The present appeal has been filed under Section 18 of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short “The SARFAESI Act”) against the judgment dated 30.11.2018 passed by DRT, Allahabad whereby the S.A. No. 623 of 2018 filed by the appellant-borrowers was dismissed.

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The brief facts of the present case are that the appellant, who is a proprietor of M/S K.D. Car Shoppe, was granted a cash credit limit of Rs. 16,50,000/- by the respondentBank on 29.12.2015 to run the business of car seat cover in the name of M/S K.D. Car Shoppe. In order to secure the said facility, appellant created an equitable mortgage over the residential property being House No. 4/256A, Baluganj, Agra. The borrower did not maintain the financial discipline, therefore, the account was classified as NPA on

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30.06.2017 and demand notice dated 08.01.2018 was issued under section 13(2) of the SARFAESI Act for a sum of Rs. 18,27,791.69 as on 31.12.2017 plus interests. Since the borrower did not pay any heed to the demand raised by the Bank, therefore, possession notice dated 20.03.2018 was issued under section 13(4) of the SARFAESI Act and same was published in the newspapers. Subsequently, the respondent-Bank issued sale notice dated 24.10.2018 scheduling the auction on 30.11.2018. Thereafter, the respondent-Bank obtained an order under Section 14 of the SARFAESI Act by the District Magistrate, Agra by which the police was directed to take the possession of the property.

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The appellant-borrower challenged the entire proceedings of the respondent-Bank by filing securitization application No. 623 of 2018 before the tribunal below.

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It transpires that during the pendency of the said S.A., the appellant filed a writ petition No. 38378/2018 before the Hon’ble High Court which was disposed of on 26.11.2018 with a direction to the appellant to appear before the DRT on 30.11.2018. Thereafter, learned counsel for both the parties were present before the tribunal below on 30.11.2018 and the interim application was held to be rendered as infructuous for the want of bid and the S.A. was also dismissed being devoid of any merit vide order impugned by the tribunal below. Being aggrieved by the said order, the present appeal has been filed.

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Learned counsel for the appellant submitted that the respondent Bank has not served the demand notice on each borrower as it filed service of the same without tracking report and the same was served on wrong

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address, where the appellant was not residing. It was further contended that the appellant had given his mailing address to the respondent bank for correspondence i.e. 4/55 Gwalior Road, Baluganj, Agra, whereas the demand notice was sent to 4/256-A, Baluganj, Agra. The learned counsel further submitted that the respondent Bank has also violated Rule 8(1) and 8(2) of The Rules, 2002 as the possession notice has neither been served nor has been published by the Bank. It was, therefore, prayed that the order impugned may be set aside and the appeal may be allowed.

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Learned counsel for the respondent-Bank submitted that the demand notice dated 08.01.2018 was served upon the appellant through registered post. Copy of the demand notice along with the postal receipt at page no. 14 and 15 of the reply of the Bank to the present appeal. Since the appellant failed to clear the dues within 60 days as provided in the said notice, therefore the possession notice dated 20.03.2018 was served, affixed and also published in the newspapers. Copies of the postal receipts, photograph of its affixation and publication are at page no. 16 to 21 of the reply filed by the Bank.

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The learned counsel further submitted that the loan application filed by the appellant shows his residential address as 4/256- A, Baluganj, Agra, which is at page no. 23 of reply/ objection filed by the Bank to the present appeal. It was further contended that the subsequent renewal loan application dated 15.02.2017 also shows the residential address of the appellant as mentioned in the first loan application dated 21.12.2015. On the said address, the demand notice was sent and served and now as an afterthought a new case is being set up. It was also

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contended that in the S.A. appellant himself has described the same address and in the array of parties of memo of appeal also and the appellant claiming his address to be 4/55, Gwalior Road, Baluganj, Agra has never informed the bank. Therefore, contention of the appellant that the bank has served the notices on the address where the appellant does not reside is incorrect. It was therefore contended that the tribunal below has rightly dismissed the S.A. of the appellant holding that there is no infirmity or illegality in the process of the Bank. It was thus prayed that the appeal may be dismissed with heavy costs.

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Having heard the learned counsels for the parties and considering the materials available on record, there is no issue with regard to the disbursement/availing of loan amount. The main controversy in the present case is as to whether the demand notice and possession notice have been served upon the borrower in accordance with the provisions of Act and rules made there under or not?

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It is to be seen that the respondent-Bank issued demand notice dated 18.01.2018 to Shri Kailash Chand Srivastava, proprietor of M/S K.D. Car Shoppe. The said notice was dispatched on 11.01.2018 through registered post, copy of the same has been affixed on the second page of the said demand notice which is at page 15 of the reply filed by the Bank. In this regard, the contention of the learned counsel for the appellant that the said notice ought to have been served on each borrower is not tenable, as M/S K.D. Car Shopee is a proprietorship firm, whose proprietor is the appellant. The proprietorship firm is not constituted under the Companies Act, therefore, the entity of the proprietorship firm and its proprietor is not separate and distinct. If the notice is served either upon the firm or upon

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its proprietor, it would be presumed that the borrower has been served with the notice issued by the Bank. It is not the case of the appellant that he has not been served with the demand notice. As such it cannot be said that demand notice has not been served upon the borrower in accordance with Rule 3 of the Rules, 2002.

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So far as the compliance of Rules 8(1) and 8(2) of the Rules, 2002 is concerned, it is stated that the possession notice was issued on 20.03.2018, which was affixed, dispatched on the same day and published in two newspapers on 25.03.2018. Copies of these documents are at page no. 16 to 21 of the reply filed by the Bank. From the perusal of these documents, it is found that Rules 8(1) and 8(2) of the Rules, 2002 have been complied with as well.

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With regard to the contention of the appellant that the notices were not sent on the address i.e 4/55, Gwalior Road, Baluganj, Agra, where the appellant resides, it is stated that the appellant claiming to be the resident of the said address is incorrect, because in the loan applications, S.A. filed before the tribunal below as well as the appeal filed before this Tribunal, the address of the appellant is House No. 4/256-A, Baluganj, Agra, where the notices were sent by the Bank. The appellant has filed the proof of his address as Annexure 5 to the memo of appeal, but no document has been filed along-with it to show that he has ever informed the said address to the Bank. Thus, there was no occasion for the Bank to send the notices on the said address. Therefore, the Bank has rightly sent the notices on the address of the appellant available on record. Hence the contention of the appellant that notices were not sent on his address where he resides is not tenable.

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In view of the discussions as held above, there is no illegality or infirmity in the order impugned, hence the appeal is liable to be dismissed. Accordingly, the appeal is dismissed with no order as to costs.

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned and be also uploaded on the e- DRT portal.

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Justice R. D. Khare Chairperson

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VN Giri

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Kailash Chand Srivastava v. Canara Bank and Anr.

Case brief

What is this about?

What did the court decide?

Kailash Chand Srivastava v. Canara Bank and Anr.

Case brief

What is this about?

What did the court decide?

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