Allowed

Canara Bank v. Ms Topline Commodities Pvt. Ltd. and Ors.

DRAT2 Apr 2025MISC APPEAL/42/2024

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed the appeal by the bank, quashing a DRT order that wrongly restrained the bank from taking further SARFAESI action. The Tribunal held that fresh notices corrected measurement errors and implied withdrawal of prior notices, and criticized the DRT for issuing an unreasonable interim order without reasons.

What did the court decide?

The impugned order restraining the bank from taking further SARFAESI action is set aside; all pending I.As are disposed of.

Canara Bank versus Ms Topline Commodities Pvt. Ltd. and… — Execution and Attachment | DRAT (2025)

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Reportable/Non-Reportable

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 42 of 2024

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(Arising out of I.A. 978 of 2024 in S.A. 99 of 2024 in DRT-I, Kolkata)

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Canara Bank, Assets Recovery Management Branch, Bells House (5^th Floor), 21, Camac Street, Kolkata - 700 016;

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The Authorised Officer, Canara Bank, Assets Recovery Management Branch, Bells House (5^th Floor), 21, Camac Street, Kolkata - 700 016.

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..... Appellants

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-Versus-

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M/s. Topline Commodities Private Limited, 2, Brabourne Road, 6^th Floor, Kolkata - 700 001;

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M/s. Wonder Images Private Limited, 2, Brabourne Road, 6^th Floor, Flat No. 9WEF Hare Street, Kolkata – 700 001, West Bengal;

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M/s. Aniruddha Construction & Investment Private Limited, 2, Brabourne Road, 6^th Floor, Kolkata -700 001, West Bengal;

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M/s. Avadesh Properties Holdings Private Limited, 2, Brabourne Road, 6^th Floor, Kolkata -700 001, West Bengal;

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Sri Ram Awatar Poddar, son of Late Ram Kumar Poddar, residing at Poddar House, AD-227 Salt Lake City, Sector-1, Bidhannagar, Kolkata -700 064;

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Sri Sanjay Poddar, son of Sri Ram Awatar Poddar, residing at Poddar House, AD-227 Salt Lake City, Sector-1, Bidhannagar, Kolkata -700 064;

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Sri Rajesh Poddar, son of Sri Ram Awatar Poddar, residing at Poddar House, AD-227 Salt Lake City, Sector-1, Bidhannagar, Kolkata -700 064;

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Sri Mayur Poddar, son of Sri Bimal Kumar; Poddar, residing at BD 196, Salt Lake City, Sector-1, Kolkata -700 064.

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… Respondents

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Counsel for Appellants	…	Mr. Omkar Ganguly
Counsel for Respondents	…	None
JUDGMENT	:	2^ndApril, 2025

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THE APPELLATE TRIBUNAL :

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata 1. Instant appeal has arisen against order dated 16.5.2024 passed by Learned DRT-I, Kolkata, in I.A. 977 of 2024 and I.A. 978 of 2024 in S.A. 99 of 2024 (M/s. Topline Commodities Private Limited -vs- Canara Bank) whereby Learned DRT restrained the Appellant Bank from taking any further SARFAESI action till the matter is heard on 22.7.2024.

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2. I have heard the Learned Counsel for Appellant. Despite granting sufficient time and opportunity, none is present for the Respondents. On 11^th March, 2025 order was passed fixing the date of hearing today with a direction that no adjournment shall be granted. It was further directed that the matter shall be placed on the top of the list for hearing. Respondents did not choose or opt to appear or contest the appeal although they have filed opposition against the appeal.

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3. On the basis of the material available on record it transpires that the Respondent No. 1 is the Borrower of the Appellant and other Respondents No. 2 to 8 are Guarantors of the loan availed by Respondent No. 1. As on 14.8.2024 there was an unpaid loan of Rs.71,26,15,065.53 against the Respondents herein. Respondents herein have preferred a Securitisation Application under Section 17 of the Act before the Learned DRT. A notice under Section 13 (2) of the Act dated 14.8.2023 was issued by the Authorised Officer of the Appellant. In the notice details of secured assets in Item No. 3 is mentioned. There was a mistake regarding measurement wherein 345.37 sq.ft. carpet area was

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata mentioned. Thereafter, notice under Section 13 (4) of the Act was issued on 30^th December, 2023 with the same measurement. Subsequent thereto on identifying the mistake the Authorised Officer issued a fresh 13 (2) notice on 19.1.2024 showing the carpet area as 345.37 sq. mtr. Fresh Possession Notice was also issued with the same measurement on 27.3.2024.

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4. Respondents herein preferred a Securitization Application under Section 17 of the SARFAESI Act, 2002 (hereinafter referred to as the ‘Act’) challenging the Notice dated 14.8.2023, under Section 13 (2) of the Act, and Notice dated 30.10.2023, under Section 13 (4) of the Act, with consequential reliefs. S.A. was filed on 13.12.2023. Pending S.A., I.A. 978 of 2024 was filed for stay of the operation of Notices under Sections 13 (2) and 13 (4) of the Act dated 9.1.2024 and dated 27.3.2024 respectively.

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5. Learned DRT passed the impugned order holding that the first notice issued under Section 13 (2) of the Act as well as the notice issued under Section 13 (4) of the Act were not withdrawn and subsequently notices were issued.

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6. Learned Counsel for Appellant would submit that the impugned order suffers from material illegality and irregularity. Secured Creditor was well within its powers to withdraw a notice either under Section 13 (2) or 13 (4) of the Act when they could not be acted upon. Accordingly, fresh notices under Section 13 (2) and 13 (4) of the Act were issued. Learned Counsel placed reliance upon the judgment of Hon’ble Calcutta High Court

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata 2^nd September, 2010 passed in

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W.P. No. 17769 (W) of 2020 (M/s. Hotel Payel & Another -vs- Central Bank of India & Another) and another judgment of Hon’ble Chhattisgarh High Court in M/s. Dauji Farms Limited & Others -vs- Dena Bank & Another (AIR 2009 Chhattisgarh 22).

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7. I have gone through the records. 8. Facts of the matter are rather admitted that first Notice under Section 13 (2) of the Act was issued on 14.8.2023 followed by Notice under Section 13 (4) of the Act dated 30.10.2023. In both the notices, measurement was mentioned as 345.37 sq. ft. while it should have been 345.37 sq. mtr. When this fact came to the notice of the Appellants, fresh notices under Section 13 (2) dated 9.1.2024 and 13 (4) dated 27.3.2024 of the Act were issued. Issuance of subsequent notices implied the withdrawal of previous notices. Two parallel notices under Sections 13 (2) and 13 (4) cannot be prosecuted or be proceeded with, as has been held by the Hon’ble Calcutta High Court in M/s. Hotel Payel (supra) as well as Hon’ble Chattisgarh High Court in M/s. Dauji Farms Limited (supra). Secured Creditor is well within its powers to issue fresh notices under Section 13 (2) and 13 (4) of the Act. When the circumstances got changed, Secured Creditor was well within its powers to issue fresh notices. It is to be observed here that notices under Section 13 (2) of the Act, dated 14.8.2023 and under Section 13 (4) of the Act, dated 30.10.2023 were never acted upon. SARFAESI Application

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata was filed on 13^th December, 2023 but the notice for the same was served upon the Authorised Officers for the first time on 8.5.2024, that is much after issuance of the subsequent notices under Section 13 (2) and 13 (4) of the Act. Hence there was also no requirement to seek any leave of the DRT for issuance of any fresh notices. Furthermore, the issue of legality and validity of the notices could have been decided in the pending S.A. at the time of final decision but the Learned DRT without assigning any reason restrained the Secured Creditor from taking any SARFAESI action.

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9. There are certain principles of law regarding passing a reasoned order. No doubt, DRT has power and jurisdiction to pass interim orders but the same should be done in a judicial manner. Furthermore, judicial order must be a speaking order with reasons, as has been held by the Hon’ble Apex Court in Brijmani Devi -vs- Pappu Kumar

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and Another, reported in [(2022) 4 SCC 497] that:

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“22. On the aspect of the duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasijudicial authority, it would be useful to refer to a judgment of this Court in Kranti Associates (P) Ltd., v. Masood Ahmed Khan, (2010) 9 SCC 496 wherein after referring to a number of judgments this Court summarised at para 47 the law on the point. The relevant principles for the purpose of this case are extracted as under:

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(a) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

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(b) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasijudicial or even administrative power.

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(c) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata

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(d) Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

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(e) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.

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(f) Judicial or even quasi-judicial opinions these days can be as different as the Judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system.

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(g) Insistence on reason is a requirement for both judicial accountability and transparency.

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(h) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

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(i) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process.

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(j). It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny.

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(k) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".

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“24. The Latin maxim “cessante ratione legiscessat lex” meaning “reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself, is also apposite.”

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10. Learned DRT has not assigned any reason for issuance of a direction to the Bank not to take any further SARFAESI action.

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11. On the basis of the discussion made above, I am of the considered view that the Learned DRT has grossly misdirected itself in passing the impugned order. Impugned

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Misc. Appeal No. 42 of 2024-DRAT-Kolkata order suffers from material illegality and irregularity which is liable to be quashed. Appeal deserves to be allowed.

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O R D E R

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Appeal is allowed. The impugned judgment and order dated 16.5.2024 passed by Learned DRT-I, Kolkata, in I.A. 977 of 2024 and I.A. 978 of 2024 in S.A. 99 of 2024 (M/s. Topline Commodities Private Limited -vs- Canara Bank) to the extent restraining the Bank from taking any further SARFAESI action is set aside.

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All pending I.A.s stand disposed of.

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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 pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 2^nd April, 2025 11/ac

Canara Bank v. Ms Topline Commodities Pvt. Ltd. and Ors.

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Canara Bank v. Ms Topline Commodities Pvt. Ltd. and Ors.

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