The Debts Recovery Tribunal dismissed a securitisation application where the applicants challenged the bank's possession proceeds on grounds that the Section 13(2) notice lacked the date of NPA classification and specific RBI guideline references. The Tribunal held these omissions were not fatal procedural lapses.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK
DATED THE 26th DAY OF SEPTEMBER , 2022
SECURITISATION APPLICATION NO.13/2022
…..Applicants
…..Respondents
Argued by: Sh. Diwan Sharma counsel for the applicants Sh. P.K. Khurana counsel for the respondent bank
ORDER
This Securitisation Application is under Section 17 (1) of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity).
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above said loan, applicant No.1 was co-borrower; that credit facility of Rs.7 lacs was sanctioned on 17.12.2012, of Rs.40 lacs on 06.06.2013, of Rs. 50 lacs on 04.12.2013 and of Rs.34 lacs on 04.03.2014 and thus, the total facilities availed of from the respondent bank were to the tune of Rs.194 lacs; that OD housing limit of Rs.3 lacs was also taken against the property which was further enhanced from 3 lacs to Rs.25 lacs on 25.09.2015; that account became irregular in July, 2017; that by the demand notice a sum of Rs.49,04,00,403/- as on 31.03.2018 was sought; that another notice dated 03.05.2018 under Section 13(2) of the Act, in two other accounts was served upon the borrowers and the guarantors; that thereafter, symbolic possession of the secured assets, i.e. 4 properties was taken by the Authorised Officer on 23.07.2018, in pursuance of notice dated 23.07.2018; that after receipt of the notice dated 03.05.2018 under Section 13(2) of the Act and the possession notice dated 23.07.2018, the applicants had deposited substantial amount on different dates; that the applicants fully liquidated the housing loan of Rs. 4 lacs on 30.08.2018; that all the accounts of the applicants were regularised in September 2018; that on 06.09.2018, an amount of Rs.2,30,136.43/- was debited for law [legal] charges paid for different expenses; that the bank kept charging normal interest as well as penal interest in the NPA account; that notice dated 16.08.2019 seeking possession was issued under Section 13(2) of the Act; that legal notice dated 01.07.2019 was also issued; that public notice dated 31.10.2019 for e-auction was also issued; that the Tehsildar Rohtak, also issued notice for taking possession of the mortgaged property; that notice dated 11.08.2021 under Section 13(2) of the Act was issued; that objections to the same were filed by the applicants which were rejected; that representation was also filed for restructuring of the account; that notice under Section 13(4) of the Act was issued; that the classification of the accounts was not proper and in
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accordance with the RBI guidelines, and the date of classification of the NPA was not mentioned in the notice of the 13(2) of the Act.
It was held by the Division Bench of Hon’ble Madhya Pradesh High Court in the case of Pithampur Steels Ltd. Vs Kotak Mahindra Bank Limited 2013 AIR (Madhya Pradesh) DB 53 , that if the notice issued by the bank made it clear that the debt had been classified as NPA, that was the compliance with the requirements of notice under Section 13(2) of the Act. In the light of the authority (supra), the notice under Section 13(2) of the Act, cannot be faltered for want of date of classification of account as NPA.
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guideline/guidelines issued by the Competent Authority, the accounts of the applicants had been classified as NPA. In the considered opinion of this Tribunal, the specification of the guidelines as expected/sought by the applicants is not the requirement of the law. The applicants at best, could say that a particular guideline was violated by the respondent bank and then this Tribunal could look into the validity of the same.
Learned counsel for the applicants placed reliance upon the judgment of Hon’ble Punjab and Haryana High Court in the case of ‘ Bhupinder Singh
vs. The State Bank of Patiala ’ AIR 2008 (P&H) 148, wherein the respondent bank in support of the direction had not placed on record the account of the borrower whether the same was classified by the Manager of the Bank as substandard, doubtful or loss asset, the account was held to be not declared as NPA.
Learned counsel further placed reliance upon the judgment of Hon’ble Supreme Court of India in the case of ‘ Mardia Chemicals Ltd. etc. vs. U.O.I. and others’ decided on 08.04.2004 , wherein it was held that it is not on whims and fancies of the financial institutions to classify the assets as non-performing. Bank should establish appropriate internal systems to eliminate the tendency to delay or postpone the identification of NPAs, especially in respect of high value accounts.
Learned counsel further placed reliance upon the judgment of Hon’ble Jharkhand High Court in the case of ‘M/s Stan Commodities Pvt. Ltd. vs.
Punjab and Sind Bank’ 2009 AIR (Jharkhand) 14, wherein it was held that once the debtor makes any representation or objection, it is mandatory on the part of the Bank to communicate its decision on the representation or objection as the case may be within stipulated period.
Learned counsel further placed reliance upon judgment of Hon’ble Supreme Court of India in the case of ‘ Central Bank of India vs. Ravindra and others ’ SLP (civil) 2421 of 1993 decided on 18.10.2001 , wherein
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it was held that the RBI directives have not only statutory flavour, any contravention thereof or any default in compliance therewith is punishable under sub-section (4) of Section 46 of the Banking Regulations Act, 1949.
The facts and circumstances of the present case and the cases reported in the authorities (supra) being not identical, authorities (supra) are not applicable to the case in hand.
Vs. State of Tamil Nadu and others’, 2002(3) SCC 533 , that peculiar facts and circumstances of each case are to be examined, considered and appreciated first, before applying any codified or judge made law thereto. Sometimes difference of even one additional fact or circumstance can make the world of difference.
It was held in the case of ‘ State of Orissa Vs. Sudhansu
Sekhar Mishra’, AIR 1978 SC 647 , that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there, are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. A case is only an authority for what it actually decides. It is not a profitable task to extract a sentence here and there from a judgment and to build upon it.
It was held in the case of ‘ Ashwani Kumar Singh Vs. U.P. Public Service Commission and others’, 2003(3) RSJ SC 208, that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are not to be read as Euclid's theorems nor as provisions of the statute. These
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observations must be read in the context in which they appear. Judgments of Courts are not to be construed as statutes. To interpret for Judges to embark into lengthy discussions, but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.
It was held in the case of ‘ Union of India Vs. Chajju Ram (dead) by L.Rs. and others’, (2003) 5 SCC 568 (Five Judges) that a decision is an authority for what it decides and not what can be logically deduced therefrom. A little difference in facts or additional facts may lead to a different conclusion.
It was held in the case of ‘ Punjab National Bank Vs. R.L.
Vaid and others’, AIR 2004 SC 4269, that there is always peril in treating words of a judgment as though they are words in a legislative enactment and it is to be remembered that judicial utterances are made in the setting of facts of a particular case. Circumstantial flexibility, one additional or different fact may make a difference between conclusions in two cases. Disposal of cases by merely placing reliance on a decision is not proper. Precedent should be followed only so far as it marks the path of justice.
It was held in the case of ‘ Mahadeo Laxman Sarane Vs. State of Maharashtra 2007’, (3) RCR (Criminal) SC 211, that however, similar the circumstances, the facts in one case cannot be used as a precedent to determine the conclusion on the facts in another.
Hon’ble Supreme Court of India in the case of M/s L&T Housing Finance Limited Vs. M/s Trishul Developers and Another, in Civil
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Appeal No. 3413 of 2020 (arising out of SLP (c) No.18360 of 2019 , it was held that the proceedings under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the Rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudice, if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions.
Announced in the open Tribunal
(M.M.Dhonchak) Presiding Officer DRT-2, Chandigarh
3 issues framed by the court
Whether the failure to mention the date of NPA classification in a Section 13(2) notice invalidates the proceedings.
Whether the specification of RBI guidelines in Section 13(2) notice is a mandatory requirement of law.
Whether referenced precedents are applicable to the trivial procedural objections raised in the present case.
Colour shows how this judgement treated each authority
Pithampur Steels Ltd. Vs Kotak Mahindra Bank LimitedApplied¶26
Pithampur Steels Ltd. Vs Kotak Mahindra Bank Limited 2013 AIR (Madhya Pradesh) DB 53 · Who else cites this
Bhupinder Singh vs. The State Bank of PatialaReferred¶31
Bhupinder Singh vs. The State Bank of Patiala AIR 2008 (P&H) 148 · Who else cites this
Mardia Chemicals Ltd. etc. vs. U.O.I. and othersReferred¶33
Mardia Chemicals Ltd. etc. vs. U.O.I. and others
M/s Stan Commodities Pvt. Ltd. vs. Punjab and Sind BankReferred¶34
M/s Stan Commodities Pvt. Ltd. vs. Punjab and Sind Bank 2009 AIR (Jharkhand) 14 · Who else cites this
Central Bank of India vs. Ravindra and othersReferred¶36
Central Bank of India vs. Ravindra and others
Padmausundra Rao and another Vs. State of Tamil Nadu and others'Applied¶41
Padmausundra Rao and another Vs. State of Tamil Nadu and others', 2002(3) SCC 533 · Who else cites this
State of Orissa Vs. Sudhansu Sekhar Mishra'Applied¶43
State of Orissa Vs. Sudhansu Sekhar Mishra', AIR 1978 SC 647 · Who else cites this
Ashwani Kumar Singh Vs. U.P. Public Service Commission and others'Applied¶45
Ashwani Kumar Singh Vs. U.P. Public Service Commission and others', 2003(3) RSJ SC 208
Union of India Vs. Chajju Ram (dead) by L.Rs. and others'Applied¶49
Union of India Vs. Chajju Ram (dead) by L.Rs. and others', (2003) 5 SCC 568 · Who else cites this
Punjab National Bank Vs. R.L. Vaid and others'Applied¶50
Punjab National Bank Vs. R.L. Vaid and others', AIR 2004 SC 4269 · Who else cites this
Mahadeo Laxman Sarane Vs. State of Maharashtra 2007'Applied¶52
Mahadeo Laxman Sarane Vs. State of Maharashtra 2007', (3) RCR (Criminal) SC 211
M/s L&T Housing Finance Limited Vs. M/s Trishul Developers and AnotherApplied¶53
M/s L&T Housing Finance Limited Vs. M/s Trishul Developers and Another, Civil Appeal No. 3413 of 2020
Hotel Raj and another
Punjab National Bank and another
M.M. Dhonchak
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
