Allowed

Ms Sai Trinity Organisation and Another v. Union Bank of India

DRT8 Aug 2022SA/172/2022

Case brief

AI extract

What is this about?

Securitisation Application allowed as the Respondent Bank failed to comply with mandatory provisions of Section 13(3A) regarding disposal of objections within 15 days. The Bank was given 15 days to issue fresh notice or comply.

What did the court decide?

The Securitisation Application was allowed with costs. The bank was directed to issue a fresh notice under Section 13(2) or comply with Section 13(3A) within 15 days.

Ms Sai Trinity Organisation and Another versus Union Bank of… — Banking and Recovery | DRT (2022)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH

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PRESIDED OVER BY M.M. DHONCHAK

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DATED THE 08th DAY OF AUGUST , 2022

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SA/172/2022 M/S SAI TRINITY ORGANISATION AND ANOTHER VS. UNION BANK OF INDIA

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M/s Sai Trinity Organisation through its President Smt. Sushma Sehrawat having its Office at House No.616, Ward No.18, DelhiRohtak Road, Opposite Main Bus Stand, Bahadurgarh, Haryana, 124507

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Mr. Ram Niwas Sehrawat s/o Sh. Mange Ram R/o House No.616, Ward No.18, Delhi-Rohtak Road, Opposite Main Bus Stand, Bahadurgarh, Haryana, 124507

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….Applicants

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Versus

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Union Bank of India, through its Authorised Officer/Branch Manager having its Branches at Main Delhi-Rohtak Road, Bahadurgarh, Haryana

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….Respondent

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Present: Sh. Saurabh Bhoria, counsel for the applicants Sh. Pancham Sharma, counsel for the respondent Bank

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FINAL ORDER

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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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In brief, facts of the case of the applicants are that they are borrowers/mortgagers in respect of the credit facility availed of vide sanction letter dated 27.10.2017 by respondent No.1; that they were granted the term loan of Rs.3.90 crores which was to be repaid in 84 monthly instalments of Rs.6.80 lacs; that the loan amount was taken for establishing the School at Loharu in District Bhiwani; that the

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SA/172/2022 M/S SAI TRINITY ORGANISATION AND ANOTHER VS. UNION BANK OF INDIA

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repayment was to be started with effect from April, 2018; that the credit facility was secured by way of properties as mentioned in Para 4 of the SA; that out of the sanctioned amount of Rs.3.90 crores, the erstwhile Andhra Bank released an amount of Rs.3.10 crores which resulted in hardship to the project of the applicants; that vide letter dated 25.09.2018, the applicants approached the Bank seeking an extension of 7 months in repayment schedule; that the loan was sanctioned on 14^th November, 2017 and first instalment was released on 9^th January, 2018 instead of November 2017, due to which the applicants had only 3 months to raise the school building which was impossible and resultantly, the applicants could not take larger number of students; that in 2018, applicants had received Rs.18.54 lacs only and the applicant No.1 was not able to pay EMI and interest; that request was made for repayment schedule as per new CMA Data and projection; that respondent No.1 started raising illegal demands from the applicants which led to making of the complaints to the competent Authorities; that the applicants were informed that the account was classified as NPA on 01.08.2019; that demand notice dated 01.08.2019, was issued; that possession notice dated 5.11.2019 was issued in respect of the properties which were having value of more than Rs.20 crores against the alleged recovery of Rs.3.73 crores; that vide letter dated 20.11.2019, the applicants requested for rescheduling of the term loan; that term loan was sanctioned in the month of November 2017 but no instalment was released for the project till January, 2018 and the Bank ordered the applicants to expend (spend) Rs.1.55 crores before taking first instalment and the condition was imposed to cover (surround) the land with the boundary wall on own expenses of the borrower; that the first instalment was released on 9^th January, 2018; that due to delay in disbursement of the loan, the completion of the project was delayed and the applicant No.1 had to face the loss; that there was pandemic Covid19 and there were resultant RBI guidelines and the Central Government also granted moratorium period of about 2 years and Hon’ble Apex Court also passed an order in this regard; that there was excessive rate of

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SA/172/2022 M/S SAI TRINITY ORGANISATION AND ANOTHER VS. UNION BANK OF INDIA

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interest, cost, charges and penalties; that request was made to restructure the loan but it was not considered; that respondent Bank had issued notice under Section 13(2) of the Act informing that the account had been classified as NPA on 23.04.2021 (31.03.2021) and earlier the account was stated to be classified as NPA on 01.08.2019; that the detailed reply was submitted under Section 13(3) of the Act which was rejected vide communication dated 03.06.2021; that the respondent bank further issued demand notice dated 10.06.2021 and had withdrawn the earlier demand notice dated 23.04.2021; that the applicant again submitted reply under Section 13(3A) of the Act on 04.08.2021; that the respondent bank had failed to disposed of the above said objections and issued possession notice dated 16.03.2022; that respondent bank could not proceed under Section 13(4) of the Act because of non-compliance of Section 13(3A) of the Act; that there was violation of Prudential Guidelines of the RBI; that respondent bank did not classify the account as NPA in terms of the Act and the circular on asset classification; that value of the secured asset is approximately Rs.25 crores; that the Bank could not take possession of all the properties for auction; that no mandatory prior notice before classification of accounts as NPA was issued; that compound interest was being claimed; that loan account was declared as NPA during pandemic Covid-19; that intention of the respondent bank was mala fide ; that rate of interest was wrongly charged.

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Reply to the SA was filed contending therein that applicant did not maintain the financial discipline of the loan account and the account was declared as NPA on 31.03.2021; that the demand notices were issued on 23.04.2021; that demand notices were dispatched on 24.04.2021; that the account was restructured on 20.11.2019 on the request for proposal dated 25.09.2018; that when the applicant did not turn up for payment of outstanding amount in the aforesaid loan facilities even after restructuring, the proceedings under the Act were initiated by issuing demand notice dated 10.06.2021 and notice under Section 13(4) of the Act on 19.03.2022; that possession notices were

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SA/172/2022 M/S SAI TRINITY ORGANISATION AND ANOTHER VS. UNION BANK OF INDIA

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sent to the applicant vide Registered Post on 19.03.2022; that the possession notices had also been published in two newspapers i.e., “Business Standards” and “Amar Ujala” on 22.03.2022 and possession notices had also been posted on conspicuous place outside above said stated mortgaged property.

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Replication was filed wherein the averments made in the SA were reiterated and those of the reply to the SA were controverted.

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I have heard the learned counsel for the parties and gone through the record carefully.

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It was argued by the learned counsel for the applicant that the account of the applicants was declared as NPA on 31.03.2021 which was during period of pandemic Covid-19 and thus, it was prohibited by the judgment of the Hon’ble Apex Court.

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Learned counsel for the applicant admitted that the earlier notice under Section 13 (2) of the Act was withdrawn and fresh notice under Section 13 (2) of the Act was served on 10.06.2021. This Tribunal is of the considered opinion that when second notice was issued, the earlier notice cannot be faulted for the proceedings under the Act. As far as not restructuring of the loan account is concerned, that is the exclusive domain of the bank and this Tribunal cannot direct the bank for restructuring the loan account.

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It was argued by the learned counsel with the applicant that amount of Rs.60 lacs was deposited to bring the account out of the NPA. This argument is without any proof and therefore, the same cannot be accepted. Even otherwise, this argument is beyond the scope of pleadings.

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No other point was urged before this Tribunal. No precedent was produced before this Tribunal during the course of arguments. In para 5.37 of the SA, following has been averred:

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” That the said reply/objections were duly received by the respondent bank and failed to dispose of the same hence the respondent bank has failed to comply the mandatory provisions of Section 13 (3A) of the Securitisation Act which states that “If on the receipt of the Notice

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SA/172/2022 M/S SAI TRINITY ORGANISATION AND ANOTHER VS. UNION BANK OF INDIA

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under Section 13(2) borrower makes any representation or raise any objection, and if the secured creditor come to the conclusion that the such objection is not acceptable or tenable he shall communicate ( within 15 days) of receipt of such representation or objections, the reasons for non-acceptance of the representation or objections to the borrowers”

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In reply to the above, the following was mentioned in reply:

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“ That the contents of para No.5.36 to 5.38 of the present application are vehemently denied and the respondent bank does not want to reply to such vague allegations.”

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From the above pleadings, it is clear that by evasive reply and in fact, no reply, the contents of para 5.37 of the SA have been admitted by the respondent bank.

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In the face above state of affairs wherein the non-compliance of the provisions of Section 13 (3A) of the Act has been admitted in the pleadings itself, the SA is bound to succeed. Consequently, the SA is allowed with costs.

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It will be in the interest of justice if the respondent bank is allowed to issue fresh notice under Section 13(2) of the Act or comply with Section 13(3A) of the Act in respect of the old notice under Section 13 (2) of the Act within a period of 15 days from today and start the Securitisation proceedings accordingly against the applicants. It is ordered accordingly.

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Announced in the open Tribunal

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(M.M.Dhonchak) Presiding Officer DRT-2, Chandigarh

Ms Sai Trinity Organisation and Another v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Ms Sai Trinity Organisation and Another v. Union Bank of India

Case brief

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What did the court decide?

What the court decided

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