Allowed

M S Autolite India Limited v. Union Bank of India

DRT14 Oct 2022SA/249/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal vacated the interim stay and disposed of a Securitization Application. The court quashed the bank's demand notices and orders under Section 14 of the SARFAESI Act, finding them illegal due to defective property details, lack of amount bifurcation, and procedural delays.

What did the court decide?

The demand notices dated 01.12.2021 and 07.05.2021, and the orders passed under Section 14 dated 22.03.2022, were quashed and set aside. The bank was allowed to proceed ahead as per law.

M S Autolite India Limited versus Union Bank of India — Banking and Recovery | DRT (2022)

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

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DEBTS RECOVERY TRIBUNAL, JAIPUR PRESIDING OFFICER: SH. VIVEK SAXENA

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SA No.-249/2022

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M/s Autolite (India) Limited having its Registered office at D-469, Road No. 9-A, Vishwakarma Industrial Area, Jaipur 302013 through Director Adarsh Mahipal Gupta.

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Adarsh Mahipal Gupta S/o Mahipal Gupta, R/o Plot no. 8, Tara Nagar, Near Civil Lines Metro Station, Jaipur-302006 (Rajasthan).

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.........Applicants

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Versus

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Union Bank of India, having branch office at K-13 Brij Anukampa Building, Ashok Marg, C-Scheme, Jaipur-302006 through its Chief Manager.

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........Respondent Bank

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Present:-

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Sh. Mukesh Chandra Sharma, Counsel for the Applicant

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Sh. Kirti Kapoor, Counsel for the Respondent Bank

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Sh. S Hora along with Sh. Aryan Pareek, Counsel of applicant of I.A.

¶14

no. 1341/2022

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(Final Order) (14.10.2022)

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This Securitization application which was filed on 07.05.2022 and vide order dated 11.05.2022, the prayer of interim relief was dismissed and liberty was granted to the respondents to proceed ahead as per law.

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

¶19

An I.A. no. 249/2022 was filed by the SA applicant challenging the auction notice dated 27.04.2022 and vide order dated 02.06.2022, respondent bank was directed to not to proceed ahead for auction.

¶20

The order dated 02.06.2022 has now attained finality because the respondent bank has not filed any proof on record, showing that they approached to any of the higher forum and order dated 02.06.2022 was stayed or set aside. An I.A no. 1090/2022 was filed on 04.07.2022 by the applicant bank with the prayer of vacation of stay order and as final arguments were heard so this SA as well as all I.A are being disposed of by this order.

¶21

On 12.08.2022 an I.A. no. 1341/2022 was filed by the applicant for seeking impleadment in the SA on the ground that they have entered into an agreement with the IA applicant for purchase of subject mortgaged property, on 30.10.2021 took an amount of Rs. 7.00 Crore out of final consideration but the applicant failed to deposit the same so, I.A. applicant is required to be implead as a necessary party to the proceedings of this SA.

¶22

The prayer of I.A applicant No. 1341/2022 was allowed.

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Ld. counsel for the SA applicant took various objection with regard to issuance of demand notice by the respondent bank and so, the facts are required to be discussed, since issuance of the demand notice by the respondent bank.

¶24

As per record Annexure A/3 is a demand notice, issued by the respondent bank on 07.05.2021, showing the date of NPA as 31.03.2021 and asking to pay outstanding amount of Rs. 185436370/-. As argued by Ld. counsel for the SA applicant It’s a fact that details of entire outstanding amount in total credit facility is not given and so, the details do not have any bifurcation.

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

¶27

At Annexure A/4, there is one more demand notice dated 01.12.2021, showing date of NPA as 31.03.2021, but the amount due as on 29.11.2021, is shown as Rs. 187232484/-, was issued. Again, as pointed out by SA applicant, details of outstanding amount is not mentioned, in this demand notice also.

¶28

At the bottom of demand notice dated 01.12.2021 it is mentioned that :-

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“this notice is under suppression of earlier notice dated 07.05.2021 issued under Section 13(2) of all the borrowers and guarantors.”

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It is important to mention here that reason of suppression of earlier demand notice dated 07.05.2021 are not mentioned and it is also not clear that why another demand notice was issued after a period of seven month i.e. on 01.12.2021, if demand notice dated 07.05.2021 was having any defect.

¶31

Annexure A-5 is the corrigendum dated 07.02.2022 dated 01.12.2021 which was issued on account of wrong description of details of mortgaged properties.

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Annexure A/6 is the possession notice dated 16.02.2022, having details of demand notice dated 01.12.2021.

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Two orders under Section 14 of the Act of 2002 were passed on 22.03.2022, but the same do not have any details of demand notice, but Ld. CMM, authorized to the authorized officer of the respondent bank to take possession of Plot no. D-469(A) to D-469(E), Vishkarma Industrial Area, Jaipur.

¶34

In affidavit dated 17.02.2022, filed by the respondent bank under Section 14 of the Act of 2002, do have fact of issuance of demand notice dated 01.12.2021 but it do not have any details of corrigendum dated 07.02.2022, issued by the Respondent bank.

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

¶37

The details of secured assets as mentioned in affidavit are “Plot no. D-469(A) to D-469 (E)” is mentioned.

¶38

As per reply filed by the respondent bank, they issued a notice on 05.02.2022, to SA applicant to handover peaceful possession on 16.02.2022, they also issued a corrigendum to demand notice on 07.02.2022, on account of typographical error and so there is nothing illegal in it.

¶39

As argued by Ld. counsel for the SA applicant validity of demand notice and possession notice, is to be decided. Ld. counsel for the SA applicant argued that possession notice dated 16.02.2022 is completely illegal because, corrigendum to demand notice dated 01.12.2021 was issued on 07.02.2022, so any proceedings with regard to taking possession were required to be conducted at least after 60 days from 07.02.2022.

¶40

So, in order to decide this controversy, validity of notice issued by respondent bank is to be decided.

¶41

As the demand notice dated 07.05.2022 was withdrawn so nothing is to be discussed in this regard.

¶42

Demand notice dated 01.12.2021 was definitely having details of subject mortgaged properties as, factory land & building situated at plot no. :-

D-469(a) to D-169(e)

D-469(f) to D-169(g)

D-469(h) to D-169(j)

It is important to mention here that order under Section 14 of the Act of 2002 dated 22.03.2022, is based, only on the details of demand notice dated 01.12.2021, but in both the orders, even date of demand notice is not mentioned.

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¶48

Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

¶49

Application under Section 14, was filed on 17.02.2022, but it do not have anything about the issuance of corrigendum dated 06.12.2022, through which details of Plot No. were corrected.

¶50

So, only on this count, it is not clear that on what basis order u/s 14 dated 22.03.2022, do have details of plot no. D-469(a) to D- 469(e).

¶51

So, in my considered opinion, the order u/s 14 of the Act of 2002, based on Demean Notice dated 01.12.2021, for possession of Plot No. D-469(a) to D-469(e) are completely illegal and has been issued by the competent authority without due application of mind. Even, the order u/s 14 do not have date of Demand Notice and amount due. There is nothing about corrigendum dated 06.02.2022, to Demand Notice dated 01.12.2021, so how the order u/s 14, do have correct numbers of plot, is also not clear.

¶52

Accordingly order u/s 14 of the Act of 2002, is quashed and set aside. Respondent Bank, is required to be careful, while applying for an order u/s 14 of the Act of 2002, in future.

¶53

Now, the issue of, corrigendum is to be decided.

¶54

As discussed earlier, Demand Notice dated 01.12.2022 was definitely having wrong description of the properties, and so this defect was required to be remove either by issuing a fresh Demand Notice or by issuing a corrigendum to it but as early as possible, it was required to be issued.

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Demand Notice dated 07.05.2021 (Annexure A/2) was not acted upon till 01.12.2021 and as the outstanding is increased, so it

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

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is clear that no amount was deposited by SA applicant. Date of NPA is same.

¶59

The reason for suppression of Demand Notice dated 07.05.2021, neither disclosed nor clear, so it is not clear, that why the respondent bank was kind enough with the SA applicant being defaulter, till December 2021, when a fresh Demand Notice was issued?

¶60

Corrigendum to Demand Notice dated 01.12.2021, was issued on 07.02.2022 and in the reply to the SA, the respondent bank has simply, admitted the defect in Demand Notice, as a typographical error and not more than that.

¶61

After having considered entire facts of the case I am of the considered view that the defect in demand notice, on account of wrong description of the properties, is not liable to be accepted, merely as a typographical mistake. In earlier demand notice details of properties, were clear and second demand notice dated 01.12.2021 is similar copy of the same. Corrigendum to demand notice was issued on 07.02.2022, so, it is clear that the respondent bank was not vigilant till 06.02.2022, i.e. about two months’ time and issued corrigendum after 60 days time.

¶62

This delay in issuing corrigendum, which is not permissible in any of the provision of SARFAESI Act shows the lethargic approach of respondent bank. The demand notice do not have details/ bifurcation of outstanding amount in demand notice, so on this count

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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur

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also demand notice dated 01.12.2022, is required to be quashed and

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set aside.

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Accordingly, the demand notice dated 01.12.2022, having wrong details of mortgaged properties, is completely illegal, so it is quashed and set aside. Further the orders under Section 14 of the Act of 2002, based on demand notice but having no date is also quashed and set aside.

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Needless to say, respondent bank is required to be careful while initiating proceedings under the provisions of SARFAESI Act of 2002 and they are at liberty to proceed ahead as per law afresh for recovery of outstanding amount.

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Accordingly, this Securitization Application stands disposed of as allowed.

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Copy of the order be given free to the concerned parties.

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File be placed before the Registrar for compliance after compliance file be consigned to record, as per rules.

¶72

(VIVEK SAXENA) Presiding Officer DRT, Jaipur

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M S Autolite India Limited v. Union Bank of India

Case brief

What is this about?

What did the court decide?

M S Autolite India Limited v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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