Mr Bhale Ram Nain versus Indian Bank — Company and Corporate | DRT (2022)

Mr Bhale Ram Nain versus Indian Bank — Company and Corporate | DRT (2022)

What the court decided

AI extract

Outcome

Application allowed with costs; set aside prior proceedings and permit the bank to issue notice afresh or decide valid objections and start proceedings anew.

Issue for consideration

Whether objections filed under Section 13(3A) of the Act after the receipt of the demand notice by the applicant within the statutory period of 60 days were time-barred. +4 more

Detailed headnote5 paragraphs

1. Where an applicant files objections to a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, within the statutory period of sixty days from the receipt of such notice and not from the date of its issue, the objection cannot be deemed time-barred merely because the period of submission commenced after the delivery of the notice.

2. The time limit under Section 13(3A) of the Act runs from the date of receipt of the notice by the applicant. Therefore, if objections are raised by an applicant within sixty days of receiving the notice, the same are not barred by limitation, and the Securitisation Tribunal has the jurisdiction to decide them.

3. If the Securitisation Tribunal finds that the Securitisation proceedings were conducted in violation of Section 13(3A) of the Act due to issues regarding the validity of objections, such violation affects the Securitisation proceedings universally.

4. In such a situation, where the Securitisation proceedings have been shown to have been affected by violation of provision of the Act, all Securitisation proceedings will be liable to be quashed, and the application seeking quashing will be allowed with costs.

5. However, permitting the Securitisation Application would not entirely prohibit the liquidated creditor (Bank) from taking recourse under the Act. The Bank would still be permitted to issue the notice under Section 13(2) afresh, or decide the objections already received by the Bank and start the proceedings afresh from that stage.

DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH PRESIDED OVER BY M.M. DHONCHAK

DATED THE 21^th DAY OF September , 2022

SECURITISATION APPLICATION NO.53 OF 2022

Mr. Bhale Ram Nain son of Sh. Sardha Ram Resident of Flat No. F-301, Monsoon Breeze, Sector 78, Gurgaon (PAN No. AASPN6080C)

…Applicant

Versus

Authorised Officer, Indian Bank, Jind

Ms. D.P. and Company through its sole Properitor, Mr. Dinesh at first floor, near Sarvodaya Hospital, Jind-Safidon Road, Jind

Mr. Dinesh son of Sh. Rajbir Singh, Resident of village Naguran, District Jind

…Respondents

Argued by : Sh. Harinder Pal Singh, counsel for the SA applicant Ms. Deepika Mittal, 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).

In brief, it is the case of the SA applicant that the applicant as guarantor-cum-mortgager to the loan provided by respondent No.1 to respondent No.2; that proprietor of firm Mr. Dinesh was respondent No.3 who had disposed of stock of the firm in connivance with Branch Manager; that stock of the firm was the primary security; that account was declared as NPA on 27.12.2020 without following the RBI guidelines; that notice under Section 13(2) of the Act was not served upon each in individual capacity as per Rules 8 (1), 8(2) and 8(5) of

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the Security Interest (Enforcement) Rule 2002 (hereinafter referred to as the Rules of 2002 for brevity); that detailed objections dated 23.04.2021 were filed but to no avail; that the Branch Manager was contacted for redemption of the property; that on 20.12.2021, there was possession notice at the address of the Company; that notice was not pasted and also it was not published in two leading newspapers; that default amount was not mentioned in the notice under Section 13 (2) of the Act; that no recall notice was issued; that the bank cannot enforce action under the Act without registration of charge with Central Registry; that exorbitant interest and penal interest was charged and the account was classified as NPA arbitrarily.

In reply to the SA, it was contended that the account was declared NPA in accordance with RBI guidelines; that cash credit limit of Rs. One crore was given in favour of the applicant M/s DP Company through respondent No.3 on 23.06.2017; that the applicant stood guarantor for the said loan facility and mortgaged the residential property in question; that notice under section 13 (2) of the Act was issued on 27.05.2021 to the borrower and guarantor and possession notice was also issued under Section 13 (4) of the Act and also got published in newspaper on 02.03.2022. Rest of the averments made in the reply were also denied in reply to the SA.

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

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

It was argued by learned counsel for the applicant that as per reply to the SA, notice under Section 13(2) of the Act, was sent vide postal receipts dated 03.06.2021 and the objections under Section 13(3A) of the Act, dated 23.07.2021 had been received by the respondent bank on 28.07.2021 and those were time beyond because of being received after 60 days which was the statutory period. It was argued by the counsel for the applicant that even if it was assumed

SA/53/2022 MR. BHALE RAM NAIN VS INDIAN BANK AND OTHERS 3

that the notice under Section 13(2) of the Act was received on 03.07.2021 itself then also the receipt of the objections on 28.07.2021, could not be said to be after expiry of period of 60 days. 7. There is no merit in the argument of the counsel for the respondent bank that the objection was deemed beyond limitation because the time of 60 days could not be counted from the date of issuance of the demand notice. Date of issuance of demand notice has nothing to do with the period of limitation as the applicant has to utilise the period of 60 days and this has to start with the knowledge of the applicant. Even if date of dispatch is deemed as the dated of receipt of the notice, the objections u/s 13(A) of the Act were not barred by limitation and those should have been decided by the respondent bank.

The above developments reveal that there is violation of provisions of Section 13(3A) of the Act, and when that is so, all cannot be said to be well with the Securitisation proceedings and thus, there is violation of the provisions of the Act, which warrants the SA to succeed. Accordingly, the same is allowed with costs.

However, the allowing of the SA would still permit the respondent bank either to issue the notice under Section 13(2) of the Act, afresh or decide the objections already received and start the proceedings afresh from that stage.

Announced in the open Tribunal

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