Quashed

Mr Ajay Kumar Gupta v. Anand Rathi Global Finance Limited

DRT26 Sept 2022SA/64/2022

Case brief

AI extract

What is this about?

DT Lucknow quashed the demand notice dated 26-10-21 and possession notice dated 28-12-21 issued by the Respondent Financial Institution. The court held that issuing a demand notice to only one borrower while excluding others violated the mandatory provisions of Section 13(2) of the SARFAESI Act, relying on the Swastik Agency judgment.

What did the court decide?

Demand notice dated 26-10-21 and possession notice dated 28-12-21 were quashed. The bank is at liberty to proceed afresh for recovery of its dues.

Mr Ajay Kumar Gupta versus Anand Rathi Global Finance Limited — Banking and Recovery | DRT (2022)

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IN THE DEBTS RECOVERY TRIBUNAL LUCKNOW

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Present: A. H. Khan, Presiding Officer

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Date of order 26-09-2022

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S.A. No.6 4 of 2022

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Present:-

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Counsel for the applicant Mrs.Amita Mehta Counsel for the bank Exparte

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Final arguments were heard on 06-09 -2022 and case was reserved for pronouncement of orders.

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The applicants have filed the present SA on 0l-02-22 praying to set aside the possession notice dtd.29-12-21 issued by the bank.

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The case of the applicants, in brief, is that they have availed certain credit facility from the Res.FI and have mortgaged their two propefties as security to the said facility. That without classiffing the account as NPA, Res.FI had issued demand notice dtd.26-10-21 to applicant No.l however other borrowers were not served with the said demand notice. That applicants have given reply to the demand notice issued by the Res.FI vide letter dtd.18-11-21 which was replied by respondent vide letter dtd.07-12-21. That thereafter, Res.FI had issued possession notice dtd.28-12-21 which was pasted on the secured asset but the same has not been served on other borrowers. That Res.FI has violated mandatory provisions of SARFAESI Act while proceedings with the possession of the subject properties.

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In response to notices issued by this Tribunal, REs.FI had caused its appearance through Counsel Mr.R.K.Ojha who had filed his Vakalatnama on 07-03-22 however despite sufficient opportunity, no reply has been field by Res.FI and therefore vide order dtd.06-09 -22, case was proceeded exparte against Res.FI.

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Duly considered submissions and perused the records.

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The main contention of the applicants is that demand notice dtd. 22-10-21 was not served on all the borrowers.

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Sec.13(2) of SARFAESI Act, 2002 provides that "Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor rtray require the A borrower by notice in writing to discharge in full his liabilities to the secured/ / creditor within sixty days from the date of notice failing which the secur "V ,/\ /.

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creditor shall be entitled to exercise all or any of the rights r.rnder subsection(4)."

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Hon'ble Orissa High Court in the case of Swastik Aeency Vs. State Bank of India, vide its judgment dtd.08-01-09 has held that the entire action of bank is in gross violation ofjudgment of the Hon'ble High court which specifically provided that mandatory provisions have to be followed in a particular manner and no other course is permissible. para 75 of the said judgment is as under :-

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"Para75 - Non-compliance of such a mandatory requirement vitiated the proceedings. The Tribunal and DRAT have dealt with various issues without touching the most material issues involved in this case as explained hereinabove. The Tribunal and DRAT have misdirected themselves without entering into the legal issues, particularly the requirement and compliance of statutory provisions as non-compliance hereof would vitiate the entire proceedings. It seems to be highly arbitrary and unreasonable that for the recovery ofa sum ofamount about Rs.04 Lacs, a propehy had been sold for Rs.14 Lacs and after adjusting its outstanding dues a sum ofrupees more than double of their outstanding dues had been remitted to the petitioners." It is further held that "Non-compliance of statutory requirements of publication of possession notices and auction notice in vemacular language rendered the statutory requirement as farce. There should be purposeful compliance of the provisions of law and it cannot be reduced to an empty formality. The requirement to cause publication in 'vemacular language' in the newspaper is fundamental and the statutory requirement which cannot be compromised. It is not for the borrower or guarantor to establish that non-publication of the said notices in 'vemacular language' in the newspaper has caused any prejudice to its cause. It is for the respondent to establish that noncompliance of the statutory requirements has not caused any prejudice at a11."

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In view of law settled by the Hon'ble Apex Court, it has to be held that bank has violated the mandatory provisions of Sec. 13(2) of SARFAESI Acq 2002 and therefore all the proceeding pursuant to demand notice dtd.22-10-21 including possession notice dtd.28-12-21 arc hereby quashed. Banlzshpll be at liberty to proceed afresh for recovery ofits dues as per law. I /

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l'/ .,,, I '^* Khan) Officer

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Filebeconsignedto recordroom.

Mr Ajay Kumar Gupta v. Anand Rathi Global Finance Limited

Case brief

What is this about?

What did the court decide?

Mr Ajay Kumar Gupta v. Anand Rathi Global Finance Limited

Case brief

What is this about?

What did the court decide?

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