Dismissed

Mr Ashraf v. Bharat Cooperative Bank Mumbai Limited

DRT19 Jul 2023SA/110/2022

Case brief

AI extract

What is this about?

The Tribunal dismissed the appellant's appeal challenging a recovery and possession notice issued under the SARFAESI Act. The bench held that the bank had legally complied with all procedural requirements, including notice publication and affixation, leading to the dismissal of the appeal.

What did the court decide?

The appeal filed under Section 17(1) of the SARFAESI Act against the possession notice was dismissed with an interim order vacated and pending assets closed.

Mr Ashraf versus Bharat Cooperative Bank Mumbai Limited — Banking and Recovery | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL-I, KARNATAKA AT BENGALURU

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Dated this the day 19th of July, 2023

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Present: Sri IMTIAZ ALI

Presiding Officer

s.A.No.11O/2o22

BETWEEN:

Mr. Ashraf S/o. Sri Hantyar Aboobakar Aged Major Residinq atNo.3-52, Aryapu Post, PutturTaluk Sampya, Near Post Office Ten kayedadavu Sibrikere, Mangaluru Taluk Dakshina Kannada 574210

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... APPELLANT

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AND:

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The Authorised officer Bharat Co-operative Bank (Mumbai) Ltd. Vasuki Tower, Next to Vishwas Commercial Building New Taluk Office, Opposite District Court Udupi 576 101 ... RESPONDENT

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... RESPONDENT

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Counsels on record/aooeared for: Appellant : Sri E. Devaraja Respondent : Sri H.R Sunil Kumar

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FINAL ORDER

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The Appellant has filed an Appeal under Section 17(1) of the SARFAESI Act, 2002 seeking for quashing/setting aside the Possession Notice'dated L8.O2.2O22 issued by the Respondent Bank and all further proceedings pursuant there

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SA No.110/2022

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to in respect of the schedule property for recovery of Rs.9,21,918/- from the Appe ant with further interest thereon, charges, costs. etc.

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The facts of the case of the Appellant in a nutshell are, the Appellant side is the Borrower and Guarantor. Appellant had availed Housing Loan / Term Loan of Rs.7.50 lakhs in the year 2018-2019 from the Respondent Bank_

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The Appellant stated that, the Appellant is regular and prompt in making his repayment. The Appellant had deposited substantial amount to loan account and accordingly, he has deposited Rs.1,50,OOO/_ to the loan account. The Appellant has paid sufficient amount to the loan account with up to date of interest to the Respondent Bank. The Appellant has not paid some EMI during the lock down time of pandemic of Covid_19.

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The Appellant further stated that, the Respondent Bank has failed to consider the same and initiated recovery proceedings and Respondent Bank has declared the account as NPA during the Covid-19 time and during the SOp Order passed by Hon,ble Supreme Court of India and they have not followed RBI Guidelines. The Respondent Bank has issued the

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SA No.110/2022

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notice and has not followed the RBI Circular while declaring the account as NPA. The Respondent Bank without deducting said repayments made by the Appellant and without following the Act and Rules, initiated recovery^proceeding and issued a Demand Notice under Section 13(2) of the SARFAESI Act, 2002 and initiated the recovery proceedings against the Appellant and his property. The Appellant is not a wilful defaulter in the above loan. They have not given him sufficient time to make^payment as^per the banking norms.

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The Appellant has further stated that, the Respondent Bank did not comply Sub-Rule (1) Rule 3 and Sub-Rule (1) (2) of Rule 8 of the Security Interest (Enforcement) Rules 2002. That the Respondent has not issued the Possession Notice to all Co-Borrowers and Guarantors, the Respondent Bank has issued notice during Pandemic of Covid - 19. The Respondent Bank has not followed the SOP Order of Hon'ble High Court of Karnataka and RBI Circulars. Hence, the Demand Notice has issued by the Respondent Bank is null and void and liable to be set aside. The Respondent Bank has failed to serve the Demand Notice under Section 13(2) as per the Securitlzation Act to the Appellant. The Respondent Bank

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SA No.110/2022

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has issued the^{PossessionNotice' The PossessionNotice} dated 18.02.2022^{issued by the RespondentBank was not} published. Even, the Respondent^{Bank has failed to affix the} same. Now the^{RespondentBank has been trying to take} physical possession of^{the property illegally' The Respondent} is also trying to^{sell the property. In light of the foregoing} contentions and^{the grounds urged,the Appellant has sought} to allow the^{present appeal as prayed for'}

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Upon service of^{notice, the RespondentBank has} entered appearance^{through its Counsel and subsequently} filed detailed statement^{of objections tothe appeal'} According to the^{Respondent Bank, the present S'A' is false,} frivolous, vexatious^{and not maintainableeither at law or on} facts of the case.^{The Appellant has not statedtrue facts} before this Tribunal.^{The RespondentBank has contended} that, the Appellant^{being Principal Borrower had approached} the Respondent^{Bank for financial assistance and considering} the request of the^{Appellant,the RespondentBankhas} sanctioned the Housing^{Loan ofRs.8,00,000/-on} 27.O2.2OL8. As a security^{for the said loan, the Appellant has} mortgaged the immovable^{scheduleproperty.It is relevantto}

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SA No.110/2022

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note that the one Mr. Aftab M stood as surety for the said loan amount.

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The Respondent Bank has further contended that the Appellant is irregular in repayment of monthly installments payable to the Bank. The Appellant has become defaulter !n repayments of the loan. In view of the default, the Respondent Bank has classified the lone account as a Non_ Performing Asset on 25.LO,2O20. Since, the Appellant has failed to repay the outstanding amount due to the Bank, the Respondent Bank has issued the Demand Notice dated 18.10.2021 under Section 13(2) of the SARFAESI Act, 2002 and called upon the Appellant and surety to remit the entire outstanding amount of Rs.9,21,918/- due as on 27.Og.2021 along with future interest and other charges within 60 days from the date of the notice. The Appellant received the said notice without demur. The notice was duly served on the Appellant through RPAD, Even after service of notice under Section 13(2) of the SARFASEI Act, ZOOZ, the Appellant has failed to comply with the demand made by the Respondent Bank. Since, the Appellant has become defaulter and failed to clear the outstanding amount due to the bank, the

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SA No.110/2022

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Respondent Bank has issued the possession Notice dated 74.O2.2022 thereby taken symbolic possession of the secured Asset on 18.02.2022. The Respondent Bank has also amxed the Possession Notice on the conspicuous part of the mortgaged schedule property and also published the Possession Notice in two leading newspapers including vernacular language namely in.,Vijayavani,, and the.,The New Indian Express", both on 24.02.2022.

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The Respondent further contended that, the intention of the Appellant is to defraud the creditors and to delay the recovery proceedings. Virtually there is no bona-fide in the contention of the Appellant. In the circumstances, the appeat is liable to be dismissed on the threshold. There is no procedural lapse on the part of the Respondent Bank in the proceedings initiated by them and no violation of any procedural lapse stated in the SARFAESI Act, 2OO2 and Security Interest (Enforcement) Rules, 2002. The contention of the Appellant that, the Respondent Bank has failed to consider the repayment made by the Appellant and initiated recovery proceedings and the Respondent Bank has declared the account as NPA during the Covid-19 and the Respondent

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SA No.110/2022

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Bank issued notices during the SOP Order passed by the Supreme Court and without deduction the repayments made by the Appellant initiated recovery action under the provision of SAMESI Ad 2OOZ are denied as false. On the other hand, the Respondent Bank rightly invoked the provisions of SARFAESI Act, 2002 for the recovery action against the Appellant. The Respondent Bank had duly served the Possession Notice to the Appellant. Further, the Respondent Bank duly served the Demand Notice and Possession Notice to the Appellant and also published the Possession Notice dated 14.O2.2O22 in two leading newspapers including one vernacular language dated 24.O2.2O22 and also affixed the Possession Notice on the conspicuous part of the mortgaged property.

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Further, the contention of the Appellant that, the Respondent Bank has not registered the transaction with the Central Registry as required under Section 26D of the SARFAESI Act etc are denied as false. The Respondent Bank registered the transaction with the Central registry. The Appellant has not stated true facts before this Tribunal. In the circumstances the appeal is liable to be rejected with

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SA No.110/2022

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exemplary cost. The outstanding amount due from the Appellants is Rs.9,78,805/- as on 21 .02.2022. There is no bona-fide in the contention of the Appellant. The Appeal is virtually filed just to harass the Respondent Bank / Creditor and to postpone the payment as far as possible. The Appellant has filed the Appeal with an intention to gain time and with ulterior motive and an intention to harass the Respondent Bank. Therefore, the Appeal is liable to be dismissed with exemplary costs.

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As such, the Respondent Bank prayed that this Tribunal may be pleased to dismiss the appeal with costs through, in the interest of justice and equity.

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On the above background, I have gone through the records of the case and heard the arguments advanced by Learned Counsels appearing for both the parties and the following points arise for my consideration:

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a) Whether the Appellant has made out a case

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to be allowed ? and

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b) To what relief, the parties are entitled

5A No.110/2022

REASONS

This SA is filed challenging the^{Possession Noticedated} 1A.02.2022 issued by the Respondent Bank for^{recovery of a} sum of Rs.9,78,805/-. It is the case of the^{Appellantthat} although substantial amount has been deposited in the^loan account, the Respondent Bank did not deduct the^{same. In} this regard, the Appellant has^{failedto produce any document} to show that some amount has been^{depositedin the loan} account. On the other hand, the^Respondent Bank^has produced the statement of account showing debit and credit adjustments, which would evident from^{Annexure-R8.The} contention of the Appellant is that the^{Demand Notice was not} duly served as^per the Securitization^{Act. The Respondent} Bank has^produced the Demand Notice^{as Annexure-R1 and} the postal receipt marked as Annexure-R2.^{Annexure-R3is} the postal acknowledgment for having^served the^demand notice. The Appellant after coming to^know of the^Demand Notice dated 18.10.2021 did not raise any objection. Moreover, the Appellant side did not^go ahead to make repayment of the loan amount. As the Appellant failed to make repayment, the Respondent Bank issued the impugned

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SA No.110/2022

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Possession Notice dated 18.02.2022. As per the postal acknowledgment, the Possession Notice was served on the Appellant side and same would be evident from Annexure-Rs. It is found that the Respondent Bank has caused paper publication of the Possession Notice in the '.The Indian Express", an English Edition, and '.Vijayavani,,, Kannada Edition, both on 24.02.2022. The photographs produced by the Respondent Bank show the^possession Notice was affixed on the mortgaged property. The Learned Counsel for the Respondent Bank submitted that the Borrower is a chronic defaulter even prior to the date of the account being classified as NPA and despite providing several opportunities, the Borrowers failed to regularise the loan account. The Learned Counsel for the Respondent Bank also submitted that the security interest in the property in question is created by the Appellant by executing a valid memorandum of deposit of title deeds and also deposited the title deeds with Respondent Bank with an intention to create equitable mortgage over the property as security for the loan amount utilised, which would establish subsistence of a valid, legally enforceable mortgage in favour of the Respondent Bank. In this context the Respondent Bank produced Annexure-R9 to prove CERSAI

SA No.110/2022

Registration. Having regard to the above, it is seen that the Respondent Bank has complied with the provisions of the SARFAESI Act and Rules made thereunder. In these circumstances, as it is evident that the actions of the Respondent Bank are in accordance to law and the Appellant could not establish any infirmities, the present Appeal is devoid of merits and the same is liable to be dismissed.

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I, therefore, pass the following:

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ORDER

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In the result, SA No.110/2022 is dismissed.

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Interim order, if any, stands vacated. Pending

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IAs, if any, also stand closed.

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There will be no order as to cost.

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(lOictatea to the Stenographer, directly on computer, corrected signed by me and then^pronounced by me in the Open Court on this the 19th day of luly, 2023)

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,rrrroh'Jtl "

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"B=.?:?,'I=t,n?T.lrTI

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trsrtr

Mr Ashraf v. Bharat Cooperative Bank Mumbai Limited

Case brief

What is this about?

What did the court decide?

Mr Ashraf v. Bharat Cooperative Bank Mumbai Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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