Dismissed

Ms Vishnu Beej Bhandar v. State Bank of India

DRT23 Jan 2023SA/141/2022

Case brief

AI extract

What is this about?

This judgment from Debts Recovery Tribunal-2, Chandigarh dismissed an application seeking to set aside NPA classification and possession notices. The court held that procedural lapses were not fatal where no substantial prejudice was caused, relying on Supreme Court precedents regarding the application of the Sale and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

What did the court decide?

The application was dismissed with costs.

Ms Vishnu Beej Bhandar versus State Bank of India — Contract and Commercial Disputes | DRT (2023)

¶1

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

¶2

DATED THE 23^th DAY OF JANUARY , 2023

¶3

SECURITISATION APPLICATION NO.141/2022

¶4

Sh. Vishnu Beej Bhandar, Proprietorship Firm at Railway Road, near P.W.D. Guest House, Safidon, District Jind (Haryana)

¶5

Sh. Vishvanath Gupta son of Sh. Jai Narayan Dass, resident of Ward No. 12, Annad Colony, Safidon, District Jind (Haryana)

¶6

Smt. Usha Rani wife of Sh. Vishvanath Gupta son of Sh. Jai Narayan Dass, resident of Ward No. 12, Annad Colony, Safidon, District Jind (Haryana)

¶7

…..Applicants

¶8

Versus

¶9

State Bank of India, Safidon, Hatt Road, Safidon, District Jind, Haryana-126112

¶10

State of Bank of India, at Stressed Asset Recovery Branch, SCO 70, Sector-5, Panchkula, Haryana

¶11

…..Respondents

¶12

Argued by: Sh. Karan Dev Ray counsel for the SA applicants Sh. Vivek Verma counsel for the respondents

¶13

FINAL ORDER

¶14

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).

¶15

In brief, the facts of the case as per the SA are that the respondents in purported exercise of powers under Section 13(4) of the Act and Rule 8 of Security Interest and Enforcement Rules, 2002, (hereinafter referred to as ‘Rules, 2002’ for brevity) wrongly declared the account as NPA twice; that no demand notice under Section 13(2) of the Act was issued and possession notice in respect of the property in question was issued on 08.06.2022 without following the process of law and the respondents were going to take physical possession of the secured asset without due process of law; that the applicant approached the bank for financial assistance of Rs.15 lacs in the

¶16

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶17

¶18

year 2013 which was enhanced to Rs.50 lacs from time to time; that shop of the applicant was mortgaged with the respondent bank; that the applicant could not make regular payment of interest to the respondent bank but the respondent bank without giving any opportunity of hearing, declared the account as NPA on 28.12.2020; that on 04.05.2021, the account was declared as NPA without withdrawing previous letter dated 29.12.2020; that on 12.08.2021, legal notice was issued which was served on 17.08.2022 granting 15 days time to clear the due amount; that on 12.08.2021, the respondent bank was approached for providing statement of account to know about status of overdue amount but the request was not allowed and same was the fate on 13.08.2021; that thereafter, applicants wrote a complaint to the higher authorities of the respondent bank for not providing details of the outstanding amount; that demand notice dated 13.08.2021, was defective and it was issued against the guidelines of RBI; that the respondent bank replied to the representation on 30.10.2021, i.e. after 51 days of the receipt of the reply to the notice under Section 13(2) of the Act which was beyond the prescribed period under Section 13(3A) of the Act; that possession notice was defective in which the outstanding amount was wrongly mentioned by charging excessive rate of interest; that personal delivery of possession notice as required under Section 13(4) of the Act was non-compliance of Rules 8 (1) &(2) of the Rules of 2002; that applicants were not wilful defaulters; that account was not restructured despite requests; that interest was not waived in respect of period of Pandemic Covid-19; that request for some more time from the respondent bank for repayment of overdue amount was made but it was not granted; that unreasonable interest was charged; that on the basis of illegal proceedings, the bank wanted to create pressure on the applicants and it was necessary for the respondent bank to grant an opportunity of hearing before classification of the account as NPA.

¶19

It was contended in the reply to the SA that the applicants failed to repay the dues of the bank as per the terms and conditions of the security documents executed at the time of availing of the credit facility and accordingly, the accounts were declared as NPA as per guidelines of RBI; that it was wrong to say that letter dated 29.12.2022 was issued by the respondent without giving any opportunity to the applicants; that respondent bank, vide letter dated 01.01.2020, requested the applicants to deposit an amount of Rs.56,000/- immediately in order to regularise the account and it was also informed to the applicants that they were not

¶20

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶21

¶22

running the accounts as per norms of the bank; that it was also informed that account was overdrawn; that thereafter, letter dated 05.02.2020 was sent to the applicants wherein they were further advised to regularise the account as the interest applied on 30.11.2019 was not served up to 01.01.2020 and thereafter, the interest applied on 31.12.2019 and 31.01.2020 was not served by the applicants and the account was overdue by Rs. 11,43,956.00/-; that in response to the above, the Applicants vide their letter dated 28.02.2020 admitted the fact that the limit was not regular for the last 3 months and neither they had deposited the principal nor the interest; that the applicants further promised that they would deposit the overdue amount and interest by 29.02.2020 and the applicants further promised that in the event of non-deposit of the amount by 29.02.2020 if the Bank wanted to proceed against the applicants, they would be responsible for it; that it was worthwhile to submit that the respondent Bank also sent letter dated 01.07.2021 advising the applicants to regularize the account, but the advice/request of the respondent bank fell on deaf ears; that as a matter of fact, the applicants had approached the bank and made a request for restructuring of account vide letter dated 31.12.2020; that accordingly, the respondent Bank as per the guidelines of Reserve Bank of India, had sanctioned/granted RBI Covid-19 Regulatory package to the Applicants and converted the accumulated interest of Rs.2,66,424.00/accrued in the Cash Credit Limit Account No. 65170155808, during the deferment period from 01.03.2020 to 31.08.2020 to the said FITL account; that the repayment was to be made by 31.03.2021 in the said FITL Account No 39606178239; that further on the request of the Applicants, second FITL Account No.39905042763 for Rs. 1,96,200.00 was opened on 31.12.2020 to regularise the Cash Credit Limit under restructuring of the accounts; that as a matter of fact, the Bank on the request of Applicants converted the unpaid interest in Cash Credit Limit Account amounting to Rs 1,96,200.00 into Funded Interest Term Loan repayable in 24 instalments commencing from 01.01.2022 (Total tenure 36 months with moratorium of 12 months); that it was an admitted fact that Legal Notice dated 12.08.2021 was posted on 17.08.2021, hence, there was no occasion for the Applicants to have knowledge of issuance of Legal Notice on 12.08.2021 which was posted on 17.08.2021; that the applicants were provided each and every document including statement of accounts as and when asked for; that it was wrong to say that excessive rate of interest had been charged from the Applicants; that the respondent Bank informed the Applicants vide its letter dated

¶23

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶24

¶25

29.12.2020 informing the Applicants that their account had been slipped to NPA as on 28.12.2020 and further advised them to pay the irregular amount in the accounts; that the Applicants again failed to maintain the financial discipline of the bank and accordingly, the accounts were declared as NPA on 30.03.2021; that the respondents had duly complied with the provision of the Act and Rules of 2002; that the Possession Notice dated 08.06.2022 was pasted on the property on 08.06.2022; that the Possession Notice was sent to the Applicants through Post on 08.06.2022 and the Possession Notice was also published in two newspapers dated 09.06.2022; that there was no violation of RBI circular; that the plea of the petitioner before the Hon'ble Apex Court for total waiver of interest during the moratorium period, had already been dismissed by Hon'ble Apex Court vide Judgement dated 23.03.2021, hence, no benefit could be passed to the Applicants; that the prayer of the applicants with regard to setting aside possession notices dated 19.10.2016 and 08.06.2022 was barred by law of limitation, hence, same could be taken into consideration; that the prayer for setting aside the auction sale notice dated 24.03.2022 for the auction dated 05.04.2022, could not be accepted as the date of auction was 21.04.2022 and not 05.04.2022; that the applicants had failed to plead or prove any alleged violation on the part of the respondents and the prayer for OTS did not come under the jurisdiction of this Tribunal. Rest of the averments made in the SA were also denied in reply to the SA.

¶26

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

¶27

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

¶28

It was argued by the learned counsel for the applicants that NPA was declared twice. It was argued by Sh. Vivek Verma advocate that there was failure to pay the interest of three months in respect of the CC account and that led to the account going NPA on 28.12.2020. On 31.12.2020, a request was made for restructuring of the account and the account was restructured accordingly and the documents were also executed in this regard. This position was admitted at Bar by the learned counsel for the applicants. It

¶29

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶30

¶31

was further argued by Sh. Vivek Verma, advocate that again there was a default in adhering to the schedule of payment of interest for a period of three months and thus, account was declared NPA on 30.03.2021. It was argued by Sh. Karan Dev, advocate that there was Pandemic Covid-19 and thus, no interest was required to be paid by the applicants and in fact, the interest was to accumulate and separate account was to be opened. It was argued by Sh. Vivek Verma, advocate that those separate accounts were opened on 31.12.2020. In the facts and circumstances of the case, there is force in the arguments advanced by Sh. Vivek Verma, advocate. Moreover, the contentions of the learned counsel were not disputed by the learned counsel for the applicants.

¶32

It was argued by Sh. Karan Dev, advocate that the accounts were declared as NPA without issuing notice to the applicants. Sh. Vivek Verma, advocate drew the attention of this Tribunal towards letter dated 30.03.2021 addressed to the Chief Manager of the State Bank of India, Safidon, by the applicants admitting that their account was running irregular for the last three months. It has been further mentioned in that letter on record that the applicants were to pay Rs.1.60 lacs till 31.03.2021 failing which any action could be taken against the applicants. The above said letter Annexure R-4 shows that there is no merit in the arguments advanced by Sh. Karan Dev, advocate for the applicants.

¶33

It was further argued by Sh. Karan Dev, advocate that the representation under Section 13 (3A) of the Act was not decided within 15 days. With regard to not deciding the representation within fifteen days, l earned counsel for the applicants placed reliance upon judgment of the Division Bench of Hon’ble Madras High Court in the case of “Bharath Post Graduate College through its Authorised Signatory Versus India Bulls Housing Finance Limited and Others,” in Writ Petition No. 33561 of 2017 and Writ Miscellaneous Petition No. 37083 of 2017, decided on 31.07.2018, wherein inter alia it was held that the time period mentioned in sub-section 3A of Section 13 of the Securitisation and Reconstruction

¶34

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶35

¶36

of Financial Assets and Enforcement of Security Interest Act, 2002, was 15 days and it was not directory.

¶37

L earned counsel for the respondent bank placed reliance upon judgment of the Hon’ble Delhi High Court in the case of “M/s Kannu Aditya India Ltd. Versus State Bank of India,” in Writ Petition (c) No. 11540 of 2018 and CM Nos. 44668/2018 and 44669/2018, decided on 26.10.2018, wherein inter alia it was held that the reference to period of 15 days under Section 13 (3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, must therefore, be considered as directory and if it was before proceeding to take an action under Section 13(4) of the Act, there would be substantial compliance of the same.

¶38

L earned counsel for the respondent bank further placed reliance upon judgment of the Hon’ble Apex Court in the case of “Arce Polymers Private Limited Versus M/s Alphine Pharmaceuticals Private Limited and Others,” Civil Appeal Nos. 7372 and 7373 of 2021, decided on 03.12.2021, wherein it was held that failure to furnish reply to representation is not of much significance since creditor undoubtedly considered representation and proposal for repayment made and has in fact, granted sufficient opportunity and time to debtor to repay debt without any avail.

¶39

The Judgment (Supra) relied upon by Sh. Karan Dev, advocate fades into insignificance in view of the law laid down by the Hon’ble Apex Court as relied upon by Sh. Vivek Verma, advocate for the respondent bank.

¶40

Following was held in the case of M/s L&T Housing Finance Limited Vs. M/S Trishul Developers and Another , in Civil Appeal No(s). 3413 of 2020 (arising out of SLP (c) No(s). 18360 of 2019) decided on 27.10.2020:

¶41

“that the proceedings under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, cannot be held to be bad in law merely on raising

¶42

SA/141/2022 MS VISHNU BEEJ BHANDAR VS STATE BANK OF INDIA

¶43

¶44

an trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudice, if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions.”

¶45

No other point was argued before this Tribunal.

¶46

In view of the above discussion, SA is dismissed with costs.

¶47

Announced in the open Tribunal (M.M. Dhonchak) Presiding Officer DRT-2, Chandigarh

Ms Vishnu Beej Bhandar v. State Bank of India

Case brief

What is this about?

What did the court decide?

Ms Vishnu Beej Bhandar v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Mr Amrendra Kumar Jha versus Bank of Baroda

Ms Om Sai Baba Morden Rice Mill and Others versus Punjab National Bank

Narniat Powers and Company versus State Bank of India

Pawan Kumar Sharma versus Punjab National Bank

Ms Morinda Rice and General Mills versus State Bank of India

State Bank of India versus Ms Taj Agencies