Allowed

Ms Shiv Shakti Polymers v. Punjab National Bank

DRT18 Oct 2023SA/162/2023

Case brief

AI extract

What is this about?

The Tribunal quashed the bank's demand notice and all subsequent recovery actions, including auction proceedings. The ruling held the notice illegal due to the bank's failure to provide a detailed bifurcation of the outstanding loan amounts as required under Section 13(3) of the SARFAESI Act.

What did the court decide?

The demand notice dated 24.10.2017 is quashed and set aside. All actions initiated by the respondent bank thereunder, including auction and possession notices, are also quashed and set aside. Amounts

Ms Shiv Shakti Polymers versus Punjab National Bank — Company and Corporate | DRT (2023)

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SA No. 162/2023

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

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SA No.- 162/2023

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1. M/S Shiv Shakti Polymers Having Office At Plot No. H-9, Riico Industrial Area, Napasar, Bikaner, Rajasthan Through Its Partner Smt. Anjana Bana.

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2. Smt. Anjana Bana W/O Shri Shree Bana, R/O Suraj Vihar, Gali No. 3, Ambedkar Colony Bikaner, Rajasthan.

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... Applicants

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VERSUS

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Punjab National Bank, Having Its Office At Punjab National Bank, A-17, Kanta Khturia Colony, Bikaner (Raj.) - 334001 Through Its Authorised Officer.

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…Respondent

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Present:

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Sh. Akarsh Mathur, Ld. Counsel for the Applicant

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Sh. Kirti Kapoor, Ld. Counsel for the Respondent Bank/FI

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(Final Order)

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(18.10.2023)

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This SA was filed on 27.02.2023 by SA applicant.

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Ld. Counsel for the applicant raised the issue of bifurcation of total and outstanding amount as he argued that in the demand notice dated 24.10.2017, Annexure R/2.

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Respondent bank failed to give details of outstanding amount, therefore demand notice is required to be quashed and set aside mainly on this ground.

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On 29.09.2023, Ld. Counsel for the applicant filed copy of sanction letter vide Dy. No. 2097 and argued that the plant

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and machinery was not hypothecated with the respondent bank.

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Ld. Counsel for the applicant also referred Annexure 4, possession notice dated 27.12.2017 and submitted that in the said possession notice, which was issued on 27.12.2017, the details of demand notice dated 24.10.2017 are mentioned.

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Ld. Counsel for the applicant also submitted that the in the column of description of movable property, the bank claimed his right over equitable mortgaged of factory, land and building, situated at Plot no. H-9, RIICO Industrial Area, Napasar, Bikaner and there is no details of plant and machinery which was put for auction by the respondent bank and which has already been challenged.

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Ld. Counsel referred Annexure-5, order dated 03.02.2020, passed by Ld. District Magistrate, Bikaner, through which the Authorized Officer and local police was directed to take possession of the subject mortgaged property and the same is against the provisions as contained under Section 14 1(A) of the SARFAESI Act of 2002.

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Ld. Counsel for the applicant further challenged the sale notice at Annexure/6 dated 04.02.2023 and argued that as only land and building situated at H-9 was mortgaged with the respondent bank and therefore the bank has no right to auction the movable properties and therefore he submitted that all the actions, since issuance of the demand notice are required to be quashed and set aside.

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Ld. Counsel for the Respondent bank strongly objected the grounds taken by Ld. Counsel for the applicant and it was argued on behalf of respondent bank that the bank has taken all the actions as contained under the Provisions of SARFAESI Act of 2002, there is nothing illegal in the actions taken by them and SA is required to be disposed of as dismissed with heavy cost.

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Along with reply, copy of letter dated 27.10.2022, Annexure R/1 written by SA applicant to respondent bank on 27.10.2022, copy of demand notice dated 24.10.2017, copy of service of Rule 8(6) at Annexure R/3, original newspapers having details of possession notice at Annexure R/4 and valuation report of the subject mortgaged property at Annexure R/5 is filed, Annexure R/6 is sale confirmation letter, Annexure R/7 is the screenshot of website of the Bank having details of mortgaged property put to auction and Annexure R/8 is copy of proclamation of sale is filed on record.

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Heard arguments and perused the record.

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The objection taken by SA applicant in ground F to the SA is required to be considered first as the same is related to illegality of the Demand Notice dated 24.10.2017, issued by the respondent bank. Copy of demand notice is filed by the respondent bank also at Annexure R/2 and the same is running in two pages only and in fact along with the reply even statement of account is not filed by the respondent bank in order to response the objection taken by the SA applicant.

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In ground F to the demand notice, the SA applicant took specific objection that the respondent bank failed to give detailed bifurcation of outstanding amount in the light of order passed by Hon’ble High Court of Gujarat in the matter of Punjab National Bank vs Mithilanchal Industries decided on 17.08.2020. Based on this ground, it was argued by Ld. Counsel for the applicant that the demand notice dated 24.10.2017 is required to be quashed and set aside. Further all the actions in the light of said auction notice are required to be quashed and set aside.

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In order to decide this objection/arguments, perused the reply filed by respondent bank in reply to ground F and it is mentioned that the contents of ground E and F as stated are denied. It is submitted that the bank has provided all

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the details in the notices under Section 13(2) of the SARFAESI Act of 2002.

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If demand notice dated 24.10.2017 is to be perused then following are the details with regard to details of credit facility, limit as sanctioned and balance outstanding amount as on 13.10.2017 and the relevant table is reproduced here as under:-

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Facility	Limit(lacs)	Balance O/S as on 13-10-2017
Term Loan	80.00	3905431.00
Cash Credit	20.00	2016330.27
Total	100.00	5921761.27

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Perusal of above said table is sufficient to show that respondent bank has simply mentioned balance outstanding amount as on 13.10.2017 in two loan accounts, and they failed to give details of the entire outstanding amount, in the light of order passed by Hon’ble High Court of Gujarat in the matter of Punjab National Bank vs Mithilanchal Industries and as pointed out by Ld. Counsel for the applicant during the course of arguments as well as in the SA itself.

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Time and again it has been noticed that in many of the demand notice issued by the PNB, it do not have any details of complete outstanding amount which is very much necessary, considering the provisions as contained in Section 13(3) of the SARFAESI Act of 2002 as well as, as per directions issued by Hon’ble Gujarat High Court in the matter of applicant bank itself.

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It is also a fact that the demand notice was issued on 24.10.2017, but in auction notice, copy of which is filed at Annexure R/3 page no. 18, the date of demand notice is mentioned as 13.10.2017 and so, the auction notice also do not contain the correct date of demand notice issued by the respondent bank because as per record, there is no such demand notice, which was issued by the respondent bank on

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13.10.2017, is filed on record. As per record, date of NPA is 13.10.2017.

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As per auction notice at Annexure R/3, the subject mortgaged property is in physical possession of the respondent bank and the date of possession notice is 27.12.2017, but respondent bank obtained the order under Section 14 of the Act of 2002 on 03.02.2020 (Annexure R/5) i.e. about after a gap of more than two years time and it is not clear that who stopped them to proceed ahead for early recovery of outstanding amount because the account was declared as NPA on 13.10.2017 and demand notice was issued on 24.10.2017.

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It is also a fact that the respondent bank obtained order under Section 14 of the Act of 2002 on 03.02.2020, but they issued auction notice (Annexure/6) on 18.01.2023 and again it is not clear that despite having passing of period, being adversely affected by the impact of COVID-19, who stopped the respondent bank from proceeding ahead for recovery of outstanding amount, therefore it is clear that somewhere respondent bank was also not interested in early recovery of the outstanding amount and they have caused sufficient delay in recovery of outstanding amount which is of course a public money.

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Therefore, in my considered opinion, the respondent bank failed to follow mandatory provisions of SARFAESI Act of 2002, they failed to give details of outstanding amount in the demand notice in the light of Section 13(3) of the SARFAESI Act of 2002 and therefore the demand notice dated 24.10.2017 is quashed and set aside and further all the actions initiated by the respondent bank also stands quashed and set aside because foundation i.e. issuance of the demand notice is found to be illegal, is against the provisions of law.

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With these observations SA stands disposed of as allowed.

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Whatsoever amount if any stands deposited by auction purchaser be refunded to them and amount so deposited by SA applicant after filing of this SA and as per direction issued by this Tribunal be adjusted in the account of SA applicant.

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It is needless to say that respondent bank is at liberty to proceed ahead as per law afresh.

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Authorized Officer of the Bank, is required to be careful while issuing notices under the Provisions of SARFAESI Act of 2002 as well as directions issued by Hon’ble Apex Court as well as Hon’ble High Courts also. Delay, caused by Authorized Officer of the Bank is also a serious issue because the order under Section 14 of the Act of 2002 was passed on 03.02.2020 and bank issued first auction notice on 18.01.2023 and delay so caused in taking recovery proceedings (except the period of COVID-19) is not clear.`

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

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

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Vivek Saxena Presiding Officer DRT, Jaipur

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Ms Shiv Shakti Polymers v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Ms Shiv Shakti Polymers v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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