Allowed

Mrs L Uthiramarry Wife of Late Mr Paul v. Mahindra Rural Housing Finance Ltd.

DRT13 Feb 2023SA/172/2022

Case brief

AI extract

What is this about?

In a securitization application under the SARFAESI Act, the Debts Recovery Tribunal examined the legality of measures taken to take actual possession of mortgaged property. Finding a procedural irregularity due to lack of evidence regarding the affixture of a possession notice, the Tribunal set aside the possession measures and restored possession to the applicant.

What did the court decide?

Measures taken for taking possession set aside; applicant restored possession; respondent directed to restore possession forthwith; applicant directed not to mulct cost.

Mrs L Uthiramarry Wife of Late Mr Paul versus Mahindra Rural… — Banking and Recovery | DRT (2023)

¶1

BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

¶2

Dated this 13^th day of February, 2023

¶3

PRESENT: SHRI T. RAJESH

¶4

PRESIDING OFFICER

¶5

SA No.172 of 2022

¶6

Mrs. L. Uthiramarry W/o Late Mr. Paul No.288, Madha Kovil Street Semmiyamangalam Village and Post Polur Taluk, Tiruvannamalai District – 606 904 …Applicant

¶7

Versus

¶8

Mahindra Rural Housing Finance Limited Rep. by its Authorised Officer Mr. A. Murali No.621, SIRE Mansion, Second Floor Anna Salai, Chennai – 600 006 …Respondent

¶9

Counsel for the Applicants : M/s S. Patrick Counsel for Respondent : M/s A. Damodaran

¶10

FINAL ORDER

¶11

This Securitization Application is filed under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), herein after been referred as SARFEASI Act or the Act as the case be with a prayer to stay the measures leading to the procurement of section 14 orders (Crl.MP.260/21) of the Chief Judicial Magistrate and also with a prayer to give back the property to the applicant.

¶12

The applicant admits to have availed a sum of Rs.12,50,000/- from the respondent after executing necessary loan documents on 30.9.2015 and by mortgaging the residential property. It is also admitted that the applicant had interalia agreed to pay back the amount borrowed with interest @12% in 181 equal monthly instalments of Rs.15,011/-. The applicant further admits that

¶13

¶14

the applicant could only repay 8 monthly instalments and due to covid-19 pandemic and untimely death of her husband, who was an Army man, the further payments were defaulted.

¶15

It is further contended that even as the applicant approached the respondent for One Time Settlement, the present proceedings are continued and actual possession was taken on the strength of the impugned orders. The applicant alleges that the measures in taking actual possession are flawed by procedural irregularities. It is also pointed out the loan recall letter were issued after taking the actual possession. Even though the applicant prayed for setting aside the measures leading to the section 14 orders, the applicant in the SA is also taking a contention as to the flaws in measures in taking actual possession. A specific ground raised in the SA that the respondent, after taking possession of the property illegally is proceedings further. Along with the SA, the applicant had produced the loan sanction letter, loan agreement, order passed by the Ld. Magistrate request for OTS, loan recall notice, sale notice as affixed by the respondent. On the basis of the aforementioned contentions and documents, the applicant seeks to set aside the measures and also seek for restoration of possession.

¶16

The respondent entered appearance and filed their counter denying the averments and contentions as made in the SA. The availment of the facility, execution of documents and creation of security interest all as admitted by the applicant is reiterated by the respondent. It is further stated by the respondent that, having availed the facility, the applicant was always irregular in repayment and despite repeated reminders and requests, the account was

¶17

¶18

not regularized. It is also stated as the account was not regularized and was in default, the same was declared as NPA on 9.8.2018. It is further stated that in consequential to the classification of account as NPA, the demand notice was issued on 31.01.2019 calling upon the borrowers to pay Rs.13,07,151.46p in 60 days. It is also stated that the demand notice was duly published in two dailies. It is further contented that since the repayments were not forthcoming the steps for taking possession was taken.

¶19

It is further stated that the respondent had there after moved the Ld. Magistrate wherein the order had been passed by the Magistrate. It is also stated that later the respondent had published the sale notice. It is also contended that the SA is filed without any bonafides. Along with the counter, the respondent had produce the copies of loan application, loan agreement, loan sanction letter, MODTD, demand notice, publication of demand notice, possession notice, publication of possession notice, order of the Magistrate, Foreclosure letter and the statement of account. On the basis of above contentions and the documents, the respondent seeks for dismissal of the SA.

¶20

Heard the Ld. Counsel for both sides considered the rival contentions as raised in the SA, counter affidavit in the light of documents produced by both sides along with their pleadings. The only issue that arise for consideration is as to the legality of measures and the validity of procedure followed by the respondent under the Act.

¶21

Though a sale notice is stated to have issued the same is neither impugned or legality of the same is specifically challenged by the applicant. The applicant had sought for restoration of possession taken in pursuant to the order of the

¶22

¶23

Ld. Magistrate and hence the scope of enquiry can be extended as to the legality of procurement of actual possession by the respondent. Even though applicant had taken general contentions as to the legality of the measures, the same will not absolve the respondent obligation to let in evidence as to the legality of measures leading up to the actual possession. The respondent had along with their counter had produced copy of the demand notice and proof as to the despatch of the same. However, neither the proof of service or returned covers as produced by the respondent to prove whether the notice is served or not. Even in the absence as to the proof of service, this Tribunal is inclined to hold there is proper service, as the respondent had produced the proof of paper publication in two dailies. Hence it is to be construed that there is due compliance of rule 3 of the Security Interest (Enforcement) Rules.

¶24

Even though the legality of measures in taking symbolic possession cannot ordinarily be an issue as to the legality of actual possession this Tribunal is of the view that since no separate possession notice is issued after taking actual possession, the procedure as to the issuance of possession notice need to be examined. The respondent had produced the proof of issuance of possession notice and publication of the same along with the counter. In this regard it is to be noted that statute mandates compliance of affixture of possession notice apart from issuance and publication as rule 8(1) of the Security Interest (Enforcement) Rules requires that the possession notice to be affixed on the other door at conspicuous place of the property. No document is produced to prove the compliance of mandate as to the affixture of possession notice. It is true that taking symbolic possession is not sine qua non and ordinarily the flaws in taking symbolic possession will not invalid the measures u/s 14 of the

¶25

¶26

Act, but in the present case, the applicant is seeking restoration of possession and in the absence of any proof as to the issuance of separate possession notice after taking actual possession, the legality of symbolic possession notice need to be looked into.

¶27

In the absence of any evidence as to the compliance of Rule 8(1) of the Rules, it is to be held that the action of taking possession is flawed by procedural irregularity and even though the measures as to issuance demand notice is to be upholded, the subsequent measures need to be struck down. Therefore this Tribunal is of the opinion that this SA is to be allowed to the extent as to the challenge of taking possession, possession notice and the applicant is to be restored possession.

¶28

In the result, this SA stands allowed as follows: -

¶29

(a) SA No.172 of 2022 stands allowed.

¶30

(b) The measures taken by the respondent as to taking possession is set aside, the respondent is directed to put the applicant bank in possession of the schedule property forthwith.

¶31

(c) The measures of issuance of demand notice is upheld and hence it will be open to the respondent to reinitiate steps for taking possession in accordance with law, which could be commenced only after restoring possession to the applicant.

¶32

(d) The applicant is directed not to mulct the cost of issuance of possession notice, filing Section 14 application and the expenses for taking

¶33

¶34

possession on the applicant, if any amount is debited in the regard, necessary reversals had to be made forthwith, before proceeding further.

¶35

(e) In the facts and circumstances of the case no orders as to cost is passed.

¶36

Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (procedure) Rules 1993.

¶37

(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 13^th day of February, 2023)

¶38

Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

¶39

Mrs L Uthiramarry Wife of Late Mr Paul v. Mahindra Rural Housing Finance Ltd.

Case brief

What is this about?

What did the court decide?

Mrs L Uthiramarry Wife of Late Mr Paul v. Mahindra Rural Housing Finance Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Karur Vysya Bank versus Mr. v. Sathiyanathan

Karur Vysya Bank versus Mr. v. Chandrasekar

Karur Vysya Bank versus Mr. E. Sivakumar

Ramachandran Son of Narayanan versus Canara Bank

State Bank of India versus Tamilarasan

Idbi Bank versus Mr. v. Pakiswaran