Dismissed

Dev Roadlines Pvt. Ltd. and Ors. v. State Bank of India

DRT17 Jan 2023SA/180/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an applicant's challenge to parallel SARFAESI action and physical possession proceedings by the respondent bank. The court held that such parallel proceedings are competent and that delays by the District Magistrate do not invalidate the action under the SARFAESI Act.

What did the court decide?

The SARFAESI application filed by Dev Roadlines Pvt. Ltd. & Ors. is dismissed on contest against the Respondents.

Dev Roadlines Pvt. Ltd. and Ors. versus State Bank of India — Writ and Judicial Review | DRT (2023)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA

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JEEVANSUDHA BLDG. 9^TH FLOOR, 42/C, J.L.NEHRU ROAD, KOLKATA – 700071

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BEFORE SHRI AMBUJA MOHAN DAS, PRESIDING OFFICER

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SA No. 180 of 2022

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1 Dev Roadlines Pvt. Ltd., having its Registered Office at 9-210, City Pearl, Opposite Gangaur M-1 Road, Jaipur, Rajasthan, Pin- 302001 and corporate office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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2 Mr. Ravi Modi, Director of M/s. Dev Roadlines Pvt. Ltd., having corporate office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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3 Ms. Anjana Modi, Director of M/s. Dev Roadlines Pvt. Ltd., having corporate office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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4 M/s. Bhavyaa Global Limited (Dev Ispat Limited) having its office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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5 M/s. P.N.S. Enclave & Finco Pvt. Ltd., having its office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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6 M/s. Bhavyaa Resort Hotels Pvt. Ltd., having its office at Plot No. BD 107, 5^th floor, office No. 501, Aparna Apartment, Samar Pally, Krichnapur, Kolkata – 700012.

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7 M/s. Modi Infra Development Pvt. Ltd., (formerly Coke Nath Construction Pvt. Ltd.) having its office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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8 M/s. Robust Packaging Co. Pvt. Ltd., having its office at M/s. P.N.S. Enclave & Finco Pvt. Ltd., having its office at 229, A. J. C. Road, Crescent Tower, Unit-9C, 9^th floor, Kolkata – 700020.

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------------ Applicants Vs.

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1 State Bank of India, a body corporate under State Bank of India Act, 1955, having its local head office at 1, Strand Road, Kolkata-700001 and Branch Office, inter alia, at 8, Netaji Subhas Road (commonly known as Commercial Branch) and also at State Assets Management Branch, 8^th floor, Nagaland House, 11-13, Shakespeare Sarani, P.S. Shakespeare Sarani, Kolkata -700071

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2 Authorized Officer, State Bank of India, Stressed Assets Management Branch, Jeevan Deep Building, 1^st floor, 1, Middleton Street, Kolkata - 700071

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---------- Respondents.

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Present:

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For Applicant: Mr. Prabhat Sil, Ld. Counsel

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For Defendant : Mr. Debasish Chakraborty, Ld. Counsel.

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Ms. Anindita Das, Ld. Counsel

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J U D G E M E N T

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Delivered on 17^th January, 2023.

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The Sarfaesi Applicant has challenged the Sarfaesi action of the Respondent Bank and the Respondent Bank has taken exparte order in O.A.No.345 of 2014 in respect of the same property in this SA. The Applicant has filed an application being no. MA/45/2017 against the said exparte order in O.A.No.345 of 2014. The Applicant has filed a SA challenging the Possession notice dated 16^th October,2022,before the Learned Debts Recovery Tribunal-III, being no. S.A.No.164 of 2014 which was dismissed on 22/04/2019. During the pendency of the SA the Respondent Bank through Authorised Officer obtained an order from the Ld. District Magistrate at Alipore for taking physical possession of the property.

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Ld. Advocate for the Sarfaesi Applicant has challenged the parallel action of the Respondent Bank by taking Sarafaesi action and physical possession of the property when exparte order in O.A. No. 345 of 2014 was passed on 22^nd February,2016 and local Police Station was insisted on 02/02/2022 to execute the order and the said order was communicated on 19/05/2022.

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The Respondent Bank has filed affidavit in opposition to the SA and contended that the Respondent Bank is competent to initiate parallel proceedings under the Recovery Of Debts And Bankruptcy Act,1993 and the SARFAESI Act,2002 and in that respect Ld. Advocate has relied authority of the Hon’ble Supreme Court.

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The Respondents have also pleaded in their opposition that they have lawfully obtained the order of the Ld. District Magistrate at Alipore. The Respondent Bank also pleaded that the order of the Ld. District Magistrate was challenged in SA/164/2014 which was dismissed subsequently. The Respondent Bank is competent to take physical

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possession of the secured property as the Appellant is a defaulter and huge amount is due and payable as on 09/05//2014 Rs.54,01,44,543.25. The Respondent Bank has taken Sarfaesi action parallel with Recovery proceedings in OA which the Respondent Bank is competent to do and prays for dismissal of the SA as it is not maintainable on facts and law.

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In this SA the Sarfaesi Applicant has challenged the order of the District Magistrate. Ld. Advocate for the Applicant has relied upon the judgment of M/S Hindon Forge Pvt. Ltd. vs. The State of Uttar Pradesh, wherein Hon’ble Supreme Court held that borrower/debtor can approach Debts Recovery Tribunal u/s 17 of Act at the stage of possession notice referred to in Rule 8(1) and 8(2) of 2002 Rules. This decision is not significant help to the Applicant Borrower as the right of the Sarfaesi Applicant is to challenge the possession notice which is not denied. Ld Advocate has relied upon the judgment of Hon’ ble High Court of Andhra Pradesh Mangalagiri Textile Mills Private Limited, Rep. by its Chairman, Dr.Goli Nagasaina Rao and Another Versus State Bank of India, Rep. by its Authorized Officer and Another wherein Hon’ble High Court held that :

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“ In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case… No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case”

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In this case by the order passed by the Ld. District Magistrate on 22^nd February,2016 and the Commissioner of Police Kolkata/the Superintendent of Police, South 24 Parganas was requested to provide police assistance to the secured creditor for taking possession of the secured assets. Ld. District Magistrate, South 24-Parganas vide the Memo no.S31/ SARFAESI dated 19^th May,2022 has appointed Mr. Sidhartha Guin, WBCS(Exe) as the representative of the District Magistrate for taking physical possession of the secured asset to execute the order after six years.

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Ld. Advocate for the Applicant has also relied upon the order of the Hon’ble Supreme Court in the matter of State Of Punjab & Ors vs.

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Bhatinda District Coop. Milk Producers Union Ltd. dated 11 October, 2007 wherein Hon’ble Supreme Court held that :

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“It is a cooperative society registered under the Punjab Cooperative Societies Act, 1948. It is also registered as a dealer under the Punjab General Sales Tax Act and the bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefore, the same would not mean that the said power can be exercised at any time .”

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At para 18 Hon’ble Supreme Court held that :

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“It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.”

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But this order is relating to Punjab General Sales Tax Act not relating to Recovery Of Debts And Bankruptcy Act,1993 and the SARFAESI Act,2002

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On the contrary Ld. Advocate for the Respondents has cited the judgment of Hon’ble Supreme Court in the matter of C. Bright vs The District Collector & ors. dated 5^th November, 2020 which is strictly on the SARFAESI Act relating to the order of the District magistrate u/s 14 in which Hon’ble Supreme Court has relied upon the several authorities. As per para 21

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“The Act was enacted to provide a machinery for empowering banks and financial institutions, so that they may have the power to take possession of secured assets and to sell them. The DRT Act was first enacted to streamline the recovery of public dues but the proceedings under the said Act have not given desired re-sult. Therefore, the Act in question was enacted. This Court in Mardia Chemical, Transcore and Hindon Forge Private Limited has held that the purpose of the Act pertains to the speedy recovery of dues , by banks and financial institutions. The true intention of the Legislature is a determining factor herein. Keeping the objective of the Act in mind, the time limit to take action by the District Magistrate has been fixed to impress upon the authority to take possession of the secured assets. However, inability to take possession within time limit does not

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render the District Mag-istrate Functus Officio. The secured creditor has no control over the District Magistrate who is exercising jurisdiction under Section 14 of the Act for public good to facilitate recovery of public dues. Therefore, Section 14 of the Act is not to be interpreted literally without considering the object and purpose of the Act. If any other interpretation is placed upon the language of Section 14, it would be contrary to the purpose of the Act. The time limit is to instill a confidence in creditors that the District Magistrate will make an at- tempt to deliver possession as well as to impose a duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute to deliver the possession within 30 days and for reasons to be recorded within 60 days. In this light, the remedy under Section 14 of the Act is not rendered redundant if the Dis- trict Magistrate is unable to handover the possession. The District Magistrate will still be enjoined upon, the duty to facilitate delivery of possession at the earliest”

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By virtue of the Hon’ble Supreme Court order the delay in giving order of possession will not render the action infructious or time barred. The decision relied by the Ld. Advocate for the Applicant of Hon’ble High Court, Andhra Pradesh is superseded by the judgment of Hon’ble Supreme Court in the matter of C. Bright vs. The District Collector & ors. the decision of State Of Punjab & Ors vs. Bhatinda District Coop. Milk Producers Union Ltd. is not relating to the Sarfaesi Act which is not applicable to this case.

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Ld. Advocate for the Respondents has also relied upon the judgment of Supreme Court of India in the matter of P.T. Rajan vs. T.P.M. Sahir And Ors on 26 September, 2003 wherein Hon’ble Supreme Court of India has held that:

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“It is a well settled principle of Law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefore, the same would be directory and not mandatory……”

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Ld. Advocate for the Respondents has also relied upon the judgment of Supreme Court of India in the matter of M.D.Frozen Foods Exports Private Limited-versus- Hero Fincorp Limited’, which is related to the Mathew Varghese vs. Rosamma Varghese case is as follows

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“A reading of Section 37 discloses that the application of the SARFAESI Act will be in addition to and not in derogation of the

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provisions of RDDB Act. In other words, it will not in any way nullify or annul or impair the effect of provisions of the RDDB Act.”

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Hon’ble Supreme Court of India in this matter has held that :

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“in the event of any of the provisions of the RDDB Act not being inconsistent with the provisions of the SARFAESI Act, the application of both the Acts, namely, the SARFAESI Act and the RDDB Act, would be complementary to each other.”

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In view of the provision under Section 35 and 37 the decision of the Hon’ble Supreme Court the Respondent Bank can take parallel steps under Recovery Of Debts And Bankruptcy Act,1993 and the SARFAESI Act,2002 to recover the loan by selling the secured property.

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Ld. Advocate for the Sarfaesi Applicant has challenged the order of the Ld. District Magistrate on the ground of delayed execution that the Respondent Bank took Sarfaesi Action while taking action under the Recovery Of Debts And Bankruptcy Act,1993. Both the allegations are not held illegal as per the decision of the Hon’ble Supreme Court of India. Hence, the Sarfaesi Application filed by Dev Roadlines Pvt.

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Ltd. & Ors. is not maintainable.

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SA/180/2022 is dismissed on contest against the Respondents.

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Consequently, pending I.A.s are also disposed of.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s

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website.

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File is consigned to the Record Room.

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(Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 17^th January 2023.

(Ambuja Mohan Das)

Presiding Officer

	Order Sheet (continuation)
Case NO. SA	/180/2022 Dev RoadlinesPvt. Ltd.& Ors. vs.StateBankof India &Anr
Date of the Order	Order with Signature	Office action with date and dated Signature of Parties when necessary
17.01.2023	Ld. Counsel Mr. Prabhat Sil appeared for the Sarfaesi Applicant.
	Ld. Counsel Mr. Debasish Chakraborty and Ms. Anindita Das appeared for the Respondent Bank. SA/180/2022 is dismissed on contest against the Respondents. Consequently, pending I.A.s are also disposed of. Copy of the Judgment/Final Order be uploaded in the Tribunal’s website. File is consigned to the Record Room. (Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 22^nd December 2022
	(Ambuja Mohan Das) Presiding Officer

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Date of the Order	Order with Signature	Office action with date and dated Signature of Parties when necessary

Dev Roadlines Pvt. Ltd. and Ors. v. State Bank of India

Case brief

What is this about?

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Dev Roadlines Pvt. Ltd. and Ors. v. State Bank of India

Case brief

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