The Debts Recovery Tribunal disposed of a securitization application challenging possession action under SARFAESI Act. The court found the applicant filed an insolvency petition concurrently as a strategy to delay recovery and dismissed the application with no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL No.2, MUMBAI (BEFORE HON’BLE PRESIDING OFFICER) ORDER SHEET
08.05.2023 Sr. No.904
| SA No.181 of 2023 | ||
|---|---|---|
| classifi -cation |
No. of Exh. |
Govardhan Prasad Shah & Anr Vs. Nutan Nagrik Sahakari Bank Ltd. & Ors. |
| Mr Aayush Kothari i/b Mrs Uma S. Fadia – Advocate for the applicants. Mr Govardhan Shah – applicant no.1 in person. Mrs Archana Shah – applicant no.2 in person. Mr Prashant Pandit and Mr Jay Pandit – Advocate for defendant no.1. None for other defendants. |
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| 1. On 2ndMay 2023, the applicants applied under Section 17(1) challenging the 1st defendant’s action and measures under the SARFAESI Act read with the Rules. 2. It is the applicant’s case that on 6thDecember 2012, the 1stdefendant sanctioned cash credit facility in the sum of Rs.5 crores to the 2nddefendant (corporate debtor). The applicants are the guarantors and mortgagors. The 3rdand the 4thdefendants are also guarantors. The cash credit facility was secured by hypothecation of stocks and book debts. The 2nddefendant in its capacity as the |
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| principal borrower passed a resolution on 17th |
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| November 2012 authorizing the director to sign and | ||
| execute loan documents. On 15thNovember 2013, the |
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principal borrowers and the guarantors signed and executed the loan and security documents. To secure the credit facilities, the 2nd defendant, the applicants and one Mrs Archana Satish Bhatia created mortgage of the properties more particularly set out in 13(2) notice dated 11th October 2018. In 2014, at the request of the principal borrower, the 1st defendant renewed the then existing cash credit facility in the sum of Rs.50 lakhs. Thus, the corporate debtor was granted the credit facility in the sum of Rs.5.50 crores. On 22nd April 2015, the principal borrower and the guarantors signed and executed the loan and security documents. It appears the principal borrower failed to maintain the financial discipline which resulted in the 1st defendant classifying the corporate debtor’s account or the principal borrower’s account as NPA on 21st July 2015. After that, the 1st defendant applied under Section 84 of the Multistate Co-operative Societies Act, 2002 before the Statutory Arbitrator. On 3rd August 20118, the Arbitration Tribunal passed an award against the applicants, defendants 2 and 3. The award attained finality and there is no existence of dispute either between (i) the corporate debtor and the 1st defendant or (ii) the applicants, defendants 3 and 4 and the 1st defendant. On 25th February 2019, the 1st defendant issued possession notice to take physical possession of the mortgaged properties. On 2nd November 2019, procured an order under Section 14 and on 10th January 2020, obtained a copy of screenshot of order dated from
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e-courts application. On 13th April 2023, the learned Chief Metropolitan Magistrate issued the Warrant to take physical possession of the secured assets. On 17th April 2023, the Advocate Commissioner, issued notice to take physical possession of the secured assets on 8th May 2023 and 9th May 2023 respectively.
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| ready on 3rdMay 2023 though nota | rized on 4thMay |
|---|---|
| 2023. Its shows clear intention of | the applicant to |
| perpetrate fraud upon the Tribunal | and somehow to |
| protract or defeat or delay the 1stdef | endant’s legitimate |
| recovery and to take physical possess | ion of the secured |
| assets. Be that as it may, the applica | nts have made the |
| endorsement that they do not wish | to prosecute the |
| Securitization Application any |
further. Hence, |
| Securitization Application No.181 | of 2023 stands |
| dismissed with no order as to costs. | |
| Sd/- Presiding DRT-2, Mu |
Officer, mbai |
Nidhi
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2 issues framed by the court
Whether the application challenging the bank's action under SARFAESI and seeking stay on possession, filed while an insolvency petition was simultaneously being prepared, should be dismissed.
Whether failure to disclose adjudication of the cause of action and simultaneous filing of insolvency petition amounted to perpetrating fraud upon the Tribunal.
2 provisions across 2 enactments
Govardhan Prasad Shah & Anr
Nidhi
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
