Dismissed

Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

DRT29 Dec 2023SA/19/2023

Case brief

AI extract

What is this about?

In a Securitization Application under Section 17 of the SARFAESI Act, applicants challenged the issuance of a possession notice by a finance company. The Tribunal found that the company had complied with statutory requirements for notice service and publication and that the account classification was justified.

What did the court decide?

The Securitization Application No.19/2023 is dismissed; cost orders not made.

Syed Faiyaz S a versus Cholamandalam Investment and Finance… — Banking and Recovery | DRT (2023)

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IN THE DEBT RECOVERY TRIBUNAL –II CHENNAI Dated this 29^th day of December, 2023

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PRESENT: SHRI T.RAJESH PRESIDING OFFICER

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S.A.19 OF 2023

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Syed Faiyaz S A,

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S/o.S.Abbas,

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No.2, Flat No.S1, 2^nd Floor,

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Apanuridha Flat,

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Sri Ram Nagar Main Road VYA,

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Tondiarpet,

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Fort St.George – 600 039.

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Akther Azeeza S F,

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W/o.Mr.Syed Faiyes S A,

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No.2, Flat No.S1, 2^nd Floor,

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Apanuridha Flat,

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Sri Ram Nagar Main Road VYA, Tondiarpet,

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Fort St.George – 600 039.

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S F N International, Represented by its Proprietor,

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Syed Faiyaz S A,

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No.50, Thiruvengadam Mudalia Street, Permet, Tondiarpet, Fort St.George – 600 003.

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… Applicants. Vs.

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Cholamandalam Investment and Finance Company Limited, Represented by its Authorised Officer, Dare House, 2, N.S.C.Bose Road, Parrys, Chennai – 600 001. … Respondent.

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Counsel for Applicants : M/s.P.Jesus Moris Ravi. Counsel for Respondent : M/s.K.J.Parthasarathy.

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…… ORDER

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The Securitization Application is filed by the applicants u/s.17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter been referred to as the SARFAESI Act or the Act, as the case be) with a prayer to call for records pertaining to the proceedings initiated by the respondent under the Act and in particular, the possession notice dated 25.07.2022.

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The Applicant is admitting the availment of the credit facility and creation of Security Interest in lieu of the same. The 1^st Applicant is the proprietor of the 3^rd applicant proprietary concern and the 2^nd applicant is the guarantor. It is also contended by the Applicants that based on the transaction track record, the respondent had sanctioned the credit facility for a sum of Rs.67 lakhs on 31.03.2018. It is also admitted that an additional credit facility for Rs.24 lakhs was also sanctioned on 28.02.2019.

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It is further contended that the Applicant had never defaulted the repayment, however was compelled to avail moratorium due to covid19. It is also stated that as the Applicants restarted the repayments, an

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additional facility for Rs.17 lakhs was also sanctioned. It is the case of the Applicants that despite prompt payment, the impugned possession notice was issued. It is also stated that the 2^nd and 3^rd applicants were not served with the impugned possession notice and also the demand notice which is to be preceded the possession notice, was also not served on the Applicants.

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In the grounds to the SA also, the Applicants are reiterating the contentions as stated in the facts of the SA. The Applicant had reiterated the contention on the classification of account on NPA, non service of demand notice as well as non service of possession notice. Another specific contention taken is that of the alleged non-affixture of the possession notice. Along with the S.A. the Applicants had produced the following documents:

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i) Sanction letters dated 30.03.2018, 28.02.2019 and 30.10.2020

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ii) Impugned possession notice dt.25.07.2022.

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On the basis of above contentions and documents, the Applicants seek to set aside the measures leading to the impugned possession notice.

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The respondent had filed their counter affidavit contending that the measures taken by them leading to the issuance of impugned possession

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notice are in accordance with the statute. It is stated that the Applicants

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had approached the respondent for availing a home loan and the Applicants were sanctioned credit facility for Rs.67,00,000/Rs.34,00,000/- and Rs.17,17,000/- in pursuant to the execution of loan documents on 31.03.2018, 28.02.2019 and 12.11.2020. It is also stated that the Applicants failed to adhere to the terms of loan agreements and defaulted in repayments of monthly installments. It is also stated that the following the defaults, the account was declared as NPA and demand notice was issued, affixed and published as required under the statute.

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It is further contended by the respondent that even as no repayment was made despite issuance of demand notice, the impugned possession notice was issued and symbolic possession was taken. It is stated that an amount of Rs.1,02,87,040/- is due from the Applicants and that penal interest is not capitalized.

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Along with the counter affidavit the respondent had produced the

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following documents:

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i) CERSAI registration

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ii) 13(2) notice with tracking report

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iii) Proof as to affixture of demand notice iv) Publication of demand notice v) Possession notice with tracking report

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vi) Proof as to affixture of possession notice

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vii) Paper publication of the possession notice

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When the SA came up, this Tribunal had granted an interim order staying from these proceedings on condition that Applicant remitting Rs. 20,00,000/- in two installments and it is reposted. The said order is complied with. Thereafter even though the respondent expressed their willingness in their counter to regularize the account on condition that the applicant pays the overdue amount, the said concession was not availed as no effort was made by the Applicant to pay back the over dues and get the account regularized. Hence the matter was heard on merits.

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Heard the Land Counsel for both sides and considered the rival contentions. The only issue that arose for consideration in this matter is as to whether the measures taken by the respondent leading to the issuance of impugned possession notice is in accordance with law or not.

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The main contention taken by the Applicants is regarding the classification of account as NPA. The Applicants contend that the despite prompt payments, the respondent had classified the account as NPA. In response to the same, the respondent in their counter had specifically contended that the account was classified as NPA due to the default committed by the borrowers. In spite of the said specific

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contentions the Applicants had not produced any scrap of evidence to show their so claimed remittances, if any actually made by them. In the absence of any such evidence and in view of the memo filed by the respondent as to the outstanding, this Tribunal is not inclined to accept the contentions of the Applicants as to the so claimed prompt remittances.

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The next contention taken by the Applicants is as to the amount as claimed is not actually due, cannot be gone into in an enquiring under section 17, this Tribunal is not expected to conduct any detailed enquiry as to the due amount. Even otherwise, the contention of the Applicants as to the dispute in respect of due amount cannot be gone into in this proceedings.

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The Applicants are also contending that the possession notice is issued without issuing any demand notice. This contention is also disproved by the respondent as they produced the proof of dispatch of the demand notice. As the demand notice could not be served, the respondent had published and affixed the same as mandated in the proviso to rule 3 of the Security Interest (Enforcement) Rules, 2002. Hence there is no basis in the contention of the Applicants as to non issuance of demand notice.

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In respect of the possession notice also, the Applicants had produced the proof as to the service, affixture and publication of the same which can only leading to the conclusion that there is due compliance of rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

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On the basis of discussions as held in foregoing paragraphs and findings entered therein, this Tribunal is of the view that there is no merit in the SA and the same is liable to the dismissed.

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Taking into consideration the above aspect, IA Sr.No.3388 filed by applicants with a prayer to initiate contempt proceedings against the Authorised Officer of the respondent Bank, Mr.K.Thiyagarajan for alleged disregard of the order of this Tribunal dt.19.01.2023 needs to be dealt separately. Hence Registry to number the IA Sr.No.3388 if the same is otherwise in order and post on 24.01.2024.

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In the result SA No.19/2023 stands dismissed. No orders as to cost. All other pending IAs stands closed. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules 1993.

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(Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 29^th day of December, 2023)

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

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Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

Case brief

What is this about?

What did the court decide?

Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

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

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