The Tribunal dismissed an application challenging a possession notice under SARFAESI Act. It held that a valid mortgage deed existed for Rs.60 lakh and found statutory compliance for demand and possession notices based on evidence of service and publication.
Application to set aside measures leading to consent possession notice dismissed.
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.
BEFORE THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI
Dated this 24th day of March, 2023
PRESENT : SHRI T.RAJESH
PRESIDING OFFICER
SA No.1/2022
Mr.N.Krishnappa, No.3/304, Oddarpalyam, Ward No.3, Bagepalli (P), Hosur, Tamil Nadu 635 126.
… Applicant.
Vs.
The Authorized Officer, M/s.Karvy Financial Services Limited, 705/706, 7th Floor, Hallmark Business Plaza, Sant Dyaneshwar Marg, Opp Guru Nanak Hospital, Bandra (East), Mumbai – 400 051. … Respondent. Counsel for Applicant : M/s.J.Prince. Counsel for Respondent : M/s.M.Ajmal Azzath. …..
O R D E R
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seeking a sum of Rs.60,00,000/- whereas the respondent disbursed only Rs.10,80,169/-. It is also stated that the said financial assistance was availed after execution of documents as required by the respondent. The applicant further contends that the repayments were regular for some time and only due to COVID 19 pandemic some defaults occurred resulting the account had been classified as NPA. In regard to the measures taken by the respondent, the applicant contends that the same is not registered with Central Registry so as to enable the respondent to continue with the measures under the Act. The applicant is also having a case that the bank had issued a demand notice calling upon the borrowers to pay an amount of Rs.1,14,41,770/- which according to the applicant was not duly served on all the borrowers as required under Rule 3 of Security Interest (Enforcement) Rules, 2002. The main contention taken by the applicant that they were funded only with a sum of Rs.10,80,169/- is reiterated again. Another contention is taken as to the validity of demand notice that the period of 60 days to redeem the property based on section 13(8) is not mentioned in the said notice and that the said notice is issued during COVID lock down when the restrictions u/s.144 of CRPC is invoked throughout the country. It is also stated that the subsequent possession notice was issued by the respondent which also remain unserved on the applicant though the same was published on 26.11.2021. In the grounds to the SA, the applicant had reiterated the following contentions: (i) non-disbursement
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of entire liability and disbursement of Rs.10,80,169/(ii) the classification of account as NPA which according to the applicant is not in accordance with the statute (iii) want of proper service of demand notice and (iv) want of proper service of possession notice. Hence on the above contentions, the applicant seeks to set aside the measures leading up to the issuance of impugned possession notice. Along with SA, the applicant had produced the following documents:
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the amount with interest. It is also stated that the applicant had deposited the title deeds pertaining to the property with an intention to create equitable mortgage. It is further stated that the applicant failed to make repayment as per the schedule, despite repeated reminders made by the respondent. The account was classified as NPA as per the guidelines and consequently the demand notice was issued on 08.12.2020 stating that the entire facility had been recalled and the applicant was called upon to pay back the amount. It is also stated that the paper publication of possession notice was also effected on 30.12.2020. The respondent further submits that even after issuance of demand notice no repayments were made, thereby the respondent had issued the possession notice dt.16.11.2021 which was also duly served on the borrowers by registered post with acknowledgement due. The respondent contends that the possession notice is also duly published in two dailies as required under the statute. Along with counter, the respondent had filed the following documents:
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Since these issues are correlated and inter related, the same are gone into and decided together.
the applicant had with the respondent had been closed as evidenced from the Discharge Deed executed by the respondent in favour of applicant. This Tribunal had considered the said document wherein it is
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evident that the security interest created over the property in lieu of facility for Rs.39,58,000/- had been realized. The Ld. Counsel for the applicant further took reliance as to the cheque no.188942 dt.30.05.2015 evidences that the cheque for Rs.10,80,169/- drawn in favour of applicant’s ICICI account is disbursed by the respondent. Based on the above document, it is the case of the applicant that he is having credit facility with respondent which stood fully discharged and the respondent had also issued the Discharge Deed. It is also stated that pursuant to the discharge of said liability, an additional facility of Rs.10,80,169/- alone is sanctioned and disbursed as evidenced from the cheque drawn in favour of applicant by respondent. This contention of the applicant had to be looked into in view of the documents produced by the respondent which pertains to the transaction between the applicant and the respondent. The respondent contends that the applicant was having credit facility of Rs.39,58,000/- with the respondent which was sanctioned on 27.10.2014. It is also stated that in lieu of security to the said facility, a mortgage was created and Memorandum of Deposit of Title Deeds was executed as Doc.No.16305/2014. It is further case of the respondent that the applicant had again availed a facility for Rs.60,00,000/- which according to the respondent was availed for closing of existing facility of Rs.39,58,000/- and also for closure of TVS Credit Auto Loan. The counsel for respondent placed reliance as to the Memorandum of Deposit of Title Deeds claimed to have been executed by the applicant on 16.06.2015. Even though the applicant is disputing the
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execution of said documents it is pertinent to note that till date the applicant had not impugned the said Memorandum of Deposit of Title Deeds which is registered as Doc.No.9793/2015 on the file of SRO, Hosur. It is also to be noted that the said document remain unchallenged till date and the consideration as shown in the Memorandum of Deposit of Title Deeds as Rs.60,00,000/- is in conformity with the respondent’s case. The respondent had also produced no due certificate from City Union Bank and the sanction letter of the credit facility. On consideration of these documents, this Tribunal feels that nothing is available in these documents to weigh the same in favour of the applicant. Admittedly, the original document is still with the respondent which probabalise the case of the respondent that applicant had simultaneously executed fresh mortgage deed along with Discharge Deed which the respondent got executed in favour of applicant. The fact that the memorandum of deposit of title deeds executed by applicant on 16.06.2015 evidences the creation of mortgage of Rs.60,00,000/- remains unchallenged as on date which leads this Tribunal to the finding that there is a valid creation of security interest in lieu of borrowed amount of Rs.60,00,000/-. Even though the sanction ticket standing alone cannot come in aid of the respondent, the memorandum of deposit of title deeds coupled with the sanction ticket can lead only to the findings that the case of the applicant that they were disbursed only Rs. Rs.10,80,169/- is to be rejected.
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( Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 24th day of March, 2023 )
Sd./(T.RAJESH) PRESIDING OFFICER DRT-II, CHENNAI
2 issues framed by the court
Whether the denial of disbursement of the entire facility is to be upheld in light of documents produced by both parties?
Whether the measures taken by the respondent leading up to issuance of impugned possession notice are in accordance with the statute?
3 provisions across 2 enactments
Mr.N.Krishnappa
The Authorized Officer, M/s.Karvy Financial Services Limited
T.RAJESH
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
