The Debt Recovery Tribunal dismissed a Securitisation Application challenging a demand and possession notice issued by a financial institution regarding a loan default under the SARFAESI Act.
Note for the loan account is dismissed with 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.
DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK
SECURITISATION APPLICATION NO.212/2022
DATE OF INSTITUTION: 19.09.2022
DATE OF DECISION: 30th DAY OF OCTOBER, 2023
….. Applicants
Versus
M/s Religare Finvest Limited Salcon Rasvilas, 5th Floor, District Centre, Saket, New Delhi-110017, through Authorised Officer
…..Respondent
Argued by: Sh. Nitin Jain Advocate for the applicants (SA) (through VC) Sh. Sanjeev Singh Advocate along with Ms Mudrakshi Advocate and Sh. Dixit Kumar, Authorised Officer for the respondent FI (through VC)
FINAL ORDER
This Securitisation Application has been filed under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity). 2. This application has been directed against demand notice dated 12.04.2021 and possession notice dated 01.11.2021. In brief, it is the
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case of the applicants that the applicants sought documents from the respondent particularly sanction letter and loan agreements; that as per sanction letter dated 04.07.2016, the mortgaged property was unpartitioned land measuring Khewat No. 473, Khasra No. 17/1 (4-0), 18/1 (4-0), 19/2 (4-0) and 20/1 (4-0) in the revenue estate of Barna, Tehsil Thanesar, District Kurukshetra; that the customer copy as given in original to the applicant trust, the land mortgaged was 16 Kanal falling in Khewat No. 473, Khasra No. 17/1 (4-0), 18/1 (4-0), 19/2 (4-0) and 20/1 (4-0) in the revenue estate of Barna, Tehsil Thanesar, District Kurukshetra; that as per sanction letter, which is gospel document upon which the very loan transactions have been sanctioned for Rs. 12.44 crore, the property purported to be mortgaged in favour of the respondent is undefined and unpartitioned portion of the land stated above and thus, apparently at best, the mortgaged land was measuring 16 Kanal as per sanction letter dated 04.07.2016; that loan facility agreement (original customer copy) also talk of description of the property for mortgage of the same piece of land which is also commensurate with sanction letter dated 04.07.2016; that third parties have been claiming right of certain portion of land and apparently, there is dispute regarding the possession of the property; that mortgage over any piece of land is not ascertainable in favour of the respondent till the time there is division of the land in question; that there could not be any demarcation of the mortgaged property; that the applicant trust is registered as MSME vide registration dated 21.09.2020 and thus, entitled to facilities available to the MSMEs as per RBI guidelines; that in the Year 2007, the applicants had taken loan from Punjab National Bank which was taken over by Kotak Mahindra Bank in January 2013; that the respondent had taken over the said loan from Kotak Mahindra Bank vide documents dated 04.07.2016 and issued sanction for 16,10,40,000/- on 28.02.2015; that the loan account was re-booked on 15.07.2016 for Rs. 12,44,00,000/-; that vide letter dated 16.02.2019, the respondent increased rate of interest from 13.1 per cent to 14.1 per cent with effect from 01.11.2018 and issued revised repayment schedule dated 04.02.2018; that intervention of Ombudsman was sought which led to agreement dated 15.07.2019; that the respondent did not update the applicants with regard to floating rate of interest; that no benefit of fall in the interest rate was given to the applicants; that claim raised in demand notice dated 12.04.2021 was contrary to the repayment schedule; that
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the outstanding amount against the applicants would be less than Rs. 9 crore in total; that at best, one principal EMI as due on 29.02.2021 was overdue beside certain component of interest which had occurred due to pandemic Covid-19 and thus, the account could not be classified as NPA on 31.03.2021; that the account was required to be restructured in view of the fact that the unit of the applicants is a MSME unit but that was not done; that interest of EMIs of December 2019, January 2020 and February 2020 were cleared after the lockdown was over but principal EMI of Rs. 69,92,618.29/- which became due in February 2020, could not be cleared because of the financial problems on account of Covid-19 pandemic; that the respondent did not consider the genuine request of the applicants about restructuring of the loan; that request was made to release the surplus land measuring 5 acre besides approximately 1 lac sq. feet building even prior to Covid-19 pandemic to arrive at the realistic Resolution Plan; that the Government came out with the Emergency Credit Line Guarantee Scheme (ECLGS) but except for 6 months moratorium, the request for restructuring was not considered by the respondent; that unrealistic amount of Rs. 4.12 crore as equity from the promoters was asked by the respondent; that no intimation was given to the applicants before classification of the account as NPA on 31.03.2021; that the applicants replied to the notice under Section 13(2) of the Act requesting to withdraw notice dated 12.04.2021 and to apply MSME and RBI guidelines; that the respondent responded to the objections without entering into the aspect of applicability of the cut back arrangement; that the applicants filed rejoinder dated 03.08.2021 taking specific objections with regard to the faulty classification of the account as NPA etc.; that the respondent issued possession notice dated 01.11.2021 which was affixed upon the premises of the applicants; that the applicants filed complaint before the Deputy Commissioner, Kurukshetra, on account of forgery of the loan documents and the loan agreement wherein excess land was shown to be mortgaged than as per sanction letter and facility agreements; that sanction letter dated 04.07.2016 provided for nil payment charges/closure fees/ foreclosure charges but in notice dated 12.04.2021, the charges were claimed; that RBI Circular dated 07.04.2021 directed not to charge interest on interest during moratorium; that the payment of the amount to the respondent showed clear intention of the applicants to pay; that the default whatsoever, was not wilful and rather it was beyond the control of the applicants and due
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to pandemic Covid-19; that the Trust was having ownership over 59 Kanal 15 Marlas of the unpartitioned land out of the land shown in notice dated 12.04.2021; that it was incumbent upon the respondent to refer the case to the Committee under MSME guidelines and formulate a suitable corrective action plan but that was not done; that the account could not be declared as NPA without due intimation to the applicants; that it was imperative for the respondent to offer an OTS to the applicants but it was not so done and the respondent failed to comply with Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘Rules of 2002’ for brevity). 3. Reply to the SA was filed by respondent wherein inter alia it was contended that Securitisation Application under Section 17 of the Act was liable to be dismissed on the ground that the respondent had sent notice on 12.04.2021 under Section 13(2) of the Act demanding the loan amount through registered post as well as through DTDC courier service and the same were duly served on 17.05.2021 and 03.06.2021; that demand notice under Section 13(2) of the Act was also published in the daily newspapers on 22.06.2021 in English newspaper and Punjabi vernacular newspaper; that the SA applicants had sent objections dated 09.07.2021 to the demand notice which were duly considered by the respondent vide its reply dated 17.07.2021 which were also duly delivered to the SA applicants; that vide reply dated 17.07.2021, the objections were duly considered and after the careful examination of the same, the same were found to be baseless and as such, the same were declined; that the respondent upon failure of demanded amount as per notice under Section 13(2) of the Act, served possession notice under Section 13(4) of the Act on 01.11.2021 which were duly served to the applicants; that the Rules prescribed had been complied with at the time of serving the same; that further notice under Section 13(4) of the Act was pasted on the
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conspicuous part of the property on 01.11.2021 and the photographs were also taken; that the publication of notice under Section 13(4) of the Act was done in the two daily newspapers on 08.11.2021, i.e. in “Business Standard” English newspaper as well as in “Ajit Samachaar Haryana” vernacular newspaper; that the SA applicants had first approached the respondent for loan which was duly sanctioned vide loan agreement number XMORCHG00058686 dated 28.02.2015 amounting to Rs. 16,10,40,000/- and the terms and conditions of the loan were reduced in writing forming part of loan agreement dated 28.02.2015; that the SA applicants had mortgaged property admeasuring 152 Kanal 16 Marla situated in the revenue estate of Barna, Tehsil Thanesar, District Kurukshetra, comprising in Khewat No. 345, Khatauni No. 598, Kite 24, Area 1195/2398 Part of total 119 Kanal 18 Marla, property Bakadar 59 Kanal 15 Marla and Khewat No. 510, Khatauni No. 827, Kite 14, Area 93 Kanal 1 Marla as per Jamabandi for the Years 2012-13 and another property bearing No. B/1/574 Block B-1, Janakpuri, Delhi; that the security interest was duly created in the official record; that on the request of the SA applicants, the above said loan was re-booked and a fresh loan agreement bearing No. XMORCHG00077806 dated 04.07.2016 was signed and executed between the parties for a total amount of Rs.12 crore 44 lac; that loan account of the SA applicants had been running irregular since last many years and the said loan account was finally declared NPA on 31.03.2021; that the respondent never intended to take over the possession of the secured assets of the SA applicants and were ready and willing to accept the outstanding amount as on 24.02.2023, i.e. Rs. 8,40,97,735.52/- (pending instalments) with
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further undertaking from the SA applicants that they would continue to make the payment of the outstanding amount as per the schedule laid down in the facility agreement; that the present SA was hopelessly time barred as the action under the Act was initiated by the respondent vide demand notice dated 12.04.2021 and thereafter, possession notice dated 01.11.2021; that as the SA applicants were duly aware of the action under the Act, hence, in terms of Section 17 of the Act they were bound to challenge the same being aggrieved with the action under the Act within the prescribed period as laid down in the Act but they had failed to do so and the present SA had been filed much after availing of all the privileges granted by the Hon’ble Apex Court; that the benefits of the MSME Act as prayed for by the applicants in the present application could not be availed of by the SA applicants in as much as the loan facility had been availed of by the SA applicants from the respondent in the Years 2015 and 2016, respectively but they had registered themselves under the MSME Act in the Year 21.09.2020 vide registration N. UDYAM-HR-11000069679 which stood duly admitted by the SA applicants vide para No. 11 of the SA; that as per the provisions of the MSME Act, the benefits and privileges as prescribed under the Act did not have retrospective effect and the aspect of mortgage of 152 Kanal 16 Marla of land situated in the revenue estate of Barna, Tehsil Thanesar, District Kurukshetra, comprising in Khewat No. 345, Khatauni No. 598, Kite 24, Area 1195/2398 Part of total 119 Kanal 18 Marla, property Bakadar 59 Kanal 15 Marla and Khewat No. 510, Khatauni No. 827, Kite 14, Area 93 Kanal 1 Marla as per Jamabandi of the Years 2012-13, could also be established from the fact that the SA applicants had got created a
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charge/lien of the respondent for the said total property of 152 Kanal 16 Marla by way of an application requesting the Tehsildar, Kurukshetra, under signatures. Rest of the averments made in the SA were also denied in reply to the SA.
The next issue before this Tribunal is whether the applicants were not granted the concession as admissible to MSMEs. It was argued that the unit of the applicants being MSME unit, the case for rehabilitation and restructuring of the account was required to be sent to the Designated Committee but it was not done by the respondent. This argument could not be supported by the pleadings. It was argued on behalf of the respondent that benefit of six months moratorium was granted to the applicants. It was pointed out by the learned counsel for the respondent that as per averments made in para No. 11 of the SA, the unit of the applicants was registered as MSME on 21.09.2020 and the allegations
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with regard to the MSME were before this date and thus, those were not tenable. In the facts and circumstances of the case, the argument advanced by the learned counsel for the respondent cannot be brushed aside.
It was further argued on behalf of the respondent that there was admission in the pleadings from the side of the applicants that they did not pay in the months of October, November and December 2020 and only part payments were made in September 2020. It was argued by the learned counsel for the applicants that as per RBI Circular dated 07.04.2021, no interest on interest during moratorium could be charged but it was so charged by the respondent. It was argued on behalf of the respondent that statement of account would show that during the moratorium period, no interest on interest was charged. It was argued by Sh. Nitin Jain Advocate that overdue charge was mentioned in the statement of account which indicated that it was interest on interest and the same was penal in nature. On the other hand, it was argued by the counsel for the respondent that overdue charges did not mean the interest on interest and no interest whatsoever, on interest during the moratorium period was added by the respondent. In the facts and circumstances of the case, this Tribunal is of the considered opinion that the applicants have failed to bring home the case of charging of interest over interest during the moratorium.
Schedule 1 of the loan agreement does not support the argument of the learned counsel for the applicants that in loan agreement dated 04.07.2016, there was nil repayment charges. It was argued on behalf of the respondent that Schedule 1 came into existence after sanction letter upon which the learned counsel for the applicants was building his argument. In the facts and circumstances of the case, there is no merit in the argument advanced by the learned counsel for the applicants.
Learned counsel for the respondent drew attention of this Tribunal towards letter dated 26.07.2021 addressed to the District Collector, Kurukshetra by Sh. Aditya Gupta claiming that the mortgage was created over 120 Kanal and 16 Marla of the land. It was argued by the learned counsel for the respondent that after coming into existence of this letter, the theory of forgery came to an end. In the considered opinion of this Tribunal, the theory propounded by the applicants with regard to the
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mortgage remaining confined to 16 Kanal of the land has been exposed to the hilt by the above said letter and the said letter has taken the ‘wind out of the sails’ of the applicants. It was argued by the learned counsel for the respondent that all seven sale deeds were there in possession of the respondent. The argument of the learned counsel for the applicants that all the sale deeds were taken by the respondent at the time of grant of the loan. If the argument of the learned counsel for the applicants is to be believed, all the sale deeds were taken by the respondent only for some ritual and not for facilitating the mortgage in question.
It was argued by Sh. Nitin Jain Advocate that the Government came out with Emergency Credit Loan Guarantee Scheme (ECLGS) under which a pre-approved sanction limit up to 20 per cent of the outstanding loan was permissible but this facility was not extended. It has not been explained away as to how the applicants were entitled to the said facility and thus, there is no merit in this argument.
Pronounced in the open Tribunal
(M.M. Dhonchak) Presiding Officer DRT-2, Chandigarh
2 issues framed by the court
Whether the appellant was entitled to MSME concessions for restructuring the account prior to its registration.
Whether the它就是 intended to declare NPA on 31.03.2021.
M/s Gyankund Trust to Educate and to Serve
Sh. Aditya Gupta
M/s Religare Finvest Limited
M.M. Dhonchak
As recorded by the court registry
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