Dismissed

Mrs Anitha Kiran Kanchan v. Bharat Cooperative Bank Mumbai Limited

DRT20 Jul 2023SA/26/2022

Case brief

AI extract

What is this about?

This judgment dismisses an appeal under Section 17(1) of the SARFAESI Act, 2002 filed by a borrower challenging a possession notice issued by a cooperative bank. The tribunal rejected the appellant's claim that the bank failed to comply with statutory procedures, finding that the bank had properly served notices, published the possession notice, and registered the transaction with the Central Regi

What did the court decide?

The appeal filed under Section 17(1) of the SARFAESI Act, 2002 is dismissed, and the interim order stands vacated.

Mrs Anitha Kiran Kanchan versus Bharat Cooperative Bank Mumbai Limited — DRT (2023) — LawSathi Research

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IN THE DEBTS RECOVERY TRIBUNAL-I, KARNATAKA AT BENGALURU

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Dated this the day 20th of July, 2023

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Present: Sri IMTIAZ ALI

Presiding Officer

S.A.No.26/2022

BETWEEN:

Smt. Anitha Kiran Kanchan

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Wo.^{Kiran Kanchan} Aged Mager

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Residing at-

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No. 3-113, Vanitha Farm House

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Tenkayedadavu, Sibri kere Mangaluru Taluk Dakshina Kannada

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... APPELLANT

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AND:

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The Authorised officer

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Bharat Co-operative Bank (Mumbai) Ltd.

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Vasuki Tower, Next to Commercial Building Near Taluk Office, Opposite District Court Udupi 576 101

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... RESPONDENT

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Counsels on record,/appeared for: Appellant : Sri E. Devaraja

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Respondent : Sri H.R Sunil Kumar

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FINAL ORDER

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The Appellant has filed an Appeal under Section 17(1) of the SARFAESI Act, 2002 seeking for quashing/setting aside the Possession Notice dated 06.12.2021 issued by the Respondent Bank and all further proceedings pursuant there to in respect of the schedule property for recovery of

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SA No.26/2022

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Rs.43,48,934/- from the Appellant with further interest thereon, charges, costs, etc.

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The facts of the case of the Appellant in a nutshell are, the Appellant side is Borrower and her Husband Sri. Kiran Srinivas Kanchan is Co-Borrower and Guarantor has availed Business / Term Loan of Rs.37 lakhs from the Respondent Bank, during the year 2018. The Appellant is regular and prompt in making his repayments. The Appellant has deposited substantial amount to loan account and accordingly, he has deposited Rs.7,00,OOO/- to the loan account. The Appellant has paid sufficient amount to the loan account with up to date interest to the Respondent Bank. It is submitted that the Appellant has not paid some EMIS during the lock down time of pandemic of Covid-19.

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The Appellant stated that, the Respondent Bank has failed to consider the same and initiated recovery proceedings and the Respondent Bank has declared the account as NpA during the Covid-19 time and during the SOp Order passed by Hon'ble Supreme Court of India and they have not followed RBI Guidelines. The Respondent Bank has issued the notice and has not followed the RBI Circular while declaring the account as NPA. The Respondent Bank without deducting said

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SA No.26/2022

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repayments made by the Appellant and without following the Act and Rules, initiated recovery proceedinq and issued a Demand Notice under Section 13(2) of the SARFAESI Act, 2OO2 and initiated the recovery proceedings against the Appellant and his property. The Appellant ls not a wilful defaulter in the above loan. They have not given him sufficient time to make payment as per the banking norms.

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The Appellant has further stated that, the Respondent Bank did not comply Sub-Rute (1) Rute 3 and Sub-Rute (1) (2) of Rule 8 of the Security Interest (Enforcement) Rules 2002. That the Respondent has not issued the possession notice to all Co-Borrowers and Guarantors and the Respondent Bank has issued notice during^pandemic time of Covid - 19, the Respondent Bank has not followed the SOp Order of Hon,ble High Court of Karnataka and RBI Circulars. The Respondent Bank has failed to serve the demand notice under Section 13(2) as per the Securitization Act to the Appellant. The Respondent Bank has issued the possession notice. The possession notice dated O6.t2.2O21 issued by the Respondent Bank was not published. Even, the Respondent Bank failed to affix the same.

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SA No-26/2422

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Now the Respondent^{Bank hasbeen tryingto take} physical possession of the^property lllegally.^{The Respondent} is also trying to sell the^{property. In light of theforegoing} contentions and the^{grounds urged, the Appellanthas sought} to allow the^present appeal^{as prayed for.}

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Upon service of notice, the^{Respondent Bank has} entered appearance through^{its Counseland subsequently filed} detailed statement of objections^{to the appealstatingthat the} present S.A, is false, frivolous, vexatious and not maintainable either at law or on facts of the^{case. The Appellanthas not} stated true facts before this Tribunal.^{In fact, there is no merit} in the appeal filed by the Appellant. The^{Respondent Bank has} contended that, the Appellant^{had approachedthe Respondent} Bank for financial assistance and considering^{the request of the} Appellant, the Respondent Bank has sanctioned the^TermLoan of Rs.40,00,000/-. As a security for the said loan, the^Appellant has mortgaged the immovable schedule^properties.

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The Respondent Bank has further contended that the Appellant is irregular in repayment of monthly installments payable to the Bank. The Appellant has become defaulter in repayments of the loan. In view of the default, the debt has been classified as a Non-Performing Asset on 05.10.2019.

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\ Y

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SA No.26/2022

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Since, the Appellant has failed to repay the outstanding amount due to the Bank, the Respondent Bank has issued the demand notice dated t4.10.202O under Section 13(2) of the SARFAESI Act, 2OO2 and called upon the Appellant and surety to remit the entire outstanding amount of Rs.43,48,943/- along with future interest and other charges within 60 days from the date of the notice. The demand notice was duly served on the Appellant by through RPAD. Even after service of notice under Section 13(2) of the SARFAESI Act, the Appellant has failed to comply with the demand made by the Respondent Bank. The Respondent Bank has issued the possession notice dated 06.12.2021 to the Appellant thereby taken possession of the secured Asset on 06.12,2021. The Respondent Bank has affixed the possession notice on the conspicuous part of the mortgaged schedule properties. The Respondent Bank has also published the possession notice in two leading newspapers including vernacular language namely in "Vuaya Karnataka,' and the "The Times of India", both on 10.12.2O2t. Further, the Appellant has filed the present appeal with an afterthought by supressing the above material facts before this Tribunal and challenged the possession notice dated 06.12.202. In fact, there is no merit in the appeal. The intention of the Appellant is to defraud the creditors and to delay the recovery proceedings.

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SA No.26/2022

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Virtually there is no bona-fide in the contention of the Appellant. In the circumstances, the appeal is liable to be dismissed on the th reshold.

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The Respondent Bank has further contended that the Appellant is very much irregular even much prior to imposing of lockdown during Covid- 19. The statement of loan accounts clearly indicates how the Appellant is irregular in repayment of the outstanding amount. Further, the Appellant is very much irregular in repayments of the loan and become a chronic and wilful defaulter.

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With regard to contention of the Appellant in para no. k & I of the Appeal, the Respondent Bank has failed to consider the repayment made by the Appellant and initiated recovery proceedings and the Respondent Bank has declared the account as NPA during the COVID- 19 and the Respondent Bank has issued notices during SOp order passed by Supreme court and without deducting the repayments made by the Appellant initiated recovery action under the provisions of SARFAESI Act, 2002 etc., are denied as false. The Appellant is very much irregular in repayment and as such, the loan account was classified as NPA as on 05.10.2019 which is much prior to im posing of lockdown on account of COVID-19. The

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SANo.26/2022

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Respondent Bank rightly invoked the provisions of SARFAESI Act, 2OO2 for the recovery action against the Appellant.

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With regard to contention of the Appellant in para No. m of the Appeal, the Respondent Bank without complying the Sub Rule(1), Rule(3), and Rule(1) & (2) of Rule(B) the Security Interest Act had issued the possession notice etc., are false. The Respondent Bank had duly served the possession notice to the Appellant.

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With regard to contention of the Appellant in para no. n of the Appeal, memo is denied as false. The Respondent Bank had duly served the demand notice and possession notice to the Appellant and also published the possession notice dated 06.L2.2O21 in two leading newspapers and also affixed the possession notice on the conspicuous part of the mortgaged property. It is denied as false that the Respondent Bank has been trying to take physical possession of the petition schedule property and also trying to sell the property without following the Acts and Rules. The contention of the Appellant that, the Respondent Bank has not registered the transaction with the Central Registry as required under Section 26D of the SARFAESI Act etc., is denied as false. In the circumstances, the appeal is liable to be rejected with exemplary costs. The

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SA Na.26/2A22

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outstanding amount due from the Appellants is Rs.43,48,934las on 05.10.2022. There is no bona-fide in contention ot the Appellant. The Respondent Bank has registered transaction with the Central registry.

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Therefore, it is prayed that this Tribunal may be pleasecl to dismiss the appeal with costs in the interest of justice and equity. In that view of the matter, the Respondent Bank prayed for dismissal of the appeal with costs.

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On the above background, I have gone through the records of the case and heard the arguments advanced by Learned Counsels appearing for both the parties and the following points arise for my consideration.

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a) Whether the Appellant has made out a case to

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be allowed ? and

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b) To what relief, the parties are entiued

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REASONS

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This SA is filed challenging the possession notice dated 06.12.2027 issued by the Respondent Bank for recovery of a sum of Rs.43,48,934/-. tt is the case of the Appellant that although substantial amount has been deposited in the loan

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SA No.26/2022

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account, the Respondent Bank did not deduct the same. In this regard, the Appellant has failed to produce any document to show that some amount has been deposited in the loan account. On the other hand, the Respondent Bank has produced the statement of account showing debit and credit adjustments, which would evident from Annexure-R11. The contention of the Appellant is that the demand notice was not duly served as per the Securitization Act. The Respondent Bank has produced the demand notice as Annexure-R1 and the postal receipts and track records for havinq served the demand notice are marked as Annexures-R2 and R3, The Appellant after coming to know of the demand notice dated U.fO.2O2O did raised objection vide Annexur-R4 to which the Respondent Bank replied through Annexure-Rs. Moreover, the Appellant side did not go ahead to make repayment of the loan amount. As the Appellant failed to make repayment, the Respondent Bank issued the impugned possession notice dated O6.t2.2O27. As per the postal acknowledgement, the possession notice was served on the Appellant side and same would be evident from Annexure-R7 It is found that the Respondent Bank has t. caused paper publication -. of the possession notice in the^,.The Times of India", an English Edition and^,'Vuaya Karnataka,,, Kannada Edition both on 10.12.2021. The photographs

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SA No.2612022

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produced by the Respondent Bank shovl the possession notice was affixed on the mortgaged^property. The Learned Counsel for the Respondent Bank submitted that the Borrower is a chronic defaulter even^prior to the date of the account being classified as NPA and despite^providing several opportunities, the Borrower failed to regularise the loan account. The Learned Counsel for the Respondent Bank also submitted that the security interest in the^property in^question is created by the Appellant by executing a valid memorandum of deposit of title deeds and also deposited the title deeds with Respondent Bank with an intention to create equitable mortgage over the property as security for the loan amount utilised, which would establish subsistence of a valid, legally enforceable mortgage in favour of the Respondent Bank. In this context, the Respondent Bank^produced Annexure-R12 to^prove CERSAI Registration. Having regard to the above, it is seen that the Respondent Bank has complied with the provisions of the SARFAESI Act and Rules made thereunder. In these circumstances, as it is evident that the actions of the Respondent Bank are in accordance to la'If,aid the Appellant could not establish any infirmities, the present Appeal is devoid of merits and the same is liable to be dismissed.

SA No.26/2022

ORDER

In the result, SA No.2612022 is dismissed.

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Interim order, if any, stands vacated.^pending

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IAs, if any, also stand closed.

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There will be no order as to cost.

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(Dictated to the Stenographer, directly on computer, corrected signed by me and then pronounced by me in the Open Court on this the 2Os day r

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,,"_5;i* PRESIDING OFFICER DRT-I, BENGALURU

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trsrtr

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ryE-

Mrs Anitha Kiran Kanchan v. Bharat Cooperative Bank Mumbai Limited

Case brief

What is this about?

What did the court decide?

Mrs Anitha Kiran Kanchan v. Bharat Cooperative Bank Mumbai 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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