Dismissed

Umakumar Hospital v. Central Bank of India

DRT28 Jul 2023SA/332/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal-II at Chennai dismissed two appeals filed against a bank's sale notice and sale certificate under the SARFAESI Act. The tribunal rejected contentions regarding NPA classification, lack of written notice acknowledgment, non-exclusion of the building, and valuation objections, holding the proceedings regular and valid on the admitted facts.

What did the court decide?

Both special appeals challenging the sale notice and sale certificate under the SARFAESI Act are dismissed; no order as to costs.

Umakumar Hospital versus Central Bank of India — Company and Corporate | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 28^th day of July, 2023

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PRESENT : SHRI T.RAJESH PRESIDING OFFICER

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SA No.183/2021 and SA 332/2022

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SA No.183/2021 :

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M/s.Umakumar Hospital, Represented by its partners, Dr.L.K.Kumar, S/o.Kempe Gowda and Dr.Umakumar, W/o.L.K.Kumar, Plot No.54, Umakumar Hospital, Bangalore By-Pass Road, Hosur-635 109.

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Dr.L.K.Kumar, S/o. Kempe Gowda, D.No.A56, SIPCOT Housing Colony, Dharga Mookandapalli, Hosur-635 126.

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Dr.Uma Kumar, W/o. L.K.Kumar, D.No.A56, SIPCOT Housing Colony, Dharga Mookandapalli, Hosur-635 126. … Applicants. Vs.

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Authorised Officer, Central Bank of India, No.19A, M.G.Road, Hosur, Krishnagiri District – 635 109. … Respondent. Counsel for Applicants : M/s.R.Nireshkumar. Counsel for Respondent : Mr.M.L.Ganesh. …..

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SA No.332/2022 :

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M/s.Umakumar Hospital, Represented by its partners, Dr.L.K.Kumar and Dr.Umakumar, Plot No.54, Umakumar Hospital, Bangalore By-Pass Road, Hosur-635 109.

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… Applicant.

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Vs.

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Central Bank of India, Rep. by its Authorised Officer, 14/15, Variety Hall Road, Coimbatore – 641 001.

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G.Venkatesh, S/o.Guruappa, 6/26, Thorapalli Agraharam Village & Post, Hosur Taluk, Krishnagiri District – 635 109. … Respondents. Counsel for Applicant : M/s.R.Nireshkumar. Counsel for 1^st Respondent : Mr.M.L.Ganesh. 2^nd Respondent : ------

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COMMON ORDER

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These two SAs are taken up and heard together as the subject matter and the contentions are one and the same invoking the powers under section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after called SARFAESI Act or the ‘Act’). SA No.183/2021 is an application filed by the applicants to set aside the sale notice dt.09.12.2020 issued by the respondent. SA No.332/2022 is an application filed by the applicant to set aside the sale certificate dt.24.03.2022 issued by the 1^st respondent

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in favour of 2^nd respondent and registered as Doc.No.2582/2022 on the file of SRO, Hosur.

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The applicants are admitting the availment of the facility for Rs.108 lakhs and creation of security interest over the schedule mentioned property in lieu of facility availed by them. The applicants are also admitting the availment of another term loan of Rs.30 lakhs. It is contended by the applicants that the term loan is not covered under collateral security. It is also contended by the applicants that the remittances made by the applicants will come to the tune of Rs.69,04,292/- had not been accounted properly. It is further stated by the applicants that e-auction sale notice is illegal.

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In the grounds to the SA, the applicants are reiterating the contentions as above and further contend that the classification of account as NPA is erroneous, no 30 days notice was issued, sale notice was not served, valuation was not properly done and sale notice is not affixed. It is also contended that the bank had sold the property for a price less than the reserve price and time for sale was unilaterally changed. Another contention taken is that the sale certificate is issued only to facilitate the syndicate to deal with the property.

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Apart from the above contentions the other contentions taken in SA 332/2022 are as follows :

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The sale notice is not issued by the authorized officer and the description of the property is not given in the sale notice. In regard to the sale certificate it is stated that the schedule mentioned in the sale certificate is also incorrect.

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The applicants produced the following documents along with SA 183/2021 and SA 332/2022 respectively.

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SA 183/2021:

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(a) Sanction order dt.25.10.2017.

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(b) Statement dt.24.07.2020.

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(d) Order Copy S.A:128/2020 dt.16.09.2020.

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(e) Auction Notice dt.17.10.2020.

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(f) Auction Notice dt.07.11.2020.

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(g) Caveat dt.09.11.2020.

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(h) Auction Notice dt.09.12.2020.

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(i) Valuation Certificate dt.10.02.2021.

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(j) Service to CAVEATOR dt.21.04.2021 and 27.04.2021.

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SA 332/2022 :

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(a) Sale Notice dt.09.12.2020.

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(b) Sale Certificate dt.14.02.2022.

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The 1^st respondent had entered appearance and filed their counter refuting the contentions as taken in the SAs. The 1^st respondent inter alia contended that they had scrupulously followed the procedure as mandated by the Act in issuance of sale notice and in conduct of sale.

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The respondent further contends that SA 183/2021 is barred by

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limitation.

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Along with counter, the 1^st respondent had produced the following

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documents in SA 183/2021 and SA 332/2022 respectively:

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SA 183/2021 :

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(a) Sale Notice dt.09.12.2020.

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(b) Affixture of sale notice dt.09.12.2020.

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(d) Publication of sale notice in Tamil and English dailies dt.10.12.2020.

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(e) Valuation report dt.03.08.2020.

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SA 332/2022 :

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(a) Sale notice along with postal receipt dt.24.08.2020.

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(b) Sale notice along with AD card dt.17.10.2020.

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(d) Affixture of sale notice dt.09.12.2020.

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(e) Acknowledgment for sale notice dt.10.12.2020.

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(f) Publication of Sale notice in Tamil and English dailies dt.10.12.2020.

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(g) Valuation report dt.03.08.2020.

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(h) Letter sent by applicants’ counsel dt.21.04.2021.

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(i) Reply given by the respondent to the applicants’ counsel and borrower dt.30.04.2021.

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(j) Sale certificate registered as Doc.No.2582/2022 SRO, Hosur dt.14.02.2022.

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No notice was ordered to 2^nd respondent in SA 332/2022 as he is a formal party.

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Heard the Ld. Counsels for both sides and considered the rival contentions in the light of pleadings as raised in the SAs and the counter affidavits. The documents produced by both sides were also taken into consideration. The only issue that arises for consideration in these matters is as to the legality of procedure followed by the respondent in their measures leading to the issuance of impugned sale notice, conduct of sale and in the issuance of sale certificate.

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The main contention raised by the applicants in the SAs is that regarding NPA classification. This contention is to be considered in the light of admission made by the applicants in the SAs that the amount borrowed is of Rs.1,08,00,000/- and the admitted repayment is Rs.65,00,000/- Even the applicants do not have a case that the above amount of Rs.65,00,000/- is made by the regular EMI remittances to the account. Even the applicants do not have case that the applicants had been making regular EMIs and had only a case that they had repaid portion of liability. In the absence of any pleadings that the applicants had been regular in repayment, this Tribunal is not inclined to accept the challenge of the applicants as made against NPA classification.

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The applicants are not having any grievance as against the issuance of the demand notice and the possession notice. The next contention taken by the applicants is regarding the absence of signature of authorised officer and the copy of sale notice served on them. The applicants contend that the copy of notice as published in the newspaper is served on them and the same cannot be considered as a proper service of sale notice. The mandate of Rule 6(2) of Security Interest (Enforcement) Rules, 2002 mandates the authorized officer to serve the borrower, a notice of 30 days for sale of immovable property. Since the statute does not mandates a notice in writing the contention of the applicants in this regard is without any basis. Since the applicants are admitting the service of notice, though unsigned, this Tribunal is of the view that the challenge of applicants as to the service of notice is also liable to be rejected.

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The next contention of the applicants is regarding non-inclusion of building in the sale notice. However, from the valuation report produced by the 1^st respondent it is evident that the valuer had duly valued the building situated therein separately. In view of the fact that the value of building is also taken into consideration while fixing the reserve price, the failure to specifically mention the details of building will not have any consequence and as the reserve price is fixed based on the valuation which is arrived at by including the value of the building, the applicants’ contention in this regard is also unacceptable.

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The applicant though is alleging under valuation of the property, the reserve price fixed by the 1^st respondent is Rs.1,60,00,000/- is in conformity with the valuation as procured by the 1^st respondent and hence it is to be held that there is no infirmity in fixing the reserve price.

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Even though the contention is taken by the 1^st respondent that the sale is not complete without registration of sale certificate, this Tribunal is not inclined to accept the same, as it is the sole discretion of the purchaser and the bank to decide as to when the formalities of the registration has to be completed and in that decision, the borrower does not have any say.

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In view of the above discussions and findings as entered therein, the only conclusion that can follow is that SAs are devoid of any merits and are liable to be dismissed.

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In the result, SA 183/2021 and SA 332/2022 stands dismissed.

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In view of the facts and circumstances of the case, no order as to cost is passed and all pending IAs stands closed. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1983.

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( Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 28^th day of July, 2023 )

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

Umakumar Hospital v. Central Bank of India

Case brief

What is this about?

What did the court decide?

Umakumar Hospital v. Central Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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