Dismissed

Abdul Majeed Wani v. Jammu and Kashmir Bank Limited

DRT24 Mar 2023SA/35/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging SARFAESI proceedings initiated by the Bank against the applicant. The court held that while Section 31 bars enforcement on agricultural land, the bank's waiver of rights regarding such land does not vitiate its separate action on the residential house. Consequently, the application was rejected, and pending interim applications were

What did the court decide?

The application for setting aside the notice, possession, and auction order was dismissed; pending interim applications were disposed of.

Abdul Majeed Wani versus Jammu and Kashmir Bank Limited — Banking and Recovery | DRT (2023)

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SA No.35 of 2023

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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SA/35/2023 ABDUL MAJEED WANI Vs

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JAMMU AND KASHMIR BANK LIMITED

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24.03.2022 Item No.49

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Present:

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Sh. Karan Dev Ray, Counsel for the applicant.

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Sh. Mayank Mathur, Counsel for respondent bank.

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Abdul Majeed Wani (Applicant) has filed this application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, against The Jammu and Kashmir Bank and another (Respondents).

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Admittedly, in the year 2015, J&K Bank (Respondent No.1) had sanctioned Working Capital Facility of Rs.62 lacs to the applicant, which was secured by the following properties:-

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Land measuring 6 Kanal 6 marlas:

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Khasra no. 691 (1K 2M) Khewat no. 320, Khata no. 721, Khasra no. 692 (1K 11M), Khewat no. 320 ata no. 721

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Khasra no. 2383/808 (3K 13M) Khewat no. 300, Khata no: 661 of Estate Larnoo District Anantnag

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Land measuring 3 kanal and 2 marlas situated at Larnoo Anantnag, Kashmir

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Khasra no. 627 min (1K) Khewat no 300 khata no. 657

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Khasra no. 815 min (9M) Khewat no. 300 khata no. 656

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Khasra no. 696 min (5M) Khewat no. 311, Khata no. 688

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Khasra no. 735 min (8M) Khewat no. 315 khata no. 710,

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Khasra no. 863 min (1K) Khewat no. 334, Khata no. 765 of estate Larnoo, Tehsil Larnoo, District Anantnag, Kashmir

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Applicant has alleged that respondent no.1 without any notice classified his account as NPA on 30.06.2019. He further alleged that bank has charged excessive rate of interest. That apart, the bank also charged compound interest, which it was not authorized to do. Applicant has alleged that the bank did not follow the guidelines issued by the Reserve Bank of India, at the time of classifying his account as NPA. He was not issued any notice before declaring his account as NPA. Reliance has been placed on the judgment of Hon’ble Jharkhand High Court in the matter of “ Stan Commodity Private Limited through its

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SA No.35 of 2023

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managing Director Pawan Kumar Poddar V. Punjab and Sind Bank and Others {AIR 2009 Jharkhand 14}” . On 08.03.2022, bank had issued the notice U/s 13(2) of the SARFAESI Act, 2002. It is alleged that a look at the notice issued U/s 13(2) of the SARFAESI Act would show that the bank has also ordered that it will enforce its security interest in respect of some of the properties which are agricultural in nature. As per Section 31 of the Securitization Act, the bank is not entitled to exercise the security interest in respect of the agricultural land. Further, in violation of the RBI Circular No.RBI/2020-21/61 DOR.No.BP.BC.26/21.04.048/2020-21 dated October 26, 2020 bank did not waive the interest charged during the Covid period. Applicant has alleged that he had challenged the notice dated 08.03.2022 issued U/s 13(2) of Securitization Act in the court of Sub-Judge Anantnag, Kashmir, which is pending. It is alleged that notice dated 08.03.2020 was withdrawn by the bank. Thereafter, the bank issued defective notice dated 11.05.2022 without complying Section 13(4) of the SARFAESI Act, 2002 and Rules thereunder. Further, on 07.06.2022, bank filed an application U/s 14 of the SARFAESI Act, before the District Magistrate, who ordered that the possession be delivered to the bank. The bank took the possession on 16.01.2023. Applicant, who is aged 60 years, was thrown out of his house with his family and children. Since then the applicant and his family are living in the open. Further, the bank has put up the property for auction against the provisions of law. On these facts applicant has filed the present SA for setting aside the notice under Section 13(2) dated 08.03.2022; possession notice dated 11.05.2022 and 16.01.2023; order of District Magistrate under Section 14 of the SARFAESI Act, 2002.

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As mentioned earlier the bank had taken the possession. This also deserves to be mentioned that on 14.03.2023, applicant had filed IA No.247/2023 for restoration of possession and challenging the sale notice.

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Respondent No.2 in reply to the SA admitted the proceedings taken by the bank. However, he alleged that the bank has followed proper procedure in initiating the SARFAESI proceedings. It was admitted that bank had taken the possession of the house, which was mortgaged with it. It was admitted that the remaining properties are agricultural land and the bank would not pursue SARFAESI proceedings against the same.

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I have heard Mr. Karan Dev Ray, Counsel for the applicant and Mr. Mayank Mathur, Counsel for the respondent.

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SA No.35 of 2023

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Mr. Karan Dev Ray, Counsel for the applicant has argued that the SARFAESI proceedings taken by the bank are illegal. As per law, respondent No.2 could not initiate the SARFAESI action against the applicant in respect of the agricultural land. The bank had issued the notice under Section 13(2) dated 08.03.2022 wherein, it had mentioned not only the house but also the agricultural land. Since, the bank cannot take SARFAESI proceedings in respect of the agricultural land, the whole of the notice is liable to be set aside. Mr. Karan Dev further argued that the bank has fixed up the auction for 27.03.2023. For that, the bank has published, the property for auction, on 11.05.2022 and 18.05.2022 in two newspapers, namely, Tamily Irshad (Urdu) and Rising Kashmir (English) respectively. As per law, the publication should be made in two leading newspapers. Both the newspapers, in which the advertisements have been given, are not national newspapers and are local newspapers. By not giving wide publicity to the auction, the applicant has been prejudiced. Mr. Karan Dev Ray, further argued that since the Authorized Officer did not follow proper procedure under the SARFAESI Act, the applicant is entitled to the restoration of the possession. Accordingly, the SARFAESI proceedings are liable to be set aside and the bank is liable to deliver the possession to the applicant. He has further submitted that the applicant is an old man. Since the bank has taken the possession of the house, applicant along with his family is on the road and has been subjected to a lot of hardship and inconvenience. Mr. Karan Dev Ray, has also submitted that the bank did not give the credit for the interest during the COVID period, though it was mandated by the RBI, to do so.

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Per contra, Mr. Mayank Mathur, has submitted that the bank has followed proper procedure under the SARFAESI Act. Though, the applicant was sanctioned the limit of Rs.62.00 Lacs, initially, vide sanction letter dated 29.06.2018, Bank had reduced the drawing powers to Rs.55.88 Lacs. Despite that, the applicant continued to avail the CC limit of Rs.62.00 Lacs. Mr. Mathur, further submitted that the bank had given the COVID relief to the applicant. In this connection, Mr. Mathur, also drew my attention to the copy of the statement of account and pointed out that the interest which was over-charged was credited to the account of the applicant on 07.11.2020; 11.02.2021 and 15.05.2021. Mr. Mathur, further submitted that the bank does not intend to continue with the SARFAESI action in respect of the agricultural land. Accordingly, the possession of the agricultural land has not been taken. The bank has taken the physical possession of the house only and it intends to sell the same under the SARFAESI Act. He has further submitted that both the newspapers in which the publication was made for the sale of property are prime papers of J&K which have wide circulation in the area. Mr. Mathur, submitted that today i.e. 24.03.2023 is the

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SA No.35 of 2023

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last date for registration for participation in the bid. However, nobody has deposited the requisite sum of 10 percent as pre-condition for participating in the auction. Accordingly, there is no need to set aside the auction notice as there will be no participant for the same. Winding up his arguments, Mr. Mathur has submitted that there is no merit in the present SA and the same may be dismissed.

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9. I have considered the rival contentions.

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As far as the sale of property is concerned, Mr. Mathur, has confirmed that till 4.00 pm nobody has got himself registered for participating in the auction. Accordingly, the bank would re-advertise the property for auction. I am of the considered view since there are no participants, therefore, the question for setting aside the auction notice does not arise. This takes me to the rest of the contentions of the applicant. As far as the contention of the applicant that he was not given a notice before classifying the account as NPA is concerned, I am of the considered view that under the law the applicant is not entitled to any notice before declaring the account as NPA. The SARFAESI Act is a complete code in itself and lays down the procedure for the SARFAESI action which should be taken. Mr. Karan Dev Ray, relied upon the judgment of Hon’ble Jharkhand High Court. It has been brought to my notice that the said judgment is under challenge before the Hon’ble Supreme Court. Regarding issuing a notice initiating the SARFAESI action is concerned, applicant has argued that as per Section 31 of the SARFAESI Act, the bank cannot initiate the SARFAESI action in respect of the agricultural land. Mr. Mathur, agrees to the same. However, he has submitted that the bank has not taken the physical possession of the agricultural land and it also does not want to sell the same under the SARFAESI Act. Bank has not mentioned the agricultural land in the notice dated 11.05.2022. It has also not mentioned that the agricultural land would be put up for e-auction dated 17.02.2023. The issue which remains to be determined is, whether the bank had issued the composite notice under Section 13(2) in respect of the residential house and the agricultural land and whether bank can continue with the SARFAESI proceedings in respect of the house. I am of the considered view that the bank on having realized the legal position can well continue with the SARFAESI proceedings in respect of the house. The bank can certainly waive its right and no prejudice is caused to the applicant. I am of the considered view that the notice issued under Section 13(2) cannot be set aside on this ground when the Authorized Officer himself admits that he does not want to continue with the SARFAESI proceedings in respect of the agricultural land. The second question which requires to be determined is, whether the applicant is entitled to restore the possession of the house of which the bank has taken the possession ? There is no denying the fact that applicant has been put to a lot of

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SA No.35 of 2023

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inconvenience and hardship by the action of the bank in taking the possession, yet, the fact remains that the applicant has failed to fulfill his financial obligations to the bank. The notice under Section 13(2) was issued in the year 2019; the possession was taken by the bank on 16.01.2023. Prior to the same, the bank had also affixed the notice on the secured asset in respect of taking the symbolic possession of the property. The action of the bank should have alerted the applicant in respect of his financial obligations. The experience shows that it requires a lot of effort on the part of the bank to take the possession. It has to take the help of District Administration for taking the possession. Even after the District Magistrate has passed the order, there is resistance to the taking of possession by the borrower. The bank has to approach the Police Authority to the same.

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At present, the amount due from the applicant is Rs.83,65,718/- as on 31.01.2023. Mr. Karan Dev Ray, states that the applicant has submitted the OTS proposal of Rs.50.00 Lacs, which is to be paid in installments. Mr. Mathur, Counsel for the bank states that the said proposal has already been rejected by the bank. I am considered that there is no merit in the present SA and the same is hereby dismissed. All the pending IAs, if any are also stand disposed off accordingly. No other point was argued.

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File be consigned to record room after due compliance.

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(A S Narang) Presiding Officer DRT-I, Chandigarh

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Pronounced in open court Dated: 24.03.2023 Pankaj

Abdul Majeed Wani v. Jammu and Kashmir Bank Limited

Case brief

What is this about?

What did the court decide?

Abdul Majeed Wani v. Jammu and Kashmir Bank Limited

Case brief

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What did the court decide?

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