Partly allowed

Mrs Lakshmi Prabha v. Indian Bank

DRT20 Apr 2023SA/405/2022

Case brief

AI extract

What is this about?

Applicants challenged a possession notice under SARFAESI, alleging title disputes in pending civil suits. The Tribunal held that the bank must await the outcome of these litigation before invoking SARFAESI, retaining liberty to proceed under other recovery laws.

What did the court decide?

The applicants' challenge is allowed on the ground that the bank must await the outcome of pending civil suits regarding title; bank is entitled to initiate appropriate recovery proceedings under othe

Mrs Lakshmi Prabha versus Indian Bank — Banking and Recovery | DRT (2023)

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S.A.No.405/2022 20.04.2023

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of April, 2023

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Present: Shri Ganapathi K.R.K.

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Presiding Officer

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SARFAESI APPLICATION No. 405 of 2022

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Mrs. Lakshmi Prabha, W/o Late T.P. Srinivasan, Flat-3, Navins Mantra, 28/11, 10th Avenue, Ashok Nagar, Chennai – 600 083

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Mr. Anirud Srinivasan S/o Late T.P. Srinivasan, Flat-3, Navins Mantra, 28/11, 10th Avenue, Ashok Nagar, Chennai – 600 083 ….Applicants Vs.

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Indian Bank Rep. by its Chief Manager Mylapore Branch No.21, North Mada Street Mylapore, Chennai – 600 004

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Mrs. Revathi D/o Venkatraman W/o Shankar No.46/44, Solaiyappa Street Mylapore, Chennai – 600 004

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M/s Fine Rock Minerals Pvt. Ltd. No.Z4, SAF Games Village Koyambedu Chennai – 600 107

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G. Ramya 4/6, Sridharan Street 1^st Foor, Ayyayoo Colony Aminjikarai Chennai – 600 029

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S.A.No.405/2022 20.04.2023

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Ravi. A 580, 1^st Street Shastri Nagar Kilpauk Chennai – 600 101 ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s V. Chandrasekaran Counsel for 1^st Respondent : M/s.N.R. Rajagopalan None for respondents 2 to 5

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ORDER

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This SA is filed challenging the Possession Notice dated 18.08.2022 issued by respondent bank for recovery of a sum of Rs.2,60,24,473/-

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First Respondent bank entered appearance and filed counter and typed set of documents evidencing the action taken by them under the Act. Notice to 2^nd respondent was duly served, while notice to respondents 3 to 5 returned unserved with postal endorsement as ‘left’

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Heard Ld. counsels appearing for applicant and first respondent bank.

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It is the case of applicants that they are third parties to the loan facilities availed and utilised by the borrower of respondent bank, who had allegedly created a mortgage over the property belonging to the applicants herein, with forged documents. Ld. counsel has submitted that on observing that there is some intrusion into the property by third parties, a police compliant has been duly lodged in the year 2019 itself, wherein the police, after due investigation, had filed their report suggesting therein that the

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S.A.No.405/2022 20.04.2023

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documents furnished and available with the bank appear to be forged and that the same requires further investigation.

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It is the further case of applicants that the borrower, after incidence of police complaint, had initiated a Civil Suit on the file of District Munsif Court at Alandur in OS No.423 of 221 for a bare injunction against the applicant herein, whereas applicants herein, observing the wrongful contentions of the borrowers of respondent bank, had filed a consolidated suit for title declaration before Principal District Court, Chengalpet. Ld. counsel submits that both the suits are pending adjudication.

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It is also the case of applicants that they had added the respondent bank herein as party to the suit before Principal District Court, Chengalpet, while all the other borrowers, who are claimed as mortgagors by the respondent bank herein, remained ex-parte in the proceedings. Ld. counsel submits that notwithstanding the respective contentions of the parties, it is now evident that the title of the mortgagors is clouded, if not established to be defective, since applicants themselves are claiming the title over the schedule property by virtue of their possession of original documents. Ld. counsel submits that until the dispute for declaration of title is disposed, where the respondent bank is also impleaded as a party, it would not be correct for the respondent bank to invoke SARFAESI action against the mortgaged asset, since the security interest is under jeopardy. Ld. counsel further submits that respondent bank will be entitled to initiate appropriate proceedings for recovery of their money, as provided under law and invocation of SARFAESI action only will be a detrimental action to the claim of the

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S.A.No.405/2022 20.04.2023

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present applicant’s herein. Contending so, Ld. counsel submits that applicants had filed the present challenge to safeguard their property.

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Whereas respondent bank had put up appearance and filed their counter and typed set of documents evidencing their actions. Ld. counsel for respondent bank submits that the documents furnished to the respondent bank are original and that due diligence has been actively conducted as against which, loan funds are granted to the borrowers. Since the borrowers had wilfully not adhered to the repayment schedule, account is declared as NPA and demand notice has been issued under SARFAESI, followed by the impugned possession notice. Ld. counsel submits that respondent bank has to recover the entire money since borrowers are not making any repayment. Ld. counsel had conceded to the pendency of Civil Suits both at Alandur as well as at Chengalpet and submits that respondent bank is not a party to the proceedings initiated by their borrowers, but are only made as party to the proceedings initiated by applicants herein. It is the case of respondent bank that they had followed the procedure as warranted under law while issuing the impugned possession notice and that there are no infirmities in their SARFAESI actions. However Ld. counsel submits that in view of the pendency of proceedings before competent Civil Court, with regard to the very title of the borrowers as contended by the applicants herein, security interest created in favour of respondent bank herein is clouded as on date and until the same is determined by an order of competent Civil Court, invocation of SARFAESI might not be a viable option, while liberty be with respondent bank to initiate appropriate recovery proceedings, for recovery of money due from its borrowers. Submitting so, Ld. counsel has prayed for appropriate orders.

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S.A.No.405/2022 20.04.2023

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In the circumstances, as both parties had conceded to the pendency of Civil Suits, one being for bare injunction and yet another being a comprehensive suit for declaration of title, where respondent bank is also a party to the proceedings, in all fairness, respondent bank should await the outcome of the said dispute with regard to title to initiate and exercise their mortgage rights under SARFAESI, while liberty be with them to initiate recovery proceedings as provided under law. Respondent bank will be entitled to proceed under SARFAESI subject to the outcome of pending civil suits.

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Interim order, if any granted and subsisting till this day stands vacated and all other IAs, if any pending stand closed.

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With the above directions, this SA stands disposed.

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A copy of the order be communicated to the parties concerned as per extant guidelines.

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(Dictated to PS, transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 20^th day of April, 2023)

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Sd/- (GANAPATHI K.R.K) PRESIDING OFFICER

Mrs Lakshmi Prabha v. Indian Bank

Case brief

What is this about?

What did the court decide?

Mrs Lakshmi Prabha v. Indian Bank

Case brief

What is this about?

What did the court decide?

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