Dismissed

D and a Corporate Residency Pvt. Ltd. v. Canara Bank

DRT19 May 2023SA/420/2022

Case brief

AI extract

What is this about?

In this SARFAESI application, the applicants challenged the Sec. 14 measures taken by the respondent bank to obtain physical delivery of a hotel property via the CJM order. The Tribunal held the challenge meritless as Sec. 14 acts are administrative and valid even post-sale for handing over to the purchaser. While dismissing the application, status quo was maintained pending sale certificate chall

What did the court decide?

Application dismissed without costs; Interim order for status quo continued until conclusion of challenge to sale certificate; Deposit adjusted against loan.

D and a Corporate Residency Pvt. Ltd. versus Canara Bank — Specific Performance | DRT (2023)

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S.A. 420 of 2022 19.05.2023

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 19^th day of May, 2023

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Present: Shri Ganapathi K.R.K. Presiding Officer

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SARFAESI APPLICATION No. 420 of 2022

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1. M/s D&A Corporate Residency Pvt Ltd

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Rep. by its Director Old No.5, New No.9, Jagatambal Street T.Nagar Chennai – 600 017

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2. Mrs. Anitha Amarnath

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W/o Amarnath Old No.10, New No.18, Bishop Wallers Avenue (West) Mylapore Chennai – 600 004 ….Applicants Vs. The Authorised Officer Canara Bank Chennai Mowbray’s Road Branch 23, TTK Road, Alwarpet Chennai – 600 018 ….Respondent

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Counsels on record / appeared:

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Counsel for Applicants : M/s. S.Sethuraman, A.Joseph Dorairaj & A.Periyasamy Counsel for Respondent : M/s. T.S.Gopalan & Co & K.Rajesh

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ORDER

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This SA is filed challenging the measures initiated by respondent bank under

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Section 14 of SARFAESI Act before Ld. CJM, Chengalpattu in Crl.M.P.No.7197 of 2022 dated 10.08.2022 for recovery of a sum of Rs.9,28,86,843/-.

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S.A. 420 of 2022 19.05.2023

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Heard Ld.counsels appearing for both the parties.

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It is the case of applicant that the present challenge to the Sec.14, CJM order is on the measures taken by the secured creditor for obtaining physical delivery of the mortgage property. Ld. counsel for applicants submit that applicants are not challenging the order passed by the Ld.CJM but are challenging the measures initiated for obtaining such an order from the Ld.CJM. It is the express case of applicants that in the affidavit furnished before Ld.CJM, respondent bank had stated that the physical possession of the property is required for bringing the property to sale in its eventual course of recovery and therefore had approached the Ld.CJM seeking assistance in terms of the provision of Sec.14 of the act. Whereas it is contended now that, since the sale is concluded, the affidavit before the Ld.CJM is not factually true and therefore a consequential order by the Ld.CJM basing on such a wrongful affidavit averments is liable to be set aside. It is the further case of applicants that obtaining physical possession of the property is a very drastic step, since applicants’ property is a hotel property which is a running concern with many guests. Ld.Counsel further submits that consequent upon respondent bank’s action in bringing the property to sale, applicants were informed that there was an auction bidder for purchase of the property who has remitted the bid amount although belatedly. Ld.Counsel also submits that applicants had established their bonafides by making a deposit of Rs.8.5 crores to the respondent bank, to retain the property and what remains is only a negotiated settlement for the remaining amounts claimed by respondent bank herein. It is the further case of applicants that they have been making several offers for reconciliation of the account

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S.A. 420 of 2022 19.05.2023

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and entering into any negotiated settlement by payment of the balance amounts, being demanded by the respondent bank. Since it is the case of applicants that they have already complied with the discharge of the demand notice amount and also paid a crore

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of rupees more, over and above the said demand notice amount. Ld.Counsel for applicants submit that it is only the interest part that applicants are due and liable, but somehow respondent bank is adamant to the proposals made by applicants for reconciliation of the outstanding amounts and has been insisting on payment of their demanded amount.

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Whereas Ld.Counsel for respondent bank submits that, a plain reading of the Sec.14 of the SARFAESI act itself suggests that the actions of the secured creditor under Sec.14 are administrative in nature and only an assistance is being provided to the secured creditor to take physical possession of the property. It is in this context and line of thought that, there is no notice also that is warranted or proposed to be given to respondents in a petition filed under Sec.14 by secured creditor before the Jurisdictional Chief Judicial Magistrate or Chief Metropolitan Magistrate as the case may be. On perusing the documents furnished and the affidavit averments as contemplated under Sec.14 are duly complied upon, the Magistrate shall order for obtaining physical delivery of the property and handing it over to the secured creditor, if possible by appointing an Advocate Commissioner for the purpose. Nothing in this process warrants the intervention or contemplates for any objections by the defaulting borrowers. The execution of the commands of the warrant of the Ld.CJM / CMM, as the case may be, is already admitted to be only an administrative act and not any judicial act owing to which

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S.A. 420 of 2022 19.05.2023

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difference, no appeal is probabalised. However, applicants had cleverly attempted to mislead this Tribunal by saying that the challenge is not to the orders of the Ld.Magistrate, but are against measures initiated by the secured creditor in obtaining such orders. Ld.Counsel for respondent bank further reiterates that the actions of the respondent bank are duly upheld by the order of this Tribunal in a challenge by the present applicants herein up to the stage of issuance of possession notice and the measures before the Magistrate for obtaining physical delivery of the property, are only a step further and nothing more. Ld.Counsel submits that there is nothing for the Tribunal to adjudicate since the orders of the Magistrate are very clear for taking physical delivery of the property but are estopped by the interim orders of this Tribunal to maintain status quo, in view of compliance of a payment of Rs.8.5 crores by applicants herein. Ld.Counsel submits that if the interim order is vacated, it will be open for respondent bank to execute the commands of the warrant issued by Ld.CJM, Chengalpattu in Crl.M.P.No.7197 of 2022 dated 10.08.2022. Submitting so, Ld.Counsel prayed for appropriate orders.

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In the circumstances, on consideration of the submissions made by the Ld.Counsels for both parties, as applicants could not make out any tenable infirmities in the procedure adopted by the respondent bank while obtaining orders from the Ld.CJM, Chengalpattu in Crl.M.P.No.7197 of 2022 dated 10.08.2022 for taking physical possession of the property, there are no merits in the present SA and the same is liable to be dismissed.

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S.A. 420 of 2022 19.05.2023

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The contention of applicants that the averment in the affidavit of respondent bank before the Ld.CJM, to the extent, that the property is required for them to bring it to sale, will be a false statement as the property is already sold even before taking physical possession of the same. It therefore vitiates the very application itself, is not founded on any sound principles of law but is only a wishful submission to overcome the lawful measures initiated by the secured creditor in its course of recovery. It is obvious that, it is a settled principle of law that secured creditor, will also be entitled to obtain and maintain an application before the Ld.CJM / CMM for obtaining physical delivery of the property even after conclusion of sale to hand over the same to the proposed Auction Purchaser. Therefore, the submissions made on behalf of applicant that the affidavit averments in the petition are factually disturbed, by the time the order is passed or obtained by the secured creditor, does not hold much water and cannot be considered as an infirmity for interfering with the measures of the secured creditor. Hence, the contentions of applicant are held not tenable either on fact or law and thus, the SA is without merits. Accordingly, SA stands dismissed, however without costs.

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In view of the pendency of challenge to the sale certificate contemplated to be issued in favour of Auction purchaser and also in view of applicants demonstrating their willingness to redeem the property by depositing Rs.8.5 crores with the respondent bank, parties shall maintain status quo as on date till the conclusion of the said SA, while respondent bank is already entitled to adjust the amount of Rs.8.5 crores remitted by applicants to the credit of their loan account in terms of the directions of this Tribunal in the proceedings dated 15.02.2023. .

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S.A. 420 of 2022 19.05.2023

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Interim order, if any granted and subsisting till this day stands vacated and all

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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 Steno (DD), transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 19^th day of May, 2023)

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Sd/-

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(GANAPATHI K.R.K)

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PRESIDING OFFICER

D and a Corporate Residency Pvt. Ltd. v. Canara Bank

Case brief

What is this about?

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D and a Corporate Residency Pvt. Ltd. v. Canara Bank

Case brief

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