Dismissed

M S Balaji Ply Products Pvt. Ltd. v. Hdb Financial Services Limited

DRT11 Oct 2023SA/47/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal quashed a Financial Institution's Demand Notice seeking concurrent late payment penalty and prepayment charges. The court held the applicant firm maintained the suit and noted the FI failed to address specific objections, ordering fresh recovery proceedings.

What did the court decide?

Demand notice dated 26.06.2021 quashed; Respondent FI directed to proceed fresh for recovery.

M S Balaji Ply Products Pvt. Ltd. versus Hdb Financial… — Specific Performance | DRT (2023)

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SA No. 47/2022

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DEBTS RECOVERY TRIBUNAL, JAIPUR PRESIDING OFFICER: SH. VIVEK SAXENA

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SA No.- 47/2022

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1. M/s. Balaji Ply Products pvt. Ltd. E-117, RIICO Industrial Area, agra road, bassi, Jaipur (Rajasthan) through its Director Sh. Malchand Jain.

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2. Sh. Malchand Jain S/o Sh. Genda Lal Jain R/o 11, Ugam Path, Banipark, Jaipur (Rajasthan)

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3. Sh. Ashok Kumar Jain S/o Sh. Genda Lal Jain R/o 11, Ugam Path, Banipark, Jaipur (Rajasthan)

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4. Sh. Sumer Chand Jain S/o Sh. Genda Lal Jain R/o 11, Ugam Path, Banipark, Jaipur (Rajasthan)

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5. Sh. Vinod Kumar Jain S/o Sh. Genda Lal Jain R/o 11, Ugam Path, Banipark, Jaipur (Rajasthan)

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... Applicants

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VERSUS

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HDB Financial Services Limited, Regional Office Situated at First Floor, 3, Park Street, Opposite Pink City Petrol Pump, M.I. Road, Jaipur (Rajasthan), Through its Authorized Officer.

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…Respondent

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Present:

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Sh. Kirti Kapoor, Ld. Counsel for the Applicant

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Sh. Pramod Kumar, Ld. Counsel for the Respondent Bank/FI

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(Final Order)

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(11.10.2023)

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(1) This SA was filed on 29.01.2022 and vide order dt. 31.01.2022, passed by this Tribunal, Respondent FI was

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directed to file reply to SA and was further directed to not to take any coercive action till disposal of prayer of interim relief.

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(2) Reply to SA was filed on 29.08.2023 and Respondent FI took total 6 opportunities in filing reply to the SA.

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(3) Heard finally on 29.09.2023.

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(4) As per facts of the case, availing credit totally in the year 2016, mortgage of properties and later on default in repayment is admitted in Para No. 5.2, 5.3 and Para No. 5.4 of the SA.

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(5) Next objection by SA applicant is with regard to charges claimed in demand notice dt. 24.06.2021 and Ld. counsel for the SA applicant argued that the demand so raised is highly illegal because at one hand “ Late Payment Penalty Charges” are claimed for Rs. 35,59,681/- and on the other hand “Prepayment Charges @ 4.72% on outstanding principal for Rs. 17,33,356/- is claimed and both the charges cannot be claimed simultaneously and so entire demand notice is required to be quashed and set aside.

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(6) II^nd objection taken by Ld. counsel for the SA applicant is that the respondent bank failed to dispose of the objection demand notice dt. 27.08.2021, (Annexure A/3) and so the respondent bank is not entitled to proceed ahead in the light of demand notice dt. 27.08.2021, issued by them.

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(7) Based on these grounds, Ld counsel for the applicant prayed to quash and set aside all the actions, initiated by the respondent bank.

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(8) On the other hand Ld. counsel for the respondent FI took objection of maintainability of this SA, mainly on the ground of proper Authorization given by the „Board of Directors‟ in favour of SA applicant.

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(9) Ld. counsel argued that the applicant firm Balaji Ply Products Pvt. Ltd. Firm and Annexure-1, is Board Resolution passed by Mr. Malchand Jain only in his

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favorer whereas Board Resolution was required to be passed by other directors also.

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(10) With regard to disposal of objection to demand notice, Ld. counsel argued that the said objection letter dt. 27.08.2021 was never served upon them and further SA applicant failed to file any track report in order to show that the letter dt. 27.08.2021 was served upon them.

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(11) In response to arguments raised by Ld. counsel for SA applicant, with regard to different Authorized Officer as detailed in demand notice, Ld. counsel argued that there may be different Authorized Officers and there is nothing illegal in it.

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(12) Based on these ground Ld. counsel for the respondent FI prayed to dismiss this SA.

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(13) Heard arguments & perused the record.

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(14) So, for as the issue of Authorization of SA applicant to file this SA is concerned, I am of the view that the applicant firm being a separate identity can take independent steps and as no objection is filed by other directors with regard to Authorization dt. 28.01.2022, so I am of the view that merely on this count SA cannot to be said as nonmaintainable. Further, this is not such a defect which can snatch the right of a borrower firm to challenge the actions taken by the Respondent FI.

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(15) The main issue of demand as raised in the demand notice dt. 26.06.2021, is to be considered in respect of demand of outstanding amount. The figures as shown against the principal outstanding, pending installment interest are genuine demand, but following demand raised by respondent FI are objectionable:-

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Interest till date of prepayment- Rs. 2,57,065/-

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Late payment penalty chargesRs. 35,59,681/-

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Prepayment charges @ 4.70% on outstanding principalRs. 17,33,356/-

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I am of the view that Late Payment Penalty Charges can be a part of Loan Agreement, but at the same time two

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claims i.e. Late Payment Penalty Charges and Prepayment Charges @ 4.70% cannot allowed because Prepayment Charges can be claimed if the SA applicant is willing to foreclose the account.

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(16) In reply to the SA, no specific reply to this objection is given by the Respondent FI, so in my considered opinion, demand of outstanding amount, so raised in the demand notice dt. 26.06.2021 is not as per law and on this count demand notice is quashed and set aside.

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(17) With regard to reply to objection to demand notice also, the respondent FI failed to file on record any evidence to show that they replied to objection to demand notice and so on this count also respondent bank failed to follow, mandatory provisions of law.

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Accordantly the demand notice stands quashed and set aside. Respondent bank is at liberty to proceed ahead afresh for recovery of outstanding amount.

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Accordingly, SA stands disposed of as dismissed. Copy of the order be given free to the concerned parties.

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File be place before Registrar for compliance, after compliance file be consigned to record as per rules.

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Vivek Saxena Presiding Officer DRT, Jaipur

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M S Balaji Ply Products Pvt. Ltd. v. Hdb Financial Services Limited

Case brief

What is this about?

What did the court decide?

M S Balaji Ply Products Pvt. Ltd. v. Hdb Financial Services Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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