Dismissed

Ceedeeyes Healthcare Services Pvt. Ltd. v. The a O Pegasus Assets Reconstruction Pvt. Ltd.

DRT17 Jun 2023SA/481/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed an application challenging a sale notice. The Tribunal dismissed the challenge regarding NPA declaration during the moratorium period and the validity of the subsequent private treaty sale, holding the applicant's contentions were already addressed and rejected in a coordinate forum order.

What did the court decide?

Sale notice stands valid; SA dismissed without costs. Interim orders, if any, vacated.

Ceedeeyes Healthcare Services Pvt. Ltd. versus The a O Pegasus… — Banking and Recovery | DRT (2023)

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S.A. 481 of 2022 17.06.2023

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 17^th day of June, 2023

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

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SARFAESI APPLICATION No. 481 of 2022

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CEEDEEYES HEALTHCARE SERVICES PVT.LTD

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(Erstwhile Cee Dee Yes Standard Towers Pvt.Ltd) Rep. by its Managing Director No.25, Second Avenue, Indira Nagar Adyar

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Chennai – 600 020 ….Applicant

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Vs.

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1. The Authorised Officer

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Pegasus Assets Reconstruction Pvt.Ltd (Trustee of Pegasus Group One Trust XXXI) No.3F, 3^rd Floor, Kasthuri Apartments JP Avenue, 6^th Street, Dr.Radhakrishnan Road Mylapore

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Chennai – 600 004

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2. IndusInd Bank Limited

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Old No.115, 116, New No.34 G.N.Chetty Road T.Nagar Chennai – 600 017 ….Respondents

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Thomas T.Jacob, Navod Prasannan, S.K.Mylavan, D.Adithya & Davidson Devashish Counsel for Respondents : M/s. Ramalingam & Associates

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S.A. 481 of 2022 17.06.2023

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ORDER

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This SA is filed challenging the Sale Notice dated 09.11.2022 issued by respondent institution scheduling sale to 29.11.2022 for recovery of a sum of Rs.42,45,65,088.29p.

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Heard Ld.Counsels appearing for both the parties.

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It is the case of applicant that they are into real estate business and that they had contemplated to take over an existing project, for which they approached 2^nd respondent bank and availed loan funds for the same. It is the further case of applicant that they had contemplated to construct a building premises for letting it out to a proposed hospital in the said premises. However, it is the case of applicant that after the completion of the project, the hospital authorities did not come forward for occupying the premises and had let down the applicant herein, who was bewildered by the sudden turn of events as they had already made huge investments into the project. Ld.Counsel further submits that the terms and conditions of availment of the loan in terms of the sanction advice were not adhered to by the 1^st respondent institution and the violation continued without disbursing the amounts sanctioned. Ld.Counsel further submits that the time of disbursal was yet another issue, which the 1^st respondent institution has conveniently taken it towards its side and did not offer any opportunity to the applicant to vent their grievances. Ld.Counsel submits that applicant having ventured into, with a fond hope of letting out the building to a hospital, had exhibited forbearance for all the actions of the 1^st respondent and proceeded further, but were disappointed financially by the refusal of hospital authorities to occupy the premises. All these facts were

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S.A. 481 of 2022 17.06.2023

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brought to the notice of the 1^st respondent and applicant had sought time to restructure their loan account, since they wanted to look for alternative utilization of the building or letting it out to any other entity which can occupy such extents. However, Ld.Counsel for applicant submitted that the efforts of applicant could not result in any fruitful conclusion of locating a tenant and therefore none of their plans for restructuring could really take place. Ld.Counsel submits that their entire proposal for restructuring was accepted by the 1^st respondent institution, but had suddenly over turned the same and declared the account as NPA. It is also submitted that respondent had caused an absolute denial of justice in declaring the account as an NPA when the 1^st respondent knew all the travails of the applicant as they are in regular contact with the respondent. Ld.Counsel further submits that the account is not an NPA as on the date declared by the 1^st respondent, since there was no default as on the date of NPA and the repayment terms are yet to commence at a subsequent point of time, while the 1^st respondent institution had hurriedly declared the account as an NPA. Ld.Counsel further submits that since the date of declaration of NPA is primordial for initiation of the SARFAESI actions, any fallacy in the same would vitiate all further steps pursuant to the same and hence the SARFAESI actions of 1^st respondent financial institution cannot survive any longer. Ld.Counsel has relied upon the following judgements to support their contentions on the issue of declaration of the account as an NPA.

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Hon’ble Supreme court judgment in Keshavlal Khemchand & Sons Pvt. Ltd and others (Vs) Union Bank of India and others

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S.A. 481 of 2022 17.06.2023

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Judgment of Hon’ble High court of Madras in Lakshmi Shankar Mills (P) Ltd. & others (Vs) The Authorised Officer / Chief Manager of Indian Bank & others vide W.P.No.37148 & 37534 of 2007

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Judgment of Hon’ble High court of Punjab and Haryana in M/s Amar Alloys Pvt.Limited & others (Vs) State Bank of India vide C.W.P.No.16490 of 2018 dated 17.05.2019

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Judgment of Hon’ble DRT, Mumbai in Kaypan Vinuya Pvt.Ltd and others (Vs) UCO Bank vide SA.No.02 of 2006

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Judgment of Hon’ble DRT, Ernakulam in P.M.Eldhouse (Vs) Federal Bank Limited and others vide SA.No.22 of 2015

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It is also submitted that, the declaration of the account as an NPA by 1^st respondent herein, during the moratorium period of the sanction advice terms is itself wrong. It is the further case of applicant that they had originally availed loan from 2^nd respondent bank which had assigned the same in favour of 1^st respondent ARC. It is also submitted on behalf of applicant, that an aggregate sum of Rs.1,93,42,702/- had been deducted during the moratorium period between 31.05.2017 and 31.03.2018, and therefore declaration of the account as an NPA on 05.05.2018 instance even before the conclusion of the moratorium period of 1 year (ending up to 31.05.2018) is itself against the principles of natural justice. It is borne on record that 1^st respondent has not issued any claim or demand notice or atleast a recall letter against the borrowers seeking to regularise their loan account but had directly and unilaterally declared the account as NPA. The demand notice came to be issued on 16.11.2018 claiming an amount of

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S.A. 481 of 2022 17.06.2023

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Rs.29,50,21,734.36p. Thereafter, a possession notice came to be issued on 09.05.2019 which was challenged in SA No.187 of 2019 on the file of Hon’ble DRT-2, Chennai which came to be disposed off, by a final order dated 13.09.2022.

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Thereafter, the 1^st respondent ARC issued sale notice dated 12.05.2021. But the operation of the sale intended under the said sale notice dated 12.05.2021 was stayed by the Hon’ble National Consumer Disputes Redressal Commission vide its order dated 08.06.2021 in I.A.No. 3678 of 2021 in C.C.No.865 of 2020. Subsequently, the Hon’ble Supreme Court vide its order dated 09.07.2021 in C.A.Nos.2268-2269/2021 was pleased to stay the operation of above order dated 08.06.2021 passed by the Hon’ble National Consumer Disputes Redressal Commission. It is submitted that the sale intended under the sale notice dated 12.05.2021 was not carried out by the 1^st respondent ARC. It is also submitted that the Civil Appeal in C.A.Nos.2268-2269/2021 is still pending before the Hon’ble Supreme court.

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Subsequently, the 1^st respondent ARC issued sale notices dated 12.08.2021, 29.09.2021 and 17.05.2022 in respect of the schedule property. Therefore, the applicant instituted applications in SA.No.271 of 2021, SA.No.327 of 2021 and SA.No.290 of 2022 which all have been disposed as infructuous.

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Ld.Counsel for applicant submits that the SA No.187 of 2019 has been disposed of by a final order dated 13.09.2022, as against which applicant had preferred an appeal before the Hon’ble DRAT, Chennai which is pending. The present challenge is to the sale notice dated 09.11.2022 scheduling sale of schedule mentioned property, through private treaty, to 29.11.2022, for a price of Rs.59,17,00,000/-.

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S.A. 481 of 2022 17.06.2023

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It is the case of applicant that the said 3^rd party private treaty holder has been in negotiation with applicant herein for the sale of same property at a price of Rs.85 crores ever since 2021 and has made an advance of Rs.3 crores in 2021 and since the period, within which the agreement has to be honoured has elapsed, yet another agreement has been entered into in 2022 where under, a further sum of Rs.6 crores has been paid to the applicant herein. However, contrary to the said agreement, the said 3^rd party purchaser has clandestinely entered into a private treaty with the 1^st respondent in collusion with them to defeat the interest of the applicant herein and concluded the sale transaction on 29.11.2022 and got the certificate registered on 03.03.2023, before the SRO, Velachery, Chennai. Ld.Counsel further submits that the amounts remitted by the said 3^rd party private treaty holder is much prior in time to the sale notice issued by 1^st respondent and it is pertinent to observe that 1^st respondent was dubiously clever in not disclosing the name of the private treaty holder but had only mentioned the amounts for which parties have entered into a private treaty with a veiled threat to the applicant, to cause a similar payment by or before that date to retain the property or in the alternative subject himself to the said private treaty. Aggrieved by the actions of the secured creditor which are totally against to law, the present SA has been filed and submitted that, it is established before this Tribunal that the private treaty is not in accordance to the provisions of SARFAESI act. Ld.Counsel had painstakingly taken this Tribunal through the judgements referred upon with regard to the very declaration of the account as an NPA even during the moratorium period and submitted that unless this Tribunal upholds the violation in declaring the account as an NPA, there can be no justice to the applicant. It is also the case of applicant that the subsequent actions of the 1^st

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S.A. 481 of 2022 17.06.2023

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respondent are not in accordance to law and therefore needs to be set aside, notwithstanding their challenge to the sale by private treaty in the present SA.

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Whereas respondent ARC had filed its counter and typed set of documents evidencing its actions. Ld. Senior Counsel, Sh.Om Prakash has submitted that the terms of a private treaty requirement are, that there should be a failure of atleast one sale notice before entering into any private treaty and that the borrower has to be put on notice with regard to the conclusion of a private treaty. Ld.Senior counsel has submitted that all the contentions raised at length and the judgements submitted above are all dealt with in detail in SA No.187 of 2019 which is a challenge to the possession notice issued by 1^st respondent and DRT- II, by its detailed final order dated 13.09.2022 had upheld the actions of the 1^st respondent as valid under law. It is not clear as to why applicant is raising the same contentions once again before this Tribunal, while a coordinate Tribunal (DRT – II, Chennai) had already dealt with the issue at length in its final order. Consequent to obtaining such an order upholding the actions, 1^st respondent herein has initiated the subsequent action of issuance of sale notices and there are more than 3 sale notices which have been issued and also challenged by applicant herein and which were disposed as infructuous, since no sale had taken place for want of bidders. It therefore appears that the applicant is not allowing the 1^st respondent to make any recovery, much less the amounts due from applicant herein. Neither the applicant is causing the payment in terms of their promises nor is allowing the respondent to recover the money through sale of the mortgaged property. All the questions raised by applicant with regard to declaration of the account as an NPA, with regard to the issuance of demand notice, possession notice and the procedure adopted

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S.A. 481 of 2022 17.06.2023

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thereupon, are all upheld in Hon’ble DRT-2, Chennai by its orders in SA No.187 of 2019. Applicant, in fact, had preferred also an appeal before DRAT, Chennai against the said orders, which is still pending adjudication. It is also a fact borne on record that applicant had challenged every action of the 1^st respondent, whenever a sale is contemplated by duly issuing a sale notice in their attempt to determine their subsisting mortgage rights.

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There are three sale notices which are issued and which are challenged and which were all dismissed as infructuous for want of bidders. Owing to the said condition, 1^st respondent has entered into a private treaty with a proposed purchaser, which factum was duly intimated to applicant and time was also granted to them to redeem their mortgage or atleast pay the amount accepted to be paid as sale consideration by the private treaty holder. Since, applicant did not come forward with any such proposal of repayment, the private treaty has been since concluded, and a sale certificate is also duly registered. The contentions of applicant that the same person / entity has entered into a sale agreement with them in 2021 for purchase of the same property at Rs.85 crores while they had only offered a little over Rs.59 crores in the private treaty and therefore applicant is jeopardised by the said private treaty agreement, cannot hold water for the simple reason that applicant did not take any further course of action basing on the agreement of sale either in 2021 or which was alleged to be extended in 2022. When parties themselves contemplated to rescind from their respective contractual obligations, and neither of them intend to determine their legal rights thereupon, it cannot be the contention of one of the parties to say that the contract still subsists and that a private treaty with the same person by the 1^st respondent is unlawful

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S.A. 481 of 2022 17.06.2023

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just because the sale consideration was accepted at a lower value. Applicant did not take any steps even after bringing it to their notice about the contemplated private treaty terms nor raised any issues with regard to their alleged sale agreement, but had preferred the present SA challenging only the SARFAESI actions, but did not contemplate to determine the alleged contractual obligations purported to have been existing between applicant and the proposed purchaser through private treaty. It is this inaction on the part of applicant, which would render their contentions absolutely as an estoppel against them, since they are not anywhere near to the ground realities.

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The present challenge to the actions of the secured creditor are only an extensions to other earlier contentions despite of their contentions having been answered by a detailed order in SA.No.187 of 2019 by Hon’ble DRT – 2, Chennai. It therefore concludes that the present challenge is only of academic interest and has no legal legs to stand upon itself as the grounds are mere repetition of the earlier grounds taken by the applicant and duly addressed by a competent forum. Submitting so, Ld.Counsel prayed for appropriate orders.

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In the result, from the foregone detailed submissions, it is evident that applicant had been challenging every action initiated by the 1^st respondent, but was unsuccessful in canvassing their representations for want of legalities and bonafides. Applicant questioning the very declaration of the account as an NPA during moratorium period is an issue which has been dealt with in detail, considering all the submissions made on behalf of both the parties and the precedents / judgements relied upon by both the parties while concluding the decision by an appropriate forum (DRT – 2, Chennai). The

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further contentions of crying foul over the alleged private treaty is also devoid of merits nor has any legal sanction. As the very contentions of applicant are duly answered already and since there is no new contention raised on behalf of applicant, there are no

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merits in the present SA and the same is liable to dismissed.

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Accordingly, SA stands dismissed, however without costs. 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 Stenographer (DD), transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 17^th day of June, 2023)

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

Ceedeeyes Healthcare Services Pvt. Ltd. v. The a O Pegasus Assets Reconstruction Pvt. Ltd.

Case brief

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Ceedeeyes Healthcare Services Pvt. Ltd. v. The a O Pegasus Assets Reconstruction Pvt. Ltd.

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