Allowed

M Penchalaiah Son of Gangaiah v. Ms Shriram Finance Limited

DRT27 Dec 2023SA/516/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application to set aside SARFAESI measures taken by M/s Shriram Finance Limited, including physical possession of secured assets, citing lack of respondent representation and alleged statutory non-compliance.

What did the court decide?

Securitization Application allowed; action of respondent pursuant to possession notice dated 20.03.2023 and taking physical possession set aside.

M Penchalaiah Son of Gangaiah versus Ms Shriram Finance… — Execution and Attachment | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD DATED THIS THE 27TH OAY OF OECEMBER, 2023

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PRESENT: SH. MMESHWAR Ko. pnesrorr'r Jffir?i:ceoJ' L' LB' ( Hons' )' M'A'

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Securitization Application No.516 OF 2023

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[,1r. [1.^penchalaiah S/o Gangaiah Aged about 56 years R/o D.No.6/852-G, Saraswathipuram Rajampet Mandal, Annamaiah District

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... .....Applica nt.

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Versus

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lvl/s Shriram Finance Limited Rajampet Branch Rajampet, Kadapa District Rep by its Authorized Signatory .......Respondent. Counsel for the Applicant Mr. V. Murali Manohar Respondent Ex parte.

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-:ORDER:-

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The present Securitization^{Applicationis filed by the Applicant} u/s.77 of the Securitisation and^{Reconstructionof Financial Assetsand} Enforcement of Security Interest^{Act, 2002 ("Act" hereinafterfor short)} to set aside all the SARFAESI^{measures of the respondentunderthe} provisions of Sec.13(4) of the Act and Rules 8(1)^and 8(2)^thereunder including taking^{physical possession} of^{SA schedulepropertypursuant} to orders dated 10.10.2023 on the^{file of learned Senior ClvilJudge,} Kadapa.

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The facts of the case as averred by the appllcant,^{in brief,are} that the applicant availed^toan of^{Rs.25 lakhs from l4/s ShriramCity} Union Finance Limited. At its^{behest, the Arbitrator passed an Award in}

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l\Yt11' ' '\ ! ,.f tt

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sA^{No sl6/2023}

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favour^{of M/s ShriramCity Union Finance Limited in ArbitrationCase} No.391/2015^{and order ot wnicn was not servedon applicant When the} original^{lender i e' M/s Shriram City UnionFinanceLimited was not a} financial^{institution within the meaning of Sec'2(m)of the Act' the} respondent^{is not entitledto initiate SARFAESImeasuresunderthe} gu,r" o,^{urnufgurnationFurtherthere is no privity of contract between} lppticant^{and respondent No demand notice or possessionnotice were} received bv^{applicantas stated in application in crl MP No'440/2023He} was deprived^{of raising objectionsu/s 13(3A)' The addressof applicant} which was^{givenin the loan agreementand the address to whichthe} present respondent^{is sending noticesare totallydifFerentTheSA} schedule^{propertyis an agriculturalproperty and hence barred from} initiation of SARFAESI^{measuresunder Sec.31(i)' The applicant paid 27} instalments amounting^{to Rs.27,69,363/- againstloan of Rs 25 lakhs} and hence SARFAESI^{measures cannot be invoked as per Sec.31(j)' The} possession notice dated 20.03.2023 was^{published on 18.04 2023} which was not in accordance with^Rule 8(2).^{The respondent failed to} state the^payments made by^{borrower and the outstandingliability after} that in the Sec.14 application. The claim of^{Rs.81,31,497l- as per} possession notice is without any basis. The respondent falled to follow Rules 8(1) and 8(2) and^{hence SA may be allowed.}

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The respondent was set ex^parte on 73.72.2023 as called absent and no representation despite service of^notice.

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Heard learned counsel appearing for the aPplicant and^perused the material brought on record.

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It is the contention of the learned counsel that^respondent's actlon of respondent ln taklng the^{physical possession} of the^SA schedule property is liable to be set aside for^{non-compliance of}

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,/)?\twn-_ ^ n /^//' <-11.<sup>r

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sA.No.516/2O2j

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provisions under Sec.13(4) read with Rules B(1) and B(2). The applicant questions the authority of respondent to invoke provisions under the SARFAESI Act when the original lender M/s shriram city Union Finance Limited was not a Financial Institution as defined under Sec.2(m) of the Act, 2002. It is also the contention that the SA schedule property being agricultural property is exempted to be proceeded as per Sec.31(i) and the debt is below 20olo and hence SARFAESI measures cannot be invoked as per Sec.31(j). These contentions are required to be answered by the respondent. However, since the respondent remained ex parte, no proof is available to counter the contentions advanced by the applicant as to non-compliance of relevant provisions under the securitisation Act and the Rules thereunder. Under such circumstances, the contentions remain unchallenged and accordingly SA deserves to be allowed.

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In the result, the SA is allowed by setting aside the action of respondent pursuant to possession notice dated 20.03.2023 including taking physical possession in respect of SA schedule property.

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Consequently, interlocutory applications pending, if any, shall stand disposed of. No order as to costs. Communicate a copy of this order to the parties concerned.

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(Typed to my dictation by the PS, corrected, signed and pronounced by me in the open court on this the 2Vh day of December, 2023).

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7W** (RAlvtESHWAR KOTHE) PRESIDING OFFICER

M Penchalaiah Son of Gangaiah v. Ms Shriram Finance Limited

Case brief

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M Penchalaiah Son of Gangaiah v. Ms Shriram Finance Limited

Case brief

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