Allowed

D Tamilselvan So Durairajan v. Tamilnadu Grama Bank

DRT23 Jun 2023SA/534/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the applicant's stay application under the SARFAESI Act, holding that the recovery measures were illegal because the bank failed to prove service of the mandatory demand notice and affixture of possession notice.

What did the court decide?

Measures leading to the sale notice issued on 16.09.2022 declared illegal; respondent directed not to multiply costs and liable to pay Rs.20,000/-.

D Tamilselvan So Durairajan versus Tamilnadu Grama Bank — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 23^rd day of June, 2023

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PRESENT : SHRI T.RAJESH

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PRESIDING OFFICER

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SA No.534/2022

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D.Tamilselvan, S/o.Durairajan, E-73, Kamaraj Salai, Block 10, Neyveli, Cuddalore Dist.

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… Applicant.

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Vs.

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The Authorised Officer, Tamil Nadu Grama Bank, (A Government Owned Scheduled Bank Sponsored By Indian Bank), ATS Complex, Veppur X Road, Veppur Taluk,Cuddalore District. Tamil Nadu – 606 304. … Respondent. Counsel for Applicant : Mr.K.A.Ramakrishnan. Counsel for Respondent : M/s.T.Sundarrajan.

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O R D E R

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This application is filed by the applicant under section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after called SARFAESI Act or the ‘Act’, as the case be), with a prayer to set aside the impugned sale notice dt.16.09.2022 by fixing the e-auction sale on 26.10.2022.

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The SA is filed admitting that the respondent had sanctioned mortgage loan of Rs.30,00,000/- to the applicant which was secured

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against mortgage of the schedule mentioned property. It is the case of the applicant that applicant had made various remittances to the loan account and without taking note of said remittances, the respondent bank had hastily declared the account as ‘NPA’. In the grounds to the SA, the applicant contends that the respondent failed to serve the demand notice to the applicant and had also demanded the amount in excess of what is reflected in the statement of accounts. Another contention is taken regarding non-registration of secured asset with the Central Registry and non-compliance of Rule 8(1), 8(2), 8(5), 8(6) and 9 of Security Interest (Enforcement) Rules, 2002. Along with SA, the applicant had produced the following documents:

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(a) OTS Letter submitted by the applicant to the Respondent Bank dt.10.01.2022.

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(b) Letters received from the Respondent Bank dt.01.04.2022.

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(d) Payment Receipt for Rs.2,00,000/- dt.19.11.2021.

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(e) Payment Receipt for Rs.3,00,000/- dt.28.12.2021.

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(f) Payment Receipt for Rs.9,00,000/- dt.10.01.2022.

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(g) Bank Statement of Accounts dt.03.10.2022.

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(h) Impugned Notice of intended Sale dt.16.09.2022.

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The respondent who entered appearance through notice and filed their counter denying all the averments of applicant and explaining the facilities availed by applicant and the security created in lieu of the same. It is stated that demand notice is duly served on the applicant and the contentions as to the improper service of possession notice is also denied. It is also stated that the respondent procured the valuation as mandated under the Act and there is no procedural flaws in their

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measures leading to the impugned sale notice. Along with counter, the respondent had produced the following documents:

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(a) Demand Notice dt.08.07.2016.

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(b) Possession Notice dt.20.06.2017.

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(d) Paper Publication of Possession Notice in New Indian Express dt.24.06.2017.

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(e) Valuation Report dt.06.01.2021.

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(f) First Sale Notice dt.17.12.2021.

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(g) Paper Publication in New Indian Express dt.20.12.2021.

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(h) Paper Publication in Dinamalar dt.20.12.2021.

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(i) Cancellation of OTS letter dt.01.04.2022.

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(j) Sale Notice with Postal receipt and affixture photos dt.16.09.2022.

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Heard the Ld. Counsel for both sides and considered the rival contentions as taken in the SA and the counter affidavit in the light of documents produced by both sides. The only issue that arises for consideration in this matter is as to the legality of SARFAESI measures initiated by the respondent and continued by them leading to the issuance of impugned sale notice.

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The applicant is putting forward a contention that the measures taken by the respondent and continued by them are done without serving demand notice. The applicant is also disputing the procedure adopted by the respondent in issuance of possession notice and impugned sale notice. In reply to the said contention, the respondent had produced the demand notice, the possession notice and its publication are also produced by the respondent. In respect of sale notice, the respondent had produced the paper publication, postal

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receipts and photograph evidencing affixture of the same. Even though the respondent had produced typed set of documents, no proof as to service of demand notice or affixture of possession notice are forthcoming from the respondent. In the absence of any proof as to the compliance of service of demand notice and affixture of possession notice, the contention of the applicant in that regard has to be considered as proved. The respondent has not rebutted the specific contention of the applicant as to the issuance of demand notice and affixture of possession notice which is the initial mandatory provisions to be complied in proceeding with the measures under the Act. The failure in service of demand notice and affixture of possession notice will vitiate the subsequent proceedings, though the same are in order. In the above circumstances where the respondent had not produced any evidence disproving the contention of the applicant as to the non-service of demand notice and affixture of possession notice, this Tribunal is of the view that the contention of the applicant in this regard is to be accepted.

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In view of the above, the only conclusion that this Tribunal can enter into is that the measures initiated and continued by the respondent leading to the impugned sale notice are to be declared as not in accordance with the statute and to be interfered with.

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In the result, SA 534/2022 stands allowed and the following order is passed :

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(i) SA No.534/2022 stands allowed and the measures taken by the respondent leading to the issuance of impugned sale notice dt.16.09.2022 issued by the respondent is declared as illegal for want of service of demand notice and affixture of possession notice.

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(ii) It is made clear that this order will not stand in the way of respondent in re-initiating the measures by re-issuing a fresh demand notice, if so advised and if otherwise permitted by the statute.

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(iii) The respondent is directed not to mulct the cost of the proceedings leading to issuance of impugned sale notice and also the cost of this litigation on the applicant. If any debit had already been made in this regard, necessary reversal had to be made forthwith.

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(iv) In view of the facts and circumstances of the case, considering that the applicant is compelled to approach this Tribunal, a cost of Rs.20,000/- is imposed on the respondent which is to be adjusted at the time of settlement or closure of the account, as the case be.

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All pending IAs stands closed. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1983.

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( Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 23^rd day of June, 2023 )

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Sd./(T.RAJESH) PRESIDING OFFICER DRT-II, CHENNAI

D Tamilselvan So Durairajan v. Tamilnadu Grama Bank

Case brief

What is this about?

What did the court decide?

D Tamilselvan So Durairajan v. Tamilnadu Grama Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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