Allowed

M S Dsr Infra v. Punjab National Bank

DRT6 Jul 2023SA/535/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal quashed a Demand Notice issued by the Respondent Bank due to illegality. The notice lacked required bifurcation of the outstanding amount and failed to disclose the date of NPA declaration as mandated by law, violating Section 13(2) of the SARFAESI Act, 2002.

What did the court decide?

The impugned Demand Notice dated 17.05.2021 was quashed and set aside, and the Respondent Bank was directed not to debit any charges debited after the issuance of said notice.

M S Dsr Infra versus Punjab National Bank — Banking and Recovery | DRT (2023)

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SA/535/2022

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

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SECURITIZATION APPLICATION No.- 535/2022

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M/S DSR INFRA

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Office – Plot No. 53, Nawal Niwas, Golimar Garden, Sahakar Marg, Jaipur, Rajasthan 302001, through its sole Proprietor Sh. Devendra Singh Ratnawat

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………Applicant

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Versus

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PUNJAB NATIONAL BANK

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Zonal Office – 2 Nehru Place, Tonk Road, Jaipur, Rajasthan – 302015, through its Authorized Officer and Branch Office at MID Corporate Centre, Jaipur

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..... Respondent Bank

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Counsel –

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Sh. Bhrigu Sharma, Counsel for Applicant

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Sh. Vikas Jain, Ld. counsel for Respondent Bank

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(Final Order)

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(06.07.2023)

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1. This Securitization Application was filed on 31.08.2022.

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2. The Respondent Bank was a Caveator.

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3. The matter was taken up for hearing on 21.10.2022 and as informed by Ld. counsel for SA Applicant, Ld. counsel for Respondent Bank refused to receive copy of SA and also failed to appeared on 01.09.2022, when the matter was taken up for hearing.

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SA/535/2022

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4. Caveat was filed on 31.08.2022, issue of filing Caveat and hearing arguments in the absence of Respondent, were raised by the Ld. counsel for Respondent Bank on 23.09.2022 and considering the Order passed Hon’ble Rajasthan High Court in SBCWP No. 7093/2021, the objections taken by the Respondent Bank, were rejected.

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5. Vide Order dt. 01.09.2022, the Respondent bank was directed to file reply to SA on 14.09.2022, reply was not filed and on 23.09.2022, also when reply was not filed, the Respondent Bank was at liberty to file reply and to argue on the ground of interim relief on the next date of hearing and finally reply was filed on 20.10.2022.

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6. The above said details are sufficient to hold that the Respondent Bank has not at all obeyed the directions issued by this Tribunal to file reply to SA as they were directed to file reply to the SA on 14.09.2022 and reply was filed after taking 3 dates and the Bank was trying to control the proceedings of this Tribunal challenging the issue of maintainability, limitation and issue of details of outstanding amount in the Demand Notice.

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7. Vide Order dt. 23.11.2022, prayer of interim relief was allowed and Respondent Bank was directed to maintain status quo till final decision of this SA.

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8. The Respondent Bank has approached to Hon’ble DRAT, Delhi by filing Misc. Application No. 311/2022 and on 11.05.2023, Ld. counsel for Respondent Bank submitted that as no stay was granted by Hon’ble DRAT, in MA No. 311/2022, so he preferred to argue the matter, finally.

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9. The matter was finally heard as the pleadings were complete and both the parties were directed to file their written submissions.

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10. Matter is now being decided as per pleadings.

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11. The first and very important objection taken by the SA Applicant, is with regard to bifurcation of outstanding amount in the Demand Notice as well

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SA/535/2022

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date of NPA in the said Demand Notice dt. 17.05.2021 (Annexure-P/5), is required to be considered, because these grounds are the foundation of the actions, initiated by the Respondent Bank.

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12. Ld. counsel for SA Applicant argued that the Demand Notice dt. 17.05.2021, is completely illegal, the demand is arbitrary, illegal, it do not have detailed bifurcation of outstanding amount and the Demand Notice do not have date of NPA.

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13. I have perused Annexure-P/5, Demand Notice dt. 17.05.2021 issued by the Authorized Officer of the Respondent Bank being Chief Manager but name not disclosed and found that the Bank has claimed that complete outstanding amount as on 30.04.2021 for Rs. 5,32,04,876.71. This is the only demand, which is not having bifurcation with regard to outstanding amount, interest, penalty or charges etc.

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14. The Demand Notice, running into 3 pages do not have date of declaration of account as NPA, which is a mandatory requirement of a Demand Notice as envisaged in Section 13(2) of the SARFAESI Act, 2002.

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15. Annexure-P/8 is the representation/objection U/s 13(3A) dt. 01.07.2021 and in reply to it, dt. 22.07.2021 (Annexure-P/9), the Respondent Bank in para 10, first time admitted that the account was classified as NPA on 2.5.2021 but the fact remains that the date of NPA is not mentioned in the Demand Notice, which was issued on 17.05.2021.

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16. Ld. counsel for SA Applicant took objection with regard to bifurcation of outstanding amount in the Demand Notice, in the light of decision of Hon’ble Gujrat High Court in the matter of Punjab National Bank Vs Mithlanchal Industry, dt. 17.08.2020 but in reply filed by the Respondent Bank, the Authorized Officer of the Bank failed to file any reply to parawise grounds because the SA Applicant took specific objection in ground ‘Z’ but as stated above, there is

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SA/535/2022

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no groundwise reply and the Bank instead of giving a specific reply to the objection with regard to bifurcation of outstanding amount and date of declaration of account as NPA and simply stated that the SA Applicant failed to maintain financial discipline qua repayment of dues and so actions, initiated by them, are as per law.

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17. I have given a thorough reading of the reply and found that the Authorized Officer failed to give any reasonable/logical/legally sustainable reply to the grounds/objections, taken by the SA Applicant with regard to bifurcation of the outstanding amount that too in the light of the case, decided by Hon’ble Gujrat High Court, in which the Applicant Bank (Punjab National Bank) itself was a party to the proceedings, the Writ Petition was disposed of the Hon’ble Gujrat High Court, by imposing a cost of Rs. 5,00,000/upon the Bank and even after passing of the said Judgement, the Authorized Officer of the Respondent Bank issued the Demand Notice, which was not having even the date of declaration of account as NPA and details of outstanding amount.

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18. Next issue of declaration of account as NPA is involved, it is a fact that in Demand Notice date of NPA is not mentioned and in the reply to SA, first time the bank stated the date of NPA on 02.05.2021.

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19. Ld. Counsel for the applicant argued that as per Demand Notice dated 17.05.2021, the CC limit was Rs. 600 Lac and as on 30.04.2021, the amount as outstanding was Rs. 5,32,04,876/- which was below the sanctioned limit of Rs. 600 Lac and so the account was not overdrawn, therefore account was declared as NPA illegally.

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20. Ld. Counsel for the Applicant also argued that in the light of Statement of Account filed by the bank at Annexure R/6, it is clear that there were regular credit entries and there is no occasion when amount was not deposited in a time period of 90 days, as

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stated in Para 10 of the reply to objection to Demand Notice, given by the bank.

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21. In reply to this arguments, it was argued by the Respondent Bank that there was nothing illegally in the declaration of the account as NPA.

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22. After hearing arguments on this point, it is necessary to discuss this issue. From the objection to Demand notice, it is clear that the applicant raised the issue of declaration of account as NPA and in reply, in Para 10 the bank stated that it is incorrect to say that you have continuously made payment in past 90 days preceding 30.04.2021. From the statement of account filed at Annexure R/6, which is not even supported with any certificate as required under the provisions of Bankers Books of Evidence Act or IT Act, shows credit entry of Rs. 12,00,000/- on 27.11.2020, credit entries for Rs. 52,000/- on 30.12.2020 for Rs. 1,98,000/- on 30.12.2020, for Rs. 50,000/- on 30.12.2020, for Rs. 10,00,000/- on 04.02.2023, for Rs. 25,00,000/on 26.02.2021 and for Rs. 50,00,000/- but on account of signature difference benefit of amount of Rs. 50.00 Lac was not given but if the amounts as stated above are added that it is clear that from 01.01.2021 to 31.03.2021, total an amount of Rs. 35.00 Lac was deposited and during this period also limit never exceeded from sanctioned limit of Rs. 6.00 Crore. Therefore it is clear that the reply to objection to Demand notice that no amount was deposited in last three months preceding to 30.04.2021, is factually incorrect and so account was wrongly declared as NPA.

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23. The approach of the Respondent Bank, since issuance of the Demand Notice and since filing of the reply was completely against the provision of Section 13(2) of the Act of 2002, the Authorized Officer of the Respondent Bank failed to disclose the date of NPA in the Demand Notice and in my considered opinion, just after filing of the SA as soon as they came to know about this objection/deficiency, they were very

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SA/535/2022

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well at liberty to withdraw the said Demand Notice and to issue a fresh Demand Notice, by giving details/bifurcation of outstanding amount as well as date of NPA but as stated hereinabove, the Bank was busy in raising the issue of Caveat, non-appearance on 01.09.2022, delay in filing reply to the SA.

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24. In my considered opinion, it is the Respondent Bank, who after committing illegality in issuing the Demand Notice, passed a time of more than 5 months and this has caused restriction in recovery of public money.

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25. In my considered opinion, the Respondent Bank and its Authorized Officer, was always at liberty to withdraw the said defective Demand Notice and to issue Demand Notice afresh, but they failed to do so and this fact is sufficient to hold that the Authorized Officer of the Respondent Bank, who issued Demand Notice was completely unaware with the provisions as contained in Section 13(2) of the Act of 2002. He failed to give bifurcation of the outstanding amount and to mention date of NPA. Similarly, the Authorized Officer Mr. K.L. Meena, who filed reply to this SA, after having 3 opportunities, also failed to give reply of these two specific objections and the proceedings were got delayed and in my considered opinion, certain check and balances, are also required to be imposed on such Officers of the Respondent Bank as they are high ranking officers of the post of Chief Manager but they themselves are creating such situation, which gives a chance to the Borrower/Defaulter to raise the issue of legality of the actions, taken by them and recovery proceedings got delayed.

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26. Accordingly, the Demand Notice dated 17.05.2021 which do not have bifurcation of outstanding amount and account was declared as NPA, illegally, so the Demand Notice dated 17.05.2021 stands quashed and set aside.

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27. Accordingly, the SA stands disposed of as allowed with no cost.

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SA/535/2022

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28. The Respondent Bank is at liberty to proceed ahead for recovery of outstanding amount as per law.

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29. As the Demand notice dated 17.05.2021 which is the foundation of actions taken by the respondent bank is now collapsed as it was based on illegality so, respondent bank is directed to not to debit any of charges, so debited by them after issuance of the demand notice dated 17.05.2023.

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Copy of the order be given free to the parties concerned. File be placed before the Registrar for compliance. After compliance file be consigned to record.

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(Vivek Saxena) Presiding Officer DRT, Jaipur

M S Dsr Infra v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

M S Dsr Infra v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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