Dismissed

Ms Kalaiselvi Food Products Pvt. Ltd. v. Canara Bank

DRT22 May 2023SA/553/2022

Case brief

AI extract

What is this about?

In this enforcement proceeding under SARFAESI Act, the applicant challenged the possession notice issued by Canara Bank, alleging deficiency in complying with Rule 3A and failure to consider their representation due to the borrower's demise. The Tribunal found that the respondent had duly considered the representation and followed proper service and publication procedures, thus rejecting the appli

What did the court decide?

The possession notice was validated; the challenge to its issuance under Section 17 SARFAESI Act was rejected.

Ms Kalaiselvi Food Products Pvt. Ltd. versus Canara Bank — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 22^nd day of May, 2023

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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SA No.553 of 2022

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M/s Kalaiselvi Food Products Pvt. Ltd., Represented by its Director Late Mr. Jayaraman and Mrs. Kalaiselvi No.2C/5, Vilanthangal Road, Kallakurichi Villupuram District – 606 202

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Mrs. Kalaiselvi W/o Late Jayaraman No.2C/5, Vilanthangal Road, Kallakurichi Villupuram District – 606 202 …Applicants

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Versus

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The Authorised Officer Canara Bank Kallakurichi Branch Villupuram District …Respondent

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Counsel for the Applicants : M/s Jury Brain Law Officers Counsel for Respondent : M/s S. Kesavan

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FINAL ORDER

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The possession notice dated 1.9.2022 issued by the respondent is challenged this proceedings initiated under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after been referred as SARFAESI Act or the Act as the case be.

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The contention of the applicant as put forth in the SA is as follows:-

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The applicant is a private limited company engaged in the business of Paddy Rice Mills and agricultural stocking where as the 2^nd applicant is its Director. It

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is also stated that the Primary Director of the Company Late Jayaraman, the husband of the 2^nd applicant has applied for credit facilities from the respondent bank which was sanctioned for an amount of Rs.14,00,00,000/- on 29.3.2019 and another amount of Rs.2,80,00,000/- on 30.6.2020, totalling Rs.16,80,00,000/-.

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The applicant is admitting the creation of security interest over the immovable properties admeasuring a total extent of 1260 sq. Ft. vacant land and 2 Acre 64 cents of Rice Mill building together with superstructure there on with machineries and fittings, fixtures and all appurtenance presently and all amenities comprised Sy. No..295/3, 291/1A, 297/2A, 297/2B-1 and 296/1A along with vacant land comprised in sy.no.316/7 situated at Kallukunchi, Villupuram District. It is also stated that the Secured Asset belongs to the 1^st applicant company. It is further stated that 2^nd applicant had also executed a personal guarantee.

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It is further stated by the applicant that late Mr. Jayaraman expired on 22.4.2022 leaving behind 2^nd applicant and a daughter. It is also stated that after the demise of late Jayaraman, the 2^nd applicant had been managing the after of 1^st applicant. It is also the case of the applicant that till the demise of Mr. Jayaraman, the EMIs were regularly remitted and as the 2^nd applicant was not aware of the entire business and economic operations of the 1^st applicant company, the company came to a sudden halt.

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It is also stated that the respondent had issued the demand notice dated 1.6.2022 intimating the account is classified as NPA on 12.4.2022 and also demanding Rs.17,04,42,270.78 due in the account. It is further stated that on

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receipt of the demand notice, the 2^nd applicant issued a reply dated 21.7.2022, and in this regard it is alleged that the respondent failed comply with Rule 3(A) and issued the possession notice dated 1.9.2021 which is impugned in this application.

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In the ground to the SA also, the applicant apart from reiterating the contentions as stated above had also taken up a contention that, the property sought to be proceeded against is having market value of Rs.20 crores. Along with the SA, the applicant had produced the certificate of incorporation of 1^st applicant, Death Certificate of Jayaraman sanction letter, statement of accounts of two facilities, Demand notice, reply by the applicant and also the possession notice.

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The respondent had entered appearance and filed their counter. It is contented by the respondent that based in the immovable security given by late Jayaraman and 2^nd applicant, the respondent had sanctioned the credit facilities which were extended and revised from time to time. It is also stated that due to the defaults occurred in the account, the same was classified as NPA and in consequential to the same, the measures leading to the issuance of impugned possession notice was initiated. It is further contended by the respondent that they had scrupulously followed the procedure as mandated by the statute. The respondent had also filed a separate type set of documents producing the following documents viz., Demand notice and its Acknowledgment card, Reply by the applicant, Reply to the representation by the respondent, Acknowledgment card evidencing receipt of reply, Possession

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notice, Acknowledgment card and track report and Proof of publication of possession notice.

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Heard the counsel for both sides and considered the rival contentions taken by both sides in the light of documents produced by them. The only issue arise for consideration in this matter is as to the legality of measures initiated by the respondent and continued by them leading to the issuance of the impugned possession notice.

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The main grievance of the applicant in their challenge as to the measures is two fold; that the measures are initiated without considering the sudden demise of the erstwhile director and that the representation submitted by the applicant against the demand notice is not considered or disposed of by the respondent and such there is non compliance of the mandate of rule 3A of the Security Interest (Enforcement) Rules. Hence going by the pleading of the applicant, it is to be noted that the applicant is admitting the availment of the facility creation of security interest, defaults occurred in the account and the service of demand notice and service of possession notice.

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The contention of the applicant that the measures are initiated and continued without taking note of the financial condition of the applicant have no legal to stand as there is no statutory mandate requiring the consideration of the financial condition or reason thereof.

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Though the applicant is not disputing the service of demand notice, the respondent had along with their type set produced the proof of service of demand notice. In rebutting the contention as to the non-compliance of Rule 3A, the respondent had produced the proof of issuance of reply to the

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representation and its service on the applicant. In view of the production of evidence as to the consideration of representation and its communication on the applicant, this Tribunal is of the view that the applicant’s contention as to non compliance of Rule 3A is to be rejected.

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The applicant is admitting the service of possession notice. The respondent had produced the proof of publication of the possession notice and its service on the applicant. Hence the respondent had successfully rebutted the contention of the applicant as to the non-publication of the possession notice.

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Apart from the above no other contentions are raised by the applicant.

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In view of the findings entered herein before, this Tribunal is of the considered opinion that this SA is devoid of any merit and is liable to be dismissed. Hence accordingly the SA stands dismissed.

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In the result SA stands dismissed, all pending IA’s stands closed, no orders as to cost. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 22^nd day of May, 2023)

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

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Ms Kalaiselvi Food Products Pvt. Ltd. v. Canara Bank

Case brief

What is this about?

What did the court decide?

Ms Kalaiselvi Food Products Pvt. Ltd. v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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