Dismissed

Jay Jay Aqua v. Tamilnad Mercantile Bank Limited

DRT22 Sept 2023SA/570/2022

Case brief

AI extract

What is this about?

This application sought to quash proceedings under the SARFAESI Act and a sale notice. Examining claims regarding NPA classification, service of notices, and valuation flaws, the Tribunal found facts supported contrary to applicant claims and dismissed the application.

What did the court decide?

The Securitization Application is dismissed; all pending Inter Applications are closed; no orders as to cost.

Jay Jay Aqua versus Tamilnad Mercantile Bank Limited — 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 September, 2023

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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SA No.570 of 2022

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M/s Jay Jay Aqua Represented by its Proprietor Mrs. Vanisri No.15, 13^th Cross Street Lakshmipuram, Thirunindravur Thiruvallur – 602 204

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Mrs. Vanisri W/o Mr. P. Raju No.15, 13^th Cross Street Lakshmipuram, Thirunindravur Thiruvallur – 602 204

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Mr. P. Raju S/o Pragasam. G 1/15, Thozhur, Thiruvallur – 602 025

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Also at No.15, 13^th Cross Street Lakshmipuram, Thirunindravur Thiruvallur – 602 204 …Applicants

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Versus

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The Authorized Officer Tamilnadu Mercantile Bank Ltd., No.45, Pulla Avenue, Shenoy Nagar Chennai Region, Chennai – 600 030 …Respondent Counsel for Applicants : Mr. R.T. Vijayaraghavan Counsel for Respondent : Mr. N. Somasundaar

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FINAL ORDER

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This Securitization Application in short SA is filed under section 17of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), herein after been referred as

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SARFEASI Act or the Act as the case be, to quash the proceedings initiated by the respondent u/s 13(4) of the Act and also the impugned sale notice dated 1.10.2022 fixing the sale on 3.11.2022.

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Draped in brevity the applicant’s case can be narrated as follows:-

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The 1^st applicant is a proprietary concern with 2^nd applicant as the proprietor. It is also stated that the applicants had availed an Overdraft credit facility of Rs.23,30,000/- in the year 2019. It is further admitted that, due to financial crunch, the applicants sought further time for making payments which according to the applicants had orally agreed to. It is contented by the respondent that despite agreeing for deferred payments, the respondent had classified the account as NPA on 31.3.2021 and issued the demand notice dated 4.5.2021. It is also contended that the demand notice is not served on all the borrowers.

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In respect of the measures, it is the case of the applicant that rehabilitation schemes provided by RBI were not extended to the applicant. It is also stated that earlier sale notice issued on 30.9.2021 and 4.8.2022 by the respondent were impugned in SA.164 of 2021 and SA.418 of 2022 which stood dismissed as infructuous as no sale took place for want of bidders. The applicant further alleges that the measures are taken without following rules 8(5) and 8(6), 8(7) and 9(1).

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In the grounds to the SA the applicants are reiterating the contentions as to the allegedly flawed procedure in measures and is also disputing the NPA classification. The contention as to the non-service of the demand notice is also reiterated in the grounds. It is also stated that possession notice is also

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not served on the borrowers. Along with the SA, the following documents were produced viz., Demand notice dated 4.5.2021, Sale notice dated 30.09.2021, Copy of SA.164 of 2021 and SA.418 of 2022 filed before DRT-III Chennai, Sale notice dated 04.08.2022, Copy of SA No.418 of 2022 filed before DRT-I Chennai and impugned sale notice dated 1.10.2022.

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The respondent entered appearance and filed their counter refuting the contentions as taken in the SA. The respondent in their counter had interalia contented that they had scrupulously followed the procedure as mandated by the statute. It is also stated that only due to the default in repayment the account was duly classified as NPA. It is also pointed out by the respondent that while disposing the SA.164 of 2021, the Tribunal had accepted the memo filed by the respondent as to the compliance of statutory provisions. In respect of the sale notices also, the respondent contents that there are no procedural flaws in issuance of the same. It is also stated that the reserve price is fixed in relation to the valuation.

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Along with the counter the respondent had produced the following documents viz., Valuation report dated 14.02.2020, Sanction communication dated 18.02.2020, Memorandum of Deposit of Title deeds dated 18.2.2020, CERSAI Report dated 02.03.2020, Demand notice under Section 13(2) of the Act dated 04.05.2021, Postal acknowledgment card evidencing service of demand notice, Office copy of possession notice with acknowledgment of applicant dated 13.07.2021, Photograph evidencing affixture of possession notice, Paper publication of possession notice, Valuation report dated 16.05.2022, photographs relating to affixture of sale notice, Acknowledgment

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card evidencing service of sale notice, Paper publication of sale notice, Circular regarding particulars of the Chief Managers, Statement of accounts, Expenses incurred after NPA and Proceedings of auction sale. On the basis of above rebuttal and documents, the respondent seeks for dismissal of the SA.

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Heard the respective counsel appearing for the parties in the light of contentions in the SA and the rebuttal as made in the counter in the light of documents produced by both sides. The only question that to the gone into and decided in this matter is whether the measures taken by the respondent leading to the issuance of impugned sale notice is in accordance with the statute or not.

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The applicants have no dispute on to the availment of the credit facility, creation of security interest and also as to the defaults committed by them. The only challenge as to the classification of account as NPA is that the same is done without extending the time for payment and without extending the relief scheme as declared by RBI. The above contention is made without producing any evidences as to the entitlement if any for seeking extended time for repayment. Similarly the contention as to the RBI scheme is also made without producing any such circulars entitling them to seek benefits, if any, and without providing any details as to the existence of said circulars. In view of the above, this Tribunal is not inclined to accept the contention of the applicant as to NPA classification.

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The next contention of the applicant as to the alleged non service of demand notice is also refuted and rebutted by the respondent by producing the proof

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of service of demand notice. In view of acknowledgment evidencing the service of demand notice it to be held that there is due service of demand notice.

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In respect of possession notice also, the respondent had produced the proof of service, affixture and publication of the same in two dailies, one English and other in Vernacular. The document so produced by the respondent satisfactorily proves the compliance of rule 8(1) and 8(2) of the security interest (Enforcement) Rules.

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The respondent had also produced the valuation reports obtained by them before the issuance of sale notice. It is also to be noted that the reserve prices fixed in relation to the valuation given by the approved valuer. Even otherwise, the impugned sale notice is the 3^rd one and on earlier two occasions, the property remains unsold and hence there cannot be any complaint as to the deliberate under valuer of the property.

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The proof as to the service, affixture and publication of the sale notice is also produced by the respondent which proves that there is no procedural flaws as alleged in the issuance of impugned sale notice.

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Since no other contention is taken by the applicant this Tribunal is not going into the evidence as to CERSAI registration. In view of the finding as entered herein before, this Tribunal is of the considered opinion that there is no merit in the SA and the same is liable to be 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 September, 2023)

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

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Jay Jay Aqua v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

Jay Jay Aqua v. Tamilnad Mercantile Bank Limited

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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