Dismissed

B Diviya v. City Union Bank Limited

DRT30 Mar 2023SA/576/2022

Case brief

AI extract

What is this about?

In an application under Section 17 of the SARFAESI Act challenging a retender cum auction sale notice, the Tribunal rejected the applicant's grievances regarding service of notices. The Court held that statutory compliance was met and prior auction attempts by the applicant waived further challenges, dismissing the application.

What did the court decide?

SA dismissed; all pending IAs closed; copies issued.

B Diviya versus City Union 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 30^th day of March, 2023

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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SA No.576 of 2022

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Mrs. B. Divya Wife of P. Muthukumaran Proprietor of M/s SMV Traders No.35, 1^st Street, Second Plot Pudhu Nagar, Kanuvapet Villianur, Puducherry – 605 110 …Applicant

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Versus

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The Authorised Officer M/s City Union Bank Limited Credit Recovery and Management Department “Narayana”, Administrative Office No.24-B, Gandhi Nagar Kumbakonam – 612 001

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Mrs. G. Ponmalar Residing at No.30, Mariamman Koil Street Thirukanji, Puducherry – 605 110 …Respondents

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Counsel for the Applicant : M/s J. Arun Prasad Counsel for 1^st Respondent : Mr. P. Srinivasan Counsel for 2^nd Respondent : …..

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FINAL ORDER

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The retender cum auction sale notice issued under the SARFAESI Act dated 1.10.2022 is challenged in this Securitization Application, filed 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 applicant is doing Garments Business under the name and style M/s.SMV Traders. The applicant had approached the defendant bank and availed two credit facilities; one Housing loan for Rs.25 Lakhs and the other OLCC Limit for Rs.15 Lakhs. These facilities were availed in the year 2016 and 2017 respectively. It is also alleged by the applicant that the bank had obtained signatures in blank signed papers and also demanded the deposit of title deeds pertaining to the residential property and a vacant land adjacent to the same. It is also stated by the applicant that the applicant had been promptly repaying the amount without any default. It is also admitted that later due to business failure the portion of the interest was not paid and the said fact was also informed to the respondent.

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It is also stated that though the respondent had issued the demand notice and possession notice, they failed to follow SARFAESI Act and Rules as no notice was served on applicant. In regard to the possession notice, it is stated that the same was not issued in conformity with Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules. It is also contended that the respondent had clubbed together the secured and unsecured loans in initiating the proceedings. The applicant contends about their efforts to settle the liability to trough OTS.

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It is also stated that the 1^st respondent had earlier issued a sale notice dated 2.6.2022 and the same was impugned in SA.260 of 2022 before the Debt Recovery Tribunal –I Chennai and as the auction did not take place, the SA was disposed of with an observation that the applicant can approached the respondent for an OTS. Hence it is also the grievance of the applicant that

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the respondent had issued the impugned notice without considering the OTS submitted in pursuant to the direction of Debt Recovery Tribunal –I in SA.250 of 2022.

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In the grounds to the SA the applicant is reiterating the contentions as raised in the statement of facts. It is stated that the mandatory provisions contemplated under Rule 8(5), (6), (7) and 9(1) of the Rules are not followed. It is also stated that the interest claimed is exorbitant. The applicant had produced the following documents along with the SA viz., The OTS letter issued by the 1^st respondent dated 17.2.2022, Statement of accounts evidencing the payment of 5 Lakhs, E-auction sale notice dated 2.6.2022, Copy of the order in SA.260 of 2022, OTS letter dated 1.8.2022, Sale notice dated 1.10.2022 and Sale confirmation letter dated 27.10.202.

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Hence on the above contentions and documents, the applicant seeks to set aside the measures leading to the issuance of impugned sale notice and the sale conducted thereon.

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The respondent entered appearance and filed their counter denying the averments as stated in the SA and contended that the applicant herein and her husband have jointly borrowed the facility of Rs.10 lakhs and executed demand promissory note. It is also stated that another facility was availed for Rs.25 lakhs as housing loan for that also the borrowers had executed necessary documents. it is also stated that the scheduled properties were given in as collateral securities for the said facilities by way of mortgage and execution of memorandum of deposit of title deed dated 9.5.2016 registered as Doc. No.10360 of 2016 on the file of SRO Villianur.

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It is also the case of the respondent that the applicant herein owned a proprietary concern name and style M/s. SMV Traders and for the financial requirements of the firm an OLCC to the tune of Rs.15 Lakhs was availed with husband of the applicant as the co-borrower. It is also stated that towards the security of the said facility, the mortgage was extended by way of execution of memorandum of extension of deposit of title deeds dated 27.7.2017 and registered as document no.10230 of 2017 of SRO Villianur. It is also stated that the credit facility was renewed under letter of revival dated 10.1.2020.

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The respondent further states that the accounts has been classified as NPA on 14.11.2020 and 30.11.2020 pursuant to which a demand notice dated 16.7.2021 was issued, which was duly received by the borrowers on 20.7.2021. The possession notice was also served and published as required under the statute. Even though an OTS was approved, the respondent failed in compliance of the same. The sale notice issued by the respondent on 2.6.2022 was impugned vide SA.260 of 2022, which stands disposed of ordering the consideration of OTS. Subsequent to the disposal of the SA the respondent approached Chief Judicial Magistrate, Puthukottai and obtained an order under section 14. It is also stated that the auction sale notice dated 1.10.2022 was issued fixing the reserve price at 42 lakhs wherein the public auction was held and the property had been assigned in favour of 2^nd defendant herein. It is also pointed out that even after selling of property for Rs.42,30,000/- an amount of Rs.2,25,300/- is remaining due in the account as on 23.11.2022. Along with the reply the respondent had produced the following documents: -

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(i) Demand promissory note dated 18.5.2015 and 9.5.2016.

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(ii) The revival letters dated 17.1.2019 and 2.12.2021

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(iii) MODTs registered as document no.7706 of 2015, 10360 of 2015 and

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10230 of 2017 dated 15.5.2015, 9.5.2016 and 27.7.2017 respectively.

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(iv) Demand Promissory note dated 27.7.2017

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(v) Revival letter dated 10.1.2020

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(vi) Demand notice

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(vii) Possession notice

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(viii) Tender cum auction sale notice dated 8.2.2022

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(ix) OTS letter dated 17.2.2022

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(x) Retender notices dated 29.3.2022 and 2.6.2022

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(xi) Order in SA.260 of 2022

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(xii) Order in Crl.MP.5580 of 2022

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(xiii) Retender cum auction sale notice

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(xiv) Sales confirmation letter

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(xv) Statement of accounts

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(xvi) Warrant for taking physical possession.

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An additional type set was also filed by the 1^st Respondent producing the

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following: -

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(i) OTS offer letter.

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(ii) Order in SA.260 of 2022

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(iii) Cheque bearing 532817 for Rs.4,20,000/-

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(iv) Statement of accounts.

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(v) Retender cum auction letter dated 1.10.2022

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(vi) Sale confirmation letter dated 27.10.2022

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(vii) Daily order dated 6.1.2022 and willingness letter of R2 dated 25.1.2023

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On the basis of above documents and contentions as taken the respondent seeks for dismissal of the SA.

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Heard the counsel for both sides and considered the rival contentions in the

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light of pleadings and documents. The sole issue arises for consideration in

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this matter is as to whether the measures taken and continued by the respondent leading to the impugned sale notice and the consequential confirmation of sale are in accordance with statute or not.

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The Ld. Counsel for the applicant pointed out that the applicant is putting forth a grievance that the measures right from issuance of demand notice is flawed as there is no proper service of demand notice. In regard to the possession notice also the situation is same as there is no proper service. The applicant is also alleging irregularities in issuance of the impugned sale notice. On consideration of the pleadings it is evident that applicant had put forth specific contentions in the SA in regard to the alleged failure of the respondent in compliance of statutory mandate in issuance of demand notice, possession notice and the impugned sale notice. In reply to the said contention the respondent had produced the acknowledgment card evidencing the receipt of demand notice by the borrowers in page no.14 of their type set. The proof of service of possession notice is also produced along with the type set. The proof of publication of the possession notice and proof of affixture of possession notice is also produced by the respondent. By production of above documents it is clear that the respondent had duly complied the mandates of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules and the contention of the applicant in this regard is to be rejected.

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Even otherwise, the applicant had admittedly filed SA.260 of 2020 impugning the earlier sale notice and hence the applicant ought and should have raised these contentions in those proceedings. Having allowed those proceedings to be disposed of permitting the applicant to go for OTS and also with a direction

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to the respondent to consider the OTS, it is to be held that the contention if any available was waived by implied conduct by wanting to take a chance of a favourable decision.

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In view of the above findings, the only decision that is left to be decided is as to the legality of the sale notice and the consequential sale conducted by the respondent. It is stated that the respondent had conducted proper valuation of the property and the Ld. Counsel further pointed out that despite giving chances no valuation is produced by the respondent. However, the above situation also will not come in aid of the applicant as the respondent had earlier attempt to sell the property with the same reserve price and failed to get the sale go through for want of bidders. Even otherwise the applicant had successfully been scuttling the sale attempts. Hence the challenge of the applicant as to the impugned sale notice and sale conducted therein are liable to be rejected. Hence this Tribunal is of the considered opinion that there is no merit in the SA and the SA is liable to be rejected.

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In the result the SA stands dismissed and 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 30^th day of March, 2023)

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

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B Diviya v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

B Diviya v. City Union 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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