Dismissed

Arasu E v. Cholamandalam Investment and Finance Company Ltd.

DRT18 Aug 2023SA/614/2022

Case brief

AI extract

What is this about?

This application challenged measures taken by the respondent under Section 14 of the SARFAESI Act. The Tribunal rejected claims of procedural flaws, non-service of demand notice, and NPA classification errors. It held that merits were not established and dismissed the application.

What did the court decide?

The Securitization Application (SA) stood dismissed; all pending interlocutory applications were closed.

Arasu E versus Cholamandalam Investment and Finance Company Ltd. — Insurance | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 18^th day of August, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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SA No.614 of 2022

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1.	Arasu. E, S/o Ettiyappan 42, Arasu Avenue Kannaki Street, Chetpet Arni, Tiruvannamalai – 632 301
2.	A. Sudha, W/o E. Arasu 42, Arasu Avenue Kannaki Street, Chetpet Arni, Tiruvannamalai – 632 301
3.	Gokul, S/o Arasu 42, Arasu Avenue Kannaki Street, Chetpet Arni, Tiruvannamalai – 632 301
4.	Arasu Traders, C/o Arasu 42, Arasu Avenue Kannaki Street, Chetpet Arni, Tiruvannamalai – 632 301
5.	Gokul Sarees and Readmades, C/o Sudha No.19/19-1, Lingappan Street Arani – 632 301	…Applicants
	Versus
M/s C Rep. Mr.K. Dare Parry	holamandalam Investment and Finance Company Ltd., by its Senior Manager Thyagarajan House, 2, N.S.C. Bose Road s, Chennai – 600 001	…Respondent
	Counsel for the Applicant : M/s L. Thiyagaiya
	Counsel for Respondent : M/s M. Arunachalam

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FINAL ORDER

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This Securitization Application in short the SA is filed under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of

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Security Interest Act,2002 (SARFAESI Act), herein after been referred as SARFAESI Act or the Act as the case be challenging the measures taken by the respondent, in particular the proceedings under Section 14 of the Act.

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The applicant admits the availment of credit facilities. The applicant is further admitting the creation of Security Interest in lieu of the security for the credit facilities. The applicant also admits that their business failed due to COVID19 resulting in the declaration of account as NPA and issuance of demand notice on 24.1.2022. It is contented that the applicant approached the respondent offering to settle the account by periodical payments. It is also contended that in consequential to the above an amount of Rs.22,47,831 was remitted on 31.1.2022 and one account was closed. It is contented by the applicant that despite closure of one account, the documents were not returned. It is also alleged despite making payment of Rs.3,30,00,000/- for closure of other facility, the respondent had credited the same to another loan account and classified the account as NPA.

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It is also contended that without following any of the procedural mandates had issued the possession notice. In respect of Section 14 measures, it is reiterated that the same is done without serving any demand notice. The applicant further contents that the respondent failed to file supporting affidavit as mandated under Section 14 of the Act.

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The respondent entered appearance and filed their counter refuting the contentions of the applicant. It is stated that the respondent had scrupulously followed the procedure as mandated under the statute in their measures. The respondent further denies the contention of the applicant as to alleged

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procedural flaws their measures. The respondent contends that the demand notice is served on the borrowers. It is also pointed out that the Learned Magistrate had granted the order after being satisfied as to the legality of measures.

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Heard the Ld. Counsel for both sides and considered the rival contentions in the light of pleadings and documents.

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The applicant had no dispute as to the availment of the credit facility and creation of security interest though the defaults are disputed, it is stated that the measures are taken without taking note of the repayments and the efforts made by the applicant to get the matter settled. The respondent had in their counter contented that the account was duly classified as NPA due to the defaults in the account. The respondent had also produced the statements of accounts and the foreclosure statement of the loan accounts. Despite the specific contention and the production of statement of accounts, the applicant had not pointed out any anomaly as to the statement. In view of the above, the contentions, as to the NPA is liable to be rejected.

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The next contention of the applicant as to the alleged non-service of demand notice is rebutted by the respondent by producing the postal receipts and postal track record. Even though the applicant contents that the postal track record cannot be accepted as proof of service, this Tribunal is not inclined to accept the said contention as the applicant have no dispute as to the genuineness of postal track records. This Tribunal is aware that section 27 of the General clause act cannot be put in operation as rule 3 mandates the

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actual service. However the prescription under section 114 (f) can be put to operation when the postal track records are available.

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The applicant’s next contention is as to the alleged flawed service of possession notice is also tried to be rebutted by the respondent by producing the proof as to service, publication and affixture of the same. Since law in this regard is no more res-integra that the issuance of possession notice is not sine qua non for the measures u/s 14, this Tribunal is not endeavouring as to the legality of the issuance of possession notice to evidence proper service on the borrower.

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The applicant though contents that the no affidavit as mandated u/s 14 of the Act is filed by the respondent before the Ld. Magistrate, this Tribunal cannot go into the legality of the procedure adopted by the Ld. Magistrate as this Tribunal cannot sit in appeal over the orders of the Magistrate.

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In view of the discussions as above and findings entered therein, 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 18^th day of August, 2023)

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

Arasu E v. Cholamandalam Investment and Finance Company Ltd.

Case brief

What is this about?

What did the court decide?

Arasu E v. Cholamandalam Investment and Finance Company Ltd.

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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