Allowed

Umapathy v. Shriram City Union Finance Limited

DRT23 Jun 2023SA/616/2022

Case brief

AI extract

What is this about?

The Tribunal allowed an application to set aside Section 14 proceedings initiated by the Respondent. The decision was based on the undisputed fact that the mandatory Service of Demand Notice was not effected, making the enforcement measures invalid.

What did the court decide?

Measures leading to Section 14 orders set aside; borrower restored to possession; costs imposed on Respondent.

Umapathy versus Shriram City Union Finance Limited — Banking and Recovery | DRT (2023)

¶1

BEFORE THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

¶2

Dated this 23^rd day of June, 2023

¶3

PRESENT : SHRI T.RAJESH

¶4

PRESIDING OFFICER

¶5

SA No.616/2022

¶6

C.Umapathy, S/o.T.Chinnadurai, No.19, Ground Floor, Raja Street, Perambur, Chennai – 600 011.

¶7

… Applicant.

¶8

Vs.

¶9

The Authorised Officer, Shriram City Union Finance Limited, Having its regisrered Office at No.123, Angappa Naicken Street, Chennai. Rep. by its Authorized Officer cum Assistant Vice-President-Legal, Mr.V.C.Seshadrinathan. … Respondent. Counsel for Applicant : M/s.J.Prince. Counsel for Respondent : M/s.Sri & Shankar Associates. …..

¶10

O R D E R

¶11

This application is filed by the applicant under section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after called SARFAESI Act or the ‘Act’, as the case be), with a prayer to set aside the measures initiated u/s.14 of the Act by the Authorised Officer of the Respondent up to obtaining the order passed by Hon’ble CMM, Egmore in Crl.M.P.No. 26033/2022 dt.06.10.2022.

¶12

¶13

The applicant admits the availment of business loan and creation of security interest. According to the applicant there was no default in the account. It is stated by the applicant that the respondent had issued a possession notice and further admits that a demand notice dt.14.03.2022 is already issued. According to the applicant there is no proper demand notice. In regard to the measures u/s.14, it is the case of the applicant that substantial remittances made by the applicant were not given credit to and that the authroised officer has failed to file an affidavit required under the mandate of section 14(ix) of the Act; reiterating the compliance of mandatory provisions of the Act. The applicant is also taking the contention as to the legality of issuance of possession notice preceding section 14 proceedings. Along with SA, the applicant had produced the following documents:

¶14

(a) Demand notice u/s.13(2) of the SARFAESI Act issued by the Respondent dt.25.05.2022.

¶15

(b) Copy of impugned order passed in Crl.M.P.No.26033/2022 by Hon’ble CMM, Egmore dt.06.10.2022.

¶16

Notice was ordered in SA as early as on 28.11.2022 and the case is

¶17

posted to 22.02.2023. On that day interim order was also granted to the applicant. Thereafter the matter came up on 22.02.2023 and on that day the counsel for respondent entered appearance. Thereafter sufficient opportunity was given for filing counter as the case was posted on 24.04.2023 and 19.05.2023. On 19.05.2023, the chance for filing counter was closed and the matter stood posted to 14.06.2023. Even on that date also, no counter was filed though both sides were present. In

¶18

¶19

view of undisputed averments as made in the SA in regard to non-service of demand notice which is the initial measure for continuing the proceedings under the Act, no counter affidavit is filed by the respondent refuting the same, this Tribunal is of the view that the entire proceedings initiated by the respondent leading to procurement of section 14 orders is to be interfered with for want of proper service of demand notice as mandated under Rule 3 of Security Interest (Enforcement) Rules, 2002.

¶20

In the result, SA 616/2022 stands allowed and the following order is passed :

¶21

(i) The measures taken by the respondent leading up to procurement of impugned orders in Crl.M.P.No.26033/2022 is set aside.

¶22

(ii) The respondent is directed to put the applicant back in possession, if actual possession is already taken in pursuant to the impugned orders.

¶23

(iii) The respondent is further directed not to mulct the cost of the proceedings leading upto procurement of section 14 orders and also the cost of this proceeding on the applicant. If any debit had already been made in this regard, necessary reversal had to be made forthwith.

¶24

(iv) In view of the facts and circumstances of the case, since the applicant is compelled to approach this Tribunal, a cost of Rs.10,000/- is imposed on the respondent which is to be

¶25

¶26

adjusted at the time of settlement or closure of the account,

¶27

as the case be.

¶28

All pending IAs stands closed. Issue copies in accordance with

¶29

Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1983.

¶30

( Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 23^rd day of June, 2023 )

¶31