Dismissed

Putta Shree Leathers Private Limited v. State Bank of India

DRT22 Sept 2023SA/628/2022

Case brief

AI extract

What is this about?

This tribunal dismissed the securitization application challenging ejection measures under the SARFAESI Act, finding that the bank complied with statutory requirements for notices and publication. The tribunal rejected the applicant's claim of genuine revival prospects due to non-compliance with prior interim orders.

What did the court decide?

The Securitization Application is dismissed; all pending Inquiries are concluded.

Putta Shree Leathers Private Limited versus State Bank of India — 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

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PRESIDING OFFICER

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SA No.628 of 2022

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Putta Shree Leathers Private Limited Represented by its Managing Director Mr. P. Jagadeeswara Rao 261/3, Vanapadi Road, SIPCOT Ranipet District, Tamil Nadu – 32 403

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…Applicant

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Versus

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The Authorised Officer State Bank of India SME Walaja Branch Palar Towers, MBT Road Walajapet, Ranipet District – 632 513 …Respondent

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Counsel for Applicant : M/s S. Satish, B. Rajesh & S. Anusha Counsel for Respondent : Dr. T. Ramasamy

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FINAL ORDER

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The Securitization Application, in short SA is filed under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), herein after been referred as SARFAESI Act or the Act as the case be challenging the possession notice dated 19.11.2022.

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The applicant is a company engaged in manufacturing finished leather, leather shoe and other allied business activities. It is contented by the applicant that the company has a capacity to produce 2000 shoes a day as the same is equipped with state of art factory with modern equipments. The availment of the credit facility from the respondent bank is also admitted. The

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applicant also admits that the credit facility is fully secured by mortgage of schedule properties.

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In respect of the measures, it is the case of the applicant that the applicant had been maintaining the limit without any default till the spread of Covid-19. It is also stated that the second waves of COVID worsened the situation. It is also contended that the applicant had sought for restricting of the loan as approved by RBI. It is contented by the applicant that the respondent had classified the account as NPA on 25.8.2022, which according to the applicant is without considering the real situation that the applicant is recovering from financial crunch. In the Securitisation Application the applicant had put forth a case that the applicant is to receive incentives from Govt. Of Andhra Pradesh and undertakes to deposits the amount with the respondent. Another contention put forth by the applicant that the applicant is in final stage of tie-up with M/s Zenith Shoes from Hong Kong for next 15 years. Applicant is also putting forward the contention as to alleged non extension of moratorium which the applicant was entitled to. The applicant admits the receipt of demand notice however, contends that the respondent had not agreed to the proposal for clearing the due amount.

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In the grounds to the SA the applicant is reiterating their contention as to irregular declaration of NPA, without considering the moratorium. The contention as to proposed revival of business due to tie-up with Zenith Shoes and expected receipt of incentives from Andhra Pradesh all are reiterated in the grounds. Another contention taken is that the demand notice is not served on all the borrowers and that there is no affixture of the demand

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notice. In respect of the possession notice also, it is stated that the same is not affixed or served on the borrowers. The applicant also contends that the possession notice is not published within seven days.

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Along with the SA the applicant had produced the following documents viz., Application U/s.17(1) of the SARFAESI Act, Demand notice, Representation/objection letter from the applicant dated 26.9.2022, Possession notice, Certificate issued by defendant bank for period April 2021 to September 2021 & October 2021 to March 2022 for claiming reimbursement of interest amount under the Pavala Vaddi Scheme, Industrial incentives status of applicant pending with Government of Andhra Pradesh, Photographs showing visit by foreign buyers who are keen to give large long term orders to the factory unit of the applicant. Hence on the above contentions the applicant seeks to set aside the measures.

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The respondent entered appearance through caveat and submits that they had initiated the measures and continued the same in due compliance of the provisions of the statue. In respect of the demand notice and possession notice it is stated that the same were duly served on the applicant. The respondent contends that the possession notice is also affixed and published as mandated. It is further stated that the applicant forwarded and e-mail dated 22.9.2022 requesting time to pay the defaulted dues which was duly replied by the respondent in the personal meeting the applicant had with Chief Manager. The respondent contends that the account was declared as NPA as per the prevailing Rules, norms and guidelines. The contention as to the alleged flaws in measures is also denied by the respondent.

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Along with the counter the respondent had produced the following documents viz., Conditional order of the Tribunal, Demand notice with acknowledgment of service, Possession notice with acknowledgment of service, Photos evidencing affixation of possession notice, Publication of possession notice in the Hindu, Publication of possession notice in Indhu Tamil Thisai and Publication of possession notice in Prajasakti.

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Heard the counsel for both sides and considered the rival contentions in the light of case put forth by the applicant and the rebuttal of the respondent. The following issues that need to be considered are as to: -

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(i) Whether the respondent had followed the procedure in initiation and continuation of measures leading to issuance of impugned possession notice?

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(ii) Whether the contention of the applicant as to the chance of revival of business is bonafide?

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For brevity of facts and findings both these issues are gone into an decided together.

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The main grievance put forth by the applicant in the SA is that the applicant is entitled to receive incentives from Government of Andhra Pradesh and that the applicant is in course of revival in the light of business tie-up Zenith Shoes Hong Kong. This contention is to be viewed in the light of interim order granted by this Tribunal when the SA was moved. This Tribunal had considering the above contention granted an interim orders as follows: -

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“Having heard the Counsel for both sides, this Tribunal is of the view that functioning of running factory could not be

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stopped at this point of time. However, as the amount outstanding is Rs. 7 Crores, this Tribunal is of the opinion that stalling the entire proceedings will not serve the interest of justice.

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Hence, dispossession of the applicant from the schedule property is stayed till next posting date on condition that the applicant remitting an amount of Rs. 1 crore in 4 instalments out of which first instalement of Rs. 30,00,000/- is to be remitted on or before 30.12.2022 and the second instalment of Rs. 20,00,000/- is to be remitted on 30.01.2023 and the balance amount of Rs. 50,00,000/- is to be remitted in 2 instalments out of which Rs. 30,00,000/- is to be remitted on 15.02.2023 and the balance Rs. 20,00,000/- is to be remitted on the last banking date of February 2023.

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This restraint order will stand automatically vacated, if the applicant fails in compliance of any of these conditions and in that event the respondent is free to proceed further in accordance with law”.

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Even though the above interim order was granted taking note of the scope of revival of the business, the applicant had not complied with the condition imposed by this Tribunal. The above facts makes it crystal clear that the contention of the applicant as to the scope of revival of the business is without any basis.

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In regard to the measures the respondent had produced the proof as to the service of demand notice as the acknowledgment card evidencing the service of demand notice is produced. The above document clearly proves the compliance of Rule 3 of the Security Interest (Enforcement) Rules.

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The measures and the procedure in issuance of possession notice is also produced as the acknowledgment cards evidencing the service, photographs evidencing affixture and paper publication showing the publication are all produced by the respondent. Hence it could be safely concluded that there is due compliance of rule 8(1) and 8(2) of the Rules.

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Even though the applicant is putting forward a contention that the account is declared as NPA without extending the moratorium and reschedulment facility, no proof as to entitlement of the applicant for any such facility is produced. The respondent had in their counter stated that the account is classified as NPA much after the moratorium period.

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No other contention had been raised or argued by the applicant. The discussion as above and the findings entered therein, leads this Tribunal to hold that there is no merit in the SA and the same is 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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Putta Shree Leathers Private Limited v. State Bank of India

Case brief

What is this about?

What did the court decide?

Putta Shree Leathers Private Limited v. State Bank of India

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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