Dismissed

D Senthil v. Indian Overseas Bank

DRT24 Mar 2023SA/634/2022

Case brief

AI extract

What is this about?

The applicant filed a Section 14 application under the SARFAESI Act to set aside measures taken by the bank, alleging procedural irregularities including failure to serve a demand notice and clandestine sale of pledged property at a lower price. The Tribunal rejected the applicant's claims, holding that no prior notice is required before considering a Section 14 application and that issues regarding the legality of the sale are not cognizable in such proceedings.

What did the court decide?

Application to set aside Section 14 measures under SARFAESI Act dismissed; all pending interim applications closed.

D Senthil versus Indian Overseas Bank — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 24^th day of March, 2023

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PRESENT : SHRI T.RAJESH

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PRESIDING OFFICER

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SA No.634/2022

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D.Senthil, S/o.G.Dhurai, Ho.No:2/448, T-Malai Main Road, Manampodi Post, Kandachipuram Circle, Tamil Nadu 635 109.

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… Applicant.

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Vs.

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M/s.Indian Overseas Bank, Rep. by its Authorized Officer and Chief Manager, No.7/54, Ideal Garden Complex (2^nd Floor), Five Road, Salem – 636 004.

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The Manager, Indian Overseas Bank, Vilandi Branch, 16-11A, Villupuram Main Road, Manampoondi Village, Tirukoilur Taluk, Villupuram District.

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R.Vasanthakumar, W/o.Rajendran, No.1/331, Thiruvanamalai Main Road, Manampoondi & Post, Kandachipuram Taluk, Villupuram District. … Respondents. Counsel for Applicant : M/s.S.Kingston Jerold. Counsel for 1^st Respondent : M/s.Ananda Gomathy. Counsel for 3^rd Respondent :Mr.D.Senthur Kugan . …..

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O R D E R

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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), to set aside the measures taken by the 1^st Respondent pursuant to the order in CMP No.290/2022 dt.27.10.2022 passed by Ld. Chief Judicial Magistrate, Villupuram.

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The applicant admits to have availed credit facility to the tune of Rs.10,00,000/- against mortgage of schedule property. It is contended by the applicant that applicant is residing in the said property, which according to the applicant is a residential cum commercial property wherein a small tea shop is also being run. It is also admitted that the loan amount was duly repaid up to 27.02.2020 and thereafter the repayments were defaulted. It is further case of the applicant that despite various requests made by applicant to settle the facility through OTS, the respondent had continued the measures they have initiated as per the provisions of the SARFAESI Act. It is also stated that to discharge the liability an amount of Rs.9,50,000/- was remitted on 12.06.2020. It is further alleged by the applicant that the respondent had in fraudulent manner proceeded further with the measures and sold the property for Rs.26,35,000/- as against the actual value of Rs.45,00,000/-. It is also stated that impugning the sale certificate, SA 178/2020 was filed before DRT-I, Chennai. It is also stated that during the pendency of SA, the

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present measures are now initiated seeking eviction of the applicant from the premises. In the grounds to the SA, the applicant contends that measures initiated by the respondent leading to the present proceedings are vitiated for the reason for non application of mind and probability of law. It is also contended that no prior intimation was given before classification of account as NPA and that no demand notice u/s.13(2) was issued to the applicant. The applicant further alleges that the applicant was kept at dark and the property has been clandestinely sold for a lower price. Along with SA, the applicant had produced the following documents:

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(i) Copy of the E-Auction Sale Notice dt.28.01.2020.

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(ii) Copy of the requisition letter sent by the petitioner dt.09.03.2020.

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(iii)Copy of sale certificate dt.17.03.2020.

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(iv)Copy of representation sent by the appellant to the bank dt.14.10.2020.

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(v) Copy of legal notice issued on behalf of the bank dt.24.10.2020.

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(vi)Copy of bank receipts (7 Nos.)

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(vii)Copy of statement of Accounts.

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(viii)Order in CMP No.290/2022 dt.27.10.2022.

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(ix) Advocate Commissioner’s Notice dt.24.11.2020.

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The respondent bank had entered appearance and filed their counter affidavit denying all the averments as taken in the SA and contending that the present attempt of the applicant is to delay the process and the sale had been conducted as early as on 28.02.2020 and only after the sale had gone through the applicant had made some payments to wife’s account which cannot be termed as an attempt to discharge the liability. It is also stated that the respondent had duly followed the procedure as required under the statute and there is no

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infirmity in the measures leading up to procurement of section 14 orders from the Ld. Magistrate. Along with counter, the respondent bank had filed the following documents:

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(a) Demand Notice and Ack.Card dt.28.07.2017.

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(b) Demand Notice and Ack.Card dt.15.11.2017.

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(d) Paper publication in English and Vernacular dt.18.11.2017.

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(e) Sale Notice dt.28.01.2020.

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(f) Affixture of Sale Notice.

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(g) Paper publication in English and Vernacular dt.04.02.2020.

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(h) Valuation Report dt.03.02.2020.

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The 3^rd respondent has filed a memo stating that he has participated in the sale and declared as successful auction purchaser and sale certificate was also been issued to him on 17.03.2020 against which SA 178/2020 has been preferred by applicant which is pending. It is further submitted that due to pendency of the same, the physical possession of the property cannot be handed over to him and hence he has been put to irreparable loss and mental agony. The 3^rd respondent also further submits that he is adopting the counter affidavit filed by respondent bank.)

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Heard Ld. Counsels for all the parties and considered the contentions as taken by the applicant in the SA in support of documents produced by him and also the rebuttal as made in the counter affidavit in the light of documents produced by both parties. The only issue that arise for consideration in this matter is as to whether the measures

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taken by the respondent leading up to procurement of section 14 orders is in accordance with the statute or not?

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The Ld. Counsel for applicant contended that the impugned order are procured through the back of applicant, as no notice in this regard was served on the applicant. This contention does not have any legal basis as it is settled that the Ld. Magistrate is acting only in its administrative capacity and it is also settled position that no notice be issued to the borrower before consideration of application u/s.14 and what is required is only the satisfaction of Magistrate as to the compliance of procedural mandates in measures leading to the filing of section 14 application.

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Even though the applicant is making an attempt to contend that the measures taken by the respondent in classification of account as NPA is not in accordance with the statute, the said contention needs to be looked in to in the light of admitted case of the applicant that the applicant was not able to repay the amount from February, 2020. From the statement of account produced by the respondent, it is clear that the account was grossly in default and some payment seen to be reflected as remitted is not sufficient to wipe of the entire liability. After the sale is confirmed, the applicant cannot claim right of redemption as a matter of right as the right of redemption has already been lost by operation of statute.

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In his challenge as to the measures leading to procurement of section 14 orders, the applicant contends that no demand notice had been served on him. The respondent had filed their counter denying the said contention and had also produced the demand notice and the postal acknowledgement card evidencing receipt of demand notice by the applicant. The said document produced by the respondent evidencing the receipt of demand notice by the applicant itself is sufficient to hold that there is due service of demand notice and the contention of the applicant in this regard is without any basis. The respondent had also produced proof of service of possession notice along with affixture and paper publication of the same. It is settled that the issuance of possession notice is not a pre-condition in initiation of measures u/s.14. The applicant had taken another contention that the sale had been conducted in a clandestine manner without informing the applicant about the same and fixing a reserve price well below the market value. In an application filed impugning the section 14 proceedings, the legality of the sale cannot be an issue since it is the prerogative of secured creditor to invoke section 14 prior to the conduct of sale or after the sale. In view of the above fact, this Tribunal is not adverting to the legality of the same which even according to the applicant is the subject matter on SA 178/2020.

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In view of the discussions and findings entered as above, this Tribunal is of the view that none of the contentions of the applicant as

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taken in the SA are legally sustainable and there is no force in the contention of the applicant that the measures leading to procurement of section 14 orders are flawed by procedural irregularities. Hence, SA is devoid of merits and is liable to be dismissed.

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In the result, SA 634/2022 stands dismissed. In view of the fact and circumstances of the case, no order as to cost is passed and all pending IAs stands closed. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1983.

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( Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 24^th day of March, 2023 )

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

D Senthil v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

D Senthil v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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