Dismissed

M/S Panel Indus and Others v. Punjab National Bank

DRT25 Aug 2023SA/73/2023

Case brief

AI extract

What is this about?

A Securitization Application filed under the SARFAESI Act seeking to set aside enforcement proceedings due to alleged non-service of notices on a proprietorship firm was dismissed. The Tribunal held that service on the sole proprietor was sufficient and the applicants failed to show substantial prejudice.

What did the court decide?

The Securitization Application was dismissed with costs along with IA No. 259/2023.

M/S Panel Indus and Others versus Punjab National Bank — Company and Corporate | DRT (2023)

¶1

DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

¶2

PRESIDED OVER: SH. MRIDULESH KUMAR SINGH SECURITIZATION APPLICATION NO.73/2023

¶3

Date of Institution: 03.04.2023

¶4

Date of Decision: 25.08.2023

¶5

M/s Panel Indus VPO Dharur, Ludhiana through its sole proprietor Sh. Rahul Sharma (PAN CPIPS1468D)

¶6

Mr. Rahul Sharma S/o Sh. Gulshan Sharma H. No. 308 Street No. 8 Chandigarh Road, Sarpanch Colony, Jamalpur, Focal Point Ludhiana Punjab-141010

¶7

Mr. Vivek Sharma S/o Sh. Gulshan Sharma H. No. 308 Street No. 8 Chandigarh Road, Sarpanch Colony, Jamalpur, Focal Point Ludhiana Punjab-141010

¶8

--Applicants

¶9

Versus

¶10

Authorised Officer, Punjab National Bank, Circle Sastra, Ferozepur Road, New Westend Mall, Ludhiana

¶11

--Respondent

¶12

Argued by: Sh. Harinder Pal Singh, Advocate for Applicants Sh. P. S. Sobti, Advocate for Respondent

¶13

FINAL ORDER

¶14

This Securitization Application was filed under section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(hereinafter referred to as ‘the Act’ for brevity) for setting aside all actions taken by the respondent under the provisions of the above said Act.

¶15

It is stated in the application that the applicant no. 1 is the proprietorship firm of the applicant no. 2 and applicant no. 3 is the co-mortgager along with applicant no. 2; that in the year 2020 the applicant no. 1 firm availed cash credit facility of Rs. 40 lacs from respondent bank and also availed Term Loan (1) of Rs. 35 lacs and Term Loan (2) of Rs. 25 lacs from the respondent bank; that Loan Account was declared NPA on 01.05.2021; that bank has issued demand notice dated 12.09.2022 under section 13(2) of the Act to applicant Nos. 2 and 3 only; that as per Rule 3(4) of the Security Interest (Enforcement) Rules, 2002, demand notice should be served on each borrower but in the present case borrower is applicant No. 1 Firm and applicant No. 1 was not served with any demand notice; that on 31.01.2023 respondent bank issued possession notice to applicant Nos. 2 and 3 only and no service was effected upon applicant No. 1; that applicants submitted a proposal of OTS with bank but bank has not replied to the request; that applicants want to settle the account and seeking some breathing time. It is prayed that directions be issued to respondent to restructure the account of applicants.

¶16

SA 73/2023 2

¶17

Reply filed by respondent bank and it is stated that present application has been filed beyond period of limitation; that demand notice dated 12.09.2022 and possession notice dated 31.01.2023 were sent to applicants No. 2 and 3, which fact is admitted by the applicants in para-No. 5 (vi) of the application; that applicant No. 1 is proprietorship firm and applicant No. 2 is sole proprietor of applicant No. 1 who has admittedly received the notices; that applicants were highly irregular in running and operating the loan account which compelled the respondent bank to declare their loan account as NPA as per guidelines issued by RBI from time to time; that applicant No. 2 is sole proprietor of applicant No. 1 firm and admittedly he had received the notices, therefore applicants are now estopped to take such frivolous plea; that possession notice was sent to applicants through registered post and same was also published in two newspapers and also pasted on the mortgaged property and copies of publication, possession notice and photographs are attached to reply as Annexure R-2 (colly). It was prayed that the present SA may be dismissed.

¶18

Sh. Harinder Pal Singh, Advocate has argued that in light of Rule 3(4) demand notice was required to be served on each borrower; that definition of borrower is provided in section 2(f) of the Act, which means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution; that in light of the said definition all the three applicants of this SA are borrowers but demand notice under section 13(2) and possession notice under section 13(4) of the Act were served only upon applicant Nos. 2 and 3 and not on applicant No. 1. It was further argued that he is pressing only this argument and on this ground his SA may be allowed.

¶19

Per contra , Sh. P. S. Sobti, Advocate has argued that applicant No. 1 is proprietorship firm and applicant No. 2 is sole proprietor of applicant No. 1; that admittedly applicant No. 2 was served both the notices; that applicant No. 1 firm is not a person and it could not receive any paper and someone is supposed to receive the notices on its behalf; that applicant No. 2 being proprietor of applicant No. 1 firm has received the notices. It was further argued that in the circumstances this cannot be said that applicant No. 1 firm was not served with both the notices.

¶20

This fact is admitted by applicants in their application that demand notice under section 13(2) of the Act and possession notice under section 13(4) of the Act were served upon applicant Nos. 2 and 3. It was mentioned in the application itself that Mr. Rahul Sharma applicant No. 2 is the sole proprietor of the applicant No. 1 firm. In fact, in this SA M/s Penal Indus VPO Dharaur, Ludhiana through its sole proprietor Sh. Rahul Sharma was made a party as applicant No. 1, which also shows that Sh. Rahul Sharma is the best person for receiving notices on behalf of applicant No. 1 firm.

¶21

In the above circumstances this cannot be said that applicant No. 1 firm was not served with notices under section 13(2) and 13(4) of the Act.

¶22

SA 73/2023 3

¶23

Hon’ble Supreme in M/s L & T Housing Finance Limited vs. M/s Trishul Developers in Civil Appeal No.3143/2020 decided on 27.10.2020 has observed that trivial procedural lapse is not a ground of nullify SARFEASI proceedings initiated by secured creditors, if no substantial prejudice was caused to borrower. It is further observed by Hon’ble Supreme Court that proceedings initiated under the SARFEASI Act by the secured creditor cannot be nullified merely on the ground to technical defect and procedural lapse unless substantial prejudice was caused to the defaulters.

¶24

In fact, there is no procedural lapse in service of said notices but for the sake of argument if in the present case service of said notices on sole proprietor of applicant No. 1 firm is not sufficient then also in light of observations made by Hon’ble Apex Court in the above said case there is no ground to set aside the SARFAESI proceedings.

¶25

During the course of arguments learned counsel for applicants has not explained any substantial prejudice caused to applicants.

¶26

No other points pressed by the learned counsel for applicants.

¶27

After considering the whole facts and circumstances of the case this tribunal is of the considered opinion that applicants have miserably failed to make out any case in their favour. This SA is devoid of merits. Resultantly, this SA is dismissed with costs along with IA No. 259/2023.

¶28

Any other IA pending stands disposed off.

¶29

Order be uploaded on the official website of this Tribunal and Record be consigned to the record room after due compliance.

¶30

Dated: 25.08.2023 (MRIDULESH KUMAR SINGH) Presiding Officer DRT-III, Chandigarh Order dictated, signed and pronounced by me in the open Tribunal.

¶31

Dated: 25.08.2023 (MRIDULESH KUMAR SINGH) Presiding Officer DRT-III, Chandigarh

M/S Panel Indus and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

M/S Panel Indus and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Punjab National Bank, versus Sh. Ajit Singh

Indian Bank versus Sh. Kulwinder Singh

Punjab National Bank versus Sh. Balraj Gupta

Punjab National Bank versus Harman Fresh Fruits

Punjab National Bank versus Sh. Harinder Pal Singh

Hdfc Bank Ltd. versus M/s Sanjeev Trading Company