Quashed

Birendra Pratap Singh v. Dakshin Bihar Gramin Bank

DRT17 Apr 2023SA/82/2022

Case brief

AI extract

What is this about?

The applicant challenged the SARFAESI action taken by the bank for failure to comply with mandatory provisions regarding notice serving and publication. The Tribunal held that the failure to prove service of the possession notice invalidated the action and quashed it.

What did the court decide?

SARFAESI action initiated in pursuance of demand notices dated 12.06.2019 and 28.08.2019 was quashed on grounds of non-compliance with mandatory provisions.

Birendra Pratap Singh versus Dakshin Bihar Gramin Bank — Banking and Recovery | DRT (2023)

DRT,PATNA

SA 82 of 2022 [J]

DEBTSRECOVERYTRIBUNAL PATNA

¶5

Presiding Officer: Shri KaushalendraYadav

¶6

SA- 82 of 2022

¶7

Birendra Pratap Singh, S/o Sri Krishna Kumar Singh, At - Bajitpur, P.O. : Sherghati, P.S. : Amas, Dist. Gaya 824211.

¶8

. Applicants

¶9

Versus

¶10

The Authorised Officer, Dakshin Bihar Gramin Bank, Regional Office, Gaya 371-A Ramanuj Bhawan, A.P. Colony, Gaya 823001.

¶11

The Branch Manager, Dakshin Bihar Gramin Bank, Chandiasthan Branch, P.O. : Dariora, Gaya, Bihar - 8242011.

¶12

--respondents

¶13

Present:

¶14

For the Applicant : Sh. Santosh Kr. Singh, Advocate For the respondents Bank : Sh. Manoranjan Kr. Mishra, Advocate

¶15

Dated: 17.04.2023

¶16

JUDGMENT

¶17

Present application uls 17 of SARFAESI Act hereinafter termed as Act, has been filed with a prayer to quash entire SARFAESI action taken against the properties of applicant alongwith the possession notice.

¶18

The brief facts of the case is that the applicant availed Term Loan and Cash Credit Facility to the tune of Rs.22,50,000.00 from the respondent bank. On default in repayment of the dues of the bank, the account of the applicant was declared as NPA on 21.07.2016. Subsequently, the bank initiated SARFAESI Action against the borrower and issued demand notice uls 13(2) dated 28.08.2019 calling upon the applicant to make the payment of Rs.18,14,233.00. Further, possession notice dated 27.11.2019 uls 13(4) of the SARFAESI Act was issued. Thereafter, the bank proceeded for auction sale of the properties by issuing sale notice dated 02.02.2022 fixing the date of auction on 04.03.2022. Aggrieved from the sale notice, this SA has been

~~y) ;: .J_

SA 82 of 2022 [J]

DRT,PATNA

filed by the applicant.

¶24

As alleged by the applicant that without assigning any reason the bank invoked SARFAESI action and sent a demand notice u/s 13 (2) dated 12.06.2019 but no date of NPA has been disclosed in the said notice which is mandatory requirement. After some time the respondent bank again sent another demand notice dated 28.08.2019 issued u/s 13(2) without recalling the earlier notice dated 12.6.2019. However, demand amount has been revised from Rs.21,10,712.00 to Rs.18,14,233.00 in the subsequent notice. The possession notice issued u/s 13(4) of the SARFAESI Act has neither been served to the applicant nor affixed on the secured asset. The possession notice has also not been published in two leading newspapers. The bank failed to comply the provision of the Act and failed to comply Rule 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002( hereinafter referred as Rules). The land mortgaged in the matter is agricultural lands and as per provisions contained in section 31(i), the SARFAESI Act is not applicable to the agricultural lands. The respondent bank failed to serve 30 days sale notice to the applicant as required under rule 8(6) of the Rules. The sale notice has neither been affixed on the secured assets nor published in two leading newspapers.

¶25

It is further submitted that the loan was under granted under CGTMSE

¶26

Scheme, so there was no condition for collateral security in the relative sanction letter while the bank has obtained a mortgage of the immovable property through coercion, so it cannot be enforced in the court of law. The bank has made highly inflated and exaggerated demand of Rs.18 lacs approx. in their notices against the actual outstanding dues of Rs.10.00 lacs approx.

¶27

1. On the contrary, ld. Counsel of the respondent bank submitted that on default on repayment the bank invoked SARFAESI action and sent a demand notice u/s 13 (2) dated 12.06.2019 but it is came to knowledge of the bank that there is some calculation error in the said demand notice, therefore, vide letter dated 08.08.2019 the respondent bank rectified the error in calculating interest and issued fresh demand notice dated 28.08.2019 u/s 13(2). So far as objection regarding disclosing the date of NPA in the demand notice is concerned, it is not mandatory. Thereafter, the respondent bank issued possession notice dated 27.11.2019 u/s 13(4) of the SARFAESI Act and the same was received by the applicant himself as

/ ~"",0 J- ,,\v...

SA 82 of 2022 [J]

DRT,PATNA

well as also sent through post. The possession notice was published in two leading newspapers Times of India and Prabhat Khabar on 29.11.2019 and also affixed on secured assets.

¶33

I have heard Ld. Counsel for the parties and gone through the record.

¶34

It has been alleged that the no date of NPA has been disclosed in the demand notice. The respondent bank without recalling the earlier demand notice dated 12.6.2019 sent another demand notice dated 28.08.2019 issued u/s 13(2) and amount has been revised from Rs.21,10,712.00 to Rs.18,14,233.00 in the subsequent notice. The possession notice has neither been served to the applicant nor affixed on the secured asset. The possession notice has also not been published in two leading newspapers. The land mortgaged in the matter is agricultural lands. The respondent bank failed to serve 30 days sale notice to the applicant as required under rule 8(6) of the Rules. The sale notice has neither been affixed on the secured assets nor published in two leading newspapers.

¶35

On perusal of records it appears that the demand notice dated 12.06.2019 was issued by the bank as same was sent to the applicants as also admitted by the applicant. Thereafter, the bank issued a letter dated 08.08.2019 addressing Sh. Sumit Kr. Singh, Advocate with the copy of applicant that the bank has found some technical error in the calculation of interest in the account and will issue fresh demand notice. Accordingly, fresh demand notice dated 28.08.2019 was issued to the applicant which is also admitted by the applicant.

¶36

Ld. Counsel for the respondent bank submits that it has been specifically mentioned the amount due as on the date of demand notice. Although the notice does not indicate clearly that when the account was declared as NPA in so many words. Let us see the requirement of the provision under section 13 (2) of the SARFAESI Act that runs as under-

¶37

(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). ~ V'7 <sup>'tA-yO

¶38

,,-1

DRT,PATNA

SA 82 of 2022 [J]

The plain reading of the provision does not require disclosure of the NPA date as mandatory. The purpose of mentioning NPA date is just to make the borrower aware regarding the amount due against him on a particular day, so as to represent, if any, against the calculation made by the bank. It could have been made referring to the date of demand notice. In such a situation there is no reason to hold that the applicants have been taken into surprise as no date of NPA was conveyed to them and they were deprived to file representation before the bank under section 13 (3A) in any manner.

¶43

The applicant further alleges that the possession notice dated 27.11.2019 was not served to the applicant, nor published and also not affixed on the mortgaged property. The relevant Rule 8[1] & [2] of the Security Interest [Enforcement] Rules 2002 run as under-

¶44

8. Sale of immovable secured assets- [1 J Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. ss

¶45

[2J 'The possession notice as referred to in sub-rule [1J shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorized officer. ss

¶46

The Bank produced the copy of newspapers dated 29.11.2019 with regard to proof of publication of possession notice in Times of India and Prabhat Khabar. Page 19 of the counter affidavit is a copy of photographs taken at the time of affixation of possession notice proves that the affixation of possession notice was made on secured assets by the respondent bank.

¶47

It is important to note that No postal receipts or tracking has been filed by the respondent regarding service of possession notice alleged to have been issued on 27.11.2019. Since the postal receipts have also not been filed, no question of presumption of service arises. The delivery of possession notice is sine qua non for the measures intended under section 13(4) of SARFAESI Act. But the respondent has failed to prove the same as pleaded in the counter affidavit. This defect further makes the action of the respondent invalid.

¶48

On perusal of a letter dated 29.11.2019 issued by the bank, reveals that the respondent bank sent the copies 01 ~ed publication 01

~-v)
\v...::
..1

DRT,PATNA

SA 82 of 2022 [J]

¶53

possession notice to the applicant instead of individual possession notice. The Postal receipts indicating its tracking report to prove this fact were also not filed.

¶54

So far as sale notice is concerned, since the sale could not take place, therefore, sale notices become infructuous.

¶55

In view of the above discussion, it is established that the SARFAESI action initiated against the applicant is not in compliance with the mandatory provisions of the Act. The application deserves to be allowed and the measure initiated in pursuance of the demand notice u/s 13(2) of SARFAESI Act dated 12.6.2019 and revised demand notice dated 28.08.2019 is liable to be quashed. As the physical possession of the secured assets has not been taken, no order for the compensation shall be appropriate.

¶56

ORDER

¶57

Present SARFAESI application filed by Birendra Pratap Singh is allowed with costs. Alleged measure initiated in pursuance of the demand notice u/s 13(2) of SARFAESI Act dated 12.6.2019 and revised demand notice dated 28.08.2019 is quashed. r a

¶58

r a ~...../ry()n v~ ~.I\V\ [KaushalendraYadav]

¶59

Presiding Officer

¶60

Debts Recovery Tribunal, Patna

¶61

Judgment signed, sealed, dated and pronounced in the open court on this Day of 17THApril, 2023.

¶62

Presiding Officer

¶63

Debts Recovery Tribunal, Patna

Birendra Pratap Singh v. Dakshin Bihar Gramin Bank

Case brief

What is this about?

What did the court decide?

Birendra Pratap Singh v. Dakshin Bihar Gramin Bank

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

Similar cases

United Bank of India versus M S Icon J J Beverages Pvt. Ltd.

Punjab National Bank versus Lalit Chimney

Uco Bank versus Gangadhar Choudhary

Punjab National Bank versus Praveen Kumar and another

Punjab National Bank versus Pratik Kumar

Nagendra Sharma versus Indian Bank