Dismissed

Indian Overseas Bank v. Mr M Muruganatham

DRT17 Feb 2023TA/159/2022

Case brief

AI extract

What is this about?

The debt recovery Tribunal dismissed a securitization application challenging the issuance of Section 14 orders. The applicant contested the lack of proper service of demand and possession notices. The court held the bank successfully proved service via deemed service and publication in newspapers, rejecting the challenge.

What did the court decide?

Securitization Application dismissed; all pending Internal Applications closed; no orders as to cost.

Indian Overseas Bank versus Mr M Muruganatham — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 17^th day of February, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TSA No.159 of 2022

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Mrs. A. Rajeswari W/o R. Arunachalam No.774, North Street, Melmampattu Pudupillaiyar Kuppam Panruti – 607 106

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Mr. R. Arunachalam S/o Rajavel No.774, North Street, Melmampattu Pudupillaiyar Kuppam Panruti – 607 106

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...Applicants

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Versus

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Tamilnad Mercantile Bank Limited Represented by its Chief Manager / Authorised Officer Panruti Branch, No.71, Chennai Salai Panruti – 607 106 …Respondent

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Counsel for the Applicants : M/s J. Ravishankar Counsel for Respondent : M/s K.N. Chinnakrishnan

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FINAL ORDER

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The Securitization Application is originally filed as SA.105 of 2022 before DRT-I Chennai and had been renumbered as TSA.159 of 2022. The measures taken by the respondent leading up to the procurement of section 14 orders is impugned in this application filed u/s 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act), herein after been referred to as SARFAESI Act or the Act, as the case be.

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The applicant filed this SA contending that the applicant availed Credit Facility from the defendant bank including the facility of Rs.35 lakhs availed on 11.2.2020. It is admitted that the applicant had created mortgage over the scheduled properties in lieu of security for the repayment of the loan. It is also stated that only as the Government of India ordered a nationwide lockdown, the applicant was unable to run his business and make the payments. It is also stated that the applicant requested for reschedulement of the facility so that the account can be serviced. It is also stated that though the defendant under took to reschedule the loan account, the same was not down and instead the Authorized officer visited the applicant and threatened the applicant to vacate the premises. The applicant was also informed as to the filing of a section 14 application and orders passed therein by the Ld. Magistrate.

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In the grounds to the SA, the applicant contends that the bank had not issued 13(2) 13(4) notices and hence the impugned proceedings are not maintainable in law. It is also stated that the defendant had not maintained proper statement of accounts and had presented inflated outstanding amount before the Ld. Magistrate. The other contention is taken regarding so claimed assurance by the bank officials as to reschedulement. On the above contentions the applicant seeks to set aside the orders passed by the Ld. Magistrate.

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The respondent entered appearance and filed their counter/objection refuting all the contentions of the applicant. It is also contended that since there is no challenge as to the possession notice issued earlier, the present SA is not

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maintainable. In regard to the challenge as to the demand notice the respondent contends that the demand notice issued to the borrowers through registered post acknowledgment due and the same were returned stating that the borrowers refused to receive the demand notice. Hence the respondent contends that there is no requirement to publish the demand notice as there is express refusal to receive the notice. The respondent further contends that on a safer note. The respondent had published the demand notice though according to them it is not mandatory.

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Apart from the counter the respondent had produced the sanction letter, demand notice, returned cover of demand notice, paper publication of the demand notice in two dailies, English and Tamil, possession notice, photographs evidencing affixture of possession notice, returned cover of the possession notice, paper publication of the possession notice in two dailies, memorandum of deposit of title deeds dated 19.11.2011, 8.1.2014 and 9.2.2015, statement of accounts, advocate commissioners report and undertaking letter. On the production of above documents and contentions in the counter, the respondent seeks for dismissal of the SA.

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Heard the counsel of both sides and considered the contentions as taken in the SA and also the counter statement and the documents produced from the side of the respondent.

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The only issue that arise for consideration in this matter is as to whether the measures taken by the respondent leading up to the procurement of Section 14 orders are in accordance with the statute or not.

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The applicant is impugning the measures leading up to the procurement of section 14 orders contending the mainly that there is no service of demand notice or possession notice. The applicant in ground (b) the defendant bank has not issued section 13(2) and 13(4) notices to the applicant and further that the impugned order is not sustainable on that count. In rebutting the said contention, the respondents in their counter had taken a stand that since the applicant had refused the service of notice, it amounts to deemed service the respondent had also relied upon many decisions to hold that the refusal of notice is to be taken deemed service. This Tribunal is not inclined to accept the said contention of the respondent as the statute mandate publication of the notice in the event “the Authorized Officer has reason to believe that the borrower or his agent is avoiding the service of notice or that for any other reason the service cannot be made as aforesaid, the service shall be effected by affixing the copy of a demand notice and also by publishing the contends of the demand notice in two dailies”. Hence if the demand notice could not be served for any reason, it is obligatory on the Authorized officer to publish the same. In the case in had the respondent though had taken a contention that it is not mandatory to publish the notice, had also stated that they had published the demand notice in two dailies “Dinathanthi” and “The Hindu” on 22.4.2021. The respondent had also produced the proof of publication of the demand notice. Hence by production of the evidence as to the publication of demand notice and returned covers of the same, the respondent had successfully proved the service of demand notice. Hence the contention of applicant as to the non service of demand notice is to be discarded.

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The applicant is also taking a contention that there is no service of possession notice also. Even though the service of possession notice is not sinequo non for the invocation of section 14 orders, the respondent had produced the proof of issuance of the possession notice and its returned cover. The respondent had produced the photographs evidencing affixture of the possession notice. The due publication of the possession notice is also produced by the respondent. By production of the above documents, the respondent had successfully proved the compliance of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules.

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Hence by production of the document substantiating proper service of demand notice as well as possession notice. The applicant is admitting the availment of the facility, creation of security interest and the defaults occurred in the account. Apart from the alleged non service of demand notice and possession notice, no serious contention is taken by the applicant as to the challenge of proceedings leading up to the impugned orders. The respondent had substantiated the legality of the proceedings in their measures in leading to the obtainment of section 14 orders which is impugned in the SA. Hence the only conclusion this Tribunal can arrive at is that the SA is without any merit and is liable to be dismissed.

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In the result the SA stands dismissed and 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 17^th day of February, 2023)

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

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Indian Overseas Bank v. Mr M Muruganatham

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. Mr M Muruganatham

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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