Dismissed

Aftab Alam v. Hdfc Bank Limited and Others

DRT19 Dec 2024SA/130/2022

Case brief

AI extract

What is this about?

In this securitization application, the applicant challenged notices under Sections 13(2) and 14 of the SARFAESI Act, alleging fraud and lack of OTS opportunity. The Tribunal held that refusal to grant OTS is the creditor's prerogative, noting the Tribunal lacks mediation authority, and dismissed the application for failure to establish fraud.

What did the court decide?

The Securitization Application was dismissed with costs.

Aftab Alam versus Hdfc Bank Limited and Others — Execution and Attachment | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.130/2022

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Date of Institution: 28.07.2022 Date of Decision: 19.12.2024

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Sh. Aftab Alam S/o Sh. Naim Mohammad R/o House No. 79, Village Jassain, Abadi Naresh Colony, Friends Colony, Near Green Land Public School/Gautam Medical Hall, Tehsil & District Ludhiana

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--Applicant

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Versus

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HDFC Ltd., Ramon House, 169, Backbay reclamation, H.T. Parekh Marg, Churchgate, Mumbai-400020 through its Authorized Person

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HDFC Ltd., S.C.O. 143-144, Sector 8/C, Madhya Marg adjacent Sindhi Sweets, Chandigarh through its Authorized Officer

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Housing Development Finance Corporation Lts., Area Office at S.C.O. 153-155, Sector 8-C, Madhya Marg, Chandigarh, through its Authorised Person

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--Respondents

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Argued by: Sh. J.S. Jaidka, Advocate for Applicant Sh. Vaibhav S. Tara, Advocate for Respondents

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FINAL ORDER

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(1) 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 notice under Section 13(2) of the Act dated 07.06.2021 and notice under Section 14 of the Act dated 25.05.2022 and further action to be taken by the respondents being illegal.

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SA/130/2022 AFTAB ALAM VS. HDFC LTD. AND OHTERS

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(2) It was stated in the application that applicant is resident of House No. 79, Village Jassian, Abadi Naresh Colony, Friends Colony, near Greenland Public School/Gautam Medical Hall, Tehsil and District Ludhiana. Notice under Section 13(2) of the Act is annexed as Annexure A1 in which it was mentioned that applicant has availed two credit facilities, First Loan Account No. 633348156 and Second Loan Account No. 633348194 on 21.06.2018 and Rs. 14,13,425/- and Rs. 18,00,000/- was disbursed respectively in the said loan accounts; that due to adverse business circumstances there has been default regarding the payment of the loan amount in both loan accounts; that applicant has repeatedly asked the respondents to provide him an opportunity to settle his loan accounts by giving a favourable settlement scheme but respondents never helped applicant in OTS; that respondents only wants the property of the applicant, which is much more in value than the total loan amount and therefore, respondents do not want to settle the loan accounts; that respondents are trying to usurp the property of the applicant; that applicant received notice under Section 13(2) of the Act dated 07.06.2021; that applicant had duly replied the above said notice on 06.07.2021; that in the said reply it was specifically mentioned that due to Covid-19, Pandemic, there was default in re-payment of the loan because of miserable economic condition; that no restructuring of the loan accounts had been adhered to by the respondents and no waiver was given as per the guidelines of the RBI for the relevant time period; that, it was informed to respondents that as soon as the business picks up there is every intention of repayment of the loan; that applicant was most dismayed when he received the impugned notice dated 25.05.2022 (Annexure A3) issued by Tehsildar cum Executive Magistrate, Ludhiana (West); that respondents without following the due process of law issued notice under Section 13(4) of the Act to applicant; that the above said residential house is the only residential property owned by the applicant and due to the above said fraud, as has been portrayed in the preceding paragraph, applicant has every chance to come on the roadside; that the fraud is being committed upon the applicant without following proper procedure; that the unscrupulous financial institution is creating immense misery to the life of the applicant and his family; that

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SA/130/2022 AFTAB ALAM VS. HDFC LTD. AND OHTERS

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applicant has already paid a substantial amount of his loan i.e., more than Rs.06 Lacs and has been trying to pay back his rest loan amount also. It was prayed that the SA may be allowed.

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(3) Reply filed by respondents.

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(4) It is stated in the reply that applicant had availed Housing Loan from the respondents to the tune of Rs.14,13,425/- on 21.06.2018 in Account No. 633348156 and Rs.18 Lacs on 21.06.2018 in Account No. 633348194; that both the loan accounts are in default and after following due process of law the aforesaid loan facilities had been withdrawn vide recall notice dated 24.05.2021; that subsequently, the loan accounts were classified as NPA; that thereafter, demand notice dated 07.06.2021 was served upon applicant as per Rules; that on 08.07.2021, objection/representation dated 06.07.2021 was received from the applicant/Co-borrower in terms of Section 13(3-A) of the Act within 60 days from the service of the demand notice; that respondents had duly replied to the objections dated 06.07.2021 wherein the applicant was asked to repay entire outstanding amount in terms of demand notice dated 07.06.2021; that after following due process of law, an application under Section 14 of the Act had been filed in the Office of District Magistrate, Pathankot seeking assistance to take over the physical possession of the secured asset; that District Magistrate has passed the order dated 04.04.2022; that as on date, the loan accounts of applicant are in default and no attempt has been made by the applicant to regularize the loan accounts or repay the liability in full as per the statutory demand notice; that as on 24.01.2023 an amount of Rs. 40,05,335/- was repayable by applicant alongwith other charges and interest in accordance with the agreements and statement of loan accounts; that statutory notices have been duly served on the applicant and compliances under the Act and Rules framed thereunder, have been made. Therefore, the present SA may kindly be dismissed.

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(5) No replication was filed by applicant to the reply filed by respondents.

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(6) I have heard arguments advanced by Sh. J.S. Jaidka and Sh. Vaibhav S. Tara, Advocates and gone through the record carefully.

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4 SA/130/2022 AFTAB ALAM VS. HDFC LTD. AND OHTERS

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(7) It was argued by Sh. J.S. Jaidka, Advocate that notice under Section 13(2) of the Act dated 07.06.2021 was received by applicant and he has filed objections under Section 13(3-A) of the Act dated 06.07.2021 but respondents have not replied the said objections.

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Per contra , Sh. Vaibhav S. Tara, Advocate argued that respondents have duly replied to the objections filed by applicant under Section 13(3-A) of the Act on 12.07.2021 within 15 days as per Section 13(3-A) of the Act.

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A copy or representation under Section 13(3-A) of the Act was filed by respondents as Annexure R4, which shows that this representation was sent to respondents by Dr. Anwar M. Advocate and not by applicant himself as provided in Section 13(3-A) of the Act.

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(8) Sh. J.S. Jaidka, Advocate further argued that notice under Section 13(4) of the Act was not served upon applicant but notice under Section 14 of the Act was served. It was further argued that when the notice under Section 13(4) of the Act was not served upon applicant, then notice under Section 14 of the Act was not maintainable under the Law.

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Per contra , Sh. Vaibhav S. Tara, Advocate argued that all the notices were issued strictly in compliance of Rules and in accordance with law. It was further argued that there is no necessity of issuance of notice under Section 13(4) of the Act before moving the application under Section 14 of the Act before the Magistrate concerned for assistance of police for taking the physical possession of the secured asset.

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It was provided in Section 13(4) of the Act that in case the borrower failed to discharge his liability in full within the period of 60 days specified in Section 13(2) of the Act, the secured creditor may take recourse to one or more of the following measures to recover his secured debt i.e., take possession of the secured assets of the borrower.

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Section 14 of the Act provides for assistance by Chief Metropolitan Magistrate or District Magistrate in taking possession of the secured assets.

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Above provisions shows that any application moved by secured creditor under Section 14 of the Act for assistance of police in taking possession of the secured assets is nothing else but a preparation for taking

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5 SA/130/2022 AFTAB ALAM VS. HDFC LTD. AND OHTERS

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possession of the secured assets as provided under Section 13(4) of the Act. (9) Sh. Vaibhav S. Tara, Advocate placed reliance upon the judgment passed by Hon’ble Supreme Court of India in Criminal Appeal No. 1218/2013 with Criminal Appeal No. 1217/2013 decided on 22.08.2013 titled as Standard Chartered Bank Vs. V. Noble Kumar and Others 2014 All SCR 3025 . In the said judgment Hon’ble Supreme Court has discussed and examined Section 14 and Section 13(4) of the Act. It was ordered as under:

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“ 28. It is in the above – mentioned background of the legal frame of Sections 13 & 14, we are required to examine the correctness of the conclusions recorded by the High Court. Having regard to the scheme of the Sections 13 & 14 and the object of the enactment, we do not see any warrant to record the conclusion that it is only after making an unsuccessful attempt to take possession of the secured asset, a secured creditor can approach the Magistrate. No doubt that a secured creditor may initially resort to the procedure under Section 13(4) and on facing resistance, he may still approach the Magistrate under Section 14. But, it is not mandatory for the secured creditor to make attempt to obtain possession on his own before approaching the Magistrate under Section 14. The submission that such a construction would deprive the borrower of a remedy under Section 17 is rooted in a misconception of the scope of Section 17 .”

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(10) Sh. J.S. Jaidka, Advocate further argued that a fraud was committed by respondents.

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Per contra , Sh. Vaibhav S. Tara, Advocate argued that no fraud was committed by respondents and they have initiated the proceedings under the Act strictly in accordance with law.

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Neither in the application nor during the course of arguments, it was explained as to what type of fraud was committed by respondents. No specific details or facts of fraud were provided in the application neither disclosed during the course of arguments.

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Therefore, it reveals that no fraud was committed by respondents as stated by the applicant. (11) Sh. J.S. Jaidka, Advocate further argued that despite of readiness of applicant, respondents are not ready for the OTS.

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6 SA/130/2022 AFTAB ALAM VS. HDFC LTD. AND OHTERS

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Settlement of any loan account under OTS or otherwise is the sole prerogative of secured creditor i.e., Bank/FI. Any borrower has no right to compel the secured creditor to settle the loan account under OTS or otherwise.

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During my day-to-day work in the Tribunal, it has came in the knowledge that every second borrower wants for settlement under OTS and not for deposit of total outstanding amount. Since banks/FIs accepts the OTS proposals at very low amount in comparison to the total outstanding, this ailment is growing on day by day.

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As per established law this Tribunal has no authority for mediation regarding settlement of loan account between borrower and bank/FI.

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In the Act nowhere it is provided that on the ground of non-settlement of loan under OTS by secured creditor this Tribunal can set aside the SARFAESI proceedings.

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(12) Certain other facts are mentioned in the application but learned counsel for applicant has not argued on the said facts. Therefore, there is no necessity to adjudicate the same.

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(13) No other point was argued or pressed. (14) After the consideration of all facts and circumstances, there is no case made out in favour of applicant and this SA deserves to be dismissed.

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(15) SA is dismissed with costs. Record be consigned to record room after due compliance. Date: 19.12.2024. Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Aftab Alam v. Hdfc Bank Limited and Others

Case brief

What is this about?

What did the court decide?

Aftab Alam v. Hdfc Bank Limited and Others

Case brief

What is this about?

What did the court decide?

What the court decided

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