Disposed

Shefali Chakdar And Anr. v. Punjab National Bank

DRT21 Mar 2024SA/145/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal disposed of an application challenging a sale notice as infructuous because the scheduled auction failed due to paucity of bidders. The court rejected the contention that prior procedural irregularities regarding notice service could be raised after limitation via the theory of continuing cause of action.

What did the court decide?

Application rejected and disposed of as infructuous because the auction did not take place.

Shefali Chakdar And Anr. versus Punjab National Bank — Banking and Recovery | DRT (2024)

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SA/145/2023

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ORDER SHEET DEBTS RECOVERY TRIBUNAL, SILIGURI SA/145/2023

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Shefali Chakdar & Anr Applicant Vs Punjab National Bank Defendants

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Office action with date and Date of Order with Signature dated Order signature of parties when necessary. Item No. 05 21.03.2024

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ORDER

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Counsel for the applicant: Ms. Puja Bhupal.

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Counsel for the respondent bank: Mr. P.K. Sikdar.

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Instant SA was filed by the applicants challenging the sale scheduled on 04.12.2023 pursuant to the sale notice dated 26.10.2023. The sale in question did not take place due to paucity of bidders and as such Ld. Counsel of the respondent bank submitted that the SA has become infructuous and accordingly, requested to dispOsed of.

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Per contra Ld. Counsel of the applicants has filed written notes of argument and submitted that it is a case of "continuing cause of action" and 13(4) notice was not served as per law and 13(2) notice was also not properly served and thus the matter should be decided on merit on the point of irregularities, made in issuance of 13(4) notice.

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Ld. Counsel of the applicants has cited the cases of Hon'ble Supreme Court

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Presiding Officer Tibunalpassed in Indian Overseas Bank vs M/s Ashok Saw Mill [ (2009) 8 SCC 366], Mardia Chemicals Limited vs Union of India [(2004) 4 SCC 311] and cases of Hon'ble Telengana High Court, passed in M/s Alpine Pharmaceuticals Pvt. Ltd. vs Andhra Bank [(2020) SCC online TS 81], M/s Durga Bhavani vs Canara Bank (W.P. No. 12189 of 2018) decided on dated 18.04.2018 and the judgment of Hon'ble Calcutta High Court passed in case of Ramsay Exim & Technology Pvt. Ltd. & Ors vs ICICI Bank Ltd. & Ors (C.O. No. 1916 of 2019).

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Ld. Counsels of both the parties have already been heard.

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From perusal of the record it transpires that the SA was fled by the applicants challenging the sale notice dated 26.10.2023 and the sale scheduled on 04.12.2023, on various grounds mentioned in the SA and as per paragraph -4 of

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the SA, limitation has been counted from the date of sale notice i.e. 26.10.2023.

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SA/145/2023

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As per Section 17(1) of the SARFAESI Act, any person (including borrower), aggrieved by any of the measures referred in Sub-section 4 of Section 13 taken by the secured creditor or his authorized officer under this chapter, may make an

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application to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measures had been taken.

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Thus, right from the stage of issuance of 13(4) notice, other subsequent measures taken by the secured creditor after the issuance of 13(4) notice, may be challenged before the Debts Recovery Tribunal under section 17(1) of the SARFAESI Act.

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In case of Authorized Officer, Indian Overseas Bank & Anr vs M/s Ashok Saw Mill (Supra) Hon'ble the Supreme Court has held in paragraph 24 of the judgment as under:

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"24. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."

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In case of Kanaiyalal Lalchand Sachdev & Ors vs State Of Maharashtra & Ors [2011) BC 698 (SC)] Hon'ble the Supreme Court has held that an action u/s 14 of the SARFAESI Act constitutes an action taken after the stage of Section 13(4) and therefore same would fall within the ambit of Section 17(1) of the Act. Presiding Officer Tibunayo well settled principal that if during the pendency of the SA, any subsequent Debts Recovery Ciinuri measures is taken by the secured creditor, it would be challenged in the same SA, due to continuing cause of action and it is also settled that if after fling of the SA, any measures is taken then during the pendency of the SA, the said measures may be challenged irrespective of the fact, that whether it was challenged within 45 days of such measures or not? But here the point is different and the plea of the applicants is that even if 13(4) notice was not challenged within limitation, it can be challenged at a later stage also when for any subsequent measures, the SA was filed within 45 days of the such measures. If this plea of the applicants is admitted, then the borrower would wait until the last measures is taken by the bank and then by filing the SA and cOunting limitation from the last measures, the all previous measures, may be challenged in that SA itself. It is pertinent to mention that " continuing cause of action" starts from the date of first cause of action for which the case was filed and the other subsequent stages till the final judgment is pronounced in the matter but "continuing cause of action" does not include the previous cause of action which were not challenged before the end of period of limitation and it can be said that, if any actionlmeasures is not challenged within the period of limitation, the same would get the finality.

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SA/145/2023

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In case of Bank of Baroda vs Tursiram Sheetgrah Pvt. Ltd. {2022 Livelaw (SC) 671} Hon'ble the Supreme Court has held in para 12 as under:

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"The reason for providing a time limit of 45 days for filing an application under Section 17 can easily be inferred from the purpose and object of the enactment. In Transcorev. Union of India and Anr.3 this Court held that the SARFAESI Act is enacted for quick enforcement^of the security. It is unfortunate that proceedings where a property that has been brought to sale and third-party rights created under the provisions of the Act, have remained inconclusive even after a decade."

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Plea of the applicants is that 13(2) notice was not properly served and 13(4) notice was also not properly served. It is pertinent to mention that 13(2) notice does not give right to the applicant to challenge before the Debts Recovery Tribunal rather,, only after issuance of 13(4) notice, an SA under section 17(1) can be filed before the Debts Recovery Tribunal and thus, if without properly serving the 13(2) notice, any 13(4) notice has been issued, then within 45 days of the issuance of 13(4) notice. this plea has to be raised before the Debts Recovery Tribunal that the 13(2) notice was not properly served and this this principal is logical also because if without serving any 13(2) notice, 13(4) notice issued and it is challenged within 45 days of the issuance of 13(4) notice then at its early stage, the irregularities can be cured by the Debts Recovery Tribunal by giving direction to the bank to initiate a fresh SARFAESI proceeding by serving 13(2) notice in accordance with law but, if the argument of the applicants is accepted, then after 5 years of issuance of 13(4) notice, one measure taken by Presiding Officer Debts Recovery Tribunal the secured creditor can be challenged by counting limitation from the date of such measures and after admission of the case for hearing, plea may be raised Siliguri that 13(2) and 13(4) notices were not properly served and if the Tribunal finds any substance in the submissions of the borrower, the entire proceeding would be initiated a fresh after more than five years which is against the aim and object of the SARFAESI Act.

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In the instant case applicants have not denied that any 13(2) notice was not served, rather their plea is that it was not properly served. The relevant paragraphs of the SA are extracted here-in-below:

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"6.9 That your Applicants states that the Defendants however did not grant any reasonable time to the Applicant but surprisingly the Defendant No. 2 on behalf of Defendant No. 1 issues a purported notice us 13(2) of the SARFAESI Act, 2002 and Rules made thereunder without following the provisions of said Act and Rules thereafter.

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SA/145/2023

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6 10 That the Defendant Bank at all material time had the due knowledge about the loss of the Applicants and in as much as financial hardship and in spite of knowing about all such facts and circumstances, the Defendant Bank deliberately issued said purported demand notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, to the borrowers, which was not properly served to the Applicants.

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6 11 That amidst such a situation without serving any proper notice u/s 13(2) of the SARFAESI Act to the Applicants to the utmost surprise of the Applicants, the Defendant Bank all of a sudden issued a possession notice dated 23/10/2019.

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XX XX XX

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Presiding Officer Debts Recovery Tribunal Siliauri

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6.14 That your Applicants would like to humbly submit that incompleteness of Notice under 13(2) is also established because the full DETAILS of the amount payable by the borrower, SEPARATELY specifying the interests till the date of NPA, intended to be recovered by the secured creditor:. has not been provided in the same, which is an essential criterion to be fulfilleed by the secured creditor as per Section 13(3) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, and as prescribed by the Ld. Courts in landmark judgments.

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6.15 That without a proper notice u/s 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 and a complete statement of account with interest calculation sheet, the outstanding as stated in the purported demand notices is/are controversial and denied.

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XX XX XX

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6.17 That the purported notice u/s 13(2) of the SARFAESI Act, wherein, it has not enclosed the statement of accounts. As such, the respondents have violated the provisions under Section 13(3) of the Act and on the basis of the said notice, no SARFAESI action can be taken against the Applicants. As per the judgment passed by the Apex Court that any notice issued under Section 13(2) of the SARFAESI Act, should be accompanied by the statement of account along with the notice. But in the said notice dated

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SA/145/2023

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Z/08/2021 no statement of accOunts had been enclosed wnlcn Tenders the entire action of the Defendant Bank as bad and not Sustainable in the eye of law. The Applicants further states that ne S unaware of the breakup of the demanded sum by the Defendant Bank.

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XX XX

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6.25 That in the absence of any proper Notice under u/s 13(2) of the said SARFAESI Act, 2002, the Applicant's right under Section 13(3) and 13(A) is also violated."

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So far the possession notice issued under section 13(4) is concerned, again plea of the applicants is that it was not properly served, but it has been admitted that notice was actually served and even the applicants have annexed the possession notice dated 23.10.2019 at page no. 84 (Annexure-B) of the SA. All the above pleas may have been raised by the applicants, by filing SA under section 17(1) of the SARFAESI Act within 45 days from the date of issuance of 13(4) notice ie. 23.10.2019 but not in this SA which has been filed challenging the sale notice dated 26. 10.2023.

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The judgment cited by the applicants passed in case of Mardia Chemicals (Supra), Alpine Pharmaceuticals(Supra), Durga Bhawani (Supra) and Ramsay Exim & Technology (Supra) would not help the applicants on the points of limitation while challenging the 13(4) notice dated 23.10.2019 in a SA which has been filed in the last quarter of 2023, challenging the sale notice dated 26.10.2023.

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In view of the discussions made hereinabove the SA is hereby disposed of as infructuous as the sale did not take place on the scheduled date i.e. 04.12.2023 pursuant to the sale notice dated 26.10.2023.

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Let the file be consigned to the record Room.

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Registry is directed to serve the copy of this order both the parties free of cost. Upload the order in the website of the Tribunal.

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(RAKESHPATI TIWARI) Presiding Officer DRT-Siliguri

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Presiding Officer Debts Recovery Tribunal Siliquri

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Shefali Chakdar And Anr. v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Shefali Chakdar And Anr. v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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