Dismissed

Ms Mrp Associates v. the Baghat Urban Co. Operative Bank Ltd.

DRT13 Sept 2024SA/170/2024

Case brief

AI extract

What is this about?

In a securitization application, the applicant challenged bank action under the SARFAESI Act, alleging non-service of notices and that the security asset was agricultural land. The tribunal dismissed the application, noting the account was declared NPA, notices were served/published, and the applicant failed to prove the asset was agricultural.

What did the court decide?

The Securitization Application was dismissed with all pending Interlocutory Applications disposed of accordingly.

Ms Mrp Associates versus the Baghat Urban Co. Operative Bank Ltd. — Arbitration | DRT (2024)

¶1

SA No.170/2024

¶2

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

¶3

SA No.170 of 2024 M/s MRP Associates and another Versus A.O. The Baghat Urban Co-operative Bank Limited and another

¶4

13.09.2024 Item No. 19

¶5

Argued by: Sh.Atul Mahajan, Counsel for the Applicants. Sh.Yogesh Jain, counsel for Respondent Bank.

¶6

M/s MRP Associates and another (Applicants) have filed this Securitization Application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against the Authorized Officer, The Baghat Urban Cooperative Bank Limited and another (Respondents).

¶7

The case of the Applicants as set up in the application is that whereas, Applicant No.1 is a partnership firm, Applicant No.2 and his wife Smt.Meenu Panwar are the partners. Applicant No. 1 is engaged in the wine business. Applicants were having a CC Limit with Respondent No.2/Bank. Vide sanction letter dated 20.03.2018, the said CC Limit was enhanced to Rs. 2 crores. Apart from this, Applicants were also sanctioned Term Loan of Rs. 50 lacs. Applicants state that they were making regular payments. However, during Covid, their business was badly affected and they suffered losses. Further, due to the incessant rains during the monsoon season 2023, the family of Applicant No.2 suffered huge losses as a result of the intense land-slides. It is alleged that the Applicants visited the Bank many times with the request to grant them time to make the payment. The Bank officials assured the Applicants that they would not take any coercive action. However, on 27.12.2023, the Bank issued the demand notice, which was received by the Applicants on 30.12.2023, informing them that a sum of Rs.13,13,677/- has become overdue in the account. Applicants were called to make the payment within 15 days. They immediately contacted the Bank officials on 01.01.2024

¶8

¶9

SA No.170/2024

¶10

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

¶11

and requested them to grant them time to make the payment. The Bank officials asked them to make the payment by the month end. However, Applicants were surprised when on 10.01.2024 they got a notice from Shri KC Sharma, Advocate, Civil Court of the Respondent bank asking them to deposit Rs. 15,02,862/-, which was overdue amount. Applicants again approached the Bank. However, they were shocked to find a possession notice pasted outside their residential property on 03.04.2024 stating that Bank has taken the symbolic possession of the property. It is stated that Applicants never received the notice under Section 13(2). Their account was never declared NPA. It is stated that the secured asset is agricultural land. Accordingly, the bank cannot take any SARFAESI action against it. As such, the possession notice dated 03.04.2024 deserves to be set aside. Applicants state that they again met the Bank officials and requested them to settle the matter and permit them to sell the property. They also continued to deposit the money in the loan account. It is stated that the notices issued by the Bank are against the provisions of Security Interest (Enforcement) Rules, 2002. The possession notice was not served personally on the Applicants and also not published in the newspapers. The secured asset is a valuable property. However, the Respondents in order to favour their chosen persons, have decided to illegally divest the Applicants of the said property and sell it at very low price. It is stated that the property was not registered with CERSAI. Further, the Bank has capitalized penal interest. On these broad facts, Applicants have filed the present SA, wherein they have challenged the SARFAESI action.

¶12

Bank, in reply to the SA, has denied the case of the Applicants. It is stated that vide request letter dated 20.03.2018 (Annexure R-1), Applicants had approached the Bank for enhancement of CC Limit to the extent of Rs. 2 crores. Vide sanction letter dated 20.03.2018 (Annexure R-2), it was sanctioned to Applicants. Applicants had executed loan cum security

¶13

¶14

SA No.170/2024

¶15

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

¶16

documents, in favour of the Respondent bank. On 20.04.2016, 06.07.2016, 06.07.2017 and 07.04.2018, Applicants had executed registered mortgage in favour of the Respondent Bank (Annexure R-4). The loan was repayable in 180 monthly installments and was chargeable to the interest @ 11.50% p.a. Applicants failed to run the account properly. Vide letters, dated 12.12.2023, 27.12.2023, 10.01.2024 and legal notice dated 27.12.2023, Applicants were asked to clear the liability. However, Applicants fail to do so. On 18.01.2024, Bank issued the notice under Section 13(2) asking them to pay Rs. 2,15,93,911/- within 60 days. However, Applicants did not make the payment. The demand notice was also published in two local dailies, on 02.02.2024. On 03.04.2024, bank issued the notice under Section 13(4), which was published in two local newspapers. The security interest has been duly registered with the CERSAI. Applicants committed default in maintaining the account. After May 2023, Applicants made few deposits. It is stated that Applicants are liable to pay Rs. 2,15,99,911/-. The Bank has denied that the secured asset is agricultural land. It is stated that Applicants have not produced on record any khasra girdwari entries to show as to what crop had been cultivated on the secured asset. The account was rightly declared NPA. Accordingly, it is stated that there is no merit in the present SA and the same be dismissed.

¶17

I have heard Mr.Atul Mahajan, counsel for the Applicants and Mr.Yogesh Jain, Counsel for Respondent bank.

¶18

Mr.Mahajan, counsel for the Applicants has argued that Applicants were maintaining the account properly. However, the Bank wrongly declared the account NPA. The Bank has over charged the interest. The notice under Section 13(2) was not served on the Applicants. The secured asset is agricultural land. As per Section 31(i) of the Securitization Act, the said land is exempt from the provisions of the SARFAESI Act. Counsel has drawn my

¶19

¶20

SA No.170/2024

¶21

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

¶22

attention to the mortgage deed and copy of jamabandi and submitted that the SARFAESI action be set aside.

¶23

Per contra , Mr.Jain, counsel for the Respondent bank has argued that there is no merit in the present SA. Mr.Jain submitted that on 10.01.2024 bank declared the account of the Applicants NPA and on 18.01.2024 it issued the notice under Section 13(2) of the SARFAESI Act. Applicants avoided the service of the same. Accordingly, bank published the notice in the newspapers. Again, Applicants were served with the notice under Section 13(4). Still the payment was not made. Mr.Jain submitted that the secured asset is not agricultural land. Applicants have not produced on the record any khasra girdawari entries. That apart, we have to see the position on the date the security interest was created. Applicants have not produced any such material that the secured asset is agricultural land. Accordingly, it is submitted that there is no merit in the present SA and the same be dismissed.

¶24

7. I have considered the rival contentions.

¶25

It is admitted on the record that vide sanction letter dated 20.03.2018, the CC Limit of the Applicants was enhanced to Rs. 2 crores. Further, Applicants also availed Term Loan of Rs. 50 lacs. Further, a perusal of the statement of account of the Applicants would show that after May 2023, except depositing Rs. 1.50 lacs in the CC Limit, Applicants did not deposit any money. Applicants also failed to service the interest. This led the bank to declare the account NPA on 10.01.2024. On 18.01.2024, Bank issued the notice under Section 13(2). Bank has also produced on the record the notice dated 18.01.2024 and the postal receipts. The address of the Applicants as mentioned in the SA and the on the notice are same. Bank also got the demand notice published in the newspapers on 02.02.2024. This notice was followed by symbolic possession notice dated 03.04.2024 and paper publication. Applicants have failed to prove that the secured asset is agricultural land. It is

¶26

¶27

SA No.170/2024

¶28

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

¶29

settled law that the description of the land in the revenue record is not decisive of the matter. Further, it should be seen at the time when security interest was created as to whether the secured asset is agricultural land or not. Applicants have not produced any khasra girdwari entries.

¶30

Having considered the whole of the matter, I am of the considered view that there is no merit in the present SA. The same is hereby dismissed . All the pending IAs, if any, are also disposed of, accordingly.

¶31

Registrar is directed to send a copy of this order to all the parties, as per rule. Thereafter, file be consigned to record room after due compliance.

¶32

Pronounced in open court. MANOJ/13.09.2024

¶33

(A S Narang) Presiding Officer DRT-I, Chandigarh

¶34

Ms Mrp Associates v. the Baghat Urban Co. Operative Bank Ltd.

Case brief

What is this about?

What did the court decide?

Ms Mrp Associates v. the Baghat Urban Co. Operative Bank Ltd.

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

Mehamood Kiliyanni versus State Bank of India

Kantibhai Devajibhai Vankar versus Bandhan Bank Limited

Hdfc Bank versus Navin

Canara Bank versus Harnek Singh

State Bank of India versus M/S New Shree Laxmi Mobile through Its Prop Smt. Laxmi W/O Radheshyam Shahu

Punjab National Bank versus Mosan Ricetech Pvt. Ltd.