Dismissed

Dhruba Charan Das v. Punjab National Bank

DRT19 Jun 2024SA/187/2023

Case brief

AI extract

What is this about?

This application challenged bank recovery proceedings under the SARFAESI Act, alleging procedural violations regarding notices and auction. The Debt Recovery Tribunal examined compliance with statutory requirements. Finding the bank followed all relevant provisions and rules, the Tribunal dismissed the application as devoid of merit.

What did the court decide?

Application dismissed without cost; parties to bear their own costs.

Dhruba Charan Das versus Punjab National Bank — Banking and Recovery | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL, CUTTACK

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PRESENT: -SHRI JITENDRA PRASAD SINGH

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PRESIDING OFFICER.

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S.A. No.187 OF 2023

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DATE OF DELIVERY OF ORDER: 19.06.2024

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Dhruba Charan Das, aged about 54 years,

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S/o- Bhakta Charan Das

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Of Rajendra Nagar, P.O/P.S-Madhupatna,

Dist-Cuttack, Odisha

…. Applicant

-versus-

The Authorized Officer,

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Punjab National Bank, Circle Sastra Centre, Circle Office, Cuttack A/32, Kharvel Nagar, Unit-3, Bhubaneswar

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Dist-Khurda, Odisha, PIN-751001

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The Branch Manager

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Punjab National Bank

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Ranihat Branch, Ranihat At-Bajrakabati Road, P.O-Buxibazar, Dist-Cuttack PIN-753001, Odiaha

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Auction Purchaser

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Sri Manas Ranjan Jena

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Flat No.202, Krishna Enclave

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Dolamundai, Bajrakabati Road,

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Buxibazar, Dist-Cuttack

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… Respondents

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Counsel for the Applicant: Shri B. B. Champatiray. Counsel for the Respondent No.1 & 2:- Shri S. K. Ghose Counsel for the Respondent No.3:Shri D. R. PARIDA

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JUDGEMENT

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This is an application under Section 17 (1) of the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 filed by the applicant for quashing the proceeding U/s 13 of the SARFAESI Act, 2002 vide Annexure-2 and 3 and further

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not to give physical possession to the Respondents bank in the schedule land and for other reliefs.

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The brief facts of the case of applicants is that the applicant is the borrower has availed a loan in Housing loan and GECL Loan of Rs.51,25,000/- on dtd. 15.04.2013 from the Respondent No.2’s bank for smooth running of Hotel Business situated at Rajendra Nagar. The present applicant applied the above loan before the Respondent Bank and the said bank was pleased to sanction the above loan by mortgaging his only residential building homestead land situated at Mouza-Cuttack Sahar Unit No.32 Madhupatna belong to his name.The respondent/bank issued notice section 13(4) of SARFAESI Act to the applicant to pay the outstanding dues of Rs.46,92,171.08 on dtd. 23.08.2023 which is received by the applicant on 25.08.2023. On 26.08.2023 without any intimation to the applicant, the respondent Bank published auction sale notice in the daily Newspaper. Finding no other alternative, the applicant submitted an application before the Respondent bank on 11.09.2023 requesting them to grant two months time for regularize the NPA account as his wife has undergone surgery due to fracture injury at Om Subham Hospital, Ranihat, Cuttack. On 15.09.2023 the respondent Bank issued a letter for time extension to update the NPA account which is received by the applicant on dtd. 18.09.2023. Without any intimation to the applicant the respondent Bank U/s.14 of the SARFAESI Act, for physical possession of the mortgage property and violating the orders time to time passed by the Hon’ble Apex Court as well as High Court of Orissa. Furthermore, the respondent bank have also violated the principles of natural justice which is mandatory in the eye of law. Due to Covid-19 pandemic restrictions are continuing time to time by the Govt. of India as well as Govt. of Odisha, for source of the income became loss and not paid the loan amount in time. During initiation of proceedings under the SARFAESI Act, 2002 the procedure laid down has not been followed and no notice has been issued to the aggrieved parties and so also the procedure laid down U/s.13(3-A) of the SARFAESI Act, 2002 has not been complied with. The mortgage properties are the residential house of the applicant, where the entire family members of the applicant are residing and the parents of the applicant are Senior Citizen and also the wife of the applicant is not able to move due to surgery and the respondent bank without any intimation/issuing any notice published Auction under Annexure-3 is highly illegal, unjust and

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improper manner. The NPA notice did not provide necessary details as contemplated U/s.13(4) of the SARFAESI Act. The said notice does not mention the rate of interest on which the alleged liability was demanded by the respondent bank. In absence of such necessary particular and/or details on which the loan accounts were alleged classified as NPA, the issuance of the said NPA notice was bad in the eye of law. The provisions of SARFAESI Act, 2002 imposes responsibility upon respondent bank which requires due caution and care on their part and does not warrant casual approach from them, while issuing notice under the provisions of the Act. Therefore the instant notice is illegal, bad in the law and void ab-initio. The instant notice has been issued by the respondent bank in undue haste and in a very casual manner without due application of mind. As such the instant notices are illegal and arbitrary and deserve to be withdrawn. Steps as contemplated under Rule 8(1) of the said Rules of 2002 have not been taken or carried out by the respondent bank. Hence the applicant prays this Tribunal to quash the proceeding U/s 13 of the SARFAESI Act vide Annexure-2 & 3.

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Notices were issued to the Respondents No.1 to 3. On receipt of the notice the Respondents No.1 and 2 appeared and filed counter affidavit and though Respondent No.3 appeared but did not file any counter. 4. The Respondent Bank appeared in the case and filed their counter contending that the Applicant had availed the Over Draft of Rs.35,00,000/- only on 06.10.2016, Housing Loan of Rs.9,25,000/- only on 17.12.2016 and TLGCL loan (Covid Loan) of Rs.7,00,000/- only on 17.07.2020 respectively, the total loan amount comes to Rs.51,25,000/- only and the he had also created Mortgage the landed property recorded in his name situated under Dist-Cuttack, MouzaCuttack Sahar Unit No.32, Madhupatna as Collateral Security against the said loans in favour of the Respondent Bank. Initially the said Applicant was in touch with the Respondent Bank and also made some transactions in the above loan accounts but later on he not only avoided but also neglected to repay the outstanding dues in respect of all the said loan accounts as per the terms and condition of the loan agreements as a result of which all the said loan accounts have been Classified as NPA with effect from 31.03.2021. As the Applicant did not take any effective steps to regularize the said loan accounts for which this Respondent Bank was Constrained to issue combined Notice U/s. 13(2) of SARFAESI Act, 2002 to the said applicant as well as his wife

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Smt. Pravat Nalini Das, who is the Proprietor of Café-D and availed the loans from the Respondent Bank on 01.06.2021 with a request to both of them to repay the total outstanding dues of Rs.83,34,113/- only along with further interest with effect from 01.05.2021 from the Applicant and his wife within 60 (Sixty) days from the date of the said Notice failing which the Respondent Bank will take action U/s.13(4) of the SARFAESI Act. Though the said Applicant has received the said Notice but instead of repaying the Outstanding dues, he has sent the Objection on 30.07.2021 inter alia narrating his difficulties by praying 6 months time to regularize his loan accounts in response to the Notice issued to him U/s.13(2) of SARFAESI Act, 2002 by the Respondent Bank. On receipt of the said Notice, the Respondent Bank has immediately re-examined the same and found that the said Proposal given by the Applicant was not acceptable as per the extent Guidelines of the Bank and also sent the reply on 06.08.2021 to the said Objection to the Applicant. Since the said Applicant has failed to repay the outstanding dues with interest as demanded by the Respondent Bank in the Notice issued to them U/s.13(2) of the SARFAESI Act 2002 within the said stipulated period, the Respondent Bank was constrained to issue Notice to the Applicant U/s.13(4) of the SARFAESI Act, 2002 on 23.08.2021 and also took over the Symbolic Possession of the said Mortgaged Property on that date. The same has also been Published in the local Newspapers 28.08.2021.After waiting for reasonable period, when the Applicant did not take any steps to repay the outstanding dues to the Respondent Bank. Respondent Bank was very much convinced that the Applicant is avoiding to repay the outstanding dues, for which the Respondent Bank was constrained to issue the e-auction Notice in respect of the said Mortgaged Property on 23.08.2023 and the same was published in two leading Newspapers having wide circulation in that locality i.e. the Oriya Daily “The Samaja” and English Daily “The Statesmen” respectively on 26.08.2023.The Reserve Price of the said Mortgaged Property was fixed at Rs.1,35,00,000/- only. The e-auction was held on 13.09.2023. The Mortgaged property was sold to one Sri Manas Ranjan Jena in auction at Rs.1,36,00,000/- on 13.09.2023 in his favour and the same was also intimated to the Auction Purchaser on 14.09.2023. Thereafter the said Auction Purchaser has deposited a sum of Rs.34,00,000/- only which is 25% of the auction amount before the Respondent Bank on that date i.e. on 15.09.2023 itself which has been deposited in “No Lien” account

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of the Respondent Bank. All along the Respondent Bank has discharged its duty as per the provisions of law. The Respondent Bank has never violated any of the guidelines issued by the Reserve Bank of India as well as their own Bank issued from time to time for which also the aforesaid Securitization Application is liable to be dismissed with cost. Since the applicant has miserably failed to repay the outstanding dues in respect of the all the said loan accounts to the Respondent Bank, inspite of all notices issued to him, the Respondent Bank has put the said Mortgaged land and building into auction after observing all other formalities as required, Since no illegality has been committed by the Respondent Bank in putting the Mortgaged property into auction, since this situation has occurred as the said Applicant has failed to repay the Outstanding dues in respect of all the loan accounts, since the Respondent Bank has discharged its duty as per law, the prayer made by the applicant in the SA may be dismissed.

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Applicant relied on the following decisions in support of its case.

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Writ petition No.8155/2018 Shree Sai Annandatha Polymers & another Vrs.Canara Bank

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2009(II) OLR.-201 Swastik Agency and two others Vrs. SBI

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2017 (IB)Claw.in 72HC M/s. Sea Poly Plast India Pvt. Ltd & others Vs. Union of India & others

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4.W.P NO.21814(w) of 207 United Bank of India & Anr. Vs. State of west Bengal & others

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Respondent Bank relied on the following decisions in support of its case. (i) Celir Lip vs Bafna Motors (Mumbai) Pvt. Ltd. on 21September, 2023 in Civil Appeal Nos.5542-5543 of 2023

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(ii) Between Canara Bank Vs. M. Amarender Reddy & another reported in AIR 2017 Supreme Court, page 1441

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Heard both Counsels at length and perused the records.

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On the perusal of the pleadings of the rival parties, the following issues arise for consideration.

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(i) Whether the bank has followed the procedure laid down under Section 13(3) & 13(3A) of the SARFAESI Act?

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(ii) Whether the bank has issued notice to all the parties as per Rule?

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(iii) Whether the bank has issued individual notice under 8(6) & 9(1) of the Security Enforcement Rules 2002? (iv) Whether the Respondent Bank has followed Rule 8(1) as per Rules?

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(vi) Whether the applicant is entitled to the reliefs as claimed?

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1. Issue No.(i ):- Whether the bank has followed the procedure laid down under Section 13 (3) and 13(3A) of the SARFAESI Act?

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The contention of the applicant is that during initiation of proceedings under the SARFAESI Act, the procedure laid down has not been followed and no notice has been issued to the aggrieved parties and so also the procedure laid down U/s 13(3-A) of the SARFAESI Act, 2002 has not been complied with.

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Further contention of the applicant is that the NPA notice did not provide necessary details as contemplated U/s 13(4) of the SARFAESI Act. The said notice does not mention the rate of interest on which the alleged liability was demanded by the respondent bank. Notice U/s 13(2) was issued on 01.06.2021 demanding the outstanding dues of amount of Rs.83,34,113/- thereafter depositing substantial amount by the applicant the loan account has been regularised and now for the recovery of present outstanding dues of amount of Rs.46,92,171.08 without issuing fresh 13(2) notice.

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The contention of the Respondent Bank is that initially the applicant was in touch with the Respondent Bank and also made some transactions in the loan accounts but later on he not only avoided but also neglected to repay the outstanding dues in respect of all the said loan accounts as per the terms and conditions of the loan agreements as a result of which all the loan accounts have been classified as NPA with effect from 31.03.2021. As the Applicant did not take any effective steps to regularize the said loan accounts for which the Respondent Bank was Constrained to issue combined Notice U/s. 13(2) of SARFAESI Act, 2002 to the said applicant as well as his wife Smt. Pravat Nalini Das, who is the Proprietor of Café-D and availed the loans from the Respondent Bank on 01.06.2021 with a request to both of them to repay the total outstanding dues of Rs.83,34,113/- only along with further interest with effect from 01.05.2021 from the Applicant and his wife within 60 (Sixty) days from the date of the said Notice failing which the Respondent Bank will take action U/s.13(4) of the SARFAESI Act. Though the said Applicant has received the said Notice but instead of

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repaying the Outstanding dues, he has sent the Objection on 30.07.2021 inter alia narrating his difficulties by praying 6 months time to regularize his loan accounts in response to the Notice issued to him U/s.13(2) of SARFAESI Act, 2002 by the Respondent Bank. On receipt of the said Notice, the Respondent Bank has immediately re-examined the same and found that the said Proposal given by the Applicant was not acceptable as per the extent Guidelines of the Bank and also sent the reply on 06.08.2021 to the said Objection to the Applicant.

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“Section 13(3) says that the notice referred to in sub-section (2) shall give the details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debs by the borrower.”

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“Section 13(3-A) says that If, on receipt of the notice under Section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable he shall communicate within 15 days of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.”

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From the perusal of the record it is seen that the Respondent Bank sent notice under Section 13(2) on 01.06.2021 and the applicant sent objection on 30.07.2021 to the notice under Section 13(2). Thereafter the Respondent Bank replied on 06.08.2021 within 15 days of receipt of the objection. As such there is no violation of Section 13(3-A) by the Respondent Bank.

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From the perusal of the notice under Section 13(2) annexed in the IA No.2015/2023 it is evident that the Respondent Bank has issued notice to all the borrower/guarantors giving the details of the amount due and details of the property. As such the notice under 13(2) is as per rule, there is no violation at all. Accordingly Issue No.(i) is answered. 10. Issue No.(ii) Whether the bank has issued notice to all the parties as per Rule?

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The contention of the applicant is that during initiation of proceedings under the SARFAESI Act, the procedure laid down has not been followed and no notice has been issued to the aggrieved parties.

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The contention of the Respondent Bank is that the loan accounts of the applicant and his wife have been Classified as NPA with effect from 31.03.2021. As the Applicant did not take any effective steps to

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regularize the said loan accounts for which this Respondent Bank was Constrained to issue combined Notice U/s. 13(2) of SARFAESI Act, 2002 to the said applicant as well as his wife Smt. Pravat Nalini Das, who is the Proprietor of Café-D and availed the loans from the Respondent Bank on 01.06.2021 with a request to both of them to repay the total outstanding dues of Rs.83,34,113/- only along with further interest with effect from 01.05.2021 from the Applicant and his wife within 60 (Sixty) days from the date of the said Notice failing which the Respondent Bank will take action U/s.13(4) of the SARFAESI Act. After issuance of notice U/s.13(2) of the SARFAESI Act, 2002, on 01.06.2021, the loan accounts of Smt. Pravat Nalini Das, who is also he proprietor of Café-D and also the wife of the applicant have been closed.

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In view of the discussion made above, it is evident that the Respondent Bank has issued 13(2) notice to both the applicant and his wife and after closure of the loan account of the wife of the applicant subsequent notices have not been issued to the wife of the applicant. Hence there is no illegality or irregularity committed by the Respondent Bank. Accordingly issue No.(ii) is answered.

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11. Issue No.(iii) :- Whether the bank has issued individual notice under 8(6) & 9(1) of the Security Enforcement Rules 2002?

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The contention of the applicant is that the mortgage properties are the residential house of the applicant, where the entire family members of the applicant are residing and the bank without any intimation/issuing any notice published auction sale notice under Annexure-3.

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The contention of the Respondent Bank is that the Respondent Bank

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was very much convinced that the Applicant is avoiding to repay the outstanding dues, for which the Respondent Bank was constrained to issue the e-auction Notice in respect of the said Mortgaged Property on 23.08.2023 and the same was published in two leading Newspapers having wide circulation in that locality i.e. the Oriya Daily “The Samaja” and English Daily “The Statesmen” respectively on 26.08.2023. The e- auction was held on 13.09.2023.

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From the perusal of the record it is seen that the applicant himself has annexed sale notice issued under Rule 8(6) dated 23/08/2023 fixing the auction sale on 13.09.2023 and the said notice was also published in to leading Newspaper i.e “The Samaj” odia daily and “The Statesman” English daily. Since the said auction notice was issued for the second time, as per the provision of SARFAESI Act, 2002, 15 days time is

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required. As such the Respondent Bank has complied Rule 8(6) and 9(1) and there is no violation at all. Accordingly issue No.(iii) is answered.

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12. Issue No.(iv):- Whether the Respondent Bank has followed Rule 8(1) as per Rules?

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The contention of the applicant is that the steps as contemplated under Rule 8(1) of the said Rules of 2002 have not been taken or carried out by the Respondents. The Respondent bank issued notice under Section 13(4)of the SARFAESI Act to the applicant on 23/08/2023 which is received by the applicant on 25/08/2023.

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The contention of the Respondent bank is that since the said applicant and his wife have failed to repay the outstanding dues with interest etc. as demanded by the Respondent bank in the notice issued to them U/s 1(2) of the SERFAESI Act, 2002 within the said stipulated period, the Respondent Bank was constrained to issue notice to the applicant under Section 13(4) of the SARFAESI Act, 2002 on 23.08.2021 and also took over the symbolic Possession of the said mortgage property on that date.

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“Rule 8(1) says that 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.”

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From the perusal of the record it is seen that possession notice under Section 13(4) was issued on 23/08/2023 and the same was received by the applicant on 25/08/2023 and the same was also affixed on that date. As such there is no violation of Rule 8(1) by the Respondent Bank. Accordingly issue No.(iv) is answered.

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13. Issue No.(v):- Whether the applicant is entitled to the reliefs as claimed?

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After availing the credit facilities from the bank, the applicant did not adhere to the terms and conditions of the sanction and did not clear the amount despite several correspondences and request from the bank for which the said loan accounts of the applicant became NPA. Thereafter the Respondent Bank had initiated the actions against the applicant under the provisions of the SARFAESI Act by issuing notice under Section 13(2) and thereafter 13(4) of the said Act and thereafter

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published the E-auction sale notice Hence there is no illegality or irregularity committed by the Respondent Bank. The Respondent Bank has followed the provisions of SARFAESI Act or the Rules made thereunder.

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The decisions relied on by the applicant is not strictly applicable to this case, whereas the decisions relied on by the Respondent Bank is applicable to this case.

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In view of the above discussion, this Tribunal is of the opinion that the Respondent Bank has not violated any of the provisions of the SARFAESI Act and this Tribunal further found that there are no merits in the present SA and the present SA is filed only to stall the recovery proceedings initiated by the Respondent bank under SARFAESI Act, 2002 without any merits. Accordingly issue No.(v) is answered.

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O R D E R

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In the result, SA No.-187 of 2023 filed by the applicant being devoid of any merit is dismissed without cost and the Respondent Bank has taken steps as per law and no irregularity is found by this Tribunal on the part of the Respondent Bank while initiating action under SARFAESI Act. Each party shall bear their own cost.

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Since the main SA is disposed of, hence all the IAs, pending, if any, stands disposed of and interim order, if any, stands vacated. Let the file of SA No.187 of 2023 be consigned to the record room. Let a copy of this order be supplied to the parties forthwith as per rules.

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This order is dictated and corrected by me and pronounced in the open Court under my signature, this the 19^th day of June, 2024.

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(Jitendra Prasad Singh) Presiding Officer.

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Dhruba Charan Das v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Dhruba Charan Das v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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