DRT dismissed an interim application seeking stay on an auction. The court rejected the Applicant's claim regarding incorrect due disclosures and held the NPA classification valid post-restructuring, distinguishing the cited precedent.
Prayer for stay on auction scheduled for 24.01.2024 was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
| 25/01/2024 | Ex. No. |
Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. Roznama in SA No.224 of 2023 M/s Muktar Automobiles Pvt. Ltd. Vs. Central Bank of India |
Next date |
|---|---|---|---|
Advocate Prashansha Agarwal i/b Adv. Anirudh P. & Adv. Sankalp P. appeared for the Applicant. |
I | ||
| RT1 MUMB Advocate Rajesh Dubey appeared for the Respondent. IA No.84/2024 1. Today the matter is listed for order on the present IA. 2. By way of the present IA, the Applicant is praying to stay the auction schedule on 24.01.2024 vide auction notice dated 05.01.2024. 3. Ld. Counsel for the Applicant contends that the Respondent in the present auction did not provide the complete details of the amount which is still recoverable. She also submits that out of 10 (ten) mortgaged properties around 9 (nine) properties have already been sold, however, the Respondent failed to provide the amount received and what the amount still remains to recover. She also submits that the Respondent failed to upload the notices on their website and thereby violated the Rule 8 (7) of |
1
| the Security Interest (Enforcement) Rules, |
|---|
| 2002. She also submits that the NPA classification of the present account is against the RBI Master Circular. |
| BAI 4. She also submits that the respondent failed to give any response/justification on the objection to NPA classification which is decided by Hon’ble High Court of Andhra Pradesh in M/s Sarvan Dall Mill P. Limited, Rep. by its Managing Director Vs. Central Bank of India, |
| MUM Rep. by its Chief Manager, Writ Petition No.18089/2006, thus, she prayed that the present IA may be allowed and the Respondent may be restrained to take further action in the auction which is scheduled for today. |
| DRT1 5. In rebuttal, Ld. Counsel for the Respondent Bank vehemently objected to the present SA as well as the present IA and submits that since the Applicant failed to keep the account in order and not remitting the payment of the dues as per the sanction letter and inspite of the requests Applicants failed to make the payment and to regularize the account therefore, the same was declared as NPA on 28.11.2019 and thereafter, demand notice was issued on 06.12.2019. |
2
| DR 6. 7. 8. 9. 10. |
T1 MUMBAI He also submits that an Original Application is filed before this Tribunal being OA No.684/2021, where detail of the mortgaged properties has duly been provided. He also submits that the physical possession of the properties was already taken on 30.11.2022 however, Applicant never objected to the said action of the Respondent Bank. He also submits that till date 4 (four) mortgaged plots have already been sold. He also contends that there is no illegality in the present auction notice dated 05.01.2024 therefore, the present IA may be rejected. Having considered the rival submissions of the parties and gone through the record. In the present IA, the Applicant has challenged the fresh auction notice dated 05.01.2024 and the auction is slated for 24.01.2024. It will not be out of contest to mention here that when the earlier auction was fixed by the Respondent Bank, the Applicant herein alongwith M/s S. M. Engineering Works has challenged the auction on the ground of the proceeding pending with the NCLT which is filed by the Applicant herein, however, this Tribunal did not grant any interim relief. |
|---|
3
4
| RT1 MUMBAI already provided the necessary details in the auction sale notice dated 05.01.2024 and further in the auction sale notice, the details of the dues has duly been mentioned. Even, according to the Ld. Counsel for the Respondent Bank, the complete statement of account has already been provided in the OA No.684/2021 and the Applicant of SA may obtain necessary information from the OA/RC proceeding. 15. Insofar as objection pertaining to the NPA by the Applicant that sanction letter was issued on 18.10.2019 however, account was classified NPA on 28.11.2019 is concerned, the Applicant itself acknowledged in the SA that Cash Credit Facility, Term Loan Facility alongwith the Bank Guarantee was initially sanctioned in 2011 however, same was renewed, reviewed and enhanced time to time. The said renewed, reviewed and enhanced would fall in the category of restructuring as per RBI guidelines. The relevant clause of Prudential Guidelines on |
|---|
| D Restructuring of Advances is quoted herein below: |
“2.2.7.2 The accounts classified as 'standard assets' should be immediately re-classified as 'sub-standard assets' upon restructuring. 2.2.7.3 The non performing assets, upon restructuring, would slip into further lower asset classification category as |
5
| DR 16. 17. 18. |
T1 MUMBAI per extant asset classification norms with reference to the pre-restructuring repayment schedule.” (emphasis provided) Therefore, as per Prudential guidelines 2.2.7.3, the NPA upon restructuring would slip into further lower asset classification thus, the objection of the Applicant that the account was wrongly declared as NPA on 28.11.2019 has no substance. In so far as judgment relied upon by the Applicant in M/s Sarvan Dall Mill (supra) is concerned, the fact of the said matter is quite different from the present matter as in the said matter there was no restructuring/reviewing of the facility. In view of the above, prima facie, I find no merit in the present IA and hence, the same is hereby dismissed. PO DRT-I |
|---|
6
3 issues framed by the court
Whether the Auction notice dated 05.01.2024 was issued in violation of the Security Interest (Enforcement) Rules, 2002 by failing to disclose recoverable dues.
Whether the classification of the account as NPA on 28.11.2019 was illegal in view of the restructuring of the facility.
Whether the Applicant was justified in challenging the SARFAESI measures while pursuing a moratorium under Section 14 of the NCLT.
Colour shows how this judgement treated each authority
M/s Sarvan Dall Mill P. Ltd. (Via H'ble High Court of Andhra Pradesh)Distinguished¶18
M/s Sarvan Dall Mill P. Ltd. Rep. by its Managing Director Vs. Central Bank of India, Writ Petition No.18089/2006
2 provisions across 2 enactments
M/s Muktar Automobiles Pvt. Ltd.
Central Bank of India
Dr. Rekha G. Dhakar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
