Dismissed

Akshata Realtors Private Limited v. State Bank of India

DRT25 Jan 2024SA/225/2023

Case brief

AI extract

What is this about?

In an interim application dated 25/01/2024, the applicant challenged possession proceedings initiated by the respondent bank under the SARFAESI Act, claiming the account was incorrectly classified as NPA before restructuring. The court examined RBI guidelines regarding asset reclassification, the procedural history of the loan, and the Chief Metropolitan Magistrate's order. The applicant sought a

What did the court decide?

Interim application for stay on physical possession and other reliefs dismissed.

Akshata Realtors Private Limited versus State Bank of India — Banking and Recovery | DRT (2024)

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25/01/2024	P	Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. *Roznama in SA No.225 of 2023* *M/s Akshata Realtors Private Limited & Ors.* *Vs. State Bank of India, a lead Bank to* *various Banks*	Next date
		Advocate G. Kinkabwala i/b Chandika P. appeared for the Applicant. Advocate Bhavesh Poojary i/b MDP & Partners. IA No.130/2024 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 effect, operation, implementation and execution of the order dated 06.01.2024 and the possession of the residential plot bearing no.153, A-2, Block, Safdarjung Enclave, New Delhi- 110029 on 27.01.2024 (“property in question”); restrain the Court Receiver from taking physical possession of the property in question on 27.01.2024; and other reliefs. 3. Ld. Counsel for the Applicant contended the credit facilities were sanctioned/renewed vide letter dated 26.03.2015 however, the Respondent has declared the account as NPA on 01.12.2014 and issued the three demand notices, first demand notice was issued on 16.01.2017,

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second demand notice was issued on 03.01.2019 and third demand notice was issued on 18.06.2020 and in all the three demand notices, the NPA date was 01.12.2014 whereas admittedly the facility was renewed in March, 2015 thus, he submits that the entire action of the Respondent is liable to be quashed on this ground alone.

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He also drawn my attention on the order dated 06.01.2023 of Ld. CMM, New Delhi, it is recorded that there is no objection/ representation whereas the Applicant herein has gave its representation dated 27.07.2020 against the demand notice dated 18.06.2020, thus, he submitted that the order of Ld. CMM is obtained after providing the wrong information and therefore, the present notice of possession on the basis of the said order, is not sustainable thus, the Respondent may be restrained from taking possession of the property in question.

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He also submitted that in the demand notices, the Respondent failed to give the details of the authorized officer and his designation therefore, in view of the judgment of Hon’ble DRAT, Mumbai in IDFC First Bank Ltd. Versus M/s Tristar Cars Private Limited and Another, Appeal No.4/2019, the said demand notice is liable to be quashed.

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Per contra , Ld. Counsel for the Respondent vehemently objected to the present Application and submitted that there is no merit in the present Application. He contended that the account was declared NPA as the Applicants/Borrowers failed to maintain the financial discipline of the account. 7. He also submitted that in the year 2014, the Lender had identified incipient stress in the account of the Borrower Company and in order to formulate a correction action plan among all the lenders to adopt the account of the Borrower Company from becoming NPA, the account of the Borrower was identified as a Special Mention Account as per RBI Guidelines and a Master Joint Lenders Forum Agreement was entered on 20.11.2014 and pursuant to which, the Lender had come to the conclusion that the account of Borrower Company had become stressed due to various factors interalia downturn in the global steel industry, decrease in domestic steel consumption, liquidity issues, increase in cost of raw material and reduction in margin. He submitted that in the month of March, 2015, the Borrower approached the Lenders for restructuring of the existing term loans, grant of additional loans and enhancement of the existing working capital facilities, pursuant to the said

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request, the Respondent and other consortium granted additional working capital facility of Rs.200 Crores, restructure the existing Term Loans and sanctioned additional Term Loans of Rs.134 crores and to secure the same, the Borrowers and Applicant executed the security documents on 30.04.2015 and created security by way of equitable mortgage, but the Applicants/Borrowers failed to keep the account in order, therefore, bank has proceeded further under the SARFAESI Act, 2002.

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He also contended that the symbolic possession was already been taken on 09.10.2023, same was pasted on the property in question and same was also published in the newspapers however, the Applicant never objected on the same. He also submitted that in the order of Ld. CMM, New Delhi, it is recorded that there is no representation pending thus, the objection of the Applicant that no objection/representation filed by the Applicant against the demand notice is not sustainable.

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He also informed that the borrower company was admitted under CIRP by the Ld. NCLT, Mumbai bench vide its order dated 29.01.2020 and pursuant to the same the Resolution Plan with respect to the same was approved by the NCLT vide the order dated 11.10.2023 and

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pursuant to the same, the Respondent Bank has only been able to recover its dues of Rs.106,78,04,603/- on 12.12.2023 against its admitted liability of Rs.928,88,42,884/- thus, he submitted that the present IA may be dismissed and Respondent Bank may be allowed to proceed further under the SARFAESSI Act, 2002.

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Considered the rival submissions of the parties and perused the record.

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Admittedly, the credit facilities were enhanced from time to time since the year 2005 and in 2014, at the request of the Borrower Company, the Respondent and consortium lenders granted Working Capital Facility of Rs.1,120 crores and Term Loan of Rs.175 crores. Since the Applicant/Borrowers failed to maintain the financial discipline and committed defaults in timely repayment, the account of the Borrower Company was declared as NPA on 01.12.2014.

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It is relevant to mention here that as per the RBI guidelines, the account of the borrower was identified as a Special Mention Account and a Master Joint Lenders Forum Agreement was entered on 20.11.2014 in order to formulate a correction action plan among all the lenders to adopt the account of the Borrower Company from becoming NPA. Accordingly, the

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Respondent and consortium lenders at the request of the Borrower Company granted an additional working capital facility of Rs.200 Crores, and restructured the existing Term Loans and sanctioned additional Term Loans of Rs.134 crores, but the Applicant/ Borrowers failed to keep the account in order.

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As per the RBI 2.2.7 Prudential Guidelines on Restructuring of Advances, it is clearly provided that:

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“2.2.7.2 The accounts classified as 'standard assets' should be immediately re-classified as 'sub-standard assets' upon restructuring.

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2.2.7.3 The non performing assets, upon restructuring, would slip into further lower asset classification category as per extant asset classification norms with reference to the pre-restructuring repayment schedule.” (emphasis provided)

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Therefore, as per 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 sanction/ restructure on 26.05.2015 but the NPA was prior to the said date i.e. on 01.12.2014 is not acceptable.

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Insofar as objection pertaining to the objection/ representation is concerned, it is clearly

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mentioned in the order of Ld. CMM, New Delhi dated 06.01.2024 that “there is no pending objection received from the borrower” therefore, the objection of the Applicant that it is recorded in the order of Ld. CMM that no objection/representation of the demand notice under Section 13(2) of the SARFAESI Act, 2002 and the said order is obtained after providing wrong information, is not acceptable.

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As far as objection pertaining to the name and designation of the authorized officer in the demand notice is concerned, since the said issue is not raised by the Applicant by way of objection/representation dated 27.07.2020 and only raised in the present SA, therefore, the Respondent shall provide the details of authorized officer who signed the demand notice and therefore, the said issue shall be decided after completion of pleadings by the parties.

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In view of the above, prima facie , I do not find any merit in the present interim relief application and same is hereby dismissed.

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DRT-I

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Akshata Realtors Private Limited v. State Bank of India

Case brief

What is this about?

What did the court decide?

Akshata Realtors Private Limited v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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