Dismissed

Kamala Mills Ltd. v. India Bulls Housing Finance Ltd.

DRT13 Mar 2024SA/244/2023

Case brief

AI extract

What is this about?

This was a securitization application filed by borrowers to set aside a Magistrate's order under Section 14 of the SARFAESI Act and challenge recovery notices. The Tribunal addressed issues regarding cross-linked loan accounts, defects in demand notices, and procedural compliance of possession notices, ultimately dismissing the application.

What did the court decide?

The present Securitization Application is dismissed, the file is closed, and the application to set aside the Section 14 order is not maintainable due to lack of specific objections.

Kamala Mills Ltd. versus India Bulls Housing… — Contract and Commercial Disputes | DRT (2024)

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SA No.244 of 2023

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IN THE DEBT RECOVERY TRIBUNAL-I AT MUMBAI SECURITIZATION APPLICATION NO. 244 of 2023

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1. M/S KAMALA MILLS LTD. Kamala House, Senapati Bapat Marg, Lower Parel, Mumbai-400013 also having its address at Violette Valley Flat No.101, 602, 901, 1101, 1201, 1202 and Flat No.501, 601, 701, 801, 901 Violette Valley/Presidency, Bandra (West), Mumbai-400050

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2. AQUA MARINE ENTERPRISE, having its address at Violette Valley, Flat No.101, 602, 901, 1101, 1201, 1202 and Flat No.501, 601, 701, 801, 901 Violette Valley/Presidency, Bandra (West), Mumbai-400050

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3. RAMESH GAHMANDIRAM GOWANI, Having its address at Kamala House, Senapati Bapat Marg, Lower Parel, Mumbai-400013 also having its address at Violette Valley Flat No.101, 602, 901, 1101, 1201, 1202 and Flat No.501, 601, 701, 801, 901 Violette Valley/Presidency, Bandra (West), Mumbai-400050

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4. NIDARSHANA GOWANI, Having its address at Kamala House, Senapati Bapat Marg, Lower Parel, Mumbai-400013 also having its address at Violette Valley Flat No.101, 602, 901, 1101, 1201, 1202 and Flat

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5. KLARISSA PROPERTY DEVELOPERS PVT. LTD. having its address at Violette Valley Flat No.101, 602, 901, 1101, 1201, 1202

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SA No.244 of 2023

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and Flat No.501, 601, 701, 801, 901 Violette Valley/Presidency, Bandra (West), Mumbai-400050

…Applicants

Versus

...Respondents

Counsel for the Applicant:

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Counsel for Respondent No.1 & 2: Senior Adv. Nitin Thakkar a/w Adv. N. Dave, Adv. Megha Gupta, Adv. K. K. Khanna, i/b M/s H. H & Fex LLP

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1. INDIA BULLS HOUSING FINANCE LTD. One International Centre, Tower-1, 18^th Floor, Senapati Bapat Marg, Elphinstone Road, Mumbai-400013, Contact No: 022-61891000) 2. ASSET RECONSTRUCTION COMPANY INDIA LTD. 10^th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar West, Mumbai, Maharashtra, PO: 400028 CINU65999MH2002PLC134884 3. ADDITIONAL METROPOLITAN MAGISTRATE, ESPLANADE, MUMBAI 4. COURT COMMISSIONER, Priyadarshani Chawl Chawl No.104, Ramabai Ambedkar Nagar, Ghatkopar (East), Mumbai ...Respondents Counsel for the Applicant: Adv. Rajesh Nagory a/w A. Mishra i/b K. agarwal,

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SA No.244 of 2023

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F I N A L O R D E R

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Dated: 13.03.2024

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INTRODUCTION

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By way of the present SA, the Applicants prayed to set aside the order dated 06.10.2023 passed by Additional Metropolitan Magistrate (AMM), Esplanade, Mumbai in Case No.1868/SA/2022 issued under Section 14 of the SARFAESI Act, 2002 (“Act, 2002”); set aside the SARFAESI Action namely notice dated 08.03.2021 and 19.09.2022 and other reliefs.

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BRIEF HISTORY 2. In the present SA, the Applicants moved Interim Application (L) No.3473/2023 to stay the order dated 06.10.2023 passed by Ld. CMM, Esplanade, Mumbai, till the final disposal of the SA. This Tribunal vide order dated 27.12.2023 passed the following order: “After considering the fact that the mortgaged properties are the vacant flats therefore, the Respondents is hereby allowed to take the possession of the mortgaged properties, however, shall not sell the mortgaged properties till next date. Both sides are hereby directed to advance the final argument on the present SA on the next date and also file their written submissions before the date fixed”

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In the present SA, the Applicants moved Interim Application (L) No.3473/2023 to stay the order dated 06.10.2023 passed by Ld. CMM, Esplanade, Mumbai, till the final disposal of the SA. This Tribunal vide order dated 27.12.2023 passed the following order:

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(emphasis supplied)

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Being aggrieved by the said order, the Applicants filed Miscellaneous Appeal (D) No.2339/2023 before the Hon’ble DRAT, Mumbai, alongwith application being Interim Application No.835/2023 seeking waiver of 50% pre-deposit.

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SA No.244 of 2023

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The Hon’ble DRAT, Mumbai vide order dated 28.12.2023 permitted the Applicants herein to deposit an amount of Rs.7 crores by 25.01.2024 as pre-deposit and also directed to surrender physical possession of 2 (two) flats of the subject properties, and restrained the Respondent No.2 from selling not more than 1 (one) of the aforesaid 2 (two) properties in order to receive the dues outstanding to the Respondent No.2 by the Applicants, only if the Respondent No.2 had not taken physical possession of the subject properties by 12:30 p.m. The relevant portion of the order of Hon’ble DRAT, Mumbai is reproduced herein below: “Under the circumstances, the Appellants are directed to deposit a sum of ₹7 crores as pre-deposit. The Ld. Counsel appearing for the Appellants offers to deposit a sum of ₹1 crores by today by way of pay orders in favour of the Registrar of this Tribunal and seek time to deposit the balance amount. The Ld. Counsel appearing for the Respondents submits that unless the entire 50% amount is deposited and the mandate u/s 18(1) no interim reliefs may be granted in favour of the Appellants. After considering the entire facts and circumstances of the case, and keeping in view the deposit of ₹11 crore towards pre-deposit, there shall be an order preventing the Respondent from taking over possession of the secured assets except two flats undertaken to be surrendered, till the next date of hearing provided, the possession

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The Ld. Counsel appearing for the Respondents submits that unless the entire 50% amount is deposited and the mandate u/s 18(1) no interim reliefs may be granted in favour of the Appellants. After considering the entire facts and circumstances of the case, and keeping in view the deposit of ₹11 crore towards pre-deposit, there shall be an order preventing the Respondent from taking over possession of the secured assets except two flats undertaken to be surrendered, till the next date of hearing provided, the possession of the flats is not taken by 12:30 P.M. today. However, it is clarified that the Respondent is at liberty to take physical possession of two flats and even proceed to sell one of the flats. The balance amount of ₹6 crores shall be deposited in two equal installments of two weeks each as stated hereunder:

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SA No.244 of 2023

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*Number of* *Installments* *Payment on or* *before*
1st Installment of ₹3,00,00,000/- 11.01.2024
2nd Installment of ₹3,00,00,000/- 25.01.2024
DRT1 MUMBAI 7. Default in payment off any of the installment/amount shall entail in dismissal of the appeal without any further reference to this Tribunal. 8. As and when the said amounts are deposited, they shall be invested in term deposits in the name of Registrar, DRAT, Mumbai with any nationalised bank, initially for 13 months, and thereafter to be renewed periodically.” (emphasis provided) . Being aggrieved by the order of Hon’ble DRAT, Mumbai, th Respondent No.2 filed Writ Petition (Lodging) No.4350/202 before the Hon’ble High Court of Bombay. The Hon’ble Bomba High Court vide order dated 12.02.2024 has passed the followin order: “5. We find that rather than keeping the Appeal pending challenging the interim order of the DRT, it would be expedient that the DRT decides Securitization Application No.244 of 2023 on its scheduled date, namely

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Being aggrieved by the order of Hon’ble DRAT, Mumbai, the Respondent No.2 filed Writ Petition (Lodging) No.4350/2024 before the Hon’ble High Court of Bombay. The Hon’ble Bombay High Court vide order dated 12.02.2024 has passed the following order:

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“5. We find that rather than keeping the Appeal pending challenging the interim order of the DRT, it would be expedient that the DRT decides Securitization Application No.244 of 2023 on its scheduled date, namely 27th February 2024. It is accordingly directed that the DRT shall finally hear Securitization Application No.244 of 2023 on or before 27th February 2024. In light of the direction, Mr. Godbole fairly submitted that on withdrawal of Rs.7 crores by the Petition-ARC, nothing would survive in the

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SA No.244 of 2023

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Appeal filed by the borrowers before the DRAT and the same can be treated as disposed of as withdrawn. It is accordingly so ordered.

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6. The Writ Petition is disposed of in the aforesaid terms. However, there shall be no order as to costs.

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Thereafter, the Hon’ble Bombay High Court vide order dated 20.02.2024 extended the time period to finally decide the present SA upto 12th March, 2024.

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On 12.03.2024, since the undersigned was on leave due to the Medical Problem, therefore, the matter is listed today i.e. 13.03.2024.

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FACTS OF THE CASE

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Facts of the SA are that the Applicants are a reputed business group dealing with various real estate businesses in Mumbai. The Applicants are the borrowers/guarantors under the loan for an amount of Rs.26,93,86,846/- obtained from Respondent No.1 which ultimately was unilaterally and illegally assigned to Respondent

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7. It is clarified that as per the order of the DRAT, dated 28th December 2023, the Petition-ARC shall be entitled to sell one flat as directed in the said order, notwithstanding the withdrawal of the amount of Rs.7 Crores by the Petition-ARC or the withdrawal of the said Appeal. 8. We may hasten to add that we have not opined on the merits of the matter and the same shall be decided by the DRT as and when it decides Securitization Application No.244 of 2023.” (emphasis provided) 6. Thereafter, the Hon’ble Bombay High Court vide order dated 20.02.2024 extended the time period to finally decide the present SA upto 12th March, 2024. 7. On 12.03.2024, since the undersigned was on leave due to the Medical Problem, therefore, the matter is listed today i.e. 13.03.2024. FACTS OF THE CASE

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SA No.244 of 2023

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No.2. The loan was obtained under Loan against property facility by mortgaging the property i.e. Flat No.101, 602, 901, 1101, 1201, 1202 and Flat No.501, 601, 701, 801, 90 Violette Valley/Presidency, Bandra (West), Mumbai-400050 (“subject properties”). The Applicants regularly paid the EMIs under the loan facility and till date paid an amount of Rs.23,29,75,743/-. 9. It is stated that the Respondent No.1 issued a notice dated 08.05.2021 under Section 13(2) of the Act, 2002 and called upon the Applicants to pay a sum of Rs.13,48,29,851/-. It is stated that since the Applicants already paid Rs.23,29,75,743/- out of the loan amount of Rs.26,93,86,846/-, therefore, the Applicants through a plethora of communications has called upon the Respondents to provide the loan agreement executed in July-August, 2018 however, the Respondent No.1 refused to furnish the loan agreement to the Applicants therefore, the Applicants were unable to reply to the statutory notice under Section 13(2) of the Act, 2002 issued by the Respondents. 10. It is further stated that the Respondent failed to give detailed calculations to the Applicant to justify a demand of Rs.13.48 crores and no interest bifurcation has been furnished to the Borrowers. 11. It is also stated that there is complete breach of mandatory provisions of Rule 2(a), 4(1) as well as Rule 8(1) & (2) of the Security Interest (Enforcement) Rules, (“Rules, 2002”). The

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It is stated that the Respondent No.1 issued a notice dated 08.05.2021 under Section 13(2) of the Act, 2002 and called upon the Applicants to pay a sum of Rs.13,48,29,851/-. It is stated that since the Applicants already paid Rs.23,29,75,743/- out of the loan amount of Rs.26,93,86,846/-, therefore, the Applicants through a plethora of communications has called upon the Respondents to provide the loan agreement executed in July-August, 2018 however, the Respondent No.1 refused to furnish the loan agreement to the Applicants therefore, the Applicants were unable to reply to the statutory notice under Section 13(2) of the Act, 2002 issued by the Respondents.

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It is further stated that the Respondent failed to give detailed calculations to the Applicant to justify a demand of Rs.13.48 crores and no interest bifurcation has been furnished to the Borrowers.

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It is also stated that there is complete breach of mandatory provisions of Rule 2(a), 4(1) as well as Rule 8(1) & (2) of the Security Interest (Enforcement) Rules, 2002 (“Rules, 2002”). The Respondent did not paste the said notice as mandated under Rule 8(1) of the Rules, 2002 while there were settlement discussions happening between the parties. Further, the Respondent failed to

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SA No.244 of 2023

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publish the said notice in 2 leading newspapers as mandated under the rules of 2002.

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Being aggrieved by the Notice dated 19.09.2022 issued under Section 13(4) of the Act, 2002 as well as the order dated 06.10.2023 received on 05.12.2023 under Writ of Commissions dated 30.11.2023 issued under Section 14 of the Act, 2002, the Applicant has filed the present SA.

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Notices were issued to the Respondents. The Respondent No.1 & 2 filed their joint Affidavit in Reply.

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AFFIDAVIT IN REPLY 14. In their affidavit in reply, the Respondent No.1 & 2 have stated that the Applicants approached this Tribunal with unclean hands and suppressed various material facts and documents. It is further stated that during the period 2016 to 2021, the Applicants and its group companies availed 6 loans amounting to Rs.1,20,52,00,000/(approx.) (“Group Loan Accounts”) from Respondent No.1. Furthermore 5 loan accounts were assigned to the Respondent No.2 vide Deed of Assignment dated 01.12.2022 alongwith Rectification Deed dated 07.02.2024. Out of the Group Loan Accounts, the Applicants challenged the proceedings under the Act, 2002 before this Tribunal in the present SA without disclosing about the other loan accounts and the outstanding thereunder. Further, the loans

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In their affidavit in reply, the Respondent No.1 & 2 have stated that the Applicants approached this Tribunal with unclean hands and suppressed various material facts and documents. It is further stated that during the period 2016 to 2021, the Applicants and its group companies availed 6 loans amounting to Rs.1,20,52,00,000/(approx.) (“Group Loan Accounts”) from Respondent No.1. Furthermore 5 loan accounts were assigned to the Respondent No.2 vide Deed of Assignment dated 01.12.2022 alongwith Rectification Deed dated 07.02.2024. Out of the Group Loan Accounts, the Applicants challenged the proceedings under the Act, 2002 before this Tribunal in the present SA without disclosing about the other loan accounts and the outstanding thereunder. Further, the loans availed under the Group Loan Accounts by the Applicants and their Group Entities are also inter-linked together by way of specific cross-linking documents executed by the Applicants and its other group companies with the Respondent No.1. The Group Loan Accounts are interlinked by way of Declaration Cum Undertaking

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SA No.244 of 2023

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executed by the Group Entities. By way of the Declaration Cum Undertaking, the Applicants declared that they have linked all the Group Loan Accounts together as per their consent and authorization to link all the loan accounts. The Declaration Cum Undertaking provided that if any of the borrowers close any one or two loan accounts, then the parties are bound to close all loan accounts simultaneously with Respondent No.1. The said document also provided that if the loans are not closed together then Respondent No.1 would withhold the title documents of the properties and the same would be treated as security for the unsatisfied loan accounts. This cross-linking documents has been concealed by the Applicants and its group entities before this Tribunal. 15. The Respondent No.1 & 2 the present SA is not maintainable since it is barred by limitation. It is stated that the Applicants failed to make representation under Section 13(3A) of the Act, 2002, therefore, by their own actions waived the right to challenge the Demand Notices under Section 13(2) of the Act, 2002 dated 08.05.2021. The symbolic possession notice under Section 13(4) of the Act, 2002 was issued and served to the Applicants on 19.09.2022 by following the due procedure and conferring the time limits prescribed within the Act, 2002 by the Respondent No.1, but the Applicants neglected to challenge the notice under Section 13(4) of the Act, 2002 within the limitation period of 45 days and even the

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The Respondent No.1 & 2 the present SA is not maintainable since it is barred by limitation. It is stated that the Applicants failed to make representation under Section 13(3A) of the Act, 2002, therefore, by their own actions waived the right to challenge the Demand Notices under Section 13(2) of the Act, 2002 dated 08.05.2021. The symbolic possession notice under Section 13(4) of the Act, 2002 was issued and served to the Applicants on 19.09.2022 by following the due procedure and conferring the time limits prescribed within the Act, 2002 by the Respondent No.1, but the Applicants neglected to challenge the notice under Section 13(4) of the Act, 2002 within the limitation period of 45 days and even the Applicants did not file application for condonation of delay, thus, it is stated that the present SA is liable to be dismissed on this ground alone. The Respondent No.1 & 2 also stated that this Tribunal has no jurisdiction to condone the delay in filing the SA and for the said

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SA No.244 of 2023

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purpose, they referred the judgment of Velar Engineering Works Private Limited Vs. The Authorized Officer/Chief Manager, Indian Bank, Kanchipuram & others, [MANU/TN/5046/2019].

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It is also stated that there is no mention or indication by the Applicants detailing any flaws or illegality regarding the order under section 14 of the Act, 2002. While the Application highlights non-compliance with the rules specified under the Rules, 2002 concerning Section 13(4) of the Act, 2002, leading to the view that the Ld. Magistrate Court’s order to be legally flawed, the Applicants have not articulated any specific concerns or issues regarding the Section 14 order, thus, making it evident that the present SA is merely an all-encompassing veil to challenge the notices dated 08.05.2021 and 19.09.2021 i.e. notices issued under Section 13(2) and 13(4) of the Act, 2002. Further, in the primary prayer of the present SA, the Applicants prayed for setting aside order dated 06.10.2023 issued under Section 14 which was served on the Applicant on 05.12.2023 with Court Commissioner’s Notice. The Applicant has mischievously calculated the limitation period from the date of service of the order dated 06.10.2023 however, the Applicant has cleverly drafted the subsequent prayer which prays for setting aside the 13(2) and 13(4) notices issued under the Act, 2002 on 08.05.2022 and 19.09.2022 respectively which is barred by limitation. For the said purpose, the Respondent No.1 & 2 relied upon the judgment of Hon’ble Apex Court in Ram Singh Vs. Gram Panchayat Mehal Kalan.

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SUBMISSION OF THE PARTIES

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I have heard the Ld. Counsel of the parties and perused the record.

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SA No.244 of 2023

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Ld. Counsel for the Applicants submitted that the Applicant has already paid an amount of Rs.23,29,75,743/- out of the loan amount of Rs.26,93,86,846/- however, still the respondent bank is claiming an amount of Rs.13,48,29,851/-. He also submitted that if the demand of the Respondent No.1 of Rs.13,48,29,851/- is taken then the Respondent will receive an amount of Rs.7 crore in compliance of order of Hon’ble High Court dated 12.02.2024 in Writ Petition (Lodging) No.4350/2024. He further submitted that the Respondent No.2 is claiming mortgage over the 12 (twelve) Flats whereas the dues of the Respondent would be satisfied by sale of one Flat, and if the dues of the Respondent No.2 could not be satisfied by the sale of the one flat then the Applicants will surrender the another Flat and then the Respondent would get satisfied their entire dues therefore, he submits that the Respondent may be restrained from taking possession of the rest of the mortgaged flats as dues of the Respondent would satisfied from the maximum two flats.

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He also drawn my attention to the demand notice 08.05.2021 and contended that the amount of foreclosure is also mentioned thus, he submitted that there are multiple illegal entries in the said demand notice and therefore, the said demand notice is liable to be quashed.

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He also contended that the demand notice itself is a defective demand notice as the Respondent failed to provide the name of the

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He also contended that the demand notice itself is a defective demand notice as the Respondent failed to provide the name of the officer who issued the demand notice and therefore, the said demand notice would vitiate on application of the judgment of Hon’ble DRAT, Mumbai in He relied upon the judgment in IDFC First Bank Ltd. Vs. M/s Tristar Cars Pvt. Ltd. MANU/DM/0018/2019.

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SA No.244 of 2023

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He also stated that the Respondent No.1 & 2 failed to provide the copy of the loan agreement executed in July-August, 2018 therefore, the Applicants were unable to reply to the statutory notice under Section 13(2) of the Act, 2002 issued by the Respondent No.1.

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Per contra , Ld. Senior Counsel for the Respondent No.1 & 2 submitted that during the period 2016 to 2021, the Applicants and its group companies availed 6 loans amounting to Rs.1,20,52,00,000/(approx.) (“Group Loan Accounts”) from Respondent No.1. Furthermore 5 loan accounts were assigned to the Respondent No.2 vide Deed of Assignment dated 01.12.2022 alongwith Rectification Deed dated 07.02.2024. He stated that out of the Group Loan Accounts, the Applicants challenged the proceedings under the Act, 2002 without disclosing about the other loan accounts and the outstanding thereunder. Further, he stated that the loans availed under the Group Loan Accounts by the Applicants and their Group Entities are also inter-linked together by way of specific cross-linking documents executed by the Applicants and its other group companies with the Respondent No.1. He also submitted that the Group Loan Accounts are interlinked by way of Declaration Cum Undertaking executed by the Group Entities and the Applicants declared that they have linked all the Group Loan Accounts together as per their consent and authorization to link all the loan accounts. The said undertaking provided that if any of the borrowers close any one or two loan accounts, then the parties are bound to close all loan accounts simultaneously with Respondent No.1. The said document also provided that if the loans are not closed together then Respondent No.1 would withhold the title

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SA No.244 of 2023

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documents of the properties and the same would be treated as security for the unsatisfied loan accounts.

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He stated that the Applicants failed to make representation under Section 13(3A) of the Act, 2002, therefore, by their own actions waived the right to challenge the Demand Notices under Section 13(2) of the Act, 2002 dated 08.05.2021.

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He further submitted that Respondent No.1 & 2 also stated that the present SA is not maintainable since it is barred by limitation. It is also submitted that the symbolic possession notice under Section 13(4) of the Act, 2002 was issued and served to the Applicants on 19.09.2022 by following the due procedure and conferring the time limits prescribed within the Act, 2002 by the Respondent No.1, but the Applicants neglected to challenge the notice under Section 13(4) of the Act, 2002 within the limitation period of 45 days and even the Applicants did not file application for condonation of delay, thus, he submitted that the present SA is liable to be dismissed on this ground alone. He also stated that this Tribunal has no jurisdiction to condone the delay in filing the SA and for the said purpose, Ld. Senior Counsel for the Respondent No.1 & 2 referred the judgment of Velar Engineering Works Private Limited Vs. The Authorized Officer/Chief Manager, Indian Bank, Kanchipuram & others, [MANU/TN/5046/2019].

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He also stated that the demand notice dated 08.05.2021 under Section 13(2) of the Act, 2002 contained a Schedule which provided for the calculations of the outstanding amount and the details of the Calculation of the foreclosure amount is mentioned with a purpose to inform the borrower about the dues, if any. He stated that the

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13(2) of the Act, 2002 dated 08.05.2021. 24. He further submitted that Respondent No.1 & 2 also stated that the present SA is not maintainable since it is barred by limitation. It is also submitted that the symbolic possession notice under Section 13(4) of the Act, 2002 was issued and served to the Applicants on 19.09.2022 by following the due procedure and conferring the time limits prescribed within the Act, 2002 by the Respondent No.1, but the Applicants neglected to challenge the notice under Section 13(4) of the Act, 2002 within the limitation period of 45 days and even the Applicants did not file application for condonation of delay, thus, he submitted that the present SA is liable to be dismissed on this ground alone. He also stated that this Tribunal has no jurisdiction to condone the delay in filing the SA and for the said purpose, Ld. Senior Counsel for the Respondent No.1 & 2 referred the judgment of Velar Engineering Works Private Limited Vs. The Authorized Officer/Chief Manager, Indian Bank, Kanchipuram & others, [MANU/TN/5046/2019]. He also stated that the demand notice dated 08.05.2021

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SA No.244 of 2023

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Applicants in the present SA filed the copy of Ledger account maintained by the Applicants (Exb.F of SA), for the period of 24.03.2000 to 24.03.2022 which clearly lists out the calculations of the outstanding balance payable to the Respondent No.2, thus, the Applicants very well aware about the dues payable to the Respondent No.2.

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He further submitted that no reply/representation under Section 13(3-A) of the Act, 2002 to the demand notice was given by the Applicants and it is only for the first time they asked for a copy of loan agreement in their letter dated April, 2013, therefore, the objection of the Applicants that representation under Section 13(3-A) of the Act, 2002, could not be given due to non furnishing the loan agreement by the Respondent, is completely bogus.

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CONSIDERATION

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Considering the submissions of the parties and also the record. The following issues emerge in the present case.

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A. Whether the Respondent Bank is entitled to proceed for all the Flats of the subject properties?

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B. Whether the Demand Notice under Section 13(2) of the Act, 2002 is defective?

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C. Whether the symbolic possession was taken on 19.09.2022 as per law?

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D. Whether the order dated 06.10.2023 passed by Ld. AMM, Esplanade, Mumbai, under Section 14 of the Act, 2002 is not in accordance with law?

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He further submitted that no reply/representation under Section 13(3-A) of the Act, 2002 to the demand notice was given by the Applicants and it is only for the first time they asked for a copy of loan agreement in their letter dated April, 2013, therefore, the objection of the Applicants that representation under Section 13(3-A) of the Act, 2002, could not be given due to non furnishing the loan agreement by the Respondent, is completely bogus. CONSIDERATION 27. Considering the submissions of the parties and also the record. The following issues emerge in the present case. A. Whether the Respondent Bank is entitled to proceed for all the Flats of the subject properties? B. Whether the Demand Notice under Section 13(2) of the Act, 2002 is defective? C. Whether the symbolic possession was taken on 19.09.2022 as

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SA No.244 of 2023

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Now hereinafter, I would like to decide the issues that arise in the SA.

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A. Whether the Respondent Bank is entitled to proceed for all the Flats of the subject properties ? (i) Ld. Counsel for the Applicants submitted that the Applicants have already paid an amount of Rs.23,29,75,743/- out of the loan amount of Rs.26,93,86,846/- however, still the respondent bank is claiming an amount of Rs.13,48,29,851/-. He also submitted that if the demand of the Respondent No.1 of Rs.13,48,29,851/- is taken then the Respondent will receive an amount of Rs.7 crore in compliance of order of Hon’ble High Court dated 12.02.2024 in Writ Petition (Lodging) No.4350/2024. He further submitted that the Respondent No.2 is claiming mortgage over the 12 (twelve) Flats whereas the dues of the Respondent would be satisfied by sale of one Flat, and if the dues of the Respondent No.2 could not be satisfied by the sale of the one flat then the Applicants will surrender the another Flat and then the Respondent would get satisfied their entire dues therefore, he submits that the Respondent may be restrained from taking possession of the rest of the mortgaged flats as dues of the Respondent would satisfied from the maximum two flats. (ii) Per contra , Ld. Senior Counsel for the Respondent No.1 & 2 submitted that during the period 2016 to 2021, the Applicants and

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(ii) Per contra , Ld. Senior Counsel for the Respondent No.1 & 2 submitted that during the period 2016 to 2021, the Applicants and its group companies availed 6 loans amounting to Rs.1,20,52,00,000/(approx.) (“Group Loan Accounts”) from Respondent No.1. Furthermore 5 loan accounts were assigned to the Respondent No.2 vide Deed of Assignment dated 01.12.2022

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alongwith Rectification Deed dated 07.02.2024. He stated that out of the Group Loan Accounts, the Applicants challenged the proceedings under the Act, 2002 without disclosing about the other loan accounts and the outstanding thereunder. Further, he stated that the loans availed under the Group Loan Accounts by the Applicants and their Group Entities are also inter-linked together by way of specific cross-linking documents executed by the Applicants and its other group companies with the Respondent No.1. He also submitted that the Group Loan Accounts are interlinked by way of Declaration Cum Undertaking executed by the Group Entities and the Applicants declared that they have linked all the Group Loan Accounts together as per their consent and authorization to link all the loan accounts. The said undertaking provided that if any of the borrowers close any one or two loan accounts, then the parties are bound to close all loan accounts simultaneously with Respondent No.1. The said document also provided that if the loans are not closed together then Respondent No.1 would withhold the title documents of the property and the same would be treated as security for the unsatisfied loan accounts, however, the Applicants concealed the said documents before this Tribunal. He relied upon the judgment of Hon’ble Supreme Court in K.D. Sharma Vs. Steel Authority of India Ltd. & Ors, and S.P. Chengalvaraya Naidu (Dead) by LRs Vs. Jagannath (Dead) by L.Rs. and Ors. (AIR 1994 SC 853) (iii) He further stated that by virtue of the cross linking the total

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(iii) He further stated that by virtue of the cross linking the total outstanding amount secured by mortgage of the flats across 6 loans which are subject matter in SA before this Tribunal is Rs.1,39,93,11,373.15/as on 03.02.2023 payable with further interest thereon.

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(iv) I have gone through the record.

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(v) Admittedly, in the present matter, the Applicants and its group companies availed 6 loans amounting to Rs.1,20,52,00,000/(approx.) (“Group Loan Accounts”) from Respondent No.1 and secured the said loan by way of the mortgage of the subject properties. The Applicants by way of Declaration Cum Undertaking dated 19.07.2021, declared as under: “I/We are aware and do hereby undertake, agreed and confirm that the Indiabulls Housing Finance Limited has linked our Loan Accounts mentioned herein above as per our consent and authorization to link all the Loan Accounts. If we wish to foreclose our above loan accounts of IHFL, we shall close all the Loan Accounts simultaneously with IHFL or as it will be advised by IHFL. We are aware and do hereby undertake, agree and confirm that if we fail to close all the loans simultaneously and/or as per the terms of the agreement or we close either of the loan accounts, in such circumstances the IHFL may at its sole discretion withhold the title document of the property of the loan account which has been closed by us. The same would be treated as part and parcel of security for unsatisfied loan account. We are aware that any breach or default in complying with the aforesaid undertaking will constitute an event of default under the said Loan

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We are aware that any breach or default in complying with the aforesaid undertaking will constitute an event of default under the said Loan Agreement.

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We are aware that it is on the faith of our aforesaid undertakings that Indiabulls Housing Finance Ltd. has agreed to disburse the said loan.”

(emphasis supplied)

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On perusal of the said undertaking, it is clear that by way of the undertaking, the Applicants confirms that the Group Loan Accounts are interlinked and the Applicants declared that they have linked all the Group Loan Accounts together as per their consent.The said undertaking provided that if any of the borrowers close any one or two loan accounts, then the parties are bound to close all loan accounts simultaneously with Respondent No.1. The said document also provided that if the loans are not closed together, then the Respondent No.1 would withhold the title documents of the property and the same would be treated as security for the unsatisfied loan accounts. (vi) Since the creation of mortgage of all the properties in the impugned account is not in dispute and as informed by the Respondent No.2 that by virtue of the cross linking the total outstanding amount secured by the mortgage over the flats across 6 loans is Rs.1,39,93,11,373.15/- as on 03.02.2023 with interest. Thus, I do not find any illegality in the action taken by the Respondent No.2 in respect of the mortgage flats therefore, the objection of the Applicants is hereby rejected. B. Whether the Demand Notice under Section 13(2) of the Act, 2002 dated 08.05.2021 is defective? (i) Ld. Counsel for the Applicants submitted that Respondent No.1 & 2 failed to give detailed calculations in the demand notice

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B. Whether the Demand Notice under Section 13(2) of the Act, 2002 dated 08.05.2021 is defective?

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(i) Ld. Counsel for the Applicants submitted that Respondent No.1 & 2 failed to give detailed calculations in the demand notice under Section 13(2) of the Act, 2002 dated 08.05.2021 to justify a demand of Rs.13.48 crores and no interest bifurcation has been furnished to the Borrowers. He also stated that in the demand notice the amount of foreclosure is also mentioned, which is an

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incorrect entry thus, he submitted that there are multiple illegal entries in the said demand notice and therefore, the said demand notice is liable to be quashed.

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(ii) He also contended that Respondent failed to provide the name of the officer who issued the demand notice and violated the provision of Rule 2(a) of the Rules, 2002, therefore, the said demand notice would vitiate on application of the judgment of Hon’ble DRAT, Mumbai in He relied upon the judgment in IDFC First Bank Ltd. Vs. M/s Tristar Cars Pvt. Ltd. MANU/DM/0018/2019. (iii) On the other hand, Ld. Senior Counsel for the Respondent No.1 & 2 vehemently objected to the contentions of the Applicants and submitted that the Applicants failed to make representation under Section 13(3A) of the Act, 2002, therefore, the Applicants waived the right to challenge the Demand Notice under Section 13(2) of the Act, 2002, dated 08.05.2021. (iv) He also submitted that the demand notice under Section 13(2) of the Act, 2002 dated 08.05.2021 contained a Schedule which provides the calculations of the outstanding amount. He clarified that the details of the Calculation of the foreclosure amount is mentioned with a purpose to inform the borrower about the dues. He further contended that the Applicants in the present SA themselves filed the copy of Ledger account maintained by the

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(iv) He also submitted that the demand notice under Section 13(2) of the Act, 2002 dated 08.05.2021 contained a Schedule which provides the calculations of the outstanding amount. He clarified that the details of the Calculation of the foreclosure amount is mentioned with a purpose to inform the borrower about the dues. He further contended that the Applicants in the present SA themselves filed the copy of Ledger account maintained by the Applicants (Exb.F of SA), for the period of 24.03.2000 to 24.03.2022 which clearly lists out the calculations of the outstanding balance payable to the Respondent No.2, thus, the Applicants were very well aware about the dues payable to the

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Respondent No.2, therefore, objection taken by the Applicants is only delaying tactics.

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(i) I have gone through the record.

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(ii) Record reveals that in the Demand Notice dated 08.05.2021 under Section 13(2) of the SARFAESI Act, 2002, the details of the outstanding dues are provided as under: “As per the Statement of Account maintained by the Secured Creditor in ordinary course of business, a total amount of Rs.13,48,29,851.05 (Rupees Thirteen Crore Forty Eight Lakh Twenty Nine Thousand Eight Hundred Fifty One and paise Five only) by way of outstanding principal, arrears (including accrued late charges) and interest till 04.05.2021 is due and payable by you along with applicable further interest in terms of the loan agreement w.e.f. 05.05.2021 (“Outstanding Amount”). In addition to the Outstanding Amount, you are also liable to pay penal interest, Penal interest, Cheque Bouncing Charges, Cost and other Charges due in future till the entire Outstanding Amount is paid. You all the Addresses being the Borrower/Co-Borrower(s) are jointly, severally and co-extensively liable to pay the Outstanding Amount to the Secured Creditor.” (emphasis provided) (iii) Further, in the said demand notice, the schedule i.e. letter

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(iii) Further, in the said demand notice, the schedule i.e. letter dated 05.04.2021 is annexed. In the said letter, the detailed calculation of the amount of Rs.13,48,29,851.05 is provided. The relevant portion is also reproduced herein below:

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“Ref: Prepayment of Your Home Loan

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Account No.: HHLLPM00467815

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With reference to your request for the above, we enclose have with the following amount for your loan Principal : 12,04,63,802.89 L.P.P. Charges : 13,50,124.00 Cheque Bouncing Charges: 4,720.00 Interest for the month: 17,06,570.55 Foreclosure Charges @2% at O/S Principal: 24,09,276.06 [email protected]% : 2,16,834.65 CGST- [email protected]% : 2,16,834.85 Pending Installments: 89,60,642.00 Other charges : 1336.00 Interest on interest : -5,00,290.15 Total amount payable: 13,48,29,851.05” (emphasis provided) (iv) Thus, it is clear from the above letter that the complete detail of the outstanding dues is provided. (v) According to the Applicants, in the said schedule the amount of foreclosure is also mentioned, whereas according to the Respondent No.1, the foreclosure amount is mentioned with purpose to inform the borrower about the total dues.

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(iv) Thus, it is clear from the above letter that the complete detail of the outstanding dues is provided.

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(v) According to the Applicants, in the said schedule the amount of foreclosure is also mentioned, whereas according to the Respondent No.1, the foreclosure amount is mentioned with a purpose to inform the borrower about the total dues.

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(vi) It is matter of record that the Applicants herein never objected regarding the total dues prior to the present SA. Further after filing the SA, the demand notice dated 08.05.2021, the Applicants approached the Respondent for the settlement of the account and

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they gave a proposal on 10.10.2023 however, the same was subsequently rejected by the Respondent No.2. In the said letter also the Applicants did not raise any objection regarding entry as mentioned in the demand notice dated 08.05.2021. (vii) Even otherwise, as rightly stated by Ld. Senior Counsel for the Respondent that in the copy of Ledger account maintained by the Applicants (Exb.F of SA) for the period of 24.03.2000 to 24.03.2022 the calculations of the outstanding balance payable to the Respondent No.2 is clearly mentioned, thus, the Applicants were aware about the dues payable to the Respondent No.2. Therefore, the objection of the Applicants regarding the dues is not sustainable hence, rejected. (viii) As far as issue pertaining to name of the authorized officer in the demand notice and non-compliance of provision of Rule 2(a) of the Rules, 2002 is concerned, the Respondent Bank has duly informed that the demand notice was signed by Mr. Awadhesh Srivastava, Authorized Officer of the Respondent No.1 who is duly authorized vide Board Resolution dated 05.02.2020 (Exb.A of Reply of Respondent No.2), therefore, the objection of the Applicants is not sustainable hence, declined. C. Whether the symbolic possession was taken on 19.09.2022 as per law?

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C. Whether the symbolic possession was taken on 19.09.2022 as per law?

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(i) Ld. Counsel for the Applicants submitted that there is complete breach of mandatory provisions of Rule 4(1) of the Security Interest (Enforcement) Rules, 2002. He also submitted that the Respondent did not paste the possession notice as mandated under Rule 8(1) of the Rules, 2002 while there were

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settlement discussions happening between the parties. Further, the Respondent failed to publish the said notice in 2 leading newspapers as mandated under the Rules, 2002.

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(ii) Per contra , Ld. Senior Counsel for the Respondent No.2 strongly objected to the contention of the Applicants and submitted that the objection of the Applicants on the possession notice is barred by limitation. He also submitted that even otherwise, the Respondent No.1 has duly annexed and pasted possession notice on the outer door of the subject properties thus, the objection of the Applicants is absolutely incorrect and false. (iii) Record reveals that the Respondent No.2 has provided the photos of the notices pasted on the doors of the subject properties as (Exb.B (Colly) of Reply of Respondent No.2) as well as copy of publication of the possession notice in the newspapers (Exb.C (Colly) of Reply of Respondent No.2) but which was not challenged by the Applicants within 45 days and after 2 years when the Respondent proceeded to auction the subject properties. It is only a strategy of the Applicants to delay the recovery of the Respondent No.2 thus, the objection of the Applicants is hereby declined. (iv) The issue of non-compliance of provision of Rule 4(1) of the Rules, 2002 is concerned, the said Rule is pertaining to the movable property however admittedly in the present matter, the properties mortgaged against the loan agreement and sanction letter dated

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(iii) Record reveals that the Respondent No.2 has provided the photos of the notices pasted on the doors of the subject properties as (Exb.B (Colly) of Reply of Respondent No.2) as well as copy of publication of the possession notice in the newspapers (Exb.C (Colly) of Reply of Respondent No.2) but which was not challenged by the Applicants within 45 days and after 2 years when the Respondent proceeded to auction the subject properties. It is only a strategy of the Applicants to delay the recovery of the Respondent No.2 thus, the objection of the Applicants is hereby declined.

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(iv) The issue of non-compliance of provision of Rule 4(1) of the Rules, 2002 is concerned, the said Rule is pertaining to the movable property however admittedly in the present matter, the properties mortgaged against the loan agreement and sanction letter dated 21.08.2018 are all immovable properties thus, the objection of the Applicants is baseless hence, rejected.

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D. Whether the order dated 06.10.2023 passed by Ld. AMM, Esplanade, Mumbai, under Section 14 of the Act, 2002 is not in accordance with law?

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(i) The Applicants have prayed the main relief in the SA as under: “a) This Honourable Tribunal be please to set aside the order dated 6^th October, 2023 passed by Defendant No.3 in Case No.1868/SA/2022 issued under Section 14 of the SARFAESI Act, 2002”

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(ii) However, in the entire SA, the Applicant did not raise any objection and/or pointed out any specific reason for challenging the order under Section 14 of the Act, 2002 passed by the Ld. ACM, Esplanade, Mumbai, therefore, the said prayer of the Applicants is not maintainable hence, declined.

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CONCLUSION 29. In view of above, the present SA is hereby dismissed. 30. File be closed and consigned to the record. Place: Mumbai. (Dr. Rekha G. Dhakar) Date: 13.03.2024 Presiding Officer, DRT-1, Mumbai. sc

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(ii) However, in the entire SA, the Applicant did not raise any objection and/or pointed out any specific reason for challenging the order under Section 14 of the Act, 2002 passed by the Ld. ACM, Esplanade, Mumbai, therefore, the said prayer of the Applicants is not maintainable hence, declined.

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CONCLUSION

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