Dismissed

Inder Mohan v. Au Small Finance Bank Limited and Another

DRT11 Jul 2024SA/244/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal disposed of a securitization application filed to set aside dispossession notices and restore possession. The court held that since the applicant failed to deposit outstanding dues and no substantial prejudice was caused, the application was dismissed.

What did the court decide?

The Securitization Application was dismissed; record to be consigned to record room after due compliance.

Inder Mohan versus Au Small Finance Bank Limited and Another — Banking and Recovery | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.244/2024

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Date of Institution: 05.07.2024 Date of Decision: 11.07.2024

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Inder Mohan S/o Sh. Radha Krishan, R/o House No.644-C, Swastik Vihar, Zirakpur, Tehsil Dera Bassi, District SAS Nagar, Mohali

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--Applicant

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Versus

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Authorised Officer, A.U. Small Finance Bank Ltd., Branch at Registered Office at 19-A, Dhuleshwar Garden, Ajmer Road, Jaipur, Rajasthan

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A.U. Small Finance Bank Limited (Formally known as AU Financiers (India) Limited), Rakhsa Business Centre, Ambala Chandigarh Road, Near Metro, Branch Zirakpur, Tehsil Dera Bassi, District SAS Nagar, Mohali

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--Respondent

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Argued by: Sh. Akhilesh Vyas, Advocate for Applicant Ms. Deepika Mittal, Advocate for Respondents

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity) for setting aside the dispossession letter dated 21.06.2024 whereby, possession is scheduled to be taken on 11.07.2024, Possession notice dated 17.08.2023 and demand notice dated 06.05.2023 or quashing any other proceedings arising under the Act related to the property in dispute and restore the possession to the applicant.

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(2) It was stated in the application that applicant had availed Financial Facility on 08.09.2017 in the shape of Term Loan from the respondents to the tune of Rs. 9

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SA/244/2024

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INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER Lacs. It was further stated that applicant had paying regular installments in his loan accounts but on 20.08.2020 co-borrower Smt. Anuradha Sharma was died, due to which applicant could not pay the instalment amount and the loan account of applicant was classified as NPA on 03.05.2023. It was further stated that thereafter, respondent had issued notice dated 06.05.2023 under Section 13(2) of the Act. It was further stated that due to medical expenses and ill health conditions suffered by the wife of the applicant he was unable to pay the outstanding amount to the respondent. It was further stated that respondent had issued possession notice dated 17.08.2023 wrongly and illegally as per Rules. It was further stated that respondent and bank Officials have played a fraud with the applicant by affixing the notice dated 30.04.2024 to take possession of the house in question. It was further stated that respondent had issued another possession notice dated 17.08.2023 for the loan account No. L9001060820460739 but respondent has not served any demand notice with this regard. It was further stated that applicant filed a Civil Suit before Additional Civil Judge (Senior Division), Dera Bassi for permanent injunction restraining the respondent from interfering in the peaceful possession and dispossession of the applicant from the secured asset. It was further stated that respondent put appearance in the said Civil Suit No. CS/421/2024 dated 14.05.2024. It was further stated that notice under Section 13(2) as well as possession notices are totally wrong and illegal as the same were issued against the dead person. It was further stated that respondent is well within the knowledge of the fact that wife of the applicant was earlier died and they have put burden upon the applicant to the pay the loan amount after the death of his wife. It was further stated that after getting order dated 30.04.2024 from Kanungo, Zirakpur the respondent filed petition under Section 14 before the Field Kanungo, Zirakpur for taking the actual possession of the property and they have not informed regarding order dated 30.04.2024 to applicant. It was further stated that after getting knowledge about the order dated 30.04.2024 applicant approached the SDM, Derabassi by sending representation dated 20.05.2024 and mentioned that there is a Civil Litigation going on between the parties and respondent has not disclosed while getting

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SA/244/2024

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INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER

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the order dated 30.04.2024. It was further stated that respondents have intentionally not disclosed the said fact rather dispossession letter dated 21.06.2024 issued. It was further stated that as per dispossession letter dated 21.06.2024, the possession is scheduled to be taken on 11.07.2024. It was further stated that respondent has not filed nine-point affidavit while filing the petition under Section 14 of the Act. It was further stated that respondent has not registered the mortgaged property with Central Registry. Therefore, dispossession notice dated 21.06.2024 may be quashed and SA may be allowed.

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(3) Reply to SA filed by respondents.

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(4) It was stated in the reply that all the actions under the Act are taken by the answering respondents after the proper compliance and procedure. It was further stated that applicant had approached the respondents for financial assistance in the year 2017 and after considering the request, respondents had sanctioned the various Credit Facilities from time to time. It was further stated that Term Loan to the tune of Rs. 9 Lacs was sanctioned on 08.09.2017, Second Term Loan to the tune of Rs. 1.5 Lacs was sanctioned on 22.08.2018, Third Term Loan to the tune of Rs. 1.5 Lacs was sanctioned on 17.02.2020, Fourth Term Loan to the tune of Rs. 1.25 Lacs was sanctioned on 16.10.2020 and Credit Card Facility was sanctioned of Rs. 5 Lacs. It was further stated that in all loan accounts applicant had mortgaged the immovable property mentioned in para 5 to the reply, by depositing the Original Title Deed. It was further stated that applicant did not maintained the financial discipline and defaulted in payment of loan account also in repayment of credit card. It was further stated that applicant did not repay the credit card amount as per terms and conditions and resultantly, his credit card has been classified as NPA on 03.05.2023. It was further stated that due to the classification of the credit card account as NPA, all the accounts of the applicant have also been classified as NPA as per guidelines issued by RBI vide Master Circular dated 01.07.2015. It was further stated that thereafter, respondents have initiated proceedings under the Act and issued notice under Section 13(2) & 13(4) of the Act to applicants. It was further stated that notice under Section 13(2) of the Act dated 06.05.2023 was sent to applicant through

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SA/244/2024

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INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER

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registered post on 09.05.2023 and the same was received by applicant as admitted in para 5.2 of the SA. It was further stated that after receipt of above notice applicant had neither complied with demand nor raised any objection under Section 13(3-A) of the Act. It was further stated that when applicant did not deposited a single penny in the loan accounts, notice dated 17.08.2023 under Section 13(4) of the Act was issued and the same was received by applicant as admitted in para 5.5 of the SA. It was further stated that when applicant had not handed over the peaceful physical possession of the property to the respondent then they approached District Magistrate, Mohali under Section 14 (1) of the Act. It was further stated that after being satisfied with the contents of nine-point affidavit, District Magistrate, Mohali had passed order dated 05.03.2024 in favour of respondents. It was further stated that the mortgaged property was registered on the portal of Central Registry as per mandate of Section 26-D of the Act. It was further stated that respondents had approached many times to applicant for regularization of the accounts but applicant has not paid any attention. It was further stated that answering respondents has filed a case before Permanent Lok Adalat, Dera Bassi for settlement of Credit Card dues but applicant did not appear therefore, the said case was withdrawn by respondents. It was further stated that whenever respondents approached applicant for regularization of accounts, every time applicant threatened the Bank Officials that if they demand the loan amount then he will commit suicide and he will put entire blame on the Bank Officials. It was further stated that applicant is not entitled for any relief and this SA may be dismissed.

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(5) No replication filed by applicant.

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(6) I have heard arguments advanced by Sh. Akhilesh Vyas and Ms. Deepika Mittal, Advocates and gone through the record carefully.

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(7) Sh. Akhilesh Vyas, Advocate argued that there are total five loan accounts of applicant. Four loan accounts were Term Loan and One was Credit Card Facility, which were obtained by applicant. It was further argued that against the outstanding of Credit Card Facility, SARFAESI proceedings cannot be initiated. It was further argued that respondents have wrongly classified Credit Card Facility as NPA on 03.05.2023. It was further

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SA/244/2024

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INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER

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argued that notice under Section 13(2) and 13(4) of the Act were not served as per Rule 8 of the Security Interest (Enforcement) Rules, 2002. It was further argued that notice under Section 13(2) of the Act was issued against the dead person. It was further argued that since Credit Card Facility cannot be classified as NPA therefore, rest Term Loan accounts also cannot be classified as NPA on the basis of Credit Card Facility.

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(8) Per contra , Ms. Deepika Mittal, Advocate argued that applicant did not repaid the Credit Card amount as per terms and conditions of the agreement therefore, his Credit Card Facility has been classified as NPA on 03.05.2023 and resultantly, all the accounts of applicant has also been classified as NPA as per guidelines issued by RBI vide Master Circular dated 01.07.2015. It was further argued that as per Clause 4.2.7 of the Master Circular dated 01.07.2015 it was provided that asset classification to be borrower wise and not to be facility wise. It was further argued that Credit Card Facility was classified as NPA in strict compliance of Rules and there is no illegality in it. It was further argued that notice under Section 13(2) & 13(4) of the Act were served upon applicant strictly in accordance with law. It was further argued that applicant never informed respondents regarding death of his wife therefore, being co-borrower notices were sent to the wife also. It was further argued that respondents have initiated proceedings under the SARFAESI Act only against the Term Loans Facility. It was further argued that applicant himself admitted that notice under Section 13(2) & 13(4) of the Act were received. It was further argued that no representation under Section 13(3-A) of the Act was sent to respondents. It was further argued that order under Section 14 of the Act was passed by the District Magistrate concerned after due consideration of ninepoint affidavit. It was further argued that applicant has no opportunity to say the said order was passed without any affidavit. It was further argued that there is outstanding of Rs.5,29,645/- as on today in the Credit Card Facility of applicant and if, he deposits the same today then respondents will not take possession of the secured asset today.

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(9) It is admitted fact that four Term Loan Facilities and one Credit Card Facility was obtained by applicant and he failed to adhere financial discipline. Sh.

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SA/244/2024

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INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER

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Akhilesh Vyas, Advocate hammered on the point that Credit Card Facility cannot be classified as NPA but he was unable to show any provision, Law or Circular in this regard. It is admitted fact that as per Master Circular dated 01.07.2015 issued by RBI, asset classification is to be borrower wise and not facility wise. In light of this Master Circular four Term Loan accounts of applicant were also classified as NPA after classification of NPA in the Credit Card Facility. Ms. Deepika Mittal, Advocate clearly submitted that respondents have initiated SARFAESI proceedings against the four Term Loan accounts of applicant. During the course of arguments, applicant has not agreed for the payment of outstanding in the Credit Card Facility.

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(10) In the SARFAESI Act nowhere it is provided that applicants have any right not to deposit their outstanding dues.

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Notices under Section 13(2) & 13(4) of the Act as well as the possession notices were duly served upon applicant as per evidence available on the record. There is no evidence on record, which can show that applicant had ever informed to respondents regarding death of his wife.

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(11) No substantial irregularity shown in the service of possession notice or any other notice.

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(12) Hon’ble Supreme Court in M/s L & T Housing Finance Limited vs. M/s Trishul Developers in Civil Appeal No.3143/2020 decided on 27.10.2020 has observed that trivial procedural lapse is not a ground of nullify SARFEASI proceedings initiated by secured creditors, if no substantial prejudice was caused to borrower. It is further observed by Hon’ble Supreme Court that proceedings initiated under the SARFEASI Act by the secured creditor cannot be nullified merely on the ground to technical defect and procedural lapse unless substantial prejudice was caused to the defaulters.

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(13) Applicant could not established any substantial prejudice caused to him by the initiation of SARFAESI proceedings. Admittedly, there is outstanding in the loan accounts of applicant and admittedly, he has not deposited the same and still not ready to deposit the amount.

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7 SA/244/2024 INDER MOHAN VS. A.U. SMALL FINANCE BANK LTD. AND ANOTHER (14) In the above facts and circumstances, in the considered opinion of this Tribunal, no case is made out by applicant in his favour. Resultantly, this SA is liable to be dismissed. SA is dismissed. Record be consigned to record room after due compliance. Date: 11.07.2024 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Inder Mohan v. Au Small Finance Bank Limited and Another

Case brief

What is this about?

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Inder Mohan v. Au Small Finance Bank Limited and Another

Case brief

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