Dismissed

Sandeep Kaur and Another v. Canara Bank and Another

DRT7 Aug 2024SA/266/2024

Case brief

AI extract

What is this about?

The applicant borrowers challenged Securitization Application No. 266/2024 seeking to quash SARFAESI proceedings, including NPA classification, demand, possession, and sale notices. The Tribunal found no substantial irregularity or prejudice, held non-payment of dues debarred redemption, and dismissed the application.

What did the court decide?

The Securitization Application (SA/266/2024) was dismissed as there was no substantial irregularity in the SARFAESI proceedings and the applicants failed to prove substantial prejudice.

Sandeep Kaur and Another versus Canara Bank and Another — Banking and Recovery | DRT (2024)

¶1

DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

¶2

PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

¶3

SECURITIZATION APPLICATION NO.266/2024

¶4

Date of Institution: 18.07.2024 Date of Decision: 07.08.2024

¶5

Smt. Sandeep Kaur aged about 40 years D/o Sh. Kabal Ram R/o First Floor, House No.904, Sector 78 SAS Nagar, Mohali Punjab

¶6

Sh. Harish Mohan aged about 54 years S/o Sh. Ram Saran R/o House No. 244, Sahib Nagar, Urf Their, Patiala, Punjab-147002

¶7

--Applicants

¶8

Versus

¶9

Canara Bank having its head office at Building, No. 112, J.C. Road, Bengaluru-560002 and branch office at SCF 47, Phase 7, Mohali Punjab (SAS Nagar)-160061 through its Authorised Officer

¶10

Canara Bank having through its Recovery and Legal Section, Circle Office, 2^nd Floor, Sector 34-A, Chandigarh through its Divisional/ Regional Manager

¶11

--Respondents

¶12

Argued by: Ms. Ridhi Bansal, Advocate for Applicants Sh. Yogesh Kumar, Advocate for Respondents

¶13

FINAL ORDER

¶14

(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) to set aside the classification of loan account of applicants as NPA on 11.03.2024 by the respondents; to set aside the impugned demand notice dated 12.03.2024; possession notice dated 31.05.2024; impugned auction notice dated 29.06.2024 and its

¶15

¶16

SA/266/2024

¶17

SMT. SANDEEP KAUR AND ANOTHER VS. CANARA BANK AND ANOTHER

¶18

publication thereof dated 21.06.2024 and further action to be taken by the respondents being illegal. (2) It was stated in the application that applicants being the purported borrowers/ guarantors/ mortgagors have preferred the present Securitization Application being aggrieved by the measures taken by the respondents; that respondent bank approached the applicants offering credit facilities at lucrative rate of interest and on their assurances applicant No.1 agreed to avail credit facilities in shape of Home Loan to the tune of Rs. 1,09,80,000/- in the year 2022; that applicant No.2 stood as guarantor in the said loan; that the said facility was repayable in 360 equated monthly installments of Rs. 72,682/- at 6.95% interest p.a.; that applicant No.1 had repaid the loan regularly but due to certain unforeseen exigencies in her household, applicant No.1 unable to maintain financial discipline and thereafter, loan account of applicants came to be classified as NPA on 11.03.2024; that the classification of NPA was wrong as clause 4.2.4 of the RBI Master Circular-Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to advances dated 01.07.2015, which places an embargo on declaration of loan account as NPA solely on the basis of temporary deficiencies; that respondents issued demand notice dated 12.03.2024 under Section 13(2) of the Act for Rs. 1,16,56,879.32p, which is illegal; that the said notice was never served upon applicants especially upon applicant No.2; that the applicant No.1 filed objections under Section 13 (3-A) of the Act dated 09.05.2024 and the said objections were arbitrarily dismissed in a complete mechanical manner vide letter dated 14.05.2024; that respondents have issued notice under Section 13(4) of the Act dated 28.05.2024, which was neither served upon all the applicants nor was affixed on conspicuous portion of the properties as per Rules; that wrong amount of debt/liability has been demanded in the impugned demand notice and on this ground alone, the entire proceedings deserves to be withdrawn; that meanwhile, being completely unaware of the impugned proceedings of the Act, applicant No.1 approached respondents inter-alia praying for regularization of the loan account and the request of the applicants was kept in cold store; that the sale notice was not served upon all the applicants but applicant No.1 was served with the impugned sale notice on 05.07.2024; that impugned sale notice reveals that auction of the alleged mortgaged property is scheduled to take place on 07.08.2024 whereas in

¶19

¶20

SA/266/2024

¶21

SMT. SANDEEP KAUR AND ANOTHER VS. CANARA BANK AND ANOTHER

¶22

the e-auction notice as published in the newspaper on 21.06.2024, the auction is stated to take place on 24.07.2024 therefore, sale notices dated 29.06.2024/21.06.2024 deserves to be set aside; that the secured asset is sought to be sold at the undervalued reserve price of Rs.1,59,71,000/- against its actual valuation of Rs.2,00,00,000/-; that respondents have miserably failed to show any proper valuation which was got done by the respondents hence, the reserve price has been fixed arbitrarily without application of mind; that there has been infraction of Section 13(8) of the Act, which post the (Amendment) Act, 2016 has drastically curtailed the right of redemption available with the borrower upto the date of publication of sale notice. It was prayed to quash the SARFAESI proceedings initiated by respondents.

¶23

(3) Reply filed by respondents.

¶24

(4) It is stated in the reply that the present SA is nothing but an abuse of the process of law and deserves to be dismissed; that applicants availed financial facilities and in consideration thereof the secured asset in question was mortgaged; that the applicants were failed to repay the loan amount therefore, respondents have issued a demand notice under Section 13(2) of the Act dated 12.03.2024 to the applicants and the same was served according to Rules; that applicants filed objections under Section 13(3-A) of the Act, which were decided by the Authorised Officer vide communication dated 14.05.2024; that applicants had not paid their outstanding dues therefore, possession notice was served to all concerned as per Rules; that thereafter respondents had issued a sale notice dated 29.06.2024, which was also duly served upon all concerned as per Rules; that applicants were never regular with the payment of installments as per the terms and conditions of Sanction Letter dated 28.02.2022 and inspite the various requests to get the account regularize the applicants failed to do so therefore, the account of applicants was classified as NPA on 11.03.2024 as per the RBI Guidelines; that as required in law, the reserve price was fixed by the Competent Authority after considering all the facts and the latest valuation report; that applicants have failed to place on record their own valuation to substantiate their claim; that the publication of the possession notice dated 31.05.2024 clearly shows that mandatory time under provisions of law has been given to the applicants to redeem their property and the applicants

¶25

4 SA/266/2024 SMT. SANDEEP KAUR AND ANOTHER VS. CANARA BANK AND ANOTHER

¶26

have failed to redeem their property and at this stage they are debarred from taking the plea of redemption. Therefore, this SA is liable to be dismissed.

¶27

(5) No replication filed by applicants.

¶28

(6) I have heard arguments advanced by Ms. Ridhi Bansal and Sh. Yogesh Kumar, Advocates and gone through the record carefully.

¶29

(7) It was argued by Ms. Ridhi Bansal, Advocate that respondents have wrongly classified the account of applicants as NPA on 11.03.2024 because there was no 90 days default in continuation as per RBI Circular.

¶30

Per contra , Sh. Yogesh Kumar, Advocate argued that the account of applicants was classified as NPA in strict compliance of Rules and there is no illegality in it. Ms. Ridhi Bansal, Advocate could not explained as to how loan account was wrongly classified as NPA. There is nothing on record, which can show that loan accounts can be classified as NPA only after continuous default of 90 days. In the considered opinion of this Tribunal, if borrower defaults in payment of three installments on due dates and whenever there is default of total 90 days then secured creditor is entitled to classify the loan account as NPA, if there is no legal impediment.

¶31

(8) Ms. Ridhi Bansal, Advocate further argued that notice under Section 13(2) of the Act was not served according to Rule 8 of the Security Interest (Enforcement) Rules, 2002. It was further argued that in the said notice, two loans were mentioned though only one Housing Loan was obtained by applicant No.1 and on this count above notice is illegal.

¶32

Per contra , Sh. Yogesh Kumar, Advocate argued that notice under Section 13(2) of the Act was duly served upon all the applicants as per Rules. It was further argued that copy of said notice is Annexure R1 to the reply, which shows that the said notice was issued to both the applicants on 12.03.2024. Copies of receipts of registered posts along with tracking reports are also filed as Annexure R2, which shows that notices were served upon both applicants. It was further argued that in the said notice Housing Loan was mentioned at serial No.1, which was admittedly availed by applicant No.1 and at the serial No.2 Canara Home Loan Secure was mentioned, which is the premium of insurance and the same was not paid by applicant No.1. It was further argued that as per the settled norms at the time of sanction of Housing Loan necessarily the loan is secured with the insurance.

¶33

5 SA/266/2024

¶34

SMT. SANDEEP KAUR AND ANOTHER VS. CANARA BANK AND ANOTHER

¶35

In light of above factual position, it is established that notice under Section 13(2) of the Act was validly issued and also served upon applicants as per Rules. There is no illegality/irregularity in the issuance of above notice.

¶36

(9) Ms. Ridhi Bansal, Advocate further argued that sale notice was not issued as per Rules and not served in compliance of Rules. It was further argued that notice was not published in leading newspapers as well as in the Haryana Edition in place of Patiala.

¶37

Per contra , Sh. Yogesh Kumar, Advocate argued that sale notice was issued and served strictly in accordance with law. It was further argued that copy of sale notice along with covering letter is annexed as Annexure R7. It was further argued that copies of receipts of registered posts along with tracking reports are also filed with Annexure R7, which shows that notices were served upon both applicants. It was further argued that sale notice was published in the ‘Indian Express and Desh Sewak’ (Vernacular) newspapers on 06.07.2024, which are Annexure R8 to reply. It was further argued that sale notice was also pasted on the secured asset.

¶38

In light of above factual position and evidences on record this Tribunal is of the considered opinion that the sale notice was prepared and served upon applicants as per Rules. Nothing is on record which can show that sale notice was defective or not served according to Rules.

¶39

(10) Ms. Ridhi Bansal, Advocate further argued that respondents have not obtained fresh valuation report before putting the property on sale.

¶40

Per contra , Sh. Yogesh Kumar, Advocate argued that valuation report (Annexure R11) was obtained on 07.06.2024 for selling the property on 07.08.2024. It was further argued that the detailed valuation report was obtained before putting the property on sale.

¶41

In the considered opinion of this Tribunal, valuation report dated 07.06.2024 cannot be assumed as illegal as the same was obtained only two months before the date of actual sale.

¶42

(11) No other point/ground was pressed.

¶43

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

¶44

(13) No substantial irregularity shown in the SARFAESI proceedings.

¶45

6 SA/266/2024

¶46

SMT. SANDEEP KAUR AND ANOTHER VS. CANARA BANK AND ANOTHER

¶47

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. (14) Applicants could not established any substantial prejudice caused to them by the initiation of SARFAESI proceedings. Admittedly, there is outstanding of Rs.1,19,40,513.32p as on 28.06.2024 (as shown in the sale notice) in the loan accounts of applicants and admittedly, they have not deposited the same.

¶48

(15) There is no illegality in the sale notice as well as proceedings initiated under the Act. Admittedly, applicants have not paid the dues.

¶49

(16) After the consideration of all facts and circumstances, there is no case made out in favour of applicants and this SA deserves to be dismissed. SA is dismissed.

¶50

Record be consigned to record room after due compliance.

¶51

Date: 07.08.2024

¶52

Pronounced by me in the open Tribunal.

¶53

(MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Sandeep Kaur and Another v. Canara Bank and Another

Case brief

What is this about?

What did the court decide?

Sandeep Kaur and Another v. Canara Bank and Another

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Central Bank of India versus Avtar Singh and Others

Punjab National Bank versus Amandeep Singh and others

Hdfc Bank Limited versus Palwinder Singh and Others

Canara Bank versus Gurnam Singh

Bank of India versus Sh. Dilbagh Singh @ Dalbagh Singh

Hdfc Bank Limited versus Sh. Darshan Singh