Allowed

Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

DRT23 Feb 2024SA/304/2023

Case brief

AI extract

What is this about?

The Applicant challenged the procurement of Section 14 orders under the SARFAESI Act, arguing it violated an existing stay order from the Tribunal. The court held that while the stay did not bind the Magistrate, it bound the Authorized Officer. Consequently, the responses leading to the Section 14 orders were unsustainable and set aside.

What did the court decide?

The measures taken by the respondent for obtaining the Section 14 order are set aside. The respondent is at liberty to apply for fresh orders.

Syed Faiyaz S a versus Cholamandalam Investment and Finance… — Banking and Recovery | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 23^rd day of February, 2024

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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SA No.304 of 2023

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Syed Fiyaz S.A. S/o S. Abbas No.2, Flat No.S1, 2^nd Floor Apanuridha Flats, Sri Ram Nagar Main Road VYA Tondiarpet, Fort St. George – 600 039 …Applicant

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Versus

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Cholamandalam Investment and Finance Company Limited Represented by its Authorised Officer No.719, N.S.C. Bose Road, Parrys Chennai – 600 01 ….Respondent

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Counsel for the Applicant : Ms. G. Pavithra Counsel for Respondent : M/s Kishore Balasubramanian

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FINAL ORDER

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The measures taken by the respondent leading to the procurement of Section 14 orders dated 14.06.2023 by Chief Judicial Magistrate, Vellore in Crl. M.P. No.3942 of 2023 is under challenge in this Securitization Application, in short the SA, filed Under Section 14 of the SARFAESI Act or the Act, as the case be.

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The case of the Applicant is encapsulated as follows:-

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The defendant sanctioned a credit facility for Rs. 67,00,000/- in lieu of Security of schedule properties. The Applicant is disputing the defaults and contends that

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despite said prompt remittances, the measures were initiated and a possession notice was issued, which is under challenge is SA 19 of 2023. Apart from reiterating the contentions as taken SA 19 of 2023 as to the classification of NPA and non service of statutory notices, a specific contention is taken that the Section 14 orders are procured when an interim order staying the proceedings are in force.

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The respondent entered appearance and filed their counter contending that there is no infirmity in the measures taken by them. The respondent had also reiterated the respondent has scrupulously followed the procedures as envisaged under the SARFAESI Act and the Rules made thereunder. The respondent had also produced the documents proving the compliance of statutory mandates.

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Heard the Ld. Counsels appearing on behalf of both sides.

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In view of the fact that SA 19 of 2023, impugning the measures leading to the issuance of possession notice is already gone into and decided by this Tribunal no detailed enquiry as to the procedure followed by the respondent is warranted.

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The only contention put forth by the Applicant is that the Section 14 order is obtained in violation of stay order passed in SA 19/2023. The applicant had produced the proceedings of the magistrate on 02.06.2023 which reads: -

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“Petitioners Rep / Senior Manager present and examined as PW1 in chief Ex P1 to 21 marked for hearing petitioners side, at

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request call on 05.06.2023”. On 05.06.2023 the proceedings read

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as follows “petitioner side heard for orders 09.06.2023”.

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The proceedings of SA 19/2023 at relevant dates ARE as follows: - On 20.04.2023 - “Counsel for both sides present post the matter on 07.07.2023 for hearing”.

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On 07-07-2023 – “Counsel for both sides present. Counter filed. Post the matter on 23.08.2023 for disposal. Interim order extended till next posting date”.

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According to the Applicant the respondent had procured the order impugned in a total disregard to the stay order passed in SA19 of 2023 and hence liable to be struck down.

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The learned counsel for the respondent placing reliance on “R.D. Jain and Company Vs. Capital First India Ltd and Others” (2023) 1 SCC 675 contended that Section 14 proceedings are only of ministerial nature and further that the stay order passed by this Tribunal does not bind the Magistrate.

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It is true that this Tribunal’s order staying the measures is not binding on the Magistrate but the stay of further proceedings granted by this Tribunal binds the Authorized Officer. Hence the stay order, if any, will preclude the said officer from proceeding further in pursuant to the measures. It is not in dispute that on date on which the Authorized officer of respondent gave evidence before the Magistrate, as evidenced from the proceedings, the stay granted by this Tribunal was in force. The action from the side of the respondent in completing the

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proceedings for procuring orders facilitating actual possession, when further proceedings are stayed cannot be sustained in the eye of law.

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In view of the finding that the respondent had let in evidence and sought for an order seeking actual possession when the stay was in operation, this Tribunal is of the view that the proceedings leading to procurement of Section 14 orders is liable to be set aside.

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Hence the following order is passed: -

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(a) SA No. 304of 2023 stands allowed.

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(b) The measures taken for obtaining Section 14 order is set aside. The respondent would be at liberty apply fresh and procure fresh orders from the competent authority if they are otherwise entitled for, as the legality of measurers leading to possession notice, which was the subject matter of SA 19/2023 is upheld.

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All pending IAs, if any, stands closed. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 23^rd day of February, 2024)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

Case brief

What is this about?

What did the court decide?

Syed Faiyaz S a v. Cholamandalam Investment and Finance Company Limited

Case brief

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What did the court decide?

What the court decided

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