Allowed

Lasys v. Religare Finvest Limited

DRT29 Aug 2024SA/418/2023

Case brief

AI extract

What is this about?

In an application under the SARFAESI Act, the Debts Recovery Tribunal set aside a possession notice dated 24.08.2023 primarily because the respondent failed to produce proof of affixing the notice on the secured property as mandated by Rule 8(1) of the Security Interest (Enforcement) Rules, 2002.

What did the court decide?

The securitisation application is allowed and the possession notice dated 24.08.2023 is set aside.

Lasys versus Religare Finvest Limited — Company and Corporate | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL^_ II AT HYDERABAD

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DATED THIS THE 29TH DAY OF AUGUST,²⁰²⁴

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PRESENT: SH. RAIVIESHWAR KOTHE,^{B.COM,,L.LB. (HONS.), M.A.} PRESIDING OFFICER

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SECURITISATION APPLICATION^{No. 418 OF 2023}

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Between:

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1.	M/s.Lasys Technologies Pvt.Ltd. RepbyitsDirector Mr.DevineniSankaraiahNaidu HIT-1, Phase-V,KukatpallyHousing Board Colony, Near RosaryHigh Public School,Kukatpa^Ily Hyderabad-500072.
2.	Mrs.Mrs.ChinnammaMorsa W/oMr. sambasivaRaoMorsa Aged65 years,H.No.1-2-100/4 PlotNo.3,Block-A KakatiyaNagar Coop. Housing Society Habsiguda,Hyderabad-500007. '...''.Applicants.
And
1.	TheAuthorised Officer ReligareFinvestLtd. 6thFloorAstralHeights 6-3-352/2&3 BesideShanbaghHotelRoad Hyderabad^-5 0 0034.
2.	Religare FinvestLtd. RepbyitsManager 6-3-3s2/2&3 BesideShanbagh HotelRoad Hydera bad- 500034. .......Respondents.
	CounselfortheApplicants:^{Mr.Abhay 5ingh.}
	CounselforRespondents:^{M/s.V.Santosh'} ,lh*'. .<br>.A,,

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sA 418/ 2023

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-:ORDER:-

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The Applicants flled the^{presentSecuritisation} Application uls.17 of the Securitization^{and Reconstruction of} Financial Assets and Enforcement of^{Security Interest Act, 2002} (hereinafter referred to as "SARFAESI Acl^{2OO2")assailingthe} possession notice dated 24.0A.2023 issued by the^Respondent against the Application^{scheduleproperty.}

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The case of the appllcants as^per the^{SA averments, in brief,} is that 1st applicant availed^{business loan from the 2nd respondent} branch to a tune of^{Rs.1.30 crores on 18.04.2014. Due to Covid} Pandemic, applicants committed default in^{paying ElYIs.Upon} initiation of securitisation^{proceedings,applicants regularised the} account and hence further^{proceedingswerestopped. A One Time} settlement has also been^{reached between the partiesfor a sum of} Rs.97 ,77 ,2791- vide Ietter daled L6.12.2022.^{As per respondent's} letter dated 13.f2.2022, the^principal amount^{outstandlngis} Rs.49,77,357/- and rest of the dues^pertain to^{cheque bounce} charges, interest on termination,^{pending instalments, LPP charges,} other taxable dues, GST and^{collection charges. Applicantshave} been constantly requesting the^{respondentto reconsiderthe said} charges and close the^issue amicably.^{Instead of sorting out the} issues, respondent once agaln^{invoked securitisationproceedings} vide demand notice dated 02.06.2023 for an^amountof Rs.7,49,70,841.41ps. Applicants objections to the demand^were disposed in a routine manner without application of^{mind vide reply} dated 07.O9.2023. The classification of^{account is} contrary^{to the} guidelines. The authorised officer is not empowered to issue the demand notice under the Rules.^{Thereafter,respond-qnt issuedthe} ..7s9P',,rL\ /// '' *'

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sA 4LA|2O23

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impugned possession notice dated 24,08.2023. Respondent has not complied with Section 13(2) read with Rule 3. The possession notice has not been served on the applicants nor alfixed on the secured asset. The Covid Pandemic benefits notified by the Government have not been extended to the applicants. Therefore, the entire proceedings of the respondent are vitiated.

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The respondents 1 and 2 company (hereinafter "respondent") filed reply statement. The averments in the reply statement in brief, are that applicants failed to clear the dues in spite of notice u/s 13(2). None of the reasons cited in the SA exonerate the applicants from the liability. Respondent classified the account as NPA in line with the RBI directions. Since the applicants failed to pay the dues even after issuance of demand notice, respondent issued the impugned possession notice. Applicants are chronic defaulters. Respondent strictly followed the^provisions of SARFAESI Act in serving on the applicants, in affixing it on secured assets and publishing in two newspapers. Instead of proposing any repayment plan, applicants filed the present SA to delay the recovery^process' Respondent relies on the^judgement in the^case of^{Tom. Thomasvs.} State Bank of India 2017^{(2) DRTC 668. Hence prayed for dismissal} of the sA.

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Heard learned counsel for the^{applicantsand the learned} counsel for the respondent^{company.Perused the written} arguments submitted by the^{respondent companyand the material} brought on record.

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Learned counsel apPearing^{for the applicants,while reiterating} the^pleadings taken in the^{SA, prayedfor allowlng the SA./&</sup>}

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sA4lal2o23

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6.Thelearnedcounselforrespondentcompanyalsoreiterated the version as^{in replystatement.He sought for dismissal of the sA} considering the averments^{of reply statementand the cited} judgement.

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Now the^points that^{arise for adjudicationare:-}

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i) Whether the^{Applicantsmade out any valid ground} for quashing the impugned^{possession notice} 24.08.2023 isst'ed by^{the respondent against the SA} schedule^{propertyunderthe provisionsof Securitisation} Act?

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ii) To what relie/?

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Point No.^(i):

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The respondent^placed on^{record the Resolution passed by its} Board authorising the^{person who filed the present SA vide page} Nos.35-36 annexed to the^{reply statement.Henceno fault can be} found on this count.^The other^{issues relate to the computation of} outstanding dues, interest^{chargesetc. In the absence of any} detailed break-up vis-a-vis related terms^{and conditions} of^{the loan} agreement, it is not^possible for this Tribunal to examine^{the same.}

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The notice under challenge is the symbolic^possession issued u/s 13(4) of the SARFAESI Act. Applicants' main^grievances are violation of RBI^guidelines in NPA classification, evasive reply to objections raised to demand notice and non-affixture of^possession notice on the secured asset.

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The contents in the objections dated 25.08.2023 raised by applicants to demand notice relate to full and final settlement

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sa 4lal2023

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amount of loan account apart from TDS related issue raised on 14.71.201,7, interest/penal interest/penalty/other expenses charged to the loan account. There is no mention of NPA classification related objection. Similarly, the reply sent by respondent to the objections to the demand notice, reveal that the objections are barred by limitation. The TDS issue has been addressed way back under email dated 22.77.2077. As regards the NPA classification, lt was made clear in the reply that the account was in default for more than 90 days. Because of these facts, I do not find any merit in the contention of the applicants that the respondent committed irregularity either ln 9ivin9 point-wise reply or NPA classification.

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As regards compliance of rule 8(1) of Security Interest (Enforcement) Rules, 2002, respondent failed to produce proof of affixture of^possession notice on the secured^property as mandated. Non-compliance of rule 8(1) amounts to violation of statutory requirement. The default on the part of the applicants does not confer any right on the respondent in^{relaxing itself} from^following mandatory requirement under a Statute. Hence the cited^judgement is not helpful to the respondent.^{The non-compllance of Rule8(1) of} the Rules, 2002 on the^part of^{respondent is clearly establishedand} it renders the^{possessionnotice invalid. Therefore, applicantshave} made out a valid^{ground for settingaside the possessionnotice} dated 24.08.2023.^{Accordingly, the SA deservesto be allowed.}

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Point No.(ii):

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In the result, the^SA is allowed setting^{aside the possession} notice dated 24.08.2023. fr$,'"

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sA 4Lal2O23

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However, this order does^{not precludethe respondentto issue} possession notice afresh strictly in accordance^{with the provisionsof} the SARFAESI Act and^{the Rules there under.}

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Consequently, Interlocutory^{Applications pendingif any, shall} stand closed. No order as to^costs.

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Communicate a copy of this order to the^{partiesconcerned} and upload in Web Portal.

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(Dictated to the Steno, signed and pronounced by me in the open court^{on thisthe29th} doy of August, 2024).

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ESHWAR KOTHE) PRESIDING OFFICER

Lasys v. Religare Finvest Limited

Case brief

What is this about?

What did the court decide?

Lasys v. Religare Finvest Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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