Dismissed

Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

DRT21 Mar 2024SA/42/2023

Case brief

AI extract

What is this about?

This application challenged enforcement action under SARFAESI Act regarding an equitable mortgage created by deposit of title deeds. The tribunal rejected claims that the mortgage required registration, upheld the validity of the demand notice despite bifurcation objections, and dismissed challenges to the District Magistrate's order, dismissing the application.

What did the court decide?

Application dismissed; possession not restored; enforcement action upheld.

Gulam Nabi Khanyari versus Jammu and Kashmir Bank Limited — Intellectual Property | DRT (2024)

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SA No.42 of 2023

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IN THE DEBT RECOVERY TRIBUNAL-I AT MUMBAI SECURITIZATION APPLICATION NO. 42 of 2023

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GULAM NABI KHANYARI, Having address at: Villa No.12, Type-A, Kandy, Cavelossim Village, Salcete Taluka, Margao, Goa-403601

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…Applicant

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...Respondent

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Counsel for the Applicant: Adv. Kushal Sawant Counsel for the Respondent : Adv. Abhishek K. i/b Adv. Rajan Pillai

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Dated: 21.03.2024

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INTRODUCTION

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The present Securitization Application (S.A.) has been filed by Applicant praying therein to declare that resort to purported action under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the SARFAESI Act, 2002") including Memorandum dated 20.12.2022 and order dated 14.10.2022 and demand notice dated 01.06.2021 as well as all further and consequential action in respect

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Cavelossim Village, Salcete Taluka, Margao, Goa-403601 …Applicant Versus THE JAMMU & KASHMIR BANK LIMITED, a banking company having Zonal Office at 1^st and 2^nd Floor, Bandra-Kurla Complex, Bandra (East), Mumbai-400051 through its Authorized Officer ...Respondent Counsel for the Applicant: Adv. Kushal Sawant Counsel for the Respondent : Adv. Abhishek K. i/b Adv. Rajan Pillai F I N A L O R D E R Dated: 21.03.2024 INTRODUCTION The present Securitization Application (S.A.) has been filed by Applicant praying therein to declare that resort to purported action

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of the said premises as without jurisdiction, nullity, invalid and contrary to statutory provisions of the SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002 (“the Rules, 2002”); quash and set aside purported action initiated by Defendant including Memorandum dated 20.12.2022 and order dated 14.10.2022 and demand notice dated 01.06.2021 as well as all further and consequential action in respect of the said premises or any part thereof; and direct the Respondent to restore the possession of the said premises to the Applicant. FACTS OF THE CASE 2. Facts of the SA are that the Applicant is the owner of residential premises being Villa No.12, Type-A, Consisting of ground and first floor known as “Kandy” or “Mobor”, 1^st Lane, at Cavelossim Village, Salcete Taluka, Margao, Goa bearing Nos.1770, 1769 registered in the Land Registration under Survey No.109, Sub Division No.1, South Goa-403721 (“the subject properties”). The Applicant is a partner of M/s A Salam Jewellers alongwith one Samiullah Majid Rather. The Respondent by a sanction letter dated 02.04.2019, the Defendant claims to have sanctioned a cash credit limit of Rs.258 lakhs to the said firm under J. K. Bank Easy Working Capital Finance Scheme for Trade and Service Sector. 3. In respect of the above cash credit limit, the Respondent is claiming

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FACTS OF THE CASE

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Facts of the SA are that the Applicant is the owner of residential premises being Villa No.12, Type-A, Consisting of ground and first floor known as “Kandy” or “Mobor”, 1^st Lane, at Cavelossim Village, Salcete Taluka, Margao, Goa bearing Nos.1770, 1769 registered in the Land Registration under Survey No.109, Sub Division No.1, South Goa-403721 (“the subject properties”). The Applicant is a partner of M/s A Salam Jewellers alongwith one Samiullah Majid Rather. The Respondent by a sanction letter dated 02.04.2019, the Defendant claims to have sanctioned a cash credit limit of Rs.258 lakhs to the said firm under J. K. Bank Easy Working Capital Finance Scheme for Trade and Service Sector.

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In respect of the above cash credit limit, the Respondent is claiming mortgage over the said premises on the basis of an Extension of Charge dated 01.11.2013, however, the alleged mortgage document is not registered as required by Section 17 of the Indian Registration Act.

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It is also stated that the disputes between the partners of the said firm on 31.03.2021 the Respondent claims to have classified the account of the said firm as NPA without giving any intimation or notice to the said firm or the Applicant as mandated by RBI guidelines.

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It is further stated that the Respondent issued notice under Section 13(2) of the SARFAESI Act, 2002 for Rs.290,34,392.88. The said notice is lacking statutory bifurcation as required by Section 13(3) of the said Act. The said notice is not issued by an Authorized Officer within the meaning of Rule 2(a) of the Rules, 2002. The signatory of the said notice has not put her designation on the said notice entitling her to act as an authorized officer of the Defendant as per Rule 2(a) of the Rules, 2002.

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It is further stated that by letter dated 10.06.2021, the Applicant raised objection to 13(2) notice dated 01.06.2021 and pointed out that the business of Applicant has suffered unprecedented loss due to Covid-19 pandemic and subsequent worldwide lockdown since March, 2020. The business of the Applicant was dependent on international tourism which was almost stopped during Covid-19 and lockdown. In view of the circumstances beyond his control, the Applicant requested the Respondent to consider the precarious situation faced by the Applicant and sought help for survival during the global crisis.

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By letter dated 22.06.2021, the Respondent responded to the letter dated 10.06.2021, but failed and neglected to consider written representation dated 10.06.2021. However, the Applicant was shocked and surprised when he received a copy of Memorandum dated 20.12.2022 issued by Mamlatdar and Revenue Recovery

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It is further stated that the Respondent issued notice under Section 13(2) of the SARFAESI Act, 2002 for Rs.290,34,392.88. The said notice is lacking statutory bifurcation as required by Section 13(3) of the said Act. The said notice is not issued by an Authorized Officer within the meaning of Rule 2(a) of the Rules, 2002. The signatory of the said notice has not put her designation on the said notice entitling her to act as an authorized officer of the Defendant as per Rule 2(a) of the Rules, 2002. 6. It is further stated that by letter dated 10.06.2021, the Applicant raised objection to 13(2) notice dated 01.06.2021 and pointed out that the business of Applicant has suffered unprecedented loss due to Covid-19 pandemic and subsequent worldwide lockdown since March, 2020. The business of the Applicant was dependent on international tourism which was almost stopped during Covid-19 and lockdown. In view of the circumstances beyond his control, the Applicant requested the Respondent to consider the precarious situation faced by the Applicant and sought help for survival during the global crisis.

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Officer, Salcete, Taluka Margo, Goa pursuant to the order dated 14.10.2022 passed by Additional District Magistrate, South-Goa, Margo, Goa. The above memorandum was received by the Applicant on 22.12.2022. By said notice an appointment to take physical possession of the said premises is fixed on 09.01.2023. On 28.12.2022, the Applicant applied to the office of the Additional District Magistrate Margo, Goa and obtained certified true copy of the following papers and proceedings: (i) Application dated 08.04.2022 filed by Defendant under Section 14 of the SARFAESI Act, 2002; (ii) Affidavit dated 08.04.2022 of one Mr. Arshad Nazir, Executive Manager of the Respondent in support of Section 14 Application; and (iii) Order dated 14.10.2022 passed by Additional District Magistrate, South-Goa, Margo, Goa. 8. On perusal of the aforesaid proceeding, inter alia, revealed that the Respondent had not filed nine pointer Affidavit as mandated by proviso to Section 14(1) of the SARFAESI Act, 2002. The Additional District Magistrate has not verified the documents and recorded satisfaction in passing the order dated 14.10.2022. The entire proceeding and the order dated 14.10.2022 is contrary to Section 14 of the SARFAESI Act, 2002. By order dated 14.10.2022 the

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On perusal of the aforesaid proceeding, inter alia, revealed that the Respondent had not filed nine pointer Affidavit as mandated by proviso to Section 14(1) of the SARFAESI Act, 2002. The Additional District Magistrate has not verified the documents and recorded satisfaction in passing the order dated 14.10.2022. The entire proceeding and the order dated 14.10.2022 is contrary to Section 14 of the SARFAESI Act, 2002. By order dated 14.10.2022 the Additional District Magistrate erroneously authorized the Executive Magistrate of Salcete Taluka to take possession of the said premises. However, the impugned notice dated 20.12.2022 is issued by the Mamlatdar which is not in consonance with the order dated 14.10.2022. Hence, the present SA.

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AFFIDAVIT IN REPLY

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Notices were issued to the Respondent. The Respondent put its appearance through counsel and filed the Reply.

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In the reply, the Respondent Bank stated that in terms of Section 14(3) of the SARFAESI Act, no act of the Ld. District Magistrate done in pursuance of Section 14 of the SARFAESI Act, 2002 can be called in question in any court or before any authority. Further, the Applicant has not challenged the action of taking symbolic possession within the limitation period of 45 days and order of Ld. District Magistrate to take physical possession is yet to be executed as on date, therefore, the SA is not sustainable and liable to be dismissed.

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It is further stated that the availment of credit facilities and creation of mortgage charge over the mortgaged property are admitted and acknowledged by the Applicant in various correspondence exchanged between the parties prior to filing of SA. The Applicant has deliberately and willfully failed to disclose the same before this Tribunal and seek to obtain favorable reliefs by misleading this Tribunal.

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It is also stated that the sanction letter dated 02.04.2019 was an internal document of Respondent addressed by Zonal Office to Branch at Panaji, Goa. Based on the said sanction letter, the

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It is also stated that the sanction letter dated 02.04.2019 was an internal document of Respondent addressed by Zonal Office to Branch at Panaji, Goa. Based on the said sanction letter, the concerned Panaji Branch had addressed another sanction letter dated 03.04.2019 on the similar line which was duly signed by the Applicant as a proof of acceptance of terms and conditions mentioned therein alongwith the other partner and guarantor. The Respondent stated that since the said sanction was only renewal of

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existing facilities, the detailed description of mortgaged property was not mentioned in the sanction letter dated 02.04.2019/03.04.2019. The Applicant is well aware of said term with regard to the renewal of credit limits and continuation of existing security however, the false contention has been made by the Applicant in the paragraph under reply to mislead this Tribunal with regard to terms of sanction viz a viz mortgage of security and obtain favorable order. 13. It is also stated that the mortgage document at Exb.B to the SA is only an extension of mortgage charge and applicable stamp duty paid on the said transaction. The Applicant has created equitable mortgage charge in favour of the Respondent by deposit of title deeds in respect of the property in question, therefore, the mortgage document is not required registration under Section 17 of the Indian Registration Act. 14. It is also stated that the Respondent issued notice under Section 13(2) of the SARFAESI Act, 2002 dated 01.06.2021 but the Applicant did not raise the objection of bifurcation in the representation dated 10.06.2021 under Section 13(3) of the SARFAESI Act, 2002 to the demand notice thus, the Applicant waived its legal right to object the contents of the notice under Section 13(2) on this ground alone. Further, the Applicant availed only one facility i.e. Cash Credit Facility of Rs.258 lakhs and the

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It is also stated that the mortgage document at Exb.B to the SA is only an extension of mortgage charge and applicable stamp duty paid on the said transaction. The Applicant has created equitable mortgage charge in favour of the Respondent by deposit of title deeds in respect of the property in question, therefore, the mortgage document is not required registration under Section 17 of the Indian Registration Act.

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It is also stated that the Respondent issued notice under Section 13(2) of the SARFAESI Act, 2002 dated 01.06.2021 but the Applicant did not raise the objection of bifurcation in the representation dated 10.06.2021 under Section 13(3) of the SARFAESI Act, 2002 to the demand notice thus, the Applicant waived its legal right to object the contents of the notice under Section 13(2) on this ground alone. Further, the Applicant availed only one facility i.e. Cash Credit Facility of Rs.258 lakhs and the Applicant was enjoying internet banking facility and had access to statement of account and was also provided statement of bank account by Respondent Bank from time to time when asked for by the Applicant. The Applicant completely aware that the amount changed over and above Rs.258 lakhs is the interest portion.

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SA No.42 of 2023

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It is further stated that the demand notice dated 01.06.2021 is signed and issued by Asha Fotedar, Executive Manager (Scale-IV) of the Respondent Bank, therefore, the objection of the Applicant that demand notice is not issued by Authorized Officer is not maintainable.

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It is also stated that the objection of the Applicant that the Respondent has not filed a 9 pointer affidavit is absolutely misleading and false. The Authorized Officer of Respondent, Mr. Arshad Nazir in his affidavit dated 08.04.2022 has categorically deposed that “2. I have filed the above application u/s. 14 of Securitization Act and for the relief, more particularly set out therein. I repeat, reiterate and confirm whatever is stated in the above application as if the same is set out herein verbatim” . The said Mr. Arshad Nazir has also signed and verified the application u/s 14 wherein in para no.4(c) the dues as on date of filing of the said Application are mentioned as Rs.3,04,44,711.08. Further, in paragraph 12 of the affidavit dated 08.04.2021, Mr. Arshad Nazir has deposed that “the provisions of SARFAESI Act, 2002 and the rules made thereunder, had been complied with by the applicant” .

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It is further stated that the objection of the Applicant that notice dated 20.12.2022 issued by Mamlatdar is not in consonance with the order dated 14.10.2022 and the Executive Magistrate is not entitled to sub-delegate his authority to the Mamlatdar, is also

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It is further stated that the objection of the Applicant that notice dated 20.12.2022 issued by Mamlatdar is not in consonance with the order dated 14.10.2022 and the Executive Magistrate is not entitled to sub-delegate his authority to the Mamlatdar, is also contrary to the record produced by the Applicant himself. The last paragraph of the order dated 14.10.2022 passed by Ld. District Magistrate records that “I further authorize the Mamlatdar/Executive Magistrate of Salcete Taluka in terms of Sub Section (2) of Section 14 of the said Act to take or cause to take such

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SA No.42 of 2023

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steps and use or cause to use, such force, as may, be necessary for taking possession of the said Assets mentioned in the schedule hereinabove. ”. The Mamlatdar and Executive Magistrate are one and the same authority and under the said order Mamlatdar/Executive Magistrate is authorized to take possession of the secured assets.

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CONSIDERATION

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I have heard the Ld. Counsel for the parties and after considering the contentions of the parties, following questions emerges to decide:

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Now hereinafter, I would like to decide the issue raised by the Applicant.

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(A) Whether the mortgage is not lawful and enforceable?

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(i) Ld. Counsel for the Applicant has raised an objection that there is no valid and enforceable mortgage. He submitted that the credit facility sanctioned on 03.04.2019 however, the mortgage is claimed relying on extension of charge dated 01.11.2013, thus, the mortgage document dated 01.11.2013 is not relatable to the sanction dated 03.04.2019. He also submitted that the mortgage document is not properly and adequately stamped. He also submitted that the Respondent has not produced any other document save and except

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CONSIDERATION 18. I have heard the Ld. Counsel for the parties and after considering the contentions of the parties, following questions emerges to decide: (A) Whether the mortgage is not lawful and enforceable? (B) Whether the demand notice dated 01.06.2021 would vitiate? (C) Whether the order dated 14/10/2022 of Ld. Additional District Magistrate, South Goa at Panaji is bad in law? 19. Now hereinafter, I would like to decide the issue raised by the Applicant. (A) Whether the mortgage is not lawful and enforceable? (i) Ld. Counsel for the Applicant has raised an objection that there is no valid and enforceable mortgage. He submitted that the credit facility sanctioned on 03.04.2019 however, the mortgage is

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extension of charge. Once it is found that the mortgage document is not adequately stamped, the Bank is not entitled to initiate action under the provisions of SARFAESI Act, 2002. In support of his contention, he relied upon the judgment of Hon’ble Supreme Court in Avinash Kumar Chauhan Vs. Vijay Krishna Mishra (AIR 2009 SC 1489). (ii) He also submitted that the alleged mortgage document satisfies legal requirements to constitute an “agreement” within the meaning of Section 2(3) of the Indian Contract Act, 1872. He stated that the Mortgage document requires compulsory registration, admittedly, it is not registered therefore, the mortgage is inadmissible in evidence and it will not affect the property as per Section 49 of the Indian Registration Act. He relied upon the judgment of Hon’ble Supreme Court in United Bank of India Limited Vs. LekharamSonaram & Co. (AI 1965 SC 1591) and judgment of Hon’ble Delhi High Court in Ishardas Vs. Dhanwant Singh (1983 SCC Online Del 284). (iii) Per contra , Ld. Counsel for the Respondent Bank has submitted that the Applicant has admitted creation of mortgage charge in favour of the Respondent Bank his letters dated 26.04.2021 (page No.40 of SA) and dated 10.06.2021 (Page No.41 of 2021) and reply dated 12.06.2022 (Page No.40 of Compilation of document filed by Respondent) to recall notice dated 01.06.2022

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(iii) Per contra , Ld. Counsel for the Respondent Bank has submitted that the Applicant has admitted creation of mortgage charge in favour of the Respondent Bank his letters dated 26.04.2021 (page No.40 of SA) and dated 10.06.2021 (Page No.41 of 2021) and reply dated 12.06.2022 (Page No.40 of Compilation of document filed by Respondent) to recall notice dated 01.06.2022 (Page No.36 of Compilation of document filed by Respondent).

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(iv) He also submitted that the Applicant has created equitable mortgage charge in favour of the Respondent by deposit of title deeds in respect of the property in question, therefore, the mortgage

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document is not required registration under Section 17 of the Indian Registration Act.

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(v) I have gone through the record.

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(vi) Admittedly, the Applicant has availed the credit facilities from the Assignor Bank. The execution of the loan documents and creation of security documents was duly admitted by the Applicant. The Applicant has admitted creation of mortgage charge in favour of the Respondent Bank by his letters dated 26.04.2021 (page No.40 of SA) and dated 10.06.2021 (Page No.41 of 2021) and reply dated 12.06.2022 (Page No.40 of Compilation of document filed by Respondent) to recall notice dated 01.06.2022 (Page No.36 of Compilation of document filed by Respondent). (vii) Further, since the Applicant has created equitable mortgage charge in favour of the Respondent by deposit of title deeds in respect of the property in question, therefore, as rightly stated by the Ld. Counsel for the Respondent Bank that the mortgage document is not required registration under Section 17 of the Indian Registration Act. Further, as per Section 59 of the Transfer of Property, such mortgages are not required to be effected by a registered instrument. (viii) The Hon’ble Apex Court in the matter of Rachpal Mahraj Vs. Bhagwandas Daruka and others, 1950 AIR 272 has held that:

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(vii) Further, since the Applicant has created equitable mortgage charge in favour of the Respondent by deposit of title deeds in respect of the property in question, therefore, as rightly stated by the Ld. Counsel for the Respondent Bank that the mortgage document is not required registration under Section 17 of the Indian Registration Act. Further, as per Section 59 of the Transfer of Property, such mortgages are not required to be effected by a registered instrument.

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“...when the debtor deposits with the creditor the title deeds of his property with intent to create a security, the law implies a contract between the parties to create a mortgage, and no registered instrument is required under section 59 as in other forms of mortgage.”

SA No.42 of 2023

(emphasis provided)

(ix) Similarly, the Hon’ble Supreme Court in the case of State of Haryana & Ors vs Navir Singh & Anr, Civil Appeal No.9030/2013 has held that- “.....In the face of it, we are of opinion that the charge of mortgage can be entered into revenue record in respect of mortgage by deposit of title-deeds and for that, instrument of mortgage is not necessary. Mortgage by deposit of title-deeds further does not require registration. Hence, the question of payment of registration fee and stamp duty does not arise. (emphasis provided) (x) Therefore, an equitable mortgage does not need to be affected by a registered instrument and also the issue of stamp duty is not relevant in the matter of deposit of title deeds. Therefore, the objection raised by the Applicant is not sustainable hence, declined. (xi) The Judgment of Avinash Kumar Chauhan (supra), is not applicable in the present matter as the said matter is pertaining to the private transaction between the two private parties and that too not for any credit facilities, whereas in the present matter the Applicants created equitable mortgage of the property by deposit of title deeds to secure the credit facilities availed from the Respondent.

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(xi) The Judgment of Avinash Kumar Chauhan (supra), is not applicable in the present matter as the said matter is pertaining to the private transaction between the two private parties and that too not for any credit facilities, whereas in the present matter the Applicants created equitable mortgage of the property by deposit of title deeds to secure the credit facilities availed from the Respondent.

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(xii) As far as judgments of United Bank of India Limited ( supra ) and Ishardas ( supra ) are concerned, the same are not acceptable in the present matter as in the present case, the mortgage was created by way of deposit of title deeds as already discussed above.

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(B) Whether the demand notice dated 01.06.2021 would vitiate?

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(i) Ld. Counsel for the Applicant has raised an objection that the Respondent has issued notice under Section 13(2) of the SARFAESI Act, 2002 for Rs.2,90,34,392.88 comprising of NPA balance of Rs.285,94,658.10 as on 31.03.2021 and unapplied interest of Rs.4,39,734.78 however, the Respondent has not given break-up of Rs.285,94,658.10, thus, he submitted that the impugned notice is bad in law and liable to be set aside. In support of his contention, he relied upon the judgment of Hon’ble Gujarat High Court in Punjab National Bank Vs. Mithilanchal Industries Pvt. Ltd., (C/LPA/159/2020) and judgment of Hon’ble of Hon’ble DRAT in Kenwood Marketing Inc. Vs. HDFC Bank Ltd. (2022 SCC Online DRAT 98). (ii) He also submitted that the said notice is not issued by an Authorized Officer within the meaning of Rule 2(a) of the Rules, 2002. For the said purpose, he relied upon the judgment of Hon’ble DRAT in IDFC Vs. Tristar Cars Pvt. Ltd. (2019 SCC Online DRAT 175). (iii) Per contra , Ld. Counsel for the Respondent Bank has submitted that notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 01.06.2021 but the Applicant did not raise the objection pertaining to the bifurcation in the representation dated

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(ii) He also submitted that the said notice is not issued by an Authorized Officer within the meaning of Rule 2(a) of the Rules, 2002. For the said purpose, he relied upon the judgment of Hon’ble DRAT in IDFC Vs. Tristar Cars Pvt. Ltd. (2019 SCC Online DRAT 175).

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(iii) Per contra , Ld. Counsel for the Respondent Bank has submitted that notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 01.06.2021 but the Applicant did not raise the objection pertaining to the bifurcation in the representation dated 10.06.2021 under Section 13(3) of the SARFAESI Act, 2002 thus, the Applicant waived its legal right to object the contents of the notice under Section 13(2) on this ground alone. He further submitted that the Applicant availed only one facility i.e. Cash Credit Facility of Rs.258 lakhs and the Applicant was enjoying internet banking facility and had access to statement of account and

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was also provided statement of bank account by Respondent Bank from time to time when asked for by the Applicant.

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(iv) He also submitted that the Applicant is completely aware that limits sanctioned under Cash Credit was Rs.258 lakhs which was completely utilized by the Applicant and therefore, any amount over and above Rs.258.00 lakhs is the interest portion. In this regard, he relied upon the judgment of Hon’ble Gujarat High Court in Sugarwala Tradelink Private Limited Vs. Authorized Officer, Bank of India reported in 2021 SCC Online Guj 3011. (v) He also submitted that the demand notice dated 01.06.2021 is signed and issued by Asha Fotedar, Executive Manager (Scale-IV) of the Respondent Bank, therefore, the objection of the Applicant that demand notice is not issued by Authorized Officer is not maintainable. (vi) I have gone through the record. (vii) Admittedly, the availment of the loan as well as default in repayment of the loan amount is not in dispute. As per the demand notice dated 01.06.2021 (Exb.C of SA), the Applicant has claimed principal amount of Rs.2,85,94,658.10 plus interest as on 31.03.2021 of Rs.4,39,734.78 (aggregating to Rs.2,90,34,392.88, and to prove the same, the Applicant has produced the Bifurcated statement of Account (Exb.A-4 of list of documents of Respondent).

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(vii) Admittedly, the availment of the loan as well as default in repayment of the loan amount is not in dispute. As per the demand notice dated 01.06.2021 (Exb.C of SA), the Applicant has claimed principal amount of Rs.2,85,94,658.10 plus interest as on 31.03.2021 of Rs.4,39,734.78 (aggregating to Rs.2,90,34,392.88, and to prove the same, the Applicant has produced the Bifurcated statement of Account (Exb.A-4 of list of documents of Respondent). Further, the Respondent has provided the bifurcation of interest charged in the account at para 12 of the Reply of Respondent Bank.

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(viii) Even otherwise, as rightly stated by Ld. Counsel for the Respondent Bank that the limits sanctioned under Cash Credit was Rs.258 lakhs and any amount over and above Rs.258 lakhs is the

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interest portion. The Hon’ble Gujarat High Court in Sugarwala Tradelink Private Limited ( supra ) has held that:

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“9. In the facts of the present case, it is not in dispute that the only financial assistance rendered by the Respondent-Bank was towards the cash credit facility for working capital to the tune of Rs.5,00,00,000/- and therefore, there was no need for the Respondent-Bank to bifurcate outstanding dues containing the interest and the principal amount which was shown to be payable as on 30th April, 2018. It is apparent from the amount of Rs.5,23,58,343.91/that it includes interest of Rs.23,58,343.91/-, over and above the cash credit limit sanctioned by the Respondent- Bank of Rs.5,00,00,000/-. 10. Moreover, the petitioners were very well aware of the rate of interest charged by the Respondent-Bank, as per the bank statement which is available from the Respondent-Bank. The petitioner has not placed on record bank statements of cash credit amount so as to point out that the petitioners were aware about the interest of the running cash credit account.” (emphasis provided) (ix) Similarly, the Hon’ble High Court of Bombay in Asrec (India) Ltd vs Fastgrowth Hospitality Llp [Civil Appeal No. 2545/2023 arising out of SLP (C) No. 14896/2018] on 18 January, 2023, has held that: that the

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(ix) Similarly, the Hon’ble High Court of Bombay in Asrec (India) Ltd vs Fastgrowth Hospitality Llp [Civil Appeal No. 2545/2023 arising out of SLP (C) No. 14896/2018] on 18 January, 2023, has held that:

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“31…The primary position that the Respondents have availed of a loan facility from IIFL is not in dispute. Defaults in repayment and consequential action taken by the secured creditor are not in dispute. That a secured interest that has been created is not in dispute. During the arguments and in the correspondence, there is no serious dispute

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regarding the principal amount of Rs.22,50,66,826/-. Therefore, the Petitioner - Asset Reconstruction Company is legitimately proceeding to recover the dues for enforcement of security interest…”

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(emphasis provided)

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(x) Therefore, in view of the above facts and circumstances, I do not find any merit in the objection raised by the Applicant and the same is hereby rejected. (xi) The judgment relied upon by the Applicant in Punjab National Bank Vs. Mithilanchal Industries Pvt. Ltd. ( supra ) and Kenwood Marketing Inc. ( supra ) are not acceptable as in the present matter, the Respondent has produced on record the Bifurcated Statement of Account as well as bifurcation of interest charged in the account, as mentioned above. (xii) Insofar as objection pertaining to designation of authorized officer is concerned, in the affidavit in reply, in the reply filed by the Respondent, the Respondent has clearly stated that the demand notice was issued by Ms. Asha Fotedar, Authorized Officer of the Respondent Bank and. Ms. Asha Fotedar was Executive Manager (Scale-IV) of the Respondent Bank at the relevant time who is equivalent to Chief Manager and by virtue of Rule 2(a) of Rules, 2002, she satisfies the requirement of her appointment as Authorized Officer under SARFAESI Act. Therefore, the objection

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(xi) The judgment relied upon by the Applicant in Punjab National Bank Vs. Mithilanchal Industries Pvt. Ltd. ( supra ) and Kenwood Marketing Inc. ( supra ) are not acceptable as in the present matter, the Respondent has produced on record the Bifurcated Statement of Account as well as bifurcation of interest charged in the account, as mentioned above.

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(xii) Insofar as objection pertaining to designation of authorized officer is concerned, in the affidavit in reply, in the reply filed by the Respondent, the Respondent has clearly stated that the demand notice was issued by Ms. Asha Fotedar, Authorized Officer of the Respondent Bank and. Ms. Asha Fotedar was Executive Manager (Scale-IV) of the Respondent Bank at the relevant time who is equivalent to Chief Manager and by virtue of Rule 2(a) of Rules, 2002, she satisfies the requirement of her appointment as Authorized Officer under SARFAESI Act. Therefore, the objection raised by the Applicant is not sustainable hence, rejected.

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(xiii) The judgment of IDFC Vs. Tristar Cars Pvt. Ltd. (supra) is not acceptable as in the present case, the Respondent has duly provided the details of the authorized officer who signed the demand notice.

SA No.42 of 2023

(i) Ld. Counsel for the Applicant has submitted that the Respondent has not made statutory declaration as required by Section 14(1) of the SARFAESI Act including declarations mandated by proviso (i), (iv), (v) and (ix) of the SARFAESI Act as: (a) The Respondent has not declared in the Affidavit total claim of the Bank as on date of filing of Section 14 Application; (b) The Respondent has not disclosed the amount in default for which account could be NPA on 31^st March, 2021; (c) The Respondent has not disclosed that the provision of the SARFAESI Acts and Rules made thereunder had been complied with. (ii) He also submitted that the Ld. District Magistrate has mechanically passed the order without examining the factual assertion made in the affidavit and recording satisfaction. He submitted that the verification as to the correctness of the information given in the said affidavit and recording of satisfaction are jurisdictional aspects for the Ld. District Magistrate to exercise power under Section 14 of the SARFAESI Act. For the said purpose, Ld. Counsel for the Applicant has referred to the judgment of

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(a) The Respondent has not declared in the Affidavit total claim of the Bank as on date of filing of Section 14 Application; (b) The Respondent has not disclosed the amount in default for which account could be NPA on 31^st March, 2021; (c) The Respondent has not disclosed that the provision of the SARFAESI Acts and Rules made thereunder had been complied with.

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(ii) He also submitted that the Ld. District Magistrate has mechanically passed the order without examining the factual assertion made in the affidavit and recording satisfaction. He submitted that the verification as to the correctness of the information given in the said affidavit and recording of satisfaction are jurisdictional aspects for the Ld. District Magistrate to exercise power under Section 14 of the SARFAESI Act. For the said purpose, Ld. Counsel for the Applicant has referred to the judgment of Hon’ble Supreme Court in Standard Chartered Bank Vs. Noble Kumar (2013) 9 SCC 620; judgments of Hon’ble Bombay High Court in Satishkumar Surendra Shetty Vs. The District Collector Thane (2022 SCC Online Bom 2847) and India Home Loan Ltd. Vs. The State of Maharashtra in Writ Petition No.2841 OF 2022.

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SA No.42 of 2023

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(iii) On the other hand, Ld. Counsel for the Respondent has submitted that the Authorized Officer of Respondent, Mr. Arshad Nazir in his affidavit dated 08.04.2022 has categorically deposed that “2. I have filed the above application u/s. 14 of Securitization Act and for the relief, more particularly set out therein. I repeat, reiterate and confirm whatever is stated in the above application as if the same is set out herein verbatim” . The said Mr. Arshad Nazir has also signed and verified the application u/s 14 wherein in para no.4(c) the dues as on date of filing of the said Application are mentioned as Rs.3,04,44,711.08. Further, in paragraph 12 of the affidavit dated 08.04.2021, Mr. Arshad Nazir has deposed that “the provisions of SARFAESI Act, 2002 and the rules made thereunder, had been complied with by the applicant” , thus, he submitted that the Respondent has complied with all provisions of Section 14(i) of the SARFAESI Act, 2002 therefore, the objection of the Applicant is liable to be rejected. (iv) Considered the submissions of both sides and perused the record. (v) Record reveals that the Respondent filed Application under Section 14 of the SARFAESI Act before the Ld. Additional District Magistrate, South Goa, Margao. On perusal of the said application its reveals that the Respondent Bank has duly provided the complete details of the account impugned. Further the Ld.

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(v) Record reveals that the Respondent filed Application under Section 14 of the SARFAESI Act before the Ld. Additional District Magistrate, South Goa, Margao. On perusal of the said application its reveals that the Respondent Bank has duly provided the complete details of the account impugned. Further the Ld. Additional District Magistrate, had verified the Application as well as the Affidavit in support thereof.

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(vi) Therefore, looking at the submissions made by the Respondent Bank, the objection of the Applicant is not acceptable hence, rejected.

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SA No.42 of 2023

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(vii) In so far as judgment of Standard Chartered Bank ( supra ) relied upon by the Applicant is concerned, since the relevant information has already been provided by the Respondent in the application before the Ld. Additional District Magistrate, therefore, the said judgment is not applicable in the present matter. (viii) The judgment of Satish Kumar Shetty ( supra ) is also not applicable in the present case as in the present matter, the Respondent has provided all the relevant information in the application before the Ld. Additional District Magistrate.

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CONCLUSION

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For the foregoing reasons, I do not find any merit in the present SA and the same is hereby dismissed.

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Place: Mumbai. (Dr. Rekha G. Dhakar) Date: 21.03.2024 Presiding Officer, DRT-1, Mumbai.

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matter. (viii) The judgment of Satish Kumar Shetty ( supra ) is also not applicable in the present case as in the present matter, the Respondent has provided all the relevant information in the application before the Ld. Additional District Magistrate. CONCLUSION 20. For the foregoing reasons, I do not find any merit in the present SA and the same is hereby dismissed. File be closed and consigned to the record room. Place: Mumbai. (Dr. Rekha G. Dhakar) Date: 21.03.2024 Presiding Officer, DRT-1, Mumbai.

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Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

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Gulam Nabi Khanyari v. Jammu and Kashmir Bank Limited

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