Dismissed

D Ayyathever v. City Union Bank Limited

DRT27 Mar 2024SA/529/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Chennai, dismissed a Securitization Application challenging possession and Section 14 orders. The Tribunal rejected claims of illegal NPA classification and insufficient notice service, citing settled law that measures cannot be struck down without proof of substantial prejudice.

What did the court decide?

Securitization Application SA 529 of 2022 is dismissed; all pending IAs are closed.

D Ayyathever versus City Union Bank Limited — Banking and Recovery | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this the 27^th day of March, 2024

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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SA No.529 of 2022

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Mr. D. Ayyathever S/o Mr. Dakshinamoorthy No.1/25, ECR Main Road Sanganthi, Edaiyur Post Thiruthuraipoondi Taluk Thiruvarur District …Applicant

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Versus

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The Authorised Officer City Union Bank Limited No.149, TSR Big Street Kumbakonam – 612 001 …Respondent

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Counsel for the Applicant : M/s P. Annal Counsel for Respondent : M/s R. Sriram

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FINAL ORDER

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The Securitization Application in short the SA filed u/s 17 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after been referred as SARFAESI Act or the Act), as the case be, with a prayer to the set aside the measures initiated by the defendant in pursuance of order passed by the Chief Judicial Magistrate dated 16.08.2022.

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The Applicant is admitting that the following credit facilities are availed by him viz., Home loan for Rs.15,00,000/-, Secured OD for Rs.50,00,000/-, Term loan Rs.15,00,000/- another Term Loan of Rs.18,00,000/- and Kisan Credit Card for Rs.73,000/-. The Applicant is also admitting the execution of necessary loan documents and also the creation of security interest by him and his wife.

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It is also the case of the Applicant that they never allowed the account to become NPA and also that the account was never classified as NPA. The Applicant is also contenting that there is no service of demand notice. The Applicant is further alleging that the possession is attempted to be taken by misusing the order of the Magistrate. It is also stated that NPA has to be on the basis of overdue position. Another contention taken by the Applicant is the provisions of Section 14 are not followed by the respondent while filing the Applicable u/s 14 of the Act.

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The respondent entered appearance and filed their counter denying the averments in the SA and contending that the measures taken by them does not suffer from any procedural infirmity. It is also the case of the respondent that only as the Applicant failed in repayment, the account was classified as NPA. The demand notice issued by the respondent had been returned “refused” resulting the same being published in two dailies. There after the possession notice was issued, published and affixed as required by the statute. In respect of Section 14 also the respondent contents that there is no procedural infirmity.

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Heard the Learned Council for both the sides and the enquiry required in this case is limited to the legality of measures leading to the procurement of impugned Section 14 orders.

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The first and foremost contention of the Applicant as to the classification of account as NPA is that the account was never defaulted and that the Applicant was regular in making repayments. This contention is specifically denied by the respondent and despite the specific denial, no proof as to the so claimed

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payments, much less any proof as to any payment is produced along with the SA. In the absence of any evidence as to any of the remittances, this Tribunal is not inclined to accept the contention of the Applicant as to the alleged illegal NPA classification.

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In respect of the demand notice also in Applicant’s case that the “same is not served” and that there is non-compliance of statutory requirements. In reply to the same, the respondent produced evidence that the notice issued to the Applicants were returned “refused” and they had published the same in two dailies. However no proof as to the affixture as mandated as per provision to rule is produced.

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Now the question arose is that whether the absence of proof as to affixture entities the Applicant to get the measures set aside. This is to be considered in the light of the fact that the Applicant had manaaged to return the notice “Refused”. Ever though the concept of “deemed service” cannot be applied to the measures under the Act, this Tribunal is of the view that the Applicant who managed to return the notice is not entitled to get the relief on that ground. The purpose of proviso to Rule 3 in respect of affixture is to put the owner of the property and others informed about the initiation of the measures. The borrower who managed to return the notice by refusing its service, cannot turn around and content that the measures are liable to be struck down for the reason of non-service of demand notice.

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Law in this regard is no more “res integra” as laid down by the Hon’ble Supreme Court in “L & T Housing Finance Ltd., Versus M/s Trishul

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is as follows: -

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Developers” dated 27.10.2020 reported in (2020) 10 SCC 659 Para 19, which

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19. In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions.

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It is settled that unless the debtor is able to show any substantial prejudice caused on account of procedural lapse as prescribed under the Act or Rules framed thereunder, the measures cannot be held to be bad in law. Hence on

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the basis of above dictum and settled position of law this Tribunal is not inclined to interfere in the measures.

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The respondent had also produced the proof of compliance of rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, though the same is not “sinequanon” for the measures u/s 14 of the Act.

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In respect of section 14 also, the respondent had produced the proof of filing supporting affidavit as mandated under the statute. No other contention is taken by the Applicant in respect of measures.

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The discussions as held in above paragraphs and findings entered there is leads this Tribunal to the considered finding that there is no mention the SA and the same is liable to be dismissed.

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In the result SA 529/2023 stands dismissed, all pending IA’s stands closed, no orders as to cost. 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 27^th day of March, 2024)

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

D Ayyathever v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

D Ayyathever v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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