Allowed

Shri Narayana Traders v. State Bank of India

DRT20 May 2024SA/704/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal set aside an order appointing an Advocate Commissioner for taking physical possession of mortgaged properties. The Tribunal held that the bank acted in contempt by approaching the civil magistrate while a conditional stay order issued by the Tribunal remained in force to prevent the confirmation of the sale.

What did the court decide?

Set aside the order of the Chief Judicial Magistrate appointing an Advocate Commissioner for taking physical possession; disposed of pending interim applications.

Shri Narayana Traders versus State Bank of India — Banking and Recovery | DRT (2024)

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SA No.704/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 17^th DAY OF MAY, 2024

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No.704/2023

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M/s. Shri Narayana Traders, Represented by its Partner, Smt. Chitra, No. 261, Dharmapuram Street, Rajapalayam -626 117. 2. Smt. K. Chitra, W/o. V.N. Kannan, No. 261, Dharmapuram Street, Rajapalayam -626 117. 3. Mr. V.N. Kannan, S/o. V.S. Narayana Raja, No. 261, Dharmapuram Street, Rajapalayam -626 117.

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Mr. V.N. Vijayan, S/o. V.S. Narayana Raja, No. 261, Dharmapuram Street, Rajapalayam -626 117. --- Applicants -VsThe Authorized Officer, State Bank of India, Stressed Assets Recovery Branch (SARB), Vinayaga Nagar Branch (Upstairs), No.8, Dr. Ambedkar Road, Madurai – 625 020. ---Defendant Bank

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Appearance of Advocates: Mr. Aiyar & Dolia ---- Counsel for the Applicants Mr. N. Dilip Kumar ---- Counsel for the Defendant Bank

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Page 1 of 20

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SA No.704/2023

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This SARFAESI Application was heard in the presence of Counsel for the Applicants and the Defendant Bank and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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1 . This application has been filed under Sec.17(1) of the SARFAESI Act 2002 by the Applicants praying to set aside the entire SARFAESI proceedings initiated by the Defendant Bank ending up with the order passed by the Ld. Chief Judicial Magistrate, Srivilliputhur, under section 14 of the SARFAESI Act made in Crl. M.P. No. 8898 of 2023 dated 23.11.2023 appointing an Advocate Commissioner for taking Physical Possession of the Schedule mentioned properties.

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2 . The brief averments of the Application filed by the Applicants are as follows:-

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The Applicants submitted that they have availed credit facilities for a sum of Rs. 1.50 crores towards cash credit from the Defendant Bank for the development of the business and also obtained a sum of Rs. 45,00,000/towards Educational Loan in the name of Shri. R. Viswath Narayanan from the Defendant Bank by extending the Schedule mentioned properties as mortgage.

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The Applicants further submitted that they were prompt in repayment initially till the intervention of Covid-19 Pandemic. However, due to the lockdown announced by the Government due to COVID-19 Pandemic, the life came to standstill for all in the country and the Applicants are not able to recover their receivables from their suppliers, in view of the same, there is break in the chain and the Applicants business came to a standstill and they were not able to adhere to the repayment schedule of the Defendant Bank and the loan account was classified as NPA on 31.03.2021 during the COVID-19 Pandemic Period when the RBI guidelines issued to restructure the MSME Loans to the loan accounts which are standard as on 01.03.2020, was in force. Hence, the classification of the loan account as NPA during the COVID-19 Lock Down is against the RBI guidelines and the

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SA No.704/2023

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same is illegal, hence, the Defendant Bank does not have any right or jurisdiction to proceed further under the SARFAESI Act, 2002.

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The Applicants further submit that the Defendant Bank initiated proceedings under the SARFAESI Act by issuing the 13(2) Demand Notice dated 21.04.2021 claiming a total sum of Rs. 1,63,64,809.90p (Rupees One Crore Sixty Three Lakhs Sixty Four Thousand Eight Hundred Nine and Ninety Paise only) as on 31.03.2021. The Applicants on receipt of the 13(2) Demand Notice immediately approached the Defendant Bank and sought for renewal/restructuring of the loan account. It is pertinent to point out here that due to Covid-19 the RBI had announced restructure package to the MSME sector which was not considered by the Defendant Bank.

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It is further submitted that in the meantime the Defendant Bank took Possession of the property by issuing the 1^st Possession Notice dated 02.07.2021 under section 13 (4) of the SARFAESI Act, 2002. However, the Possession Notice was not affixed on the conspicuous part of the properties nor the same was published in two leading newspapers as contemplated under the Act and Rules. It is pertinent to point out here that the Defendant Bank on their own without any basis in order to fill up the lacuna in the Notice dated 02.07.2021, had withdrawn the said notice with liberty to issue fresh notice and sent a letter to that effect to the Applicants on 05.08.2021. It is not out of place to mention here that if the Defendant Bank wants to withdraw the proceedings and proceed afresh they should have withdrawn the 13(2) Demand Notice and proceeded afresh. And, the Defendant Bank has issued another Possession Notice on 07.05.2022, however the Possession Notice was not affixed on the conspicuous part of the properties nor the same was published in 2 News papers as contemplated under the Rules. Aggrieved over the same the Applicants filed an Application before this Hon'ble Tribunal and the same is in SR. Stage.

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It is further submitted that in the meantime the Defendant Bank issued an Auction Sale Notice dated 05.08.2022 fixing the date of Sale on

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SA No.704/2023

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16.09.2022. Aggrieved over the same, the Applicants filed a Writ Petition in WP (MD) No. 20200 of 2022 before the Hon'ble High Court and the Hon'ble High Court vide order dated 01.09.2022 was pleased to direct the Defendant Bank to defer the auction sale proceedings on condition that the Applicant should deposit a sum of Rs. 50,00,000/- in 5 equal installments on or before 31.12.2022. The Applicant had paid Rs. 32.50 lacs out of Rs. 50,00,000/- ordered by the Hon'ble High Court. However, due to family circumstances and financial constraints, the Applicants were not able to pay the balance installment amount as ordered by the Hon'ble High Court. In the meantime, the Applicants had settled the Education Loan obtained in the name of Shri. R. Viswath Narayanan from the Defendant Bank by extending the same security as mortgage, by paying a sum of Rs. 53,37,534/- and the account was closed on 11.07.2022.

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The Applicants further submitted that taking advantage of the situation, the Defendant Bank had issued the present E-Auction Sale Notice dated 21.01.2023 fixing the date of sale on 03.03.2023. However, the said Auction Sale Notice was not affixed on the conspicuous part of the property nor the same was properly published in two leading newspapers as contemplated under the Rules. Further, the Defendant Bank had undervalued the property and fixed lowest upset price. Aggrieved over the same, the Applicants filed an Application in SA No. 75 of 2023 and this Hon'ble Tribunal vide order dated 22.02.2023 granted interim stay on condition that the Applicants should deposit a total sum of Rs. 70,00,000/in two equal installments, on or before 19.04.2023. However, the Auction Sale had not taken place on 03.03.2023 and the Applicants were not able to comply with conditional order passed by the Hon'ble Tribunal.

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Further, the Applicants submitted that the OTS proposal to the Defendant Bank on 22.03.2023 offering to pay a sum of Rs. 1,47,24,111/towards full and final settlement and the Applicants had also enclosed a Demand Draft for a sum of Rs. 15,00,000/- being 10% upfront amount for considering the OTS. However, the same was rejected by the Defendant

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SA No.704/2023

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Bank vide their letter dated 28.03.2023. Once again the Applicants sent a detailed letter on 05.04.2023 explaining about all the facts and requested for OTS, the same was also negative by the Defendant Bank vide their letter dated 11.04.2023. The Defendant Bank had issued the present E-Auction Sale Notice dated 18.04.2023 fixing the date of sale on 19.05.2023. However, the said Auction Sale Notice was also not affixed on the conspicuous part of the property nor the same was properly published in two leading newspapers as contemplated under the Rules. Further, the Defendant Bank had undervalued the property and fixed lowest upset price.

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Being aggrieved over the same the Applicants filed an Application in SA No. 178 of 2023 before this Hon'ble Tribunal and this Hon'ble Tribunal vide its order dated 19.05.2023 granted interim stay not to confirm the sale on condition that the Applicants should deposit a sum of Rs. 35,00,000/towards 1^st installment on or before 16.06.2023 and a further sum of Rs. 35,00,000/- towards 2^nd installment on or before 14.07.2023. However, despite hectic efforts taken, the Applicants were not able to comply the conditional order passed by this Hon'ble Tribunal by paying the 1^st installment amount of Rs. 35,00,000/- rather they have paid only Rs.15,00,000/- and filed an extension petition seeking 4 weeks time to pay the balance amount of 1^st installment Rs. 20,00,000/- along with the 2^nd installment amount. In the meantime, the Defendant Bank had conducted the Auction Sale and the same was also confirmed in favour of the Auction Purchaser and Sale Certificate was also issued. In the meantime, the Applicants had paid a sum of Rs. 20,00,000/- on 04.07.2023 being the balance amount on the 1^st installment amount.

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It is further submitted that the Applicants filed a Writ Petition in W.P.(MD) No. 16413 of 2023 before the Hon'ble High Court of Madras (Madurai Bench) and the Hon'ble High Court vide order dated 06.07.2023 directed this Hon'ble Tribunal, Madurai to decide the extension Petition and when it is taken up for hearing on 17.07.2023, this Tribunal directed not to register the Sale Certificate till then. But the copies are not submitted before this Hon'ble Tribunal.

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SA No.704/2023

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The Applicants further submitted that when the above Extension Petition was taken up for hearing on 17.07.2023 before this Hon'ble Tribunal, the same was adjourned to 24.07.2023 and only on 24.07.2023, the Defendant Bank had filed their Counter Affidavit and the matter is posted for enquiry in the said extension petition on 07.08.2023. In view of the above circumstances the Applicants were not able to pay the 2^nd installment amount in time. However, the Applicants had taken a Demand Draft for a sum of Rs. 35,00,000/- on 04.08.2023 and another Demand Draft for a sum of Rs. 18,54,000/- being the entire sale consideration in favour of the Defendant Bank and filed a petition to condone the delay in complying the 2^nd installment amount as per the order dated 19.05.2023 and the said petition is pending before this Hon'ble Tribunal.

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It is further submitted that in the meantime the Defendant Bank issued the present Auction Sale Notice dated 28.07.2023 for the remaining house property fixing the date of Sale on 18.08.2023, and the said Auction Sale Notice was also not affixed on the conspicuous part of the property nor the same was properly published in two leading newspapers as contemplated under the Rules. Further, the Defendant Bank had undervalued the property and fixed lowest upset price. Aggrieved over the same the Applicants filed an Application in SA No. 345 of 2023 before this Hon'ble Tribunal and obtained a conditional stay order dated 08.08.2023, which was also not fully complied with. However, he has paid a part payment of Rs. 2,32,000/- and filed an extension petition to pay the balance 1^st installment amount of Rs. 10,00,000/-. Further, all together the Applicants had paid a total sum of Rs. 1,26,36,000/- (Rupees One Crore Twenty Six Lakhs Thirty six Thousand only) after the issuance of Demand Notice by the Defendant Bank.

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Hence, the Defendant Bank again issued an Auction Sale Notice dated 07.09.2023, fixing the date of sale on 29.09.2023. However, the said Auction Sale Notice was also not affixed on the conspicuous part of the

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SA No.704/2023

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property nor the same was properly published in two leading newspapers and the property was also undervalued. Aggrieved over the Auction Sale Notice dated 07.09.2023, the Applicants filed SA No. 508 of 2023 before this Hon'ble Tribunal and this Hon'ble Tribunal vide order dated 27.09.2023 granted a conditional stay order, and they have successfully paid first two installments and they will have to pay the 3^rd installment also. As a matter of fact, the Applicants had so far paid a sum of Rs. 1.50 crores after the loan account become NPA.

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It is further submitted that in the meantime, the Defendant Bank suppressing all the above facts had filed a petition before the Ld. Chief Judicial Magistrate, Srivilliputhur under section 14 of the SARFAESI Act, 2002 in Crl.M.P.No. 8898 of 2023 and the same was ordered on 23.11.2023 without notice to the Applicants. Aggrieved over the above action of the Defendant Bank, the Applicants has filed the present Application among the following and other

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Main Grounds:-

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The Order passed by the Ld. CJM, Srivilliputhur in Crl.M.P.No. 8898 of 2023 under section 14 of the SARFAESI Act, 2002 dated 23.11.2023 appointing an Advocate Commissioner for taking Physical Possession of the Schedule mentioned properties is liable to be set aside.

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The classification of the Applicant loan accounts as NPA during the Covid-19 Pandemic period is bad in law and the same is not legally sustainable.

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The Defendant Bank has withdrawn the 1^st Possession Notice dated 02.07.2021 in order to fill up the lacuna in the said Notice, and issued the 2^nd Possession Notice dated 07.05.2022. If the Defendant wants to withdraw the proceedings and proceed afresh they should have withdrawn the 13(2) Demand Notice and proceeded afresh.

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Page 7 of 20

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SA No.704/2023

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The Defendant Bank had not affixed the Possession Notice dated 07.05.2022 on the conspicuous part of the properties, nor the same was published in 2 leading newspapers as contemplated under the Rules.

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The Auction Sale Notice dated 07.09.2023 is not affixed on the conspicuous part of the property nor the same was properly published in two leading newspapers as contemplated under the Rules.

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The Defendant has approached the Ld. Chief Judicial Magistrate, Srivilliputhur, when the stay order granted by this Hon'ble Tribunal in SA No. 178 of 2023 and SA No. 508 of 2023 is in force and suppressing the above material facts they got the order without notice to the Applicants.

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The Defendant Bank altogether paid a total sum of Rs. 1,50,00,000/after the issuance of Demand Notice by the Defendant Bank as against the 13(2) Demand Notice claim of Rs. 1,63,64,809.90p.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to allow this Application.

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SCHEDULE OF PROPERTIES

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Item No. 1

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Virudhunagar District, Virudhunagar Registration District, Rajapalayam Sub-Registration Office, Rajapalayam Village, Rajapalayam Municipality, Dharmapuram Street, Ward No. 4, Present Election Ward No. 5, site measuring East West on the North by 58 Ft., on the South by 62 Ft., North South on the West by 81 Ft., and on the East by 77 Ft., thus totally measuring 4740 Sq. Ft. with building constructed therein bearing door No. 236A, Doors, Windows, Superstructures, Compound Wall etc., bounded on the

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North : East West Street,

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SA No.704/2023

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South : House Common Wall of N.S. Alaga Raja, Leelavathi and Rajalinga

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Raja,

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East : Durai Raja House and Subbaraja House,

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West : Arjuna Raja House and Sanjeeva Raja House,

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The said property is situated in T.S.No. 24/1, Ward C, Block No. 7, within the limit of Rajapalayam Municipality and it relates to Revenue Survey No. 297/1.

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Item No. 2

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Virudhunagar District, Virudhunagar Registration District, Rajapalayam Sub-Registration Office, Rajapalayam Village, Rajapalayam Municipality, Ward C, Block No. 07, T.S.No. 25, Municipality Ward No. 5, Dharmapuram Street, House Bearing D.No. 261 and 261A, EB Sc. No. 07282-016-206, Municipal Old Water Tap Connection No. 127/16677, New Connection No. 127/005/00428, D.No. 261/1, Old Property Tax Assessment No. 127/451, New Connection No. 127/005/00429, Old Assessment No. 127/6896, New Assessment No. 127/005/00843, house measuring East West on the Northern side 72 fts on the Southern side 68 fts. North South on the both sides 72.25 fts., thus totally measuring 5092 Sq. Ft. bounded on

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North : Vacant Site commonly belonged to K.A.T. Srirenga Raja, B.Lingammal, N.A.P. Alagiri Raja, N.A.P. Raja Ramalinga Raja, K.A.Boopathiraja sites,

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South : East West Street,

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East : Arjunan Naicker house and common wall,

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West : N.A.P.Alagiri Raja and N.A.P.Raja Ramalinga Raja sites,

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The said property is situated in R.S. No. 297/1, within the limit of Rajapalayam Municipality.

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SA No.704/2023

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The Applicants have submitted the following List of documents in support of their claim in the SA, which are as follows:

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S.No.	Date	Particulars
1.	21.04.2021	13(2)Demand Notice issued bythe Defendant Bank
2.	02.07.2021	1^st13(4) Possession Notice issued by the Defendant Bank and tookpossession of theproperties
3.	05.08.2021	Letter from the Defendant Bank withdrawing the 1^st Possession Notice
4.	29.09.2021	Letter from the Defendant Bank informing about transfer of loan accounts
5.	07.05.2022	13(4) Possession Notice issued by the Defendant Bank and took symbolicpossession of theproperties
6.	22.02.2023	Interim Order passed by this Hon'ble Tribunal in S.A. No. 75 of 2023
7.	22.03.2023	OTS Proposal submitted by the Applicants to the Defendant Bank
8.	28.03.2023	Letter from the Defendant Bank rejecting the OTS Proposal
9.	05.04.2023	Letter from the Applicant to the Defendant Bank regardingOTS
10.	11.04.2023	ReplyLetter from the Defendant Bank
11.	07.09.2023	Auction Sale Notice fixingthe sale on 29.09.2023
12.	27.09.2023	Interim Order in S.A. No. 508 of 2023

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3 . On the other hand, the Defendant Bank appeared on notice and filed his Reply Statement in which he has submitted that the 1^st Applicant is the Partnership Firm represented by its Partners the 2^nd to 4^th Applicants. The name of the firm is M/s. Shri Narayana Traders. The Applicants availed the Cash Credit Facility for a sum of Rs. 1,50,00,000/- (Rupees One Crore Fifty Lakhs only) from the State Bank of India, SME Branch, Rajapalayam for the purpose of developing their business with the additional facility of Covid Funded Interest Term Loan to the tune of Rs. 11,00,000/-, which is sanctioned on 27.08.2020. In this regard, all necessary documents were executed in favour of the bank on 12.10.2020. The 3^rd and 4^th Applicants along with their mother mortgaged two properties in favour of the said Bank.

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SA No.704/2023

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It is further submitted that after availing the above said credit facility, the Applicants remained chronic defaulter in repaying the same with accrued interest from the State Bank of India, SME Branch, Rajapalayam, despite several reminders. Since, the Applicants failed to clear the outstanding dues despite receipt of several communications, the loan accounts becomes Non Performing Assets on 31.03.2021. It is pertinent to note that the outbreak of COVID-19 falls only in the year 2020 and not in the year 2021. At the time of classifying the loan account as NPA, there is no bar against the said Defendant Bank to do so on the said date when the loan account is classified as NPA. And, a Demand Notice u/s 13(2) of SARFAESI Act, dated 21.04.2021 was issued to the borrower and Guarantor (including the Legal Heirs of the Deceased Guarantor) for a sum of Rs. 1,63,64,809.90p and the same was served to the Applicants on 23.04.2021. It is also submitted that the Renewal of the loan account and the restructuring the same is not mandatory and it is as per the eligibility. The Applicants have to prove his case that he is eligible for Renewal or Restructuring of their loan accounts. Moreover, the Applicants cannot challenge the said point regarding classification of the loan account as NPA and Renewal/Restructuring of the loan account in the present Application challenging the order passed by the Ld. Chief Judicial Magistrate, Srivilliputhur, U/s. 14 of the SARFAESI Act.

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It is further submitted that admittedly, the Borrower and the Guarantor had not given any reply to the 13(2) Demand Notice and failed to repay the outstanding in the loan account. In the meantime, the said loan accounts were migrated from State Bank of India, SME Branch, Rajapalayam to the Defendant Bank for the purpose of recovery and the Defendant Bank following the Demand Notice, issued Possession Notice u/s. 13(4) of the SARFAESI Act read with Rule 8 on 07.05.2022 and the same was served to the Borrower and Guarantor on 12.05.2022. The said notice was pasted in the mortgaged premises on the same day itself. The said notice was published in Tamil through DHINATHANTHI and in English

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through THE HINDU daily Newspaper on 11.05.2022. As on date, the said Possession Notice was not challenged by the Applicants before any Forum.

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It is further submitted that pursuant to the issuance of the Possession Notice, following steps were taken by the Bank:

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1^st Sale Notice dated 05.08.2022 scheduled to be held on 16.09.2022 was issued by the Bank. By challenging the same, the Applicants filed Writ Petition in WP (MD) No. 20200 of 2022 before the Hon'ble High Court of Madras (Madurai Bench) and obtained Interim orders, but the Applicants had not complied with the said order. In the meantime, the sale was not happened due to want of bidder.

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2^nd Sale Notice dated 21.01.2023 scheduled to be held on 03.03.2023 was issued by the Defendant Bank. Since there is no bidder sale was not happened on the said date.

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3^rd Sale Notice dated 18.04.2023 scheduled to be held on 19.05.2023. Challenging the same, the Applicants filed SA No. 178 of 2023 before this Hon'ble Tribunal. Initially, an interim order was granted with the condition that the Applicants have to pay the amount stated in the order within the stipulated period. There is also a default clause that the intended sale may proceed with and the same should not be confirmed subject to the payment made by the Applicants as per the said interim order. Since, the Applicants defaulted in paying the amount, as directed by this Hon'ble Tribunal, Sale happened in respect of the 1^st item property and was confirmed in favour of the Highest Bidder and Sale Certificate was also issued in favour of the Auction Purchaser and the said sale was also registered with the registering authority at the later point of time.

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SA No.704/2023

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Writ Petition in WP (MD) No. 16413 of 2023 has been filed before the Hon'ble High Court of Madras (Madurai Bench) by the Applicants to grant extension of time to pay the 1^st installment of the stay order passed by this Hon'ble Tribunal in SA No. 178 of 2023 on 18.04.2023. The said Writ Petition was disposed off without any positive direction leaving this Hon'ble Tribunal to take a call in the extension Petition filed by the Applicant. Subsequent to the same, the extension petition was taken up for hearing and the status quo was ordered against the bidder. The said SARFAESI Application is pending as on date.

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4^th Sale Notice dated 26.07.2023 was issued by the Defendant Bank fixing the date of E-Auction as 18.08.2023 for the remaining one property. The said Notice was challenged by the Applicants in SA No. 345 of 2023 and an interim stay was granted by directing the Applicants to pay amount fixed in installments. The said interim order was not complied by the Applicant. Since, there is no bidder sale was not happened on the said date.

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5^th Sale Notice dated 07.09.2023 was issued by the Defendant Bank fixing the E-Auction as 29.09.2023 for the remaining one property. Challenging the same, the Applicants have filed the SA No. 508 of 2023 before this Hon'ble Tribunal and obtained a conditional Stay order, which was also not complied by the Applicant. Since, there is no bidder sale was not happened on the said date.

¶94

Present SA No. 704 of 2023 has been filed by challenging the orders passed by the Ld. Chief Judicial Magistrate in Section 14 Application filed by the Defendant Bank.

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The Defendant Bank has further replied that each ground raised by the Applicant for setting aside the order of the Chief Judicial Magistrate Srivilliputhur, passed in Crl.M.P.No. 8898 of 2023, which is as follows:-

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Page 13 of 20

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SA No.704/2023

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It is submitted by the Bank that there was no stay on the part of the Defendant Bank to initiate SARFAESI proceedings. If so, it is the duty of the Applicant to produce document in that regard before this Hon'ble Tribunal. In respect of restructure of the loan account as per RBI guidelines, it is the duty of the Applicant to prove that their loan accounts are eligible for restructure.

¶99

Paper Publication of the Possession Notice and affixture of the same is enclosed in the typed set of papers.

¶100

Question regarding the Sale Notices will not arise in this SA, challenging the order passed by the Ld. CJM U/s.14 of the SARFAESI Act.

¶101

At the time of filing Application U/s. 14 of the SARFAESI Act before the Ld. CJM and at the time, when the Ld. CJM pass orders in the said Application there was no stay in force.

¶102

Only on perusal of the petition filed and ensuring that the bank had strictly complied with the mandates required u/s.14 of the SARFAESI Act, the Ld. CJM allowed the Application.

¶103

Dictums in Catena of judgement passed by the Hon'ble Supreme Court and various High Court would say that the order passed by the Ld. CJM is not adjudicatory and hence, no notice is required to be given.

¶104

The Applicants cannot interpret the term Chronic defaulter, by excluding the default committed by them before filing the Application before this Hon'ble Tribunal and including the payment made by them after obtaining interim orders from this Hon'ble Tribunal.

¶105

There is no specific pleading regarding Unlawful, unreasonable act and violation of principles of natural justice on the part of the Defendant Bank.

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Section 14(3) of the SARFAESI Act clearly state that "No act of the Chief Metropolitan Magistrate or the District Magistrate any officer authorized by the Chief Metropolitan Magistrate of the District Magistrate done in pursuance of this section shall be called in question in any Court or before any authority".

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Hence, it is therefore prayed that this Hon'ble Tribunal may be pleased to DISMISS the above Application with exemplary cost and thus render justice.

¶110

Typed set of Paper filed by the Defendant Bank on 13.03.2024

¶111

S.No.	Date	Particulars
1.	21.04.2021	Demand Notice u/s. 13(2) of the SARFAESI Act to the borrower and Legal Heirs of Deceased Dhanalakshmi (Guarantor)with acknowledgment
2.	21.04.2021	Demand Notice u/s. 13(2) of the SARFAESI Act to the Guarantor with acknowledgment
3.	07.05.2022	Possession Notice with acknowledgment
4.	07.05.2022	Photograph showing affixture of the Possession Notice with Paper Publication
5.	04.08.2023	Sale Certificate registered in the name of the Auction Purchaser

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4. ON THE BASIS OF ABOVE PLEADINGS THE POINT WHICH ARISES FOR CONSIDERATION IS:-

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I. Whether the Applicants have been able to prove his case in his favour? II. Whether the applicants are entitled to get the reliefs as prayed for?

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5 . Having heard the parties and after going through the entire documents available on the records, this Tribunal find that there is no dispute with regard to the availment of loan facilities by creating equitable mortgage on his property. Since, the Applicants failed to repay the loan

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amount that made the loan account as NPA. It is the contention of the counsel for the Defendant Bank that the Applicants after availing the above said loan facilities, failed to re-pay the outstanding loan dues regularly. The Applicants stated in the SA that due to the lockdown announced by the Government due to COVID-19 Pandemic period, the Applicants could not generate funds and that there is no wilful default in repayment of the outstanding loan dues. I also find that thereafter the Defendant Bank classified the loan account as NPA on 31.03.2021 and issued a Demand Notice U/s 13(2) dated 21.04.2021. And thereafter, the bank has also issued a Possession Notice dated 07.05.2022. Later on, the Defendant Bank had approached the Ld. CJM, Virudhunagar District at Srivilliputhur and obtained an order dated 23.10.2023, for appointing an Advocate Commissioner for taking Physical Possession of the schedule mentioned property.

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6 . The Applicants stated that due to COVID-19 Pandemic period, the Applicants could not generate funds to repay the loan amount and the Defendant Bank does not have right to classify the loan account as NPA during the Covid-19, Pandemic Period, as the RBI had issued circular to restructure all the MSME loan accounts which are standard as on 01.03.2020. Whereas, the Bank in their reply statement stated that there is no bar on the part of the Defendant Bank to initiate SARFAESI proceedings during Covid-19 pandemic period. And, I also perused that the Applicants have not produced any documentary evidences to substantiate their contention. Therefore, I do not find any force in the contention of the Applicants that the classification of their loan account as NPA in contravention of the Rules and the Guidelines issued by the RBI, does not hold good.

¶119

It is the contention of the Learned Counsel appearing for the Applicants that the Bank has withdrawn the 1^st Possession Notice dated 02.07.2021 and issued the 2^nd Possession Notice dated 07.05.2022 without withdrawing the Demand Notice dated 21.04.2021 and proceeded afresh.

¶120

Page 16 of 20

¶121

SA No.704/2023

¶122

However, the bank has not produced the copy of 1^st Possession Notice dated 02.07.2021. I have also perused both the Demand Notice dated 21.04.2021 and the 2^nd Possession Notice dated 07.05.2022, I find some discrepancies between the Demand Notice and the 2^nd Possession Notice, which are as follows:-

¶123

Sl. No.	Demand Notice dated 21.04.2021	Possession Notice dated 07.05.2022
1.	In respect of Property No.1, in boundaries, West by Arjuna Raja house andSanjeeviRaja house	In respect of Property No.1, in boundaries, West by Arjuna Raja house andSanjeevaRaja house
2.	In respect of Property No.2, Property is owned bySmt. V N Dhanalakshmi	In respect of Property No.2, Property is owned bySmt. K. Chitra, W/o. Sri. V.N. Kannan through Registered will Doc. No. Registered Will BK-III-183/2019 dt. 11.11.2019 executed by Smt. V N Dhanalakshmi
3.	In respect of Property No.2, at line 4, new connection No. 127/005/00458	In respect of Property No.2, at line 4, new connection No. 127/005/00428
4.	In respect of Property No.2, at line 5, newassessmentNo. 127/005/00429	In respect of Property No.2, at line 5, newconnectionNo. 127/005/00429
5.	In respect of Property No.2, at line 7, north south on the both side 72.25fts	In respect of Property No.2, at line 7, north south on the both side 72.25vfts
6.	In respect of Property No.2, in boundaries, West byN.A.B. Alagiriraja and N.A.B. Rajaramalingaraja site	In respect of Property No.2, in boundaries, West byN.A.P. Alagiriraja and N.A.P. Rajaramalingaraja sites

¶124

The main contention raised by the Applicants is that the Possession Notice dated 07.05.2022 was neither affixed on the conspicuous part of the secure asset nor the same was published in two leading news papers. I also find that the bank has produced the copies of Possession Notice dated 07.05.2022 with acknowledgement cards for having sent the copies of

¶125

Page 17 of 20

¶126

SA No.704/2023

¶127

Possession Notice to the Applicants and Paper Publication has been effected in 'The Hindu', the English daily on 11.05.2022 and in 'Dinathanthi', the Tamil Daily on 11.05.2022, which is available at page nos. 35 & 36. However, I find that the Defendant Bank has failed to produce the clear copies of Paper Publication, the copies produced by the Bank is not legible to authenticate the veracity of the document. Further, the photo copies for having affixed the Possession Notice on the conspicuous part of the property is also available at page no. 32 to 34.

¶128

The Learned Counsel for the Applicants further contended that the Sale Notice dated 07.09.2023 was not published in two leading news papers and that it was not affixed on the conspicuous part of the secured asset. However, I do not find any merit in this ground, since the instant SA is filed challenging the order passed by the Ld. Chief Judicial Magistrate, Virudhunagar District at Srivilliputhur under section 14 of the SARFAESI Act.

¶129

Further, I have perused the SA No. 178/2023, wherein the Applicants have challenged the E-Auction Sale Notice dated 18.04.2023 fixing the date of Sale on 19.05.2023 (3^rd Sale Notice) and obtained a conditional stay order dated 19.05.2023 from this Tribunal, with a condition to deposit a sum of Rs. 70.00 Lakhs to the Defendant Bank in two equal installments and the bank shall not confirm the sale, if any, held on the scheduled date of auction with a liberty to the bank to proceed further, if the Applicants failed to pay any one of the installments. Whereas, the Applicants had only paid a sum of Rs. 15.00 Lakhs and filed an Extension Petition dated 17.06.2023, seeking 4 weeks time to pay the balance 1^st Installment amount of Rs. 20.00 Lakhs along with the 2^nd Installment of Rs. 35.00 Lakhs. Since, the Applicants had failed to deposit the 1^st installment amount, and as per the conditional order dated 19.05.2023, the bank has sold the property and Sale Certificate dated 04.08.2023 (page no. 37-52 of Bank's type set of papers) was also issued to the successful bidder Mr. R. Ramakrishnakumar,

¶130

Page 18 of 20

¶131

SA No.704/2023

¶132

Kancheepuram District by obtaining a sum of Rs.88,54,000/- as a sale price.

¶133

In this case, while going through the case details, I find that in SA No. 178/23, this Tribunal has granted an order of status quo to be maintained by both the parties, on 07.08.2023, while the Extension petition was still to be considered by this Court. On the same day, the Bank Counsel also appeared before this Tribunal and undertakes to file Vakalat and prayed time to file Counter in IA No. 1101/23 (the same Extension Petition for payment of 1^st & 2^nd Installments). And, the status quo was granted by this Tribunal, which is still in force as on date. But, I find that the Applicants have filed the copy of Order of the Ld. Chief Judicial Magistrate, Virudhunagar District at Srivilliputhur order dated 23.10.2023 (23.11.2023) vide Crl.M.P.No. 8898/2023. On perusal, I find that the Defendant Bank has obtained this impugned order on behalf of the Auction Purchaser to hand over the possession of the property passed by the Ld. CJM, Virudhunagar District at Srivilliputhur, while the Interim Order of Status quo was in force. The said SA No. 178/23 is pending for final hearing and the status quo granted by this Tribunal is still alive, as on date.

¶134

Hence, in view of the above facts and circumstances, it appears that the bank has suppressed the above Interim Order of Status quo and approached the Ld. CJM, Virudhunagar District at Srivilliputhur and obtained an order dated 23.10.2023 (23.11.2023) for appointment of an Advocate Commissioner for taking Physical Possession of the property. Hence, it amounts to the Contempt of this Court's Order.

¶135

The Applicants have no doubt being a defaulter is liable to pay the loan amount to the Defendant Bank and the Bank has every right to recover its dues in accordance with law. But, when there was a stay order in force, he cannot obtain the order of Ld. CJM, U/s. 14 of SARFAESI Act for the Schedule mentioned property.

¶136

Page 19 of 20

¶137

SA No.704/2023

¶138

This Tribunal on considering the facts, circumstances and issues involved in the case, I find that the Applicant has been able to prove his case in his favour.

¶139

In the result, the SA No.704/2023 stands Allowed as prayed for and the Ld. Chief Judicial Magistrate, Virudhunagar District at Srivilliputhur order dated 23.10.2023 (23.11.2023) in Crl. M.P. No. 8898 of 2023 is set aside. Consequently, all pending IAs are also disposed of.

¶140

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 17^th May, 2024.

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Dictated & Corrected by me

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Typed by me

(D. Krishnaveni, PA)

¶150

Page 20 of 20

Shri Narayana Traders v. State Bank of India

Case brief

What is this about?

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Shri Narayana Traders v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

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