Dismissed

Alphamed Labs and others v. Bank of Baroda

DRT26 Feb 2025SA/113/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the secured creditor's appeal challenging a sale notice dated 23.01.2024. The court held the appeal infructuous as the scheduled auction did not take place and the challenges regarding notice service were time-barred under Section 17 of the SARFAESI Act. The bank was found to have complied with procedural requirements.

What did the court decide?

Sale notice stood upheld; SA dismissed as infructuous. Interim orders vacated; no order as to costs.

Alphamed Labs and others versus Bank of Baroda — Banking and Recovery | DRT (2025)

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SA No.113/2024 (C)

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26.02.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 26^th day of February, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 113 of 2024

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M/s. Alphamed Labs, Represented by its Partners D. Akshya and Gracty, No.10, Lalaaithapuram Street, Srilalithapuram, Royapettah, Chennai – 600 014

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Mrs. D. Akshaya, W/o. Mr. C. V. Victor No.75/33, Mannarasamy Koil Street, Royapuram, Chennai – 600 013

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Mrs. T. D. Gracy, W/o. Mrs.Varghesh, No.75/33, Mannarasamy Koil Street, Royapuram, Chennai – 600 013

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….Applicants

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-Vs-

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The Authorized Officer, Bank of Baroda Adyar Branch No.77, 1^st Main Road, Gandhi Nagar, Chennai – 600 020

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….Respondent

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Counsels on record / appeared: Counsel for Applicants : Mrs. Jayaganga Counsel for Respondent : M/s. G. R. Lakshmanan

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ORDER ON SA 113 /2024

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The present SA is filed by the Applicant challenging the sale notice dated 20. 01. 2024 contending that the applicant had availed two facilities; 1] an overdraft facility for a sum of Rs. 80 lakhs and 2] a term loan of Rs. 47,20,000 for setting up of a laboratory and out of the two loan accounts, the term loan account was regular.

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SA No.113/2024 (C)

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26.02.2025

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In the year 2021, the overdraft facility was sanctioned for yearly turnover of Rs. 50 lakhs which was renewed in 2022 with a yearly turnover of Rs.60 lakhs. The third year ie., on 2023 the applicant approached the respondent bank for renewal of the overdraft facility which the bank refused and failed to renew the account submitting that the renewal of the account will be done only after the applicant shows a turnover of Rs. 4 crores which is many times over the exposure of the current amount.

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In spite of many requests and visits, the respondent bank did not renew the overdraft facility and strictly informed the applicant to show Rs. 4 crores turnover in the account and the respondent has failed to renew the account. Instead classified the loan account as NPA though the overdraft facility was regularly paid

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The applicant received the demand notice and also issued a reply requesting to regularize the loan account, but the respondent did not give any time to clear the same and have issued the notices to the applicant as per the RBI guidelines. It is further contended that the secured creditor can invoke the provisions of the SARFAESI Act only after the registration of the security interest in the central registry.

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It is opposed that the bank has invoked the provisions of the SARFAESI Act and claimed to have issued the demand notice dated 17.07.2023 under section 13[2] of the SARFAESI Act calling upon the applicant to pay a sum of Rs. 1,24,64,245 .57 which is not served on all borrowers.

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It is further contended that the bank has charged heavy interest and have capitalized the penal interest which is in contravention of the pronouncements of the Apex Court and RBI guidelines. The respondents served the sale notice dated 23.12.

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SA No.113/2024 (C)

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26.02.2025

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2024 fixing the sale of the property on 28.02.2024 which is received by the applicant only on 30.01.2024

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In the grounds of the SA, it is contended that the bank has not followed the provisions of the SARFAESI Act and the Rules. The applicant as borrower and the co borrower have not received the demand notice and possession notice. The security is not registered under the CERSAI as required under the Act, hence there is no security created under the loan.

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The sale notice is not published in two newspapers as per the provisions contained in the security Interest Enforcement Rules and the sale notice does not contain proper measurement and identification of the secured asset. Further the respondent have not issued 30 days clear notice and have proceeded in selling the property without obtaining a proper valuation from the valuer.

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It is further alleged that the sale notice is not affixed on the property, hence there is a prime facie case of defective sale notice which the bank is enforcing under the act. The applicant reserves the right to raise additional grounds and pays for to set aside the sale notice dated 23.01.20 24 fixing the E Auction scheduled on 28.02.2024.

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Objections of the bank:

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The respondent bank in the counter iInter alia contends that the first applicant is carrying on the business in a partnership firm in the name and style of M/s. Alpha Med Labs and the second and the third applicants are partners and have given guarantee to the loan availed by the first applicant and have mortgaged the property as collateral security towards the advance of the said loans.

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SA No.113/2024 (C)

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26.02.2025

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The present application is being filed challenging the E auction sale notice dated 203.01.2024 fixing the sale of the property on 28.02.2024 and to declare the sale notice as illegal contrary to the provisions of the acts and the rules and also to set aside the same notice.

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The applicants in their SA averments admitted the availing of Rs.80 lakhs under the over draft facility and a term loan of Rs.47,20,000 which was sanctioned for the purchase of machinery and it is for categorically admitted that the schedule property situated in Royapuram is mortgaged as secured asset which was offered for the various credit facilities sanctioned to the applicant. The contention of the applicant that the overdraft facility was renewed in 2021 and 2023 Is correct and the same is not renewed is incorrect.

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In spite of several written reminders for the due repayment the applicant continuously defaulted the repayment towards the loan account and the bank classified the account as non performing asset on 13.07.2023 which is admitted by the applicants. The respondent have created registration of the security interest in the central registry and have issued the section 13]2] notice to which the applicant himself admits and had requested for the extension of time for the repayment of the outstanding amount.

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The applicant has come with false story which deserves no consideration and the S.13[4] notice is also served and the bank has replied to the objections to the S. 13[2] demand notice raised by the applicant. The auction sale notice dated 23.01.20 24 is duly served which is acknowledged by the applicants and the copy of the section 13[2] and S.13[4] possession notice; affixture of photos and their paper publication along with the acknowledgement cards are all produced along with the typesets of their objection. The notices have been affixed on the property and the

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SA No.113/2024 (C)

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26.02.2025

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valuation report obtained from the approved value is also produced along with the objection. Further the sale has not taken place rendering the appeal to be disposed of as infructuous. Hence, the respondent bank prays to dismiss the SA with exemplary cost.

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Heard the submissions of both the counsels and perused the records of the case.

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Evidently, the applicant has filed the present case challenging the sale notice dated 23.01.2024 and the prayer as sought for in the SA is to set aside the sale notice and to award cost of the proceedings.

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The respondent bank has filed asphalt the copy of the section 13(2) demand notice dated 17.07.2023, along with this acknowledgement cards.

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In fact, the applicants admit the availing of the overdraft facility and the term loan facility and have mortgaged the property as collateral security towards the credit facilities availed. Further it is also an admitted fact of the applicant that the account was classified as NPA and the contention raised is that the secured asset is not registered before the central registry which is countered by the respondent bank by producing CERASI report at page 53 to 55 of their type set.

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The respondent bank has duly produced the CERSAI report which clearly reflects the mortgage of the property as collateral security towards the credit facility availed by the Applicants here in and thus the security is created by applicants which is registered as per S.26D of the SARFAESI Act, which constitute a secured asset as per the provisions of the Act and the same entitles the secured creditor to initiate proceedings under the Act. Thus, the contention of the applicant that there is no

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SA No.113/2024 (C)

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26.02.2025

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security interest created and in absence of any registration of the asset before the central registry the respondent bank cannot proceed under the SARFAESI Act fails.

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As the applicants defaulted in the repayment towards the credit facilities, the account of the applicant was classified as NPA on 13.07.2023 calling upon the applicants to clear the entire liability outstanding along with interest. The documents clearly reflects that the S.13[2] demand notice was said by RPAD which is duly received on the applicants here in as per the postal track report produced by the respondent bank from page 13 to 18 of the typeset

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As the applicants did not liquidate the liability as demanded in the S.13[2] notice, the bank has issued the possession notice dated 22.09.2023 which is sent by the RPAD and the postal acknowledgement cards reflects the receipt of the S.13[4] possession notice. The possession notice is also published in the English newspaper the new Sunday Express and in Tamil newspaper Dinamani on 22.09.2023 as required under the Act. Further the possession notice is also affixed on the property as mandated and the photograph of a fixture produced at page 22 to 32 clearly reflects the affixture of the possession notice on the secured asset.

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The present SA is filed challenging the sale notice dated 23.01.2023 , it is seen from the records that the sale notice is duly served on the applicants the same is also published in the two newspapers; sale notice is also affixed on the secured asset. The records of the case clearly reflect that the respondent bank has followed the due compliance of the procedures in issuing the statutory notices and also the sale notice as prescribed.

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Yet another contention taken by the applicant is that the respondent bank has put the property to sale without obtaining the valuation of the secured asset is also

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SA No.113/2024 (C)

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26.02.2025

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countered by the respondent bank by producing the bank valuation report dated 29.05.2023 which is produced at page 39 to 52 which clearly reflects that the bank has obtained the valuation report by their approved valuer of the property before putting the property to auction which is in accordance with the Act.

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Manifestly the challenge to the sale notice dated 23.01.2024 did not materialize and the sale as scheduled did not take place rendering the SA as infructuous. Even otherwise, the averments or allegations/ challenge in respect of section 13 [2] demand notice dated 17.07.2023 and the possession notice dated 22.09.2023 is not within the period of 45 days as required under S.17 of the Act. In spite of receipt of the statutory notices, the applicant was silent spectator to the measures and now has challenged the sale notice alleging the non-service of the notices including the sale notice. On the other hand the respondent bank has duly established the service of the statutory notices; which is duly acknowledged published and affixed on the property.

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In the instant matter though the applicant had challenged the sale notice dated 23.01.2024, as the sale has not materialized the prayer in the SA is rendered in fractures. The other averments or contentions raised by the applicant is duly countered by the respondent bank with supporting documents and have established the due compliance of the procedures in initiating the measures under the Act.

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Upon examination of the facts and the documents produced by both the parties it is evident that the respondent bank as a secured creditor have initiated the measure after classifying the account as NPA on 13.07.2023, and I have issued the section 13[2] demand notice dated 17.07.2023 and S.13 [4] possession notice dated 22.09.2023 which are duly served and have established the due compliance of the

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SA No.113/2024 (C)

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26.02.2025

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procedures under the act. The sale notice is also duly served, published and affixed on the property.

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For the foregoing reasons the present SA fails and the same stands dismissed as infructuous. Interim order granted if any stands vacated. Pending IA’s if any are disposed of in terms of this final order. No order as to cost

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Stenographer, transcribed by her, corrected, signed and pronounced by me on this the 26^th day of February, 2025)

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ANNEXURES

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DOCUMENTS FILED BY THE APPLICANT

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Sl. No.	Description of Documents	Exhibit
1.	Sale Notice dated23.01.2024	A-1

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DOCUMENTS FILED BY THE RESPONDENT

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Sl. No.	Description of Documents	Exhibit
1.	Demand Notice under Section 13(2) of SARFAESI Act, issued by the Petitioner Bank with Acknowledgement Card dated17.07.2023.	R-1
2.	Possession Notice under Section 13(2) of SARFAESI Act, issued by the Bank with Acknowledgement Card dated22.09.2023.	R-2
3.	Publication in English Paper Possession Notice “The NewSundayExpress”dated22.09.2023	R-3
4.	Publication in Tamil Paper Possession Notice “Dinamani” dated22.09.2023	R-4
5.	Possession NoticeAffixtures dated22.09.2023	R-5
6.	Sale Notice with Acknowledgement Card dated 23.01.2024.	R-6
7.	TwoPaper Publication inSaleNotice dated23.01.2024	R-7
8.	Sale Notice Affixtures	R-8

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SA No.113/2024 (C)

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26.02.2025

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9.	Bank Valuation Report dated29.05.2023	R-9
10.	CERSAI Report	R-10
11.	Statement of Accounts oftheRespondentBank	R-11

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SCHEDULE OF PROPERTY

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All that piece and parcel of the land and building land measuring 2019 Sq.ft., comprised in Old Survey No.2235, New Survey No.760, CC No.2770, Royapuram Village, bearing Old Door No.126, New Door No.33, Mannarsamy Koil Street, Royapuram, Chennai – 600 013, and bounded on the ;

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North by : Property owned by Radhakrishnan bearing Door No.32, Mannarsamy

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Koil Street,

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South by : Door No.34, Mannarsamy Koil Street,

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East by : P.V. Koil Street,

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West by : Mannarsamy Koil Street

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And situated within the Registration District of North Chennai and in the Sub-Registration District of Royapuram.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

Alphamed Labs and others v. Bank of Baroda

Case brief

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Alphamed Labs and others v. Bank of Baroda

Case brief

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