Dismissed

Pn Rambabu v. J.C.Flowers Asset Reconstruction Private Limited

DRT20 Mar 2025SA/279/2023

Case brief

AI extract

What is this about?

This Debts Recovery Tribunal Application challenged a possession notice issued under the SARFAESI Act. The Tribunal held that the First Respondent followed proper procedure for demand and possession notices through service and publication. It ruled that affixing notice on the asset is not mandatory if public notice is served, dismissing the application.

What did the court decide?

Application dismissed; interlocutory applications, if any, disposed of; no order as to costs.

Pn Rambabu versus J.C.Flowers Asset Reconstruction Private… — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT HYDERABAD

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DATED THIS THE 2O]I1 DAY OF MARC H, 2C25

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.279/2OZB

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Sri P.N.Rambabu, S/o PSN Murthy, Aged 60 years, Occ:business, R/o 1 -5-621 1 1, Street No.8, V.V. Nagar,Habsiguda, Hyderabad-sOO 0O7. ... Appiicant

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Versus 1.M/s JC Flowers Asset Reconstruction p.Ltd., Regd. Office at l2b floor, Crompton Greaves House, Dr.Annie Besant Road, Worli, Mumbai-4OO 030. Rep. by its Authorized signatory.

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2.YES bank Ltd., Somajiguda branch, Hyderabad. Rep. by its Authorrzed officer ( Proforma party) ... Respondents Counsel for the Applicant : M/ s Lex Veritas. Counsel for 7't Respondent : Ms. Laxmi Chaya

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ORDER

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1' This Application is filed u/s. 17of the Securrtization and Reconstruction of Financial Assets and Enforcement o Interest Aci, 2OO2 (SARFAESI Act, 2OO2) challenging ice dt.1O.O7.2023 issued by the l"tRespondent in and to declare the same as illegal and

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sA279/2023

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The averments made by the Applicant in brief are as follows:

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The Applicant was running his business as a proprietorship concern under the name and style of M/s Smith Cylinders and installed required plant and machinery. Thereafter the Applicant has entered into a Memorandum of Understanding (Mou) with Mr.RameshSanghvi&Mr.Vrjay Kumar Shaghvi for constituting new partnershipfirm and both the parties agreed to invest 50% each as per the MOU. Thereafter M/s Sangaz ContainersP.Ltd. was incorporated with Ramesh Sanghvi& VijayKumar Sanghvi as the Promoters and Directors and they proposed to sell the scheduleproperty belongs to the Applicant to the company and in turn, theproceeds will be transferred from the companyaccount to the Applicant. The said property was registered bythe Applicant without receiving anysale consideration and the same was registered on 06.04.2017. The Applicant requested the promoters for saleconsideration but they evaded. The Applicant also filed O.S.No.llOl2OlS on the file of Hon'ble V Addl.District.Judge, Bhongir to declare the Sale Deed dt.O6.04.2OI7 as null and void for want of salc consideration and the Hon'ble court granted an interim order in the said O.S. Subsequently, Ramesh Shanghvi &Mr.Vijay Kumar Sanghvi availed loan from the 2"d Respondent Bank by creating mortgage over the schedule property along with other properties and defaulted repayment of outstanding dues. The 2"dRespondent Bank also filed O.A.308/2O21 before this Tribunal and the Applicant filed a detailed written statement in the said O.A. During the pendency of the said O.A,, the 2nd Respondent Bank assigned the loan account to the 1"t Respondent herein and as per the Assignment Agreement dt.20.O3.2023, the Respondent No.1 issued d otice dt.20.03:2023 and the Applicant herein submi said demand notice. Without assigning proper Res t rejected the said objections vide ereaf 1"t Respondent also issued impugned possessis, .,o?i& ,ff,ffi ml "t -q SARFAESI Act, 2OO2 on 10.07 .2023 for the schedule property and the said

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sA279/2023

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demand notice and possession notice are not served on the Applicant. Hence the SA.

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The RespondentNo.l filed their Reply denying all the adverse allegations made in the SA and contended that M/s Sanagaz Containers P.Ltd. is a private limited company and Mr.RameshChandra Sanghvi, Mr.Vijay Kumar Sanghvi, Ms.SushmitaPodugu and the Applicantherein are its Directors and at the request of the said company, Respondent No.2 bank sanctioned Overall Limit of Rs.S Crores. SangazContainersP.Ltd. has duly availed the above said loan facilities and Ramesh Chandra Sanghvi, Vrjay Kumar Sanghvi, Ms.SushmitaPodugu and the Applicant herein as its Directors and guarantors,executed relevant loan documentsin security to the said loan facilities. Towardsfurther security to the said loan facilities, M/s.Sangaz Containers has created equitable mortgage against the scheduleproperty in favour of the Respondent No.2 Bank by depositing the original title deeds. The borrowers/guarantorshavingavailed the above said over all limit of Rs.50O lakhs, failed to repay the said loan and the loan account has been classified as NPAon 31.12.2018 as per the RBI guidelines. Accordingly, Respondent No.2 bank proceeded further and issued demand notice dt.22.O7.2019 and possession notice dt.04.06.2019. Thereafter the Respondent No.2 bank has assigned the debt together with all underlying security interest to theRespondent No.1 ARC vide AssignmentAgreement dt.16. 12.2022. Subsequently, the Respondent No.1 herein issued demandnotice dt.20.03.2023 u/s 13(2) of the SARFAESI Act, 2OO2 and the said notice was served on the Applicant and the same was published intwo daily newspapers vtz. Business S and Mana TelAngnana on 04.05.2023. To the said dema [cant^{herein raised objections on18.05.2023} and .";& replied to the said objections vide letter d t r0QOO6. 2 02 lza.ffir3. TfSAreafter l"tRespondent issued possession notice o,ir_tot zbf,s mF208ot o#tiie SARFAEST Act, 2oo2 and the said notice R-h,uou'g{i,fi' 3 re$'ffiw

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sA27912023

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was also sent to the Applicant through regd. post and thus there are no violations. Accordingly, Respondent No.1 prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant and Ld. Counsel for the 1st Respondent and perused the written arguments filed by both the parties.

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Now the points that arise for consideration are

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whether the Applicant has established ana ualid" ground. fo, challenging the Possession Notice dt.10.07.202s issued by the T"tRespondent against the schedule property?

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To what relief ?

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Polnt IVo.(i):-

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During the course of arguments, Ld. counsel for the Appticant and Ld. Counsel for the Respondent No.1 reiterated their respective versions as stated supra.

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The undisputed facts of the case are that M/s Sangaz Containers p.Ltd. availed overall credit facilities to a tune of Rs.500 lakhs from the 2"dRespondent and the Directors of the company including the Applicant created mortgage against the schedule property along with other properties in security to the said loan facilities and thereafter, they committed default in repaying the loan dues and the loan account has been classified as NPA. There is also no dispute regarding the fact that 2"d Respondent assigned the, loan together with all underlying security- - - -'--J interest g}3g1ato the borrowers/Applicant to the Respondent No.1 ARC vid ment dt.16. L2.2022. Thereafter the l"tRespondent of SARFAtrSI Act, 2OO2 to recover the demand notice and possession notice.

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sA279/2023

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The specific contention of the Applicant is that the schedule property belonged to the Applicant and he registered the said property in the name of the company i.e. M/s Sangaz Containers P.Ltd. without receiving any sale consideration on 06.O4.2017 and no share certificates were issued to the Applicant and so, the schedule property does not belong to the company. Ramesh Sanghvi&vrjay Kumar Sanghvi, the promoters and Directors of the company, have forged and fabricated the Sale deed No.2LO3l2Ol7 and in view of the same, the Applicant also filed OS No.11Ol2Ol8 on the file of Hon'ble V Addl.District Judge, Bhongir, Naigonda District. Further, the l"tRespondent failed to serve demand notice and possession notice on the Applicant and the said possession notice was neither affixed on the schedule properer nor published in two newspapers.

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Per contra, lstRespondent contended that they have duly followed the procedure laid down under the provisions of SARFAESI Act,2O02 and Rules made thereunder in proceeding against the secured assetunder the provisions of SARFAESI Act, 2OO2 in issuing demand notice and possession notice.

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As far as security interest created over the schedule property is concerned, Mls Sangaz Containers P.Ltd. is a Private Limited company and Ramesh chandra Sanghvi, Vrjay Kumar Sanghvi, Ms.SushmitaPodugu and the Applicant herein are its Directors. M/s Sangaz Containers P.Ltd. availed credit facilities from the 2"dRespondent andcreated equitable mortgage over the sA schedule property by depositing the original title deeds with the Respondent No.2 Bank in security I loan facilities and a Memorandum of Entry was also yfya$uffiHffffiqespondent Bank on 26.02.2019 and necessary ,h?y$ have ffin duiylfu:listered with Roc. So, valid security interest rrdd #een-..."Gt in rav-ouilof the Respondent over the application ".iqr,.^{3.0r!14$20?,!,n .r;*$. to the contention of the Applicant that} Jr

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sA279/2023

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the sA schedule property does not belong to the company and the Applicant did not receive any sale consideration are concerned, the said issues are out of the purview of this Tribunal and the Applicant can agitate the said issues before the concerned civil court.

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To substantiate their version that the 1"t Respondent has duly followed the procedure in issuing demand notice and possession notice to the Applicant, the lstRespondent has fited relevant material documents along with the Reply liled by them. As per the said documents, it is clear that the l"tRespondent issued demand notice u/s ls(2) of IheSARFAESI Act, 2OO2 on 2O.O3.2O23 to the borrowers/guarantors including the Applicant herein and sent the said notice to the Applicant and others through Regd. Post as evidenced from the postal track reports filed by the l"tRespondent. The Respondent also published the said demand notice in Business Standard and Mana Telangana daily newspapers and SO, it can be deemed that there is valid service of demand notice on the Applicant. After receiving the said demand notice, the Applicant also raised objectionsvide his letter dt.18.O5.2023 and so, the contention of the Applicant that demand notice is not served by the Respondent, is false. To the said objections, the lst Respondent issued Repiyvide their letter on 05.06.2023. Thereafter, the l"tRespondent issued possession notice u/s 13(4) of the SARFAESI Act, 2oo2 on 1O.O7.2023 to the Applicant as evidenced by the postal track reports filed by the l^{stRespondent.} As per the copies of paper publication filed by the l "tRespondent, it is clear that the Respondent published the said possession notice in two daily newspapers on 13.O7.2023. Regarding the affixture of the said possession notice on the secured asset, no documents a by the lstRespondent to prove the same. But mere \possession notice on the schedule property pa ant is having knowledge of the possession no dent, cannot be a ground to challenge the SA 0lltftBr fne t received the possession notice and the

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sA279/2023

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said notice is also published in two daily^{newspapersincludingone in} vernacular language and even il the said notice is not^{aflixed on the} secured asset, it cannot be a ground for the borrower^{as the affixtureis} meant only for the general public as per the ratio laid down by^the Hon'ble High Court of And.hra Prad,esh in M/s Solithro^Priuate Limited Vs. The Debts recoaery Trlbunal-l, rePorted in 2O78^SCC Online Hgd. 188.

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Hence in the circumstances, it is quite clear that the^{l"tRespondenthas} scrupulously followed the procedure laid down under the^{provisions of} SARFAESI Act, 2OO2 and Rules made thereunder in^proceeding against the secured asset and in issuing demand notice and^{possession notice} and there are no violations. Accordingly, this point is answeredⁱⁿ favour of the lstRespondent and against the Applicant.

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Point No.(ii):-

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1.2. In the result, S,A27912023 is dismissed. Consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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(Dictated to the P.S, transcibed bg her, corrected, signed and pronounced b11 me in the open court on this the 2)t,daA of March, 2025).

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sdl - (G. GOPr CHANDI PRESIDING OFFICER

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Pn Rambabu v. J.C.Flowers Asset Reconstruction Private Limited

Case brief

What is this about?

What did the court decide?

Pn Rambabu v. J.C.Flowers Asset Reconstruction Private Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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