Dismissed

Minakshi Roy v. Kotak Mahindra Bank Limited

DRT29 Apr 2025SA/290/2022

Case brief

AI extract

What is this about?

The applicant challenged SARFAESI actions, including notice of possession and account classification as NPA, by the bank regarding a loan taken by her late husband's proprietorship firm. The tribunal found the bank complied with requisite rules and guidelines, holding the application not maintainable.

What did the court decide?

Dismissed the SARFAESI application and consequently disposed of pending interim applications.

Minakshi Roy versus Kotak Mahindra Bank Limited — Banking and Recovery | DRT (2025)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA JEEVANSUDHA BLDG. 9^TH FLOOR, 42/C, J.L.NEHRU ROAD, KOLKATA – 700071

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BEFORE SHRI AMBUJA MOHAN DAS, PRESIDING OFFICER

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SA No. 290 of 2022

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MINAKSHI RAY

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Wife of Late Rabin Kumar Ray residing at 20/01, P.K. Roy Chowdhury ,2^nd Bye Lane, B. Garden,Howrah-711103.

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Applicant

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Kotak Mahindra Bank Ltd., carrying out its functions in accordance with the Banking Regulations Act,1949 having its office at Apeejay House ,5^th Floor,BlockB,Park Street,Kolkata-700 016.

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The Authorised Officer,Kotak Mahindra Bank Ltd., carrying out its functions in accordance with the Banking Regulations Act,1949 having its office at Apeejay House ,5^th Floor,Block B,Park Street,Kolkata-700 016.

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…………..Respondents.

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Present:

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For Applicant: Ld. Advocates Mr. Nimesh Misha and Ms. Sweta Gandhi, Ld. Counsels

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For Respondents: Mr. P. Pal and Ms. A. Ariff, Ld. Counsels

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J U D G M E N T

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Delivered on 29^th April, 2025

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The Sarfaesi Applicant has filed application u/s 17(1)of the Sarfaesi Act2002 challenging the measures taken by Respondent Bank under Sarfaesi Act and in particular to the Demand Notice dated 26/04/2022 and

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Possession Notice dated 02/08/2022 and publication of possession notice dated 06/08/2022.

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The Applicant company is a Proprietorship firm namely M/s Mahua Distributor. Applicant has challenged the measures u/s 13(4) which is in contravention of Rule 8(1),(2) and 8(2A) of the Security Interest (Enforcement) Rules, 2002. The Respondent Bank took symbolic possession of the property. It is alleged by the Applicant that Possession Notice was neither served nor published in the widely circulated newspaper.

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It is contended by the Applicant that her husband Mr. Rabin Kumar Roy was the proprietor of business of medicines. In the year 2015 Mr. Rabin Kumar Royobtained final assistance from the Respondents, Cash Credit facilities in the form of working capital loan amount of Rs. 5 crores in favour of the Proprietorship firm.

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The above credit facilities were secured by hypothecation of book debts and stock of the firm. During Covid 19 pandemic and lockdown the business was stopped. The Reserve Bank of India initiated scheme for providing Guarantee Emergency Credit Line(GECL)for the borrowers who are severely affectedby Covid -19 pandemic in respect of MSME Enterprises.

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As per the said scheme LateMr. Rabin Kumar Roy was sanctioned additional loan for Rs. 74,94,000/- on 14/07/2020. The National Credit Guarantee TrusteeCompany has given 100% guarantee of the said ECGLS. But the Respondent Bank executed various loan documents execution of mortgage which were not required as per ECGLS scheme. On the basis of the said additional credit facilities,the loan account was remainedstandard on 29/02/2020.

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On 20/01/2022 Applicant pleaded that her husband died on 19/12/2021 and Death Certificate is enclosed as Annexure ‘A’. After death of her husband the Respondent Bank in the month of December 2021insistedto submit to monthly stock statement for December,2021. The Applicant was in the stress due to bereavement in the family. During visit the representative of the Respondentenquired about the successor of her husband. Respondent no. 2 issued notice on 01/03/2022 calling upon applicant and her son to pay sum of Rs. 3,42,44,369/- and Rs. 73,26,887.17 as on 25/02/2022.

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On 26/04/2022 the Defendant Bank served Demand Notice calling the Applicant and her son to pay Rs. 4,18,84,346/-within 60 days. Applicant has annexed Demand Notice dated 26/04/2022 as Annexure ‘D’. The said Demand Notice disclosed that the account has been classified as NPA on 05/04/2022. The Applicant has challenged the account as NPA as the said classification of account contrary to the provision of the Sarfaesi Act and Rule.

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Respondent Bank has also filed an application u/s 19 of the RDDBFI Act before DRT. It is alleged by the Applicant that Defendant Bank cannot take sarfesi action and file application for realization of the outstanding amount under RDB Act. On the above ground Applicant prayed for quashing the sarfaesi measures against the Applicant and set aside the Demand Notice dated 26/02/2022,Possession Notice dated 02/08/2022 alongwith some interim reliefs.

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The Respondent Bank has filed affidavit in opposition denying pleadings of the Applicant. It is contended by the Respondent Bank that provision under Rule 8(1),8(2) and 8(2A) have been complied. Respondent Bank has annexed publication of possession notice. At the time of hearing of SA Ld. Advocate for the Applicant has argued that the Applicant as a proprietorship

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firm was given additional credit facilities under GECL scheme as the partnership firm was affected by Covid 19 pandemic and lockdown. It is argued that the said scheme was 100% covered by National Credit Guarantee Trustee Company,a government of India Company. In the said credit facility the Respondent Bank cannot debit interest on the said credit facility (ECGLS) andmake the account standard.

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The respondent bank has filed affidavit on the order dated 14/08/2024 by which Respondent has filed statement of account. The Respondent Bank also filed supplementary affidavitin compliance to the order dated 05/09/2024. In the second supplementary affidavit Respondent Bank has annexed documents by way of affidavit the entire statement of account.

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Perused the Emergency credit loan ECLGS operational guidelines dated 29/06/2023. The Respondent Bank has filed statement of account vide Annexure ‘C’. It is contended by the Respondent Bank by way of affidavit that if one account becomes NPA other account would automatically become NPA. Perused the ECLGS dated 30/03/2020and frequently asked question updated on 29/06/2023 As per the ECLGS scheme NPA is to be classified as per the RBI Guidelines i.e. Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances.

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Cash credit facilities if remains out of order as per paragraph 2.2 for a period of 90 days the same shall be classified as NPA. In the Cash Credit account if there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.

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Argument of the Ld. Advocate for the Applicant that the ECGLS credit scheme shall be debited from the borrower. The ECGLS though credited by the National Credit Guarantee Trustee Company but has to recovered from the borrower.

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In this case Respondent Bank has issued letter to the National Credit Guarantee Trustee Company about the default of the Applicant partnership firm and intimating classification of account as NPA as per Master Circular and ECGLS Scheme. Respondent Bank has filed evidence in their affidavit in opposition in 9 Volumes regarding compliance of Rule 8(1) and 8(2) etc. Therefore the arguments submitted by the ld. Advocate for the Applicant challenging the NPA is not tenable under the law. There is no merit in the SA. Hence the application under section 17 of the Sarfaesi Act challenging the measures taken by Respondent Bank under Sarfaesi Act is not maintainable and is liable to be dismissed . It is ordered:

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O R D E R

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SA/290/2022 is dismissed on contest against the Respondents. Consequently, pending I.A.s are also disposed of.

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Copy of the Judgment/Final Order be uploaded in the

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Tribunal’s website.

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File is consigned to the Record Room.

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(Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 29^th April, 2025.

(Ambuja Mohan Das)

Presiding Officer

	Order Sheet (continuation)
Case No. SA/2	90/2022 MINAKSHI ROY Vs. KOTAK MAHINDRA BANK LIMITED&	Anr.
Date of the Order	Order with Signature	Office action with date and dated Signature of Parties when necessary
29/04/2025	Present:
	For Applicant: Mr. Nimesh Misha and Ms. Sweta Gandhi, Ld. Counsels
	For Respondents: Mr. P. Pal and Ms. A. Ariff, Ld. Counsels Matter was heard in open Court on 25.02.2025. The detailed order in five pages annexed separately. The gist of the order is as follows: O R D E R
	SA/290/2022 is dismissed on contest against the Respondents. Consequently, pending I.A.s are also disposed of. Copy of the Judgment/Final Order be uploaded in the Tribunal’s website.
	File is consigned to the Record Room. (Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 29^thApril, 2025. (Ambuja Mohan Das) Presiding Officer

Minakshi Roy v. Kotak Mahindra Bank Limited

Case brief

What is this about?

What did the court decide?

Minakshi Roy v. Kotak Mahindra Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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