Dismissed

Anil Ragho Sali v. Small Industries Development Bank of India

DRT29 May 2025SA/351/2024

Case brief

AI extract

What is this about?

In a securitisation application, the Debts Recovery Tribunal dismissed the petition filed by suspended directors of a company under liquidation. The court held that liquidators alone possess legal authority to challenge sale proceedings, not suspended directors, and confirmed that the bank followed proper statutory procedures.

What did the court decide?

Application dismissed without costs as suspended directors lack locus standi and statutory procedures were duly followed.

Anil Ragho Sali versus Small Industries Development Bank… — Execution and Attachment | DRT (2025)

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Presented on: 05.10.2024 Registered on: 05.10.2024 Decided on: 29.05.2025 Duration: Y M D 7 24

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IN THE DEBTS RECOVERY TRIBUNAL AT AURANGABAD (Before Shri Dr. J. R. Chauhan Presiding officer)

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SECURITISATION APPLICATION No.351/2024

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Anil Ragho Sali , Age: 63 years,

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Ujwala Anil Sali , Age: 59 years, Both R/o. of Plot No.RM-31, MIDC, Ahmednagar, 414111 Maharashtra.

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Suspended Directors of

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M/s. Ujwal Electrical Stampings Pvt Ltd , Through Its Directors Anil Ragho Sali & Ujwala Anil Sali, At L-31, MIDC Ahmednagar-414 111, Maharashtra.

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…….. APPLICANTS

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Versus

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1.The Authorized Officer Small Industries Development Bank of India (SIDBI) Registered Office, Swavalamban Bhavan, Avenue-3, Lane-2, C-1, G-Block, Bandra Kurla Complex, Bandra East, Mumbai – 400 051

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[DAK] (SA No.351/2024) Page 1 of 13

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Small Industries Development Bank of India (SIDBI) 305 & 305A, 3^rd Floor, Kakade Bizicon, Pune – Vdyapeeth Road, CTS No.2687B Esquare, Shivaji Nagar, Pune-411 005.

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The Ahmednagar Merchants Co-Op. Bank Ltd. Market Yard, Ahmednagar – 414 001.

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Manoj Kumar Mishra Liquidator of M/s. Ujwala Electrical Stampings Pvt Ltd Office No.18, 3^rd Floor, 84/Dholakawla Bldg., Janmabhoomi Marg, Fort Mumbai – MH 400 001.

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M/s. Ujwal Electric Motors Pvt Ltd. Through its Directors Anil Ragho Sali & Ujwala Anil Sali, Plot No. C-1, MIDC, Newasa, Post – Shingwetikai, Ahmednagar – 414607- Maharashtra.

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……….RESPONDENTS

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APPEARANCES

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For the Applicants Mr. B. S. Chondhekar - Advocate For Respondent No. 1 Mr. A. S. Pathak – Advocate For Auction Purchaser Mr. Akshay D. Kulkarni For Respondent No.2 None. For Respondent No.3 None. For Respondent No.4 None.

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[DAK] (SA No.351/2024) Page 2 of 13

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APPLICATION U/S. 17(1) OF SARFAESI ACT

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J U D G M E N T (Delivered on 29^th May, 2025)

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The applicants have filed this Securitisation Application Under Section 17(1) of The Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (In short ‘’SARFAESI Act”).

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The facts of the case are as under:

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The Applicants are the Suspended Directors of M/s. Ujwala Electrical Stampings Pvt Ltd. The applicants submit that the respondent no.1 is corporation established by Small Industries Development Bank of India Act, 1989. The respondent no.2 is Co-operative Bank established under the Maharashtra Co-operative Societies Act, 1960. The respondent no.3 is the Official Liquidator of M/s. Ujwala Electrical Stampings Pvt. Ltd. The applicants are the Directors of the respondent no.4. The applicants contended that they are the lease holders/owners of the schedule properties i.e. all that piece and parcel of plot no. L-31 MIDC Area at Ahmednagar Industrial Area, village

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[DAK] (SA No.351/2024) Page 3 of 13

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Nimblak, Taluka and District Ahmednagar.

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The applicants contended that the respondent no.1 has advanced certain loan facilities to the Ujwala Electrical Stampings P. Ltd which is under liquidation by virtue of order passed by Hon. National Company Law Tribunal, Mumbai. The total loan facility is of Rs.880 lacs under Growth Capital and Equity Assistance Scheme for MSMEs (GEMs) scheme.

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The applicants submit that as per the demand notice dated 13.10.2017, the applicants were irregular in repayment in the loan accounts, therefore, accounts classified as NonPerforming Asset (NPA) on 11.05.2017. Thereafter, the respondent no.1 issued notice dated 13.10.2017 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002. The applicants have mentioned certain loopholes regarding issuance of notice u/sec. 13(2) in their application. The alleged notice U/sec. 13(2) was signed by one Pankaj Mishra while notice U/sec. 13(4) was signed by different further contended that the person. They respondent no.1 has to file proof of authority of Pankaj

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[DAK] (SA No.351/2024) Page 4 of 13

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Mishra and another signatory in what capacity they have issued alleged notices. It is admitted fact by the respondent no.1 that the applicants never created charge in respect of the immovable property. The respondent no.1 has taken symbolic possession of the said assets allegedly u/sec.13(4) of the said Act, but the action taken by the respondent no.1 is illegal and bad in law.

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The applicants further contended that on 10.07.2024 the defendants sent a letter to the applicants mentioning therein that by sale notice they took physical possession of the factory land and building of Ujwal Electrical Stampings P Ltd under SARFEASI Act, 2002. However, the applicants have not been served copies of order passed by the District Collector and notice issued by the Tehasildar in respect of taking physical possession. Thus, all the above actions of the respondent no.1 giving go by to the provisions laid down in the SARFEASI Act, 2002. Therefore, the action taken by the respondent no.1 is illegal, without following due procedure of law and same is required to be set aside.

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The applicants further contended that the alleged auction sale notice, the reserve price fixed is much lower than the

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[DAK] (SA No.351/2024) Page 5 of 13

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actual valuation report carried by Ahmednagar Merchants Co-op Bank Ltd. It has shown the value of plant and machinery as more than Rs. 10 Crores and it is much lower side than the valuation carried in the year 2016.

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The applicants further contended that in the E-Auction Sale notice dated 09.01.2024 and possession notice dated 14.12.2017 issued against M/s. Ujwal Electric Motors P. Ltd few machineries are included, therefore, there is variation of fact. In short, the main contention of the applicants that the Auction Sale fixed on 28.10.2024 through notice dated 20.09.2024 be set aside and it be declared as illegal.

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The respondent no.1 (SIDBI) has filed its reply and denied all the allegations averred in the application. The respondent no.1 contended that the applicant Anil Ragho Sali is guarantor of the subject loan. He is not the borrower or the owner of the secured assets. It is contended that before the notice of sale notice dated 20.09.2024, the redemption notice dated 10.07.2024 was issued to all the concerned i.e. the borrower and guarantors of this loan account, but none of them replied the said notice or has shown willingness for redemption of the assets. Therefore,

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[DAK] (SA No.351/2024) Page 6 of 13

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all the rights of the borrower, guarantors and the mortgagors have extinguished. The applicants have no locus standi to file the present application.

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The respondent no.1 further contended that the liquidator has also admitted the charge of SIDBI over the said assets. The possession notice was delivered to the applicant Anil Sali in person and duly signed and acknowledged. Therefore, from the above facts, it can be gathered that the applicants are not coming with clean hands before this Tribunal and suppressing the real and material facts. The said notice was duly published on 28.12.2017 in two newspapers, hence all the provisions of law are duly and properly complied with. Thereafter, the order u/s.14 of SARFAESI Act was passed on 09.08.2019 by the District Collector, Ahmednagar in connection with physical possession of the said asset which was taken by the respondent no.1 in accordance with Law.

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It further contended that the symbolic possession was given by the applicants itself and they have not challenged the same within stipulated period. So also, the order u/sec.14 was obtained and thereafter physical possession of the

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[DAK] (SA No.351/2024) Page 7 of 13

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security asset was taken. The applicants have no right to act on behalf of Liquidator; as possession is taken from the official Liquidator as per the guidelines in IBC. The valuation is conducted by approved valuer and valuation is done as per law. He further contended that it is admitted fact that the borrower company is under liquidation by virtue of orders passed by NCLT Mumbai. The official Liquidator has allowed SIDBI to proceed under SARFAESI Act and to auction the properties as per the provisions of Law. It has further stated that the auction has already been conducted and the machinery and immovable property is already sold at more than the reserved price. The respondent no.1 contended that the notice u/sec.13(2) was issued in the year 2017, symbolic possession notice was given in the year 2017, the physical possession of the assets was taken in the year 2019 and the applicants have kept mum all these years. Though the applicants have sufficient time to challenge the action in time and redeem the assets, but applicants failed to do so. Therefore, the respondent no.1 lastly prayed that considering the facts and circumstances as well as the orders passed by NCLT

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[DAK] (SA No.351/2024) Page 8 of 13

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Mumbai, the applicants are not entitled to the relief as claimed. So also, the relief claimed is not in limitation and it is time barred. The present Securitisation Application needs to be dismissed with costs.

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I have heard the arguments of learned counsel for the applicants as well as learned counsel for the respondents and gone through the material on record thoroughly and carefully and my findings are as under:

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Admittedly, the Ujwala Electrical Stampings Pvt Ltd had taken three loans worth Rs.880 lacs as details in para no.5.8 of the Securitisation Application. This company has failed to repay the loan amount as per schedule of the bank and ultimately loan account was declared as NPA on 11.05.2017.

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The Ujwala Electrical Stampings Pvt Ltd went into liquidation vide order dated 05.05.2022 (Exh.A) passed by NCLT, Court No.5, Mumbai Bench and respondent no.3 was appointed as liquidator. The present applicants have filed the Securitisation Application in the capacity of suspended Directors of Ujwala Electrical Stampings Pvt Ltd. When the company has gone under liquidation and present respondent no.3 has been appointed as liquidator vide

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[DAK] (SA No.351/2024) Page 9 of 13

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order dated 05.05.2022 (Exh.A-1), thereafter the present applicants being Suspended Directors of the company have no locus standi to file the present application under SARFAESI Act as the respondent no.3 being liquidator is the only competent person to move before the court or the Tribunal for any proceedings required but the liquidator has not filed any application under SARFEASI Act.

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Vide order dated 05.05.2022 (Exh.A), all power of the board of directors, key managerial persons, the partners of the Corporate Debtor hereafter ceased to exist. All these powers henceforth vest with the Liquidator. The applicants now cannot be claim as lease-holder/owner of the schedule properties as the M/s. Ujwal Electrical Stamping P Ltd which is a distinct legal entity and under liquidation. Therefore, the Securitisation Application filed by the applicants even not maintainable in the present form.

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Even otherwise, the case of the applicants is not sustainable on merits as the respondent bank has proceeded further against the company for recovery of the amount after following proper procedure. The demand notice u/sec. 13(2) of the Securitisation Act was issued on 13.10.2017. The

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[DAK] (SA No.351/2024) Page 10 of 13

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respondent bank has also obtained order from the District Magistrate on 09.08.2019. The respondent no.1 has placed on record mortgage executed by the applicant company and the concerned as Annexure – 3 and hence, the respondent no.1 has been established as secured creditor. It may be noted here that at earlier occasion the notice of possession and demand notice were challenged by filing Securitisation Application No.415/2022 which was disposed of on 09.10.2023 and now this Securitisation Application on the same grounds is not sustainable.

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The possession notice was duly published on 28.12.2017 in two newspaper and was also pasted on the outside of the asset. The respondent bank has produced on record publication of notices of newspaper as A-4 and A-5 dated 27.12.2017. Therefore, all the provisions of the Law are duly and properly complied with.

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It may be noted here that the liquidator moved the application for withdrawal of IA No. 4931 of 2024 before NCLT Mumbai as Exh.A-7 and NCLT Mumbai passed order on this application on 25.11.2024 whereby prayer for seeking withdrawal IA No.4931 of 2024 was allowed. The

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[DAK] (SA No.351/2024) Page 11 of 13

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learned counsel for the applicant liquidator submitted before Hon’ble NCLT Mumbai that SIDBI has already auctioned successfully the property. In view of this submission, the Interlocutory Application was permitted to be withdrawn by the liquidator. On passing this order by the NCLT Mumbai Annexure A-8 dated 25.11.2024, the respondent no.1 bank has been allowed to proceed with the auction. Moreso, it was admitted that SIDBI has already auctioned the property successfully. It is the liquidator only who can challenge the sale proceedings of the secured properties and present applicant being Suspended Directors of the company under liquidation have no legal right to challenge the possession as well as auction proceedings conducted by the respondent no.1. Therefore, the present Securitisation Application moved by the applicants is not sustainable and same is liable to be dismissed.

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Hence, I pass the following order.

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ORDER

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(A) The Securitisation Application No.351/2024 is hereby dismissed with no orders as to costs.

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(B) Pending Interlocutory Applications, if any, stand

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[DAK] (SA No.351/2024) Page 12 of 13

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disposed of in terms of this judgment.

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Place : Aurangabad. Date :29.05.2025.

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Sd/(Dr. J. R. Chauhan) Presiding Officer Debts Recovery Tribunal, Aurangabad

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[DAK] (SA No.351/2024) Page 13 of 13

Anil Ragho Sali v. Small Industries Development Bank of India

Case brief

What is this about?

What did the court decide?

Anil Ragho Sali v. Small Industries Development Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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