Dismissed

M K Sathya Narayana Prasad v. Equitas Small Finance Bank Limited

DRT7 Feb 2025SA/384/2022

Case brief

AI extract

What is this about?

The Chennai DRT dismissed a Securitization Application challenging a Section 14 order passed by the CJM Thiruvallur. The court held that the applicants failed to file within the 45-day limitation, the Magistrate’s order was purely executory under Section 14(3) and could not be questioned, and the settlement offer lacked financial credibility. The application was dismissed.

What did the court decide?

Securitization Application No. 384/2022 dismissed; Section 14 Order dated 12.07.2022 held valid; no interference required; interim orders vacated.

M K Sathya Narayana Prasad versus Equitas Small… — Contract and Commercial Disputes | DRT (2025)

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SA No.384/2022 (C)

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07.02.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 07^th day of February, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 384 of 2022

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K. Sathya Narayana Prasad S/o Kesava Rao

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No.41, Gandhi Street, Railway Station Athipattu, Chennai – 600 120

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Mr. Venkatanarendran

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S/o Prasad

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No.41, Gandhi Street, Railway Station Athipattu, Chennai – 600 120 ….Applicants -Vs-

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M/s Equitas Small Finance Bank Limited (Formerly known as M/s Equitas Finance Limited) Office at F-39, Spencer Plaza No.769, 4th Floor, Phase – 2 Anna Salai, Chennai – 600 002 Rep. by its Authorised Officer ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : Smt. Thenmozhi Shivaperumal Counsel for Respondent : M/s Kvp Deepak Raj

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ORDER ON SA No. 384 OF 2022

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The present Securitization Application [SA] is filed on 29.08.2022 under sub section [1] of S.17 of the Securitization And Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicants are borrowers, who have filed the present S.A impugning to set aside/quash order dated 12.07.2022 passed by the Ld. CJM, Thiruvallur, in Crl.

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SA No.384/2022 (C)

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07.02.2025

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M.P. No.3969 of 2021 pursuant to action initiated by respondent bank under Section 14 of the Act for recovery of a sum of Rs.6,03,602/-.

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The Applicants are the borrowers, who had availed financial assistance in the form of Loan against Property from respondent bank in a sum of Rs.5,90,000/- on 30.06.2016 and offered their residential house morefully detailed in schedule to the SA and mortgaged the property by deposit of title deeds on 06.07.2016.

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The Applicant submits that he had made the payments promptly and had remitted Rs.3 lakhs on various dates by way of EMI. However, due to Pandemic Covid-19, applicants suffered loss of income and moreover on 19.10.2019, first applicant lost his wife due to sudden illness. As the applicant failed to repay the said loan installments and the Bank had recalled the entire loan account and consequently the account has been declared as NPA.

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It is submitted that the Bank has issued Demand Notice under Section 13(2) of the SARFEASI Act dated 08.11.2019. Thereafter, respondent bank had approached CJM at Tiruvallur under Section 14 of the Act for obtaiing physical possession of the property

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In the grounds it is alleged that

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(i) out of the borrowed amount of Rs.5,90,000/- applicant had remitted Rs.3 lakhs, however respondent bank without considering the payments made had initiated the SARFAESI action.

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(ii) no reasonable opportunity has been given to appellant to explain his position or to make one time payment

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SA No.384/2022 (C)

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07.02.2025

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(iii) respondent bank without following the RBI guidelines during Pandemic Covid-19, respondent bank resorted to evict the applicants from their residential house

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(iv) the respondent bank failed to note that the property is worth about Rs.30 lakhs, while the outstanding due is less. Applicants are willing to settle the matter under OTS, provided some time is granted.

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On these grounds, the applicant has prayed to set aside the measures taken by respondent through the order made in Crl.M.P. No.3969 of 2021 dated 12.07.2022 passed by CJM, Thiruvallur.

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The respondent bank has filed their objections interalia contending that the S.A is not maintained either in law or on facts and has to be dismissed in limine.

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The respondent bank has sanctioned a Term Loan of Rs.5,90,000/- on 30.06.2016. As the applicants were irregular in repayment of EMIs, the account was declared as NPA on 08.11.2019. Hence, the bank has initiated measures under the SARFAESI Act and have issued Demand Notice dated 16.12.2019, which was duly served to applicants and applicant’s wife (since deceased). As applicants did not come forward to make the payments, respondent bank issued Possession notice dated 16.09.2020, which was duly served, affixed and published in two leading newspapers having sufficient circulation as contemplated under Rule 8(1) and 8(2) of SIE Rules, 2002.

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It is contended that though the respondent had initiated recovery proceedings in the year 2019, an order to take physical possession of the property was passed only on 12.07.2022 and till date applicants did not come forward to pay their legitimate dues to the respondent bank.

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SA No.384/2022 (C)

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07.02.2025

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It is further contended that apart from complying with conditional order payment of Rs.1,18,400/- applicant did not make any other payment.

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Ld. counsel for respondent bank submitted that there are no infirmities in the procedure adopted by the respondent bank while initiating measures under SARFAESI Act and prayed for dismissing the SA.

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Heard the Learned Counsels appearing for the respective parties and pursuing the records of the case.

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Admittedly, the Applicant has availed loan and has mortgaged the property as collateral security towards the credit facilities availed.

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There is no dispute with regard to the default in the repayment towards the loan account, hence the Respondent Bank has classified the account as NPA, as per the RBI guidelines.

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It is also an admitted fact by Applicant, that the Respondent Bank had issued a Demand Notice under section 13(2) of the SARFEASI Act dated 16.12.2019 calling upon the Applicant to make the payment of Rs.6,03,602/- within 60 days, which is duly served to the applicants as evident from postal track reports filed along with typed set of documents by respondent bank.

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Evidently, the Applicant has neither cleared the liability within 60 days but had only sought time for regularizing the loan account. After the expiry of 60 days, the Respondent Bank issued Section13(4) possession notice and have taken symbolic possession. Even after issuance of Possession Notice as borrower did not come forward to repay the dues, respondent bank approached Ld. CJM, Tiruvallur for obtaining physical possession of the property.

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SA No.384/2022 (C)

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07.02.2025

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The records of the case clearly reflect that the Applicants are aware of the issuance of demand notice dated 19.12.2019 and the possession notice dated 16.09.2020, however has not chosen to prefer an application before the Tribunal under Section 17(1) of the SARFEASI Act, within the period of 45 days.

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The applicants have failed to establish any violation or infirmities in the procedures initiated by the respondent bank and has failed to substantiate their averments in preferring this application challenging the Section 14 order.

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Even otherwise, the act of the Magistrate is only executive in nature who would consider whether the measures taken by the secured creditor are in accordance with Act based on the documents produced and after due compliance of S.14 (i) to (ix). Accordingly, the Hon’ble CJM at Thiruvallur has passed the Order dated 12.07.2022 in Crl.M.P. No.3969/2021 which does not require any interference of this Tribunal.

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In fact, the applicant has failed to point out any illegality in the S.14 application or in the affidavit filed; on the contrary have raised the contention in respect of the issuance S.13(2) demand notice dated 19.12.2019 and S.13(4) possession notice dated 16.09.2020, which is not within the prescribed period of 45 days under S.17[1] of the Act to challenge the measures initiated by the respondent bank.

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On careful examination of the pleadings and the documents produced by both the parties, it is evident that the respondent bank as secured creditor has enforced the security available to them under the Act as prescribed. The applicant has failed to make out a case of interference of this Tribunal in the S.14 order

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SA No.384/2022 (C)

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07.02.2025

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Even otherwise as per S.14(3) -No act of the Chief Metropolitan Magistrate or 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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The applicant after conclusion of the arguments submits that they intend to settle the liability and an affidavit is also filed.

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On perusal of the affidavit it is seen that the applicant is only acknowledging the loan availed and the payments made though applicant has filed an affidavit containing that he would pay the balance amount, the balance amount is not as per the outstanding amount due in the loan account.

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Counsel for the bank submits that the outstanding loan amount due is Rs.14,92,000/- as on 06.02.2025.

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In the circumstances, an opportunity is given for the applicant to approach the bank for any amicable settlement within a week’s time.

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For the forgoing reasons, the present SA No. 384/2022 is only to be dismissed.

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Accordingly, S.A No.384/2022 stands dismissed. The S.14 Order dated 12.07.2022 passed by the Hon’ble Chief Judicial Magistrate, Thiruvallur doesn’t require any interference from this Tribunal and hence the same is held as valid.

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Interim Order granted if any stands vacated. Pending IA/s if any are disposed of in terms of this Order. No order as to cost.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER,

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DRT-III, CHENNAI

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(Dictated to PS, transcribed by her, corrected, signed and pronounced by me on this the 07^th day of February, 2025)

M K Sathya Narayana Prasad v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

M K Sathya Narayana Prasad v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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