Dismissed

Shakthi Imaging and Diagnostic Pvt. Ltd. v. Tata Capital Financial Services Limited

DRT9 Jun 2025SA/483/2024

Case brief

AI extract

What is this about?

In an application challenging the appointment of an Advocate Commissioner under the SARFAESI Act, this Tribunal held that the existence of an arbitration clause does not preclude recovery proceedings under the SARFAESI Act. It further rejected the argument regarding non-registration of charges as a curable defect and dismissed the applicant's plea, allowing the respondent to proceed with recovery

What did the court decide?

The Securitisation Application was dismissed. The appointment of the Advocate Commissioner under Section 14 of the SARFAESI Act was upheld.

Shakthi Imaging and Diagnostic Pvt. Ltd. versus Tata Capital… — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL.I AT HYDERABAD

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DATED THIS THE NINETH DAY OF JUNE, 2025

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PRESENT: SH. RAMESHWAR KOTHE, B.Com., L.LB. (Hons.), M.A. PRESIDING OFFICER

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SECURITISATION APPLIATION No. 483 oF 2024

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Between:

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M/s. Shakthi Imaging and Diagnostic pvt. Ltd. H. No. 2-2-2/24/1/49/1, Soma Sundar Nagar D. D.Colony, Amberpet, Hyderabad-5000 13. Rep by its Director - S.//.S. Ranganath S/o S. Balanarsimhulu Naidu.

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.......Applicant.

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And

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M/s, Tata Capital Financial Services Ltd. Hyderabad, Plot No.3,4,5 & 6 Road No.3, Auto Paza Opp: Times of India, Banjara Hills Hyderabad-5000i4. Rep by its Authorised Officer.

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....Respondent.

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Counsel for the Applicant : Mr. V. Sethu Madhava Rao.

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Counsel for Respondents : Ms. Shireen Sethna Baria.

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-:ORDER:-

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Applicant filed the Securitisation Application u/s 17 oF the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act ") assailing the Advocate Commissioner notice dated Nil (received by Applicant on 03.t2.2024)

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sA 48312024

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appointed^{in Crl.M.P.No'578of 2024 on the file of the Chief} ludicial^{Magistrate-cum-PrincipalAssistant Magistrate' Kadapa} for taking^{the physical possessionof SA schedule assets'}

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The case^{of the applicant as per the aveiments of securitisation} application,^{in brief, is that applicant procuredScanning} Machines^{and other accessories from out of the funds pursuant} to a sanction^{letterdated04'08 '2022 and Master Lease} Agreement^{dated 09'08'2022 entered into betweenapplicant} andtherespondent.Theamountisrepayablebywayof monthly rentals^{in 60 months' Applicant became a little bit} irregular in^{paymentof monthly rental values' Respondent} initiated^{proceedings underthe provisionsof SARFAESI Act by} issuing demand^{notice and possession notice for recoveryof} dues^{from the applicant'The applicant is not a borrowernor the} respondent^{is a securedwithin the meaning of the provisions of} the SARFAESI^{Act. Clause 2L'4 of the Master LeaseAgreement} dated^{09'08.2022Stipulatesany disputes, differences or claims} arising^{betweenthe parties inconnectionwith the} interpretation,^{validity,implementation or effect' breachof} terms of^{the Agreement shallbe settled by the Arbitration in} accordance^{with the Arbitration and ConciliationAct' 1996'} Therefore,^{the action of respondent is contraryto the termsand} conditions^{agreed to between the parties' Further'the} applicant^{has not created any securityinterestin terms of} Section^{2(zf) nor executed any agreement under Section 2(zb)} of the^{SARFAESI Act' The respondenthas not compliedthe} provisions of^{Section26(b) of the SARFAESI Act in registering} the security^{with the Central Registry'Thus'the respondentis} not entitled^{to exercise the rigtr.t-s of enforcement of securities} /N#e

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sA 483/2024

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in terms of Section 26(d) of the SARFAESI Act, The other remedy available for the respondent is only to refer the matter to Arbitration or go to Civil Court and not initiation or proceedings under SARFAESI Act. The respondent suppressed material facts in the application u/s 14 of the SARFAESI Act filed before the Hon'ble Chief Judicial Magistrate, Kadapa and obtained orders by misrepresenting as if the subject properties are secured assets behind the back of the applicant. Hence the orders passed by the Hon'ble CJM, Kadapa are liable to be set aside. The present cost of the SA schedule assets is Rs.14 crores and the respondent is adopting short cut method to obtain unlawful gain under the guise of SARFAESI proceedings. In the legal notice issued through its counsel M/s. Kochhar & Co., the respondent admitted the transaction as lease. The Lease matters are governed by the provisions of Transfer of Property Act, the respondent has to approach only the Civil Court and not even arbitration to decide the right and obligation of Lessor and Lessee.

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Respondent Company filed the reply statement denying the averments of the applicant. The applicant admitted of executing Master Lease Agreement and its liability to pay the amount. However, applicant is trying to avoid payment of dues. The arbitration clause in the Master Lease Agreement does not preclude the respondent from invoking the provisions of SARFAESI Act. It is settled law that it is the choice of secured creditor whether to proceed with arbitration proceedings or invocation of SARFAESI proceedings. It is submitted that the applicant is the borrower within the meaning of Section 2(lxf), respondent is the secured creditor within the meaning of (-)/ 7fuu,^(

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sA 48312024

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Section^{2(1)(zd) of the SARFAESIAct' the transaction between} the^{parties is a security arrangementand the securityinterest} is created^{under the Master Lease Agreement'As per the} proposition of^{law laid down by the Hon'ble SupremeCourt in} Transcore^{vs. Union of India & Anr' (2008) 1 SCC 125 and M'D'} Frozen^{Foods ExportsPvt' Ltd' & Ors' Vs' Hero Fincorp Ltd'} (2017) SCC^{OnlineS'C' 1211' the proceedingsunder SARFAESI} ActandArbitrationActcanpursuedSimultaneously'The transaction^{betweenthe applicantand the respondent beinga} financial^{lease, Section 2(ma) of the SARFAESIAct appliesto} the^{presentcase'Similarly'the SA schedule propertybeinga} product of^{"financial lease"'it is covered under the definition of} ..securitylnterest,,underSection2(zf)(i)oftheSARFAESIAct. Thus, no^{irregularity is committedby the respondentin} initiating^{proceedingsunderthe provisions of SARFAESIAct'} Registration^{of charge of securedcould not be effectedthrough} on-line^{processdue to absence of relevant provisionin CERSAI} Portal.^{Hence, it was not a deliberate inaction and the sameis a} curable^{defect.Registrationis made to protectthe rights of a} bank as^{a proofof mortgage'The non-registration of chargein} no way^{cause any prejudice to the borrower' Therefore' the} order of^{the ClM, Kadapaand the actions of Advocate} CommissionerareinconformitywiththeprovisionsofSection 14 of the^{SARFAESI Act' In view of the above facts and} circumstances,^{the SA is liable to be rejected'}

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4,Heardlearnedcounselappearingfortheapplicantandthe learned^{counsel appearing for the respondent' Perused the} written^{argumentsfiled by both the partiesand the material} brought^{on r.rora.} ffitvte

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sA 483/2024

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5' Learned counsel appearing for the applicant, whire reiterating the pleadings taken in the SA, relies on the judgement of Hon'ble High Court of Judicature at Bombay in W.p. No. 2935/ 2018 in lalgaon Janta Sahakari Bank Limited and Others vs. Joint Commissioner of Sales Tax, Nodal_9 and Another in support of his contention that unless the secured interest created by the borrower is registered with the CERSAI neither can the borrower seek enforcement invoking the provisions of Chapter-Ill nor does the question of priority in payment would arise without such registration. Thus, the respondent in the present case is hit by the mandatory pre_condition under section 26(D) of the SARRAESI Act. Learned counsel would further contend that as per the principles laid down by the Hon'ble Supreme Court in decided cases, the Arbitrator has no power to adjudicate the issues in respect of mortgage.

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Per contra, learned counsel appearing for the respondent submits that the very prayer of applicant to declare the order passed by the Hon,ble Chief Judicial Magistrate, Kadapa in Crl. M.P. No. S7B/2024 as null and void, is against the provisions of Section 14 of the SARFAESI Act. The other contentions of debtor-creditor rerationship, creation of securitisation interest and non-registration of charges of secured assets under CERSAI, are contrary to the Sections 2(1)(f),2(1)(d), 2(ma), 2(zt) and 2(zd) ot the SARFAESI Act. Learned counsel relies on the judgement of Hon,ble Supreme Court in M.D. Frozen Foods Exports Pvt. Ltd. & Ors. Vs. Hero Fincorp Ltd. in C.A. I5L47 of 2017 decided on 21.09.2017 (20t7) 13 SCR B0O, judgement of Hon'ble Supreme Court in Transcore vs. Union of India & Anr. (2008) 1 SCC 125 in support of his submissions. In so far as ow*

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s A48312024

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thenon.registrationofchargeswiththeCentralRegistry,learned^{counsel seeks to rely on the screen shots of CERSAI} portaltoprovenon-availabilityofrelevantoptionintheCERSAI Portal'

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The^{points for consideration are as follows : -}

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i) Wherher^{the APPlica'lt.:'l:} "'' o valid^{gouni' 7o' interdictingthe} u/s P'o"'ari['*"i':t$'nt,bank iZ" i)nPins 'q"^initiated 14 'f against^{tn' iittnuduleProPerties?} ii) To what^relieJ?

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Point^{No' (ir:}

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B.Thefirstandforemostcontentionoftheapplicantisthat respondentisnotentitledtoinvoketheprovisionsofSARFAEI Actinthepresenceofanarbitrationmechanismforresolution ofdisputes.AspertherespondentCompany,thefinancial arrangementextendedtotheapplicantbywayofthesubject agreementwasRs.g.60croresandtheoutstandingduesaSper thepossessionnoticedated30'o7.2o24wereRs.B,1B,o0,31U-. Whiletheapplicantaversinpara6oftheSAthatanydispute ordifferencearisesoutoftheMasterLeaseAgreement, respondentshallinvokeclause2L.4oftheAgreement,it negatesthesameatparatzoftheSAthatthedisputes betweenaLessorandLesseeisthesubjectmatterofaCivil Court.Infact,thereisnodenialofavailmentoffinancial assistancefromtherespondentunderaLeaseAgreementdate og.oB.2022anddefaultinrepayment.Itisnotthecaseofthe applicant^{that respondenttook the} "WrY surprise

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sA 483/2024

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obtaining^{warrantu/s 14 of the SARFAESIAct' Accordingto its} own^{version,applicant was served with aNotice dated} 05,o4,2o24throu9h^{Kochhar & Co', on behalf of the respondent}

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Company^{forclearing lease rentals amountingto} Rs.8,05,99,387/-^{outstandingas on 04'03'2024' The Notice} dated^05'04 '2024^{was preceded by two more noticesdated} 24.!l.2O22and^{12'01'20 23' Paft 15 of the said notice notifies}

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respondent's^{intention toinitiate proceedingsunder the} Insolvency^{anO eant<ruptt'tod"' 2016 and/orproceedings} invocation^{of arbitrationclause'}

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under^{the SARAESi ;';t} havins^{t*i::::::JH"T:}

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rhere^{is no whisper} ""ooi*"t a ate^{o o s' o +'2024 or} :^""""",.il rT ". ::'f : " I" :I:*:^{: :}

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discharse^{or liabilitv} dearins^with

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";^{;;r;"21,3 or ,lln,'"n,}

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nore Lease^{sub-clause Renrars of (ii)n""'*;;;, rrr.} ,".r" ::j:,"s rhar the Lessor ,u'roo,.,,on,,^,::::r;

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.,Governine t*^tli"i;" rakins^proceedinss (Respondent)^*t'lr";:";" or"r**o other^lto, llLl., *,,n jurisdiction. possession^norice

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referred^therein :"; . fnotortut *11 ,n"^{appricant to rhe}

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Applicant^{ulto Plutt'u*,nn} ,"n,, jL"* does not seem ro dated^{30'07''o'1,"o"ro.os.zo24.} Applil""o,n" liabir*y.^Thus,

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demand^{notice d?Lcu} nor^dischar! raised^{the issuesor}

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"'r"a"

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have^respondedt r^{s verv .,"",,:,1::,"':i} ::H[ :1':i::[::il"; tto':;:';;sent sn. .::'h

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invocation " the^{rirst time in} :1" ::;;"r^{riline or :} sA :l ),""'o'"^{i.e., os.rz.zoz4,.""r,rr"o} :,f .Jil.;; ; rhis ber ated 1:ffi"'A#-L as^{an afterthought for the purposeof >}

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sA 483/2024

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g' As regards the citation of appricant in Jalgaon Janta sahakari Bank Limited and Others vs. Joint Commissioner of Sales Tax, Nodal_9 & Another _ W.p.No.29 at sr Nos 74, )1,',rlo,rru'r,Ir:ffi:TJil, ;:::jilT,ent rn fact, ,n:".r,on, 26(8), 26(D) and 26(E) of the SARFAESI Act. cited case deals more creditors 'r the disability of secured tnu claims. *1..u"o"'nn 'u.u,with interest and prioritv or tuo'": ;;"t ; t, ;itv on-rine ,.,1r1'-u -;; :;,'n" rapse beins a slitch in the respondent'"t":-^{or the} learned counsel for the tnu' tnu o-"'l'' ' deern it "oo-1:t:t:t ts curable' In this reoard' I ,, ,roro.,"oto^l,tr1e^to '""'", *", para 183 ", .l]^{tf" oo'utuutrrr';;} "" prea of the respJndent r83 or,nu.,,tLu^{t'luo;'os";u";r. or the Hon'bleHigh Court at} c i a ti o n, p a ra e d j u d s e m e n; ;; ;" ;.".::"'." :T il : ^

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"183. pe

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W*.*r.Ww

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In view of the t thar siven ; :::::.,"sition, r arn oF records straishr )PPortun;1,, .;J ;r::j:e.considered opinion resisrrarion cure the .";;"f":t^lvourd make the "r.".ll,l ruritv interest,,ri ,n" aai;'il""tn with the 10. or rhe various responden's ;;;"."1:T:,"r, conrendec of Arbtration ,o^.o.rl ^"t^1 "" appricanr, addressed ,n ,,.," "r0,"1_"1:.,,r, ^.l11ci'riation ^.; ;; proceedinss in prace observe ;; ffi^{,";:::"::r,":{} . , rLErv,ng notices""'ffi''ll'u ilT ::}::;":: to t''u':;

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sA 483 /2024

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applicant has not taken any action either to clear the dues or to protest over the Securitisation proceedings till the filing of the SA. Even in the entire SA averments, applicant chose to attribute lapses on the part of the respondent without there being any^proposal to clear the dues. The SA schedule assets are MRI scanning related systems. These items were^procured in the year 2022. fhe equipment is used by the applicant for the^purpose of carrying out the requisite tests on the^patients since then. Therefore, applicant is making an earning out of the equipment procured from out of the loan amount. The machinery is prone to depreciation both the quality and value wise. Though in para 6 of the SA averments applicant admits of default in repayment, no commitment is made about the repayment even in future. The total value of the machinery involved in the process of arranging it through lease agreement was Rs.9.60 crores. As per the applicant's own admission, it paid Rs.2.02 crores in addition to security deposit of Rs.1.28 crores. The outstanding dues mentioned in the^possession notice dated 30.07.2024 were Rs.8.18 crores, Mere repetition of procedural lapses on the part of secured creditor does not make the borrower's case strong in the absence of repayment as per the agreed terms, Under such circumstances, I do not see any infirmity on the part of respondent in electing the SARFAESI proceedings for recovery of its dues in^place of a rbitration .

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It is the submission of the respondent Company that in terms of the provisions of Sections 2^(ma) dealing with^"financial lease", Section 2(zf) dealing with "Security Interest" and Section^(zd) dealing with "Secured Creditor", it is1lear that^the ffiu"

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sA 483/2024

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provisions of the SARFAESI Act are very well applicable to the dispute covered in the SA and there is no infirmity or illegality in the measures taken by the respondent under the provisions of the Act for recovery of dues from the applicant. In view of the clear position of the Act, the contentions of the applicant in respect of these issues are not proper and baseless. Hence no irregularity or infirmity can be attributed to the respondent Company in proceeding against the secured asset for recovery of its dues,

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12, In view of the foregoing observations, the applicant has failed to make out any valid ground to interdict the action of respondent Company for appointment of Advocate Commissioner u/s 14 of the SARFASI Act for the purpose of taking the physical possession of the secured assets for recovery of outstanding dues. Therefore, the SA is devoid of any merits and is liable to be dismissed accordingly.

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Point No.(ii):

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In the result the SA fails and is hereby dismissed.

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t4. Consequently, Interlocutory Applications pending, if any, shall stand closed. No order as to costs.

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Communicate a copy of this order to the parties concerned and upload in official Web^portal.

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(Dictoted to the Steno, corrected, signed and pronounced by me in the open court on this the 9th doy of June, 2025).

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/7W**' (RIMESHWAR KorHE) PRESIDING OFFICER

Shakthi Imaging and Diagnostic Pvt. Ltd. v. Tata Capital Financial Services Limited

Case brief

What is this about?

What did the court decide?

Shakthi Imaging and Diagnostic Pvt. Ltd. v. Tata Capital Financial Services Limited

Case brief

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What did the court decide?

What the court decided

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