Dismissed

Resolution Enterprises and Ors. v. Axis Bank

DRT3 Jul 2025SA/66/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a SARFAESI application by Resolution Enterprises challenging Axis Bank's demand and possession notices. The Court held that despite a subsequent newspaper notice suggesting withdrawal, the earlier notice remained valid. It also found compliance with rules regarding possession notice publication and service.

What did the court decide?

SARFAESI application dismissed on contest with interim order vacated.

Resolution Enterprises and Ors. versus Axis Bank — Banking and Recovery | DRT (2025)

¶1

BEFORE THE DEBTS RECOVERY TRIBUNAL-III KOLKATA PRESENT: -SRI KAN4AL DE.

¶2

PRESIDING OFFICER

¶3

S.A. No. 66 OF 2024

¶4

DATE OF DELIVERY OF ORDER i 03.07.2024

¶5

Resolution Enterprises of AE 783, Sector-I, Salt Lake City, Kolkata700064.

¶6

Shrirup Roychoudhary of CJ 315, Sector-Il, Salt Lake City, Kolkata700091.

¶7

Sharmistha Roychoudhary of CJ 315, Sector-Il, Salt Lake City, Kolkata700091.

¶8

... Applicants

¶9

rhe Authorized officer, Axis;:flt:;*r, structured Assets Group-East, CRG, 1, Shakespeare Sarani, 4th Floor, A.C. Market Building, Kotkata_ 70007 t.

¶10

Axis Bank Limited, SME Deparment, A.C. Market Building, 1, Sharespeare Sarani, 3d Floor, Kolkata-700071.

¶11

¶12

... Respondents.

¶13

Counsel for the Applicants: - ... N'lr. Prasenjit^pal Counsel for respondent Bank.:- ... Mr. Avishek Guha Mr. K.D. Sarkar

¶14

JUDGEMENT

¶15

The Sarfaesi Appljcant f ed the present SA being No. S.4./66/2024 on 17.01.2024 being aggrieved by and dissatisfied with the impugned notice under Section 13(2) of the SARFAESI Act, 2OO2 dated 06.07.2024; repty dated 12.09.2023 made by the respondent No.1 and possession notice under section 13(4) of the SARFAESI Act, 2oo2 dated 01.12.2023 and subsequently order dated 1t.12.2024 passed by the Ld DM, North 24 Pa rganas.

¶16

SA applicants'case in short is that the applicant No.1 is a partnership fjrm and the applicant Nos. 2 and 3 are the partners thereof. The applicant No.1 availed credit facitity from Uco Bank in the year 2014. The said Bank had sanctioned a credit facility to the extend of Rs.3 crore to the applicant No.1. The applicant No.1 in the year 2015 shifted its loan account to State Bank of India, who sanctioned a cash credit limit of Rs.7 crore against mortgage of property situated at AE-783, Sectorl and lien on a flxed deposit of Rs.1 crore in its business. The said State Bank of India was not inclined to enhance the existing cash credit limit of Rs.7 crore. In such circumstances, Axis Bank Limited approached the applicants to take over its existing loan account with higher exposure of Rs.13 crore. The applicant No.1 was in need of urgent working capital requirement and consequenfly, Axis Bank Limited took over the existing cash credit account of the applicant No.1 from the said State

¶17

¶18

Bank of India in the^year 2017. In the^{month of March, 2020there was a} sudden outbreack of COVID-19^{pandemicand as a result thereof the} business activities of the applicant^{No.1were adversely affected, In the} month of July, 2O2O the respondent No,2 arbitrarily^{and unilaterallyreduced} the existing cash credit limit of Rs.13^{crore to Rs.11 crore. The said decision} of the respondent No.2 was whimsical.

¶19

It is stated that for securing the aforesaid cash credit^{facilitysanctioned} by the respondent No.2, there was stipulation for creation of^mortgageof two properties situated at Salt Lake but unfortunately, the^urban Development Department, Government of West Bengal refused to^give NOC in respect of one^property situated at CJ 315, Sector-I, Salt Lake City, Kolkata,

¶20

It is stated that the account of the applicant No,1 was regular as on 31.03.2020. The applicant No.1 was sanctioned Rs.2.52 crore by the respondent No.1 as ECLGS on 10.07.2020.

¶21

It is stated that the respondent No.2 on 17.L2.2O22 unilaterally and arbitrarily encashed the fixed deposit of Rs.1 crore which was lying as lien with the respondent bank.

¶22

It is stated that the respondent No.2 suddenly issued a letter dated 08.09.2021 informing the applicant No.1 that its loan accounts had been classified as NPA on 29.05.2021.

¶23

¶24

It is stated that the cash credit account of the applicant No.1 was having a sanctioned limit of Rs,11 crore after being reduced from Rs.13 crore but the respondent bank did not permit the applicant No.1 to utilize the entire sanctioned limit of Rs.11 crore also.

¶25

It is stated that on 02.03.2022 a purported demand notice under Section 13(2) of the SARFAESI Act was issued by the respondent No.1 specifically alleging that the loan accounts of the applicant No.1 were classified as NpA with effect from 30.05.2021.

¶26

It is stated that the said demand notice was not legally maintaanabte and the same was issued on wrongful and illegal assertion of classification of the loan accounts ofthe applicant No.1.

¶27

It is stated that the respondent No.1 had issued another reca notice dated 01.11.2021 wherein the loan accounts of the applicant No.1 had been classified as NPA with effect from 29.OS.2O2t.

¶28

It is stated that the altegation made in the recall notice dated 01.11.2021 and the demand notice dated 02.03.2022 regarding the date of afieged classification of the loan accounts of the applicant No.1 as NpA were contradictory and mutually destructive.

¶29

It is stated that there was no irregularity in the loan accounts of the applicant No.1 as on 30.05.2021, for which the loan accounts of the applicant No.1 could be classified as NpA either on 29.05.2021 or 3 0.05.2021.

¶30

It is alleged that the alleged classification of the loan accounts of the applicant No.1 is void and iltegal.

¶31

It i6 stated that the applicants came across a paper publication of another demand notice dated 06.07.2023.

¶32

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tt is stated that the respondent No.1 had issued such subsequent^demand notice but no such demand notice !,r,/as served upon the applicants. The issuance of such purported demand notice dated 06.07.2023 was illegal and de hors the^provisions of the SARFAESI Act, 2002.

¶34

It is stated that the since the said demand notice was issued by wrongfully invoking the^provision of the SARFAESI Act, 2002, the applicants submitted their reply dated 31.08.2023 against the demand notice dated 06.07 .2023.

¶35

It is stated that respondent No.1 issued a reply dated 12.09.2023 against the representation of the applicants dated 31.08.2023.

¶36

It is alleged that the respondent No.1 had failed and neglected to consider and deal with the specific issue/allegation raised on behalf of the appticants in their reply dated 31.08.2023.

¶37

It is stated that applicants on or about 04.t2-2023 received by post a copy of the purported possession notice dated 0t.t2.2}23 issued by the respondent No,1.

¶38

It is alleged that though the symbolic possession of the leasehold property of the applicant No.2 was taken over by the respondent No.1 on 01.12.2023 but on such date no step was taken by the respondents to serve the alleged possession notice upon the applicants.

¶39

¶40

It is alleged that the defendants had failed and neglected to cause service of the possession notice upon the applicants on 01.12.2023.

¶41

It is the specific case of the appricants that the crassification of both the roan accounts of the appricant No.1' was arso ifiegar and de hors the RBI guidelines.

¶42

SA app,icants have prayed for setting aside and/or quashing he demand notice under Section 13(2) dated 06.07.2023 issued by the respondent No.1 and also setting aside and/or quashing the reply dated f2.Og-2O23 issued by the respondent No,1 and also setting aside andlor quashing the possession notice under Section 13(4) ofthe Act dated 01.12.2023.

¶43

Respondent bank has filed affidavit in opposition as against the SA filed by the applicants.

¶44

It is stated that respondent bank made a proposal to the applicants to take over lts existing loan account from State Bank of India with an exposure of Rs.13 crore for availing credit facilities as the applicants were need of working capital requirement. Accordingly, in the year 2017 the respondent bank took over the existing cash credit account of the applicant No,1 from State Bank of India. Thereafter cash credit facility with timit of Rs.t3 crore was duly sanctioned by the respondent bank in favour of the applicants.

¶45

It is alleged that the applicants committed various defaults in repayment of the interest and principal amounts for a period of more than 90 days, the accounts of the applicants were classified as NpA on 30.05.2021 accordance with the directions/guidelines issued by the Reserve Bank of India from time to tlme.

¶46

It is stated that respondent bank was constrained to issue demand notice under section 13(2) by way of a retter dated 02.03.2022 demanding a sum of Rs.12,90,07,952.03p. However, as the same was not delavered the

¶47

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respondent bank was constrained to^publish the same in two newspapers - one in English Business Standard and in Bengali Ei-Samay on 01.07.2023.

¶49

It is stated that the applicants thereafter receiving the demand notice has replied to, by way of their letter dated 31.08.2023 and the said letter dated 31.08.2023 issued by the applicants was also replied to by the respondent bank by way of letter dated 12.09.2023.

¶50

It is stated that the respondent bank issued possession notice under Section 13(4) dated 01.12.2023 and the possession notice was pasted at a conspicuous portion of the mortgaged property and was sent by speed post and advertized in an English and Bengali daity newspapers.

¶51

It is denied that respondent bank could not classify the loan accounts of the applicant No.1 as NpA on 30.05.2021.

¶52

It is denied that there was no irregularity persistent in those loan accounts for more than 90 days as on 29.05.2021.

¶53

Respondent bank has prayed for dismissal of SA filed by the SA applicants.

¶54

SA appltcants have fited afndavit in reply as against the affidavit in opposition on behalf of the respondent bank,

¶55

¶56

It is stated that in the representation dated 31.08.2023 the applicants had refuted the allegation regarding creation of mortgage of the immovable property but the respondent bank had failed and neglected to disclose any document in reply dated 12.O9.2023 evidencing the creation of such alleged mortgage.

¶57

It is stated that the respondents have failed and neglected to produce any document to demonstrate that any attempt was made by the defendants for service of such possession notice upon the SA applicants on 01.12.2023 i.e. the date of taking over alleged symbolic possession of the property.

¶58

It is stated that Ld DM had comptetely failed to note that a separate demand notice dated 06.07.2023 was published in the newspaper which superseded the earlier demand notice dated 02.03.2022.

¶59

It is stated that affidavit in opposition filed on behalf of the respondents in t.4.5046/2024 is devoid of any merit and the respondents have made fatse and frivolous allegations which are not legally tenable.

¶60

Decision with reasons:-

¶61

Controversy hovers around the demand notice under Section 02.03.2022 alleging that the loan account of the applicant No.1 was classifled as NPA on 3 0.05.2021.

¶62

Ld Senior Counsel for the SA applicants has argued that respondent bank has issued two demand notices under Section 13(2) _ one dated 02.03.2022 and another dated 06.07,2023. He has also argued that in the recalt notice jt is stated that the loan account of the applicant No.1 was classified as NpA on 29.O5.2O21 but the DM has passed the impugned order dated 11..t2.2024 on the basis of the demand notice under Section 13(2) dated O2.O3.2022.

¶63

It is alleged by the SA applicants that prior to the issuance of demand notice, the respondent bank has issued a recall notice dated 01.11.2021 wherein it was alleged that the loan account of the appljcant No.t was classified as NpA on 29.05,202I.

¶64

¶65

It is alleged that the date of NPA in the recall notice dated 01.11.2021 and in the demand notice dated 02.03.2022 are different i.e. date of classification of loan account of the applicants as NPA are different and contradictory. It is stated that the applicants came across the paper publication of another demand notice dated 06.O7.2023.

¶66

It is the case of the SA applicants that respondent No.l had issued subsequent demand notice dated 06.07.2023 but no such demand notice was served upon the applicants.

¶67

It is the case of the SA applicants that the issuance of such demand notice dated 06.07.2023 was ilegal and de_hors the provisions of SARFAESI Act and the sA appricants had submitted in their representation dated 31.08.2023 as against the demand notice dated 06.07.2023 and the respondent No.1 also issued repry dated 12.09.2023 as against the said representation dated 31.08.2023.

¶68

It is the case of the SA applicants that the Ld DI,t has fajled to apprecaate the fact that by issuance of subsequent demand notice dated 06.07.2023, the earlier demand notice under Section 13(2) dated O2.O3.2l22was waived and had lost its force.

¶69

It is stated that the Ld DIv dated 11.12.2024 "",n" J"::' IT"t":":il":::J':::::, ;ii: 02.03.2022 under Section 13(2) of the Act and that ,nu ,"." was pubtished J in two leading newspapers _ one in English vernacular una unoti"r an Bengali vernacular but in reality the subsequent demand notice is dated 06.07.2022. It is stated that the DM has passed the purported order dated 11.L2.2024 on incorrect informationLd counsel for respondent bank submits that there is no error in the purported order of the DM dated L7.12.2024 purported order dated 11.12.2 "rO^{,i" ii,"r,,iur.r"r."o,nu} respondent bank before n,, o, lii ;";T1T"'ffiation suppried bv the It is also argued from the side of the respondent bank that representation ii["L]';li:'ii]#"::'1 ;;:" o1 .'1" "o'io""" "' inli"li'" " " and also the reply dated 72 og'2023 had been made by the responden3 3L08.2023. t bank to the said representation dated

¶70

He has also argued that there ls no second or subsequent demand notice. He has arso "rnr"o ,n", o".nu, llll," ":^{,o*.ou,lio ". ;:Jfi.:; :"::ililjj:,",J:.,HT:} after gap of one year and the pubtication " ""^{0"r"", i,."""r.iu. ,uo" ,n} accordance to the provision of Rule 3 of the SARFAESI nufes.- -- ". Caustic controversy is whether ,o0.",, n o",. ru.; ;;, ;j ;."ll:'i; ;:'. #:"J.T::. ;.'r,."r1,::,::Xil; on perusar of record it appears that sA appricants courd not fire any demand notice dated 06.07.2023. The alleged demand notice dated 06.07.2023 is virtually a paper pubtication

¶71

It appears that demand notice under Section 13(2) dated 02.03.2022 was published in the newspapers on O(

¶72

as such demand notice oz.o:.zozz' .o.'-1o,1.' :^{after a gap of one year} and was published in two leading newspapers

¶73

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one in English "Business Standard,, and another in Bengali vernacular "Aajkat" on 06.0?.2023.

¶75

In the publication in Business Standard dated 06.07.2023, jt is stated that ' the respondent bank is invoking the proviston of Section 13(2) of SARFAESI Act and called upon the borrower and the guarantors to make payment of an amount of Rs.12,90,07,952.OO etc. but in the pubrication in Aajkar it is stated that that the respondent bank is withdrawing (pattahar) the measures under section 13(2) of the SARFAESI Act.

¶76

¶77

Hon',bre DRAT, Korkata in passing the order dated 05.05.2025 in i4isc. Appear No. Lo of 2025 (arising .ut of sA/66/2024) in the matter ot Axis Bank Vs. Resolution Enterprises it has been obse.ved that,,-,, u'ir,r,u, nature of inadvertent typographical en the Hon,be apex coun , ;:'::H:;T'rTffiT;::H,:,i:,[il:: Trishut Devetopers & Anr. reported in (2020) 10 SCC 65!.

¶78

Moreover I find that SA i have neither raised this issue in the main sA nor in thu ."prurur,'pplicants under section 13(3A) of the Act or in the r.A. so46/2o24. so th" d",ut"tion or raO in the recall notice is not the date of NpA. In the demand notice , 13(2) dated 02.03 2022, the date of NpA beins 30.0s.2021 '.^{"llii"i,""'l'""} We are not to be guided b the demand notice dated 06.07.2023, but t)y the demand notice unOer Secty 2022 crassifvine the roan account of the appricants ". JT#:;l*:::tr02.'03

¶79

Observation of the Hon,ble has not been chattenged bv the sA appricants before any nr^i:l]'Kolkata be said from "."^{;.;'r;; '.rt: 'orum and} pubtic"tion^{it stands} that the^accordingly. rispondent^{so it cannot} bank has withdrawn the measures u8_engali 13(2) of the SARFAESI Act. rt arso cannot be said that ,J^o-"'.t":t'on as per reca| notice dared or':: lt^:'"tn^{ofthe date of} classitication ofNpA 13(2) dated .r..r.rro'r,or.^:: ::'}.]lffiland notice under section

¶80

As per logical follow up of th, no error in the purported o.ot ''tt"t'on'^{I am of the} oDinion that there is . 11 -" 2024 passed bv the Ld DM, has North issued 24 parganas. There t;'""; ;;;;; is ,;."""'1'^llll"'"^llubt ",.;'^:"-:o that the respondent bank the ,oan account o;,;; ";;;;: ::'[T #::]ffi1 02.o3.2022 crassiryns Other argument that has adva sA applicants is that there is no au,uo or. compriance rz.zoz: of Rure^-o;;;; 8(1) ", ,n" l1t^Y.!'the Rures resardins possess,on notice il#it^Esl opposition rired by the respondent bank, specia,; ;;,;;;," fl:''t ],, therewith it appears that the possession notice was ur"o .':l:"uo tn" conspicuous portion of the secured assets and was published ,n ,n" ltnewspaper' Thoush not date is aoDearins rn .,re pirotosraphs r;-;;;,,;; opposition ::^:.:?,;;";;";"J;;"::#:H:::::]ff it is evident that the o( "::I:j:,:,",fJ""":,7 notice was pubrished in Economic r;mes, Korkata "" ;;. r;.;;;il1-it:tt'on is within 7 days from the taking over of possession. It appears ,nu, ounltl issued possession notice under section 13(4) dated or.irlora lro""( possession notice was oasred at a consprcuous portion of ;;" ;-;:" property and the same was sent by speed post,r rn" ro "ro,,Lro'tedged d was published in an English and Bengaty

¶81

daily newspapers on 06.12.2023. There is compliance of Rule B(2) of Security Interest Enforcement Rules, 2002.

¶82

I do not find anything adverse with the possession notice or its affixation or publication,

¶83

Consequently, the instant SA merits no success and is liable to the dismissed. Hence,

¶84

Ordered

¶85

Sarfaesj application being S.A. 66 of 2024 is dismissed on contest, pending I.As, if any are also dismissed. Interim order No,06 dated 07.01.2025 passed by this Tribunat stands vacated. Copy of the Judgment/Final Order be uptoad in the Tribunal,s website, File is consigned to the Record Room after observing all formalities. (Dictated to steno, transcribed by him, corrected, signed and orolounced by me in the open Court on this 3-o Day of July, 2025) I

PRESIDING OFFICER,

/tsm

DEBTS RECOVERY TRIBUNAL.3, KOLKATA Order Sheet (Continuation)

¶90

case No. sal66/2024 Resolution Enterprises & Ors. Vs. The Authorized
Officer, Axis Bank Limited & Anr.
Otfice action
Order with signature
dated Signature
Order
Dt.03.07.2025 S.A. 6612024 along with LA. 504612025 is taken up for
hearing. Heard further argument at length from both
sides. Argument concluded on both sides.
Order pronounced (vlde 7 separate sheets).
ORDERED
Sarfaesi apptication being S.A. 66 of ZO24 is
dismissed on contest, pending I.As, if any are also
dismissed. Interim order No.O6 dated O?.OL.2025
passed by this Tribunal stands vacated,
(Ka
Presiding Officer
DRT-3.Kolkata

Resolution Enterprises and Ors. v. Axis Bank

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Resolution Enterprises and Ors. v. Axis Bank

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