Dismissed

T.Rajagopal v. City Union Bank Limited

Kerala HC22 Sept 2016OP (DRT)/19/2016

Case brief

AI extract

What is this about?

The High Court of Kerala disposed of a petition challenging an interim order of the Debts Recovery Tribunal directing repayment. The Court dismissed the petition, holding that the Section 13(2) notice was valid despite the absence of the exact non-performing asset classification date, as the notice overall sufficiently indicated the account status and outstanding details.

What did the court decide?

OP(DRT) No. 19 of 2016 is dismissed; petitioners are not entitled to any relief.

T.Rajagopal Vs City Union Bank Limited — Banking and Recovery | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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THURSDAY, THE 22ND DAY OF SEPTEMBER 2016/31ST BHADRA, 1938

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OP (DRT).No. 19 of 2016 (O)

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SA. NO.58/2016 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM.

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PETITIONERS/APPLICANTS 2 & 3:

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1. T. RAJAGOPAL,

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S/O.V.T. RAMANUJAM, KPM GARDENS, RAJGEETH, ERA-11, EMS NAGAR, KSHB COLONY, PATTOOR, THIRUVANANTHAPURAM - 695 035.

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2. R. THIRUVANGADA RAMANUJAM, S/O.T. RAJAGOPAL, KPM GARDENS, RAJGEETH , ERA - 11, EMS NAGAR, KSHB COLONY, PATTOOR, THIRUVANANTHAPURAM - 695 035.

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BY ADV. SRI.LATHEESH SEBASTIAN.

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RESPONDENTS/DEFENDANTS:

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1. CITY UNION BANK LIMITED, ADMINISTRATIVE OFFICE, NO.24-B, GANDHI NAGAR, KUMBAKONAM, TAMILNADU STATE - 612 001.

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2. THE AUTHORIZED OFFICER UNDER THE SARFAESI ACT, CITY UNION BANK LTD., ADMINISTRATIVE OFFICE, NO.24-B, GANDHI NAGAR, KUMBAKONAM, TAMILNADU STATE - 612 001.

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3. THE BRANCH MANAGER, CITY UNION BANK LTD., THIRUVANANTHAPURAM BRANCH, POWER HOUSE ROAD, THIRUVANANTHAPURAM-695 001.

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R3 BY ADVS. SRI.P.BALAKRISHNAN,

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SRI.N.SASI.

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THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 22-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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rs.

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OP (DRT).No. 19 of 2016 (O)

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APPENDIX

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PETITIONER'S EXHIBITS:-

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EXT.P-1: TRUE COPY OF THE SEC. 13(2) NOTICE. EXT.P-2: TRUE COPY OF THE SEC. 13(4) NOTICE. EXT.P-3: TRUE COPY OF THE APPEAL MEMORANDUM IN S.A.NO.58/2016 (WITHOUT ANNEXURES).

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EXT.P-4: TRUE COPY OF THE SALE NOTICE DATED 08.01.2016. EXT.P-5: TRUE COPY OF THE ERRATUM NOTICE DATED 12.01.2016. EXT.P-6: TRUE COPY OF THE IA NO.263/2016 IN SA NO.58/2016. EXT.P-7: TRUE COPY OF THE WRITTEN STATEMENT OF THE RESPONDENTS. EXT.P-8: TRUE COPY OF THE OBJECTION OF THE RESPONDENTS TO EXT.P6. EXT.P-9: TRUE COPY OF THE ORDER OF THE DRT, ERNAKULAM DATED 19.02.2016 IN SA NO.58/2016.

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RESPONDENT'S EXHIBITS:- NIL.

//TRUE COPY//

P.S. TO JUDGE

rs.

A.M. SHAFFIQUE, J.

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=============== O.P. (DRT) No. 19 of 2016

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==================

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Dated this, the 22^nd day of September, 2016

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J U D G M E N T

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Petitioners challenge Ext.P9, an order passed by the Debts Recovery Tribunal in SA No.58/2016. Ext.P9 seems to be an interim order by which the Tribunal had directed the applicants therein to pay `75 lakhs on or before 29/2/2016.

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The main contention urged by the petitioners before the Tribunal was that Section 13(2) notice was not in accordance with the statutory format. Further, there is procedural infirmity as far as sale notices issued by the authorized officer are concerned. According to the petitioners, there was no publication as envisaged under Rules 8(2) and 8(6) of the Security Interest (Enforcement) Rules.

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When the above matter came up for admission on 26/2/2016, this Court stayed further proceedings permitting the petitioners to remit `15 lakhs on or before 1/3/2016. It is stated that the said amount had been deposited.

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The question to be considered is whether there is any

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OP(DRT) No.19/16

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-:2:-

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illegality in the order passed by the Tribunal directing the petitioners to pay such an amount. Securitisation Application was filed at a stage when proceedings were taken by the respondent Bank to effect sale of the property and one of the contentions urged was that the notice under Section 13(2) was invalid. The Tribunal by the impugned order observed that the details of interest rate, security agreement executed, security asset etc., have clearly been shown in the notice. Tribunal did not find any infirmity in the said notice. Further, in regard to the contentions regarding non compliance of Rules 8(2) and 8(6), it was observed that no contention was raised in the Securitisation Application and therefore there was no necessity to consider the same.

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Having regard to the publication of notices for sale of property, it is now submitted by the learned counsel appearing on either side that the sale did not take place. Under such circumstances, I do not think it necessary to go into the allegation of non compliance of Rules 8(2) and 8(6). In any case, the Bank will have to take further steps by way of publication and therefore, there is no necessity to go into the validity of the notices issued for sale of the property.

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OP(DRT) No.19/16

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-:3:-

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Coming to the first contention that the notice under

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Section 13(2) of the SARFAESI Act is illegal, I do not think that such a contention is available to the petitioners. In para 3 of the notice, it is recorded as under;

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“3. Despite our repeated requests/demands calling upon all of you to pay the amount together with interest, you have failed to pay and committed default in repaying the amount due. The loan account has been classified as Non-Performing Asset on in accordance with directions/guidelines relating to asset classifications issued by Reserve Bank of India.”

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The only contention urged by the petitioners is that the date on which the account has been classified as Non Performing Asset is not mentioned. When the notice itself is issued on 17/6/2015, it is apparent that the account had become NPA much before the said date. That apart, the notice indicates the amount sanctioned in different accounts for different periods, details of the loan account and nature of loan and facilities are also specifically mentioned. The details of the documents executed are also very much available. Further, in para 4, it is stated that the amount was outstanding as on 30/4/2015. Therefore, Tribunal

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OP(DRT) No.19/16

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-:4:-

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was justified in assuming that the accounts have become NPA as on 30/4/2015. That apart, perusal of Section 13(2) of the Act shows that there is no necessity to inform the petitioners about the date on which the account had become NPA. Section 13(2) of the SARFAESI Act reads as under:-

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“13(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under subsection (4).”

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Section 13(2) gives power to the Bank to proceed further after 60 days from the date of service of notice. In view of the specific statement in para 3, it cannot be stated that the accounts of the petitioners had not been classified as NPA. An omission to mention the exact date on which each of the accounts had become NPA is not enough to assume that there is non compliance of Section 13(2) especially when the Bank had clearly

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OP(DRT) No.19/16

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-:5:-

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indicated about the nature of loan accounts and the dates on which it became overdue as on 30/4/2015. In the light of the aforesaid discussion, I do not think that the petitioners are entitled for any relief.

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OP(DRT) is dismissed.

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Sd/- A.M. SHAFFIQUE, JUDGE

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Rp22/09/2016

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//True Copy//

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P.S to Judge

T.Rajagopal v. City Union Bank Limited

Case brief

What is this about?

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T.Rajagopal v. City Union Bank Limited

Case brief

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