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2019 Supreme(Kar) 914
IN THE HIGH COURT OF KARNATAKA
L. NARAYANA SWAMY, R. DEVDAS, JJ.
Trishul Developers — Appellant
Versus
L & T Housing Finance Limited — Respondent
Writ Petition No. 22137 of 2019
Decided on : 27-06-2019
Advocate Appeared:
Udaya Holla, Adv., Shashikiran Shetty, Adv.
Headnote:
SARFAESI Act, 2002 - Section 13(2) - Transfer of Property Act, 1882 - section 69 or section 69A - Transfer of Property - Construction of projects - Quash - Partnership Firm availed financial assistance from first respondent -Financial Institution to tune for purpose of completion of construction of projects as per sanction letter - On default when first respondent initiated proceedings provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act petitioner herein approached Debt Recovery Tribunal (hereinafter referred to as DRT for short) challenging demand notice on ground that notice was issued by an unconcerned party from whom petitioner had not borrowed any amount- Possession notice was also sought to be quashed –Held, Position in matters of statutory jurisdiction court are of opinion that in matters of contract where there is a defect which goes to root of matter then such a defect can never be presumed to have been condoned but such condo nation should be by express consent well settled principles that if a statute provides for a thing to be done in a particular manner then it has to be done in that manner and in no other manner applies forcefully in this matter having regard court uphold contention of petitioner that as on date there is no valid demand notice issued by secured creditor court also hold that petitioner is legally entitled to raise issue of locus such issue not being raised in reply notice issued by petitioner to demand notice - Another reason for holding so is that is possible that petitioner did not notice defect of entity closely because of similarity in two names and once same was noticed petitioner proceeded to contest issue on grounds stated above argument of first respondent that no apparent prejudice is caused to petitioner cannot be countenanced for reason that demand notice being invalid having not been issued by secured creditor a demand made by a person or legal entity who is not secured creditor is definitely prejudicial to interest of petitioner - Senior Counsel for first respondent are matters where there were either typographical errors or short notice and therefore it was held that such errors could be rectified and same would not vitiate entire proceedings- Those decisions will not come to rescue of first respondent- Petition allowed
JUDGMENT :
R. Devdas, J.
The petitioner-Partnership Firm availed financial assistance from the first respondent-Financial Institution to the tune of Rs.20,00,00,000/- (Rupees twenty crores), for the purpose of completion of construction of projects, as per sanction letter dated 07.08.2015. On default, when the first respondent initiated proceedings under the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, (SARFAESI Act), the petitioner herein approached the Debt Recovery Tribunal (hereinafter referred to as 'DRT' for short), challenging the demand notice on the ground that the notice was issued by an unconcerned party, from whom the petitioner had not borrowed any amount. Possession notice was also sought to be quashed.
2. By order dated 23.03.2018, the DRT allowed the appeal S.A.No.76/2018 and quashed the demand notice dated 14.06.2017 and possession notices dated 09.11.2017 and 10.11.2017. When the first respondent approached the Debt Recovery Appellate Tribunal (for short 'DRAT'), at Chennai, the DRAT allowed the appeal, by order dated 16.04.2019. As a result, the petitioner is before this Court assailing the order dated 16.04.2019 passed by the DRAT and to uphold the order dated 23.03.2018, passed by the DRT-1, Bengaluru, in S.A.No.76/2018.
3. Sri Udaya Holla, learned Senior Counsel appearing for the petitioner submits that the DRT-1 as well as the DRAT, have concurrently held that the demand notice dated 14.06.2017 was issued on the letter head of "L&T Financial Services" and the authorized signatory has signed the notice on behalf of "L&T Finance Ltd.". It is pointed out from the order of the DRAT at paragraph-11, that the DRAT has given a finding that the first respondent herein has committed a mistake in serving the notice in the name of 'L&T Finance Ltd'. It is admitted that 'L&T Finance Ltd.' is not the secured creditor from whom the petitioner herein has borrowed the amount. It is also admitted that the secured creditor is 'L&T Housing Finance Ltd'. That being the admitted position, it is contended that the DRAT could not have upset the decision of the DRT.
4. The learned Senior Counsel has relied upon Chandra Kishore Jha Vs. Mahavir Prasad and Others, (1999) 8 SCC 266, to contend that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. In Chimanlal Vs. Mishrilal, (1985) 1 SCC 14, it was pointed out that the Hon'ble Supreme Court has held that a valid notice, as per statute, is a pre-requisite for maintaining proceedings thereon. The learned Senior Counsel further relies upon the decision in the case of Pradip Kumar Das & Ors. Vs. Asstt. General Manager, Union Bank & Anr., 2010 SCCOnLine(Cal) 1629, to buttress his argument that a defective notice under Section 13(2) of SARFAESI Act, 2002, is not tenable. Similarly, in Mathew Varghese Vs. M.Amritha Kumar and Others, (2014) 5 SCC 610, it was held that while interpreting the provisions of SARFAESI Act, 2002, it is mandatory to observe strict compliance with prescribed procedure.
5. Per contra, Sri Shashikiran Shetty, learned Senior Counsel appearing for respondent No.1 submits that the petitioner, in its reply dated 08.08.2017, issued to the demand notice dated 14.06.2017, though addressed to 'L&T Finance Limited', does not protest that it has not secured any loan from 'L&T Finance Limited'. The petitioner, knowing fully well that it has borrowed loan from 'L&T Housing Finance Limited', admitted of having borrowed loan, but contested the claim of repayment on grounds such as violations/breaches committed of the terms and conditions of the Financing Documents; non-issuance of NOCs for sale of flats inspite of making statement before the High Court; magnitude of outstanding loan amount and other incidental issues. It was pointed out from the reply that the petitioner has, in fact, admitted that they have secured a loan and it
