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DEBT RECOVERY APPELLATE TRIBUNAL, MUMBAI
RAJ MANI CHOUHAN, J. (Chairperson)
Navalakha Agencies and Anr - Appellant
Versus
Indian Bank and Ors - Respondent
Appeal No. 163 of 2011 with M.A. No. 754 of 2011
Decided On : 28-09-2012
Advocate Appeared:
For the Appellant : S.G. Aney, Rishabh Shah, Puneet Gogad, M/s. Raval Shah and Co.
For the Respondent: Ratina Maravarman
Headnote:
APPEAL against the judgment and order dated 26th August, 2011 passed by Shri Shrikant G. Kulkarni, the learned Presiding Officer, Debts Recovery Tribunal, (DRT) Pune, in the Securitisation Application (S.A.) No. 22/2011 (Navalakha Agencies v. Indian Bank) by which the learned Presiding Officer, DRT, Pune, has dismissed the S.A. filed by the applicants with costs.
Fact of the Case:
Admittedly, the appellant No. 1 Navalakha Agencies, a registered partnership firm, having its place of business at 1379, Bhavani Peth, Pune, availed certain credit facilities in the year 1990 towards Working Capital business of the firm which was sanctioned by the respondent. No. 1, the Indian Bank, a Banking company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, from its branch at Nana Peth, Pune. The appellant No. 2 Mr. Ghanshyam Lalchand Navalakha, one of the partners of the firm, stood guarantor to the above loan sanctioned by the respondent No. 1 Bank. He to secure the amount of loan created equitable mortgage of his land bearing Sub-Plot No. 4, Hissa No. 4, admeasuring 1060 sq. mtrs, out of Final Plot No. 493-B, CTS No. 1118/B admeasuring 64.85 hectares, situated in Shivaji Nagar, Bhamburda, within limit of Taluka and District and Sub-District Haveli, District Pune (hereinafter referred to as the said plot). The respondent No. 1 Bank from time-to-time further extended the credit facility to the appellant No. 1 but the appellant No. 1 could not keep the said account update, therefore, its account was classified by the respondent No. 1 Bank as Non Performing Asset (N.P.A.) on 31st March, 1993.
Finding of the Court:
The Appeal is dismissed with no order as to costs.
Issues: 1. Whether respondent No. 1 Bank could proceed under the SARFAESI Act to recover its dues during pendency of R.P. No. 46/2004 arising out of the Recovery Certificate issued by the learned Presiding Officer DRT on the basis of the judgment and order dated 7th October, 2003 passed by him in O.A. No. 792P/2001? 2. Whether the auction sale of the mortgaged property was conducted by respondent No. 2, when the order of stay passed by DRAT, Mumbai in Appeal No. 136/2004 was operative. If so, its effect? 3. Whether the mortgaged property was under attachment in R.P. No. 46/2004. If so, whether the same could be sold by respondent No. 1 Bank under the SARFAESI Act through its Authorized Officer? 4. Whether the notice issued by respondent No. 1 Bank under Section 13(2) and under Section 13(4) of the SARFAESI Act and possession-cum-auction sale notice issued on 13th December, 2008 are alleged on the ground that the description of the property to be sold mentioned therein, does not match with each other? 5. Whether the mortgaged property was a joint property and the same could not be mortgaged by the appellant No. 2 in favour of the respondent Bank to secure amount of credit facilities availed by appellant No. 1?
Ratio Decidendi: 1. The secured creditor/lender Bank can proceed under RDDBFI Act as well as SARFAESI Act. Both the proceedings can go parallel. There is no inconsistency between the two Acts. Both the Acts are meant for recovery of the dues of the Bank and Financial Institutions which is public money. 2. The auction sale of the mortgaged property conducted by the Authorized Officer of the Bank when the order of stay passed by DRAT was not operative and such auction sale was not illegal on the ground that auction sale was conducted by the Authorized Officer of the Bank in violation of the order of stay passed by DRAT. 3. When a property is already under attachment of a decree and is in possession of the Receiver, the same can be sold in execution of subsequent decree or the same can be sold under the statutory provisions. There is no complete bar for sale of such property. 4. The notice issued by the respondent-Bank under Section 13(2) and Section 13(4) and possession-cum-sale notice are not illegal on the ground that description of the property to be sold does not match with each other. 5. The mortgage of the said plot created by the appellant No. 2 in favour of the respondent-Bank is not invalid.
Final Decision: The Appeal is dismissed with no order as to costs.
RAJ MANI CHOUHAN, J. (Chairperson)
1. This Appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act) has been filed by the appellants (original applicants) (hereinafter referred to as the appellants) against the judgment and order dated 26th August, 2011 passed by Shri Shrikant G. Kulkarni, the learned Presiding Officer, Debts Recovery Tribunal, (DRT) Pune, in the Securitisation Application (S.A.) No. 22/2011 (Navalakha Agencies v. Indian Bank) by which the learned Presiding Officer, DRT, Pune, has dismissed the S.A. filed by the applicants with costs. Most of the relevant facts are not in dispute between the parties which may, in nutshell, be stated as follows:
Admittedly, the appellant No. 1 Navalakha Agencies, a registered partnership firm, having its place of business at 1379, Bhavani Peth, Pune, availed certain credit facilities in the year 1990 towards Working Capital business of the firm which was sanctioned by the respondent. No. 1, the Indian Bank, a Banking company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, from its branch at Nana Peth, Pune. The appellant No. 2 Mr. Ghanshyam Lalchand Navalakha, one of the partners of the firm, stood guarantor to the above loan sanctioned by the respondent No. 1 Bank. He to secure the amount of loan created equitable mortgage of his land bearing Sub-Plot No. 4, Hissa No. 4, admeasuring 1060 sq. mtrs, out of Final Plot No. 493-B, CTS No. 1118/B admeasuring 64.85 hectares, situated in Shivaji Nagar, Bhamburda, within limit of Taluka and District and Sub-District Haveli, District Pune (hereinafter referred to as the said plot). The respondent No. 1 Bank from time-to-time further extended the credit facility to the appellant No. 1 but the appellant No. 1 could not keep the said account update, therefore, its account was classified by the respondent No. 1 Bank as Non Performing Asset (N.P.A.) on 31st March, 1993.
2. The respondent No. 1 Bank thereafter filed a Special Civil Suit No. 952/1995 in the Court of Civil Judge (Sr. Division), Pune, against the borrower and the guarantors, for recovery of its dues along with future interest. In the meantime the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDBFI Act) came into force. Consequently the Debts Recovery Tribunal, Pune, was established. In pursuant to the provision under the RDDBFI Act, the above Special Civil Suit No. 952/1995 pending in the Court of Judge (Sr. Division), Pune, stood transferred to DRT, Pune, where it was registered as Original Application No. 792/2001.
3. The said O.A. was contested by the defendants. The parties filed documentary evidence and claim affidavit in support of their contentions. The learned Presiding Officer, DRT, Pune, vide judgment and order dated 7th October, 2003 allowed the O.A. for Rs. 28,59,305.10 with future interest @ 17.50% p.a. till full and final realization of the decretal amount. The learned Presiding Officer further ordered that there will be charge of the Bank on the said plot. The learned Presiding Officer consequently ordered for issuance of Recovery Certificate (R.C.). When the Defendants failed to pay the decretal amount, the respondent No. 1 Bank moved an application before the learned Recovery Officer, DRT, for initiating the Recovery Proceeding on the basis of the Recovery Certificate by the learned Presiding Officer. The R.O. accordingly initiated the Recovery Proceeding (R.P.) No. 46/2004 for recovery of the amount in the R.C.
4. The defendants being aggrieved by the impugned judgment and order dated 7th October, 2003 passed by the learned Presiding Officer, DRT, preferred an appeal No. 136/2004 under Section 20 of the RDDBFI Act before Debts Recovery Appellate Tribunal, Mumbai (hereinafter referred to as the DRAT, Mumbai). The R.O. in the recovery proce
