The Debt Recovery Tribunal has the authority to modify its earlier orders based on subsequent factors and can permit the bank to proceed with loan recovery against the entire mortgaged property under the SARFAESI Act.

JUDGMENT :

(Prayer: Writ Petition field under Article 226 of the Constitution of India, seeking for a writ of certiorari calling for the records passed by the second respondent contained in I.A.No.1283 of 2017 in S.A.No.95 of 2013, dated 07.08.2017 and to quash the same.)

This writ petition has been filed under Article 226 of the Constitution, seeking for a writ of certiorari, calling for the records passed by the second respondent contained in I.A.No.1283 of 2017 in S.A.No.95 of 2013, dated 07.08.2017 and to quash the same.

2. The necessary facts which are to be noticed for the disposal of this writ petition are as follows :

(i) That the first petitioner is a partnership firm, where the petitioner 2 and 3 are partners. In the year 2011, the second and third petitioners approached the first respondent Bank for availing a loan facility for the completion of the ongoing construction of the building of the petitioners, accordingly, the first respondent Bank, having considered the request of the petitioners, had come forward to sanction a loan for a sum of Rs.1,25,00,000/- under the head “Term loan” in the name of the second and third petitioners. As a security to the said loan advanced by the bank, the second and third petitioners executed number of security documents on 14.02.2011 in favour of the bank. That apart, the second and third petitioners executed an equitable mortgage of the property referred to in schedule A of the demand notice, dated 15.02.2013 of the Bank.

(ii) Thereafter it seems that, further loan was sought for by the petitioners to develop their jewellery business, that was also considered positively by the respondent Bank and it had sanctioned a sum of Rs.25 lakhs as secured overdraft and also a sum of Rs.25 lakhs under the head of HPL (O) in the name of the first petitioner firm. In order to give security over the said loan, the second and third petitioners have executed security documents on 15.02.2011 on behalf of the first petitioner firm in favour of the Bank and they also executed the equitable mortgage already created over the afore referred property for the said term loan facilities availed by them on 15.02.2011, also extended the said equitable mortgage to the subsequent loan and further second and third petitioners hypothecated the machine, equipments and stocks kept in the business premises at the first petitioner firm. Thereafter it seems that, as per the agreed terms, the loan has not been repaid by the petitioners, with the result, as per the Reserve Bank guidelines, the two loans had become NPA, i.e., Non-performing Assets on 07.12.2012 and 13.01.2013 respectively.

(iii) Even after having declared the said loans to be NPA, no positive action was forthcoming from the petitioners, therefore the respondent Bank had issued a recall notice on 17.01.2013 to the petitioners and thereafter since the overall outstanding was for a sum of Rs.1,93,49,432.62/- as on 31.01.2013, the Bank had issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (herein after referred to as “SARFAESI Act”) on 15.02.2013.

(iv) Thereafter the Bank issued a possession notice under Section 13(4) of the said SARFAESI Act on 16.05.2013 and the said notice seems to have been pasted in the premises of the mortgaged property and it was also published in vernacular and English diary having circulation over the area on 22.05.2013 as per the provisions of the said SARFAESI Act.

(v) Felt aggrieved over the possession notice issued by the Bank, dated 16.05.2013, the petitioners preferred SARFAESI Appeal in S.A.No.95 of 2013 before the Debt Recovery Tribunal, Coimbatore (DRT), where the petitioners preferred I.A.No.473 of 2013, seeking for stay of the said possession notice.

(vi) The Debt Recovery Tribunal having heard the parties, had passed a conditional order of stay, by which, stay was granted on condition that, the petitioners shall pay a sum of Rs.50 lak