JUDGEMENT

: On 19^th September, 2023 THE APPELLATE TRIBUNAL Instant appeal has been preferred against a judgment and order dated 06.09.2021 passed by Learned DRT Visakhapatnam dismissing the S.A. No. 45 of 2021 P. V. Ramana Moorthy Vs. M/s ARCIL & Ors. 2. Pleadings of the parties would reveal that the Appellant herein namely P.V. Ramana Moorthy alleges himself to be the lessee.

Third Respondent namely M/s Anandaram Developers Pvt. Ltd. is the borrower while Respondent No. 2 M/s Manoharamma Hotel Investments Private Limited represented by its Director Mr. K. Bapaiah is the guarantor. Appellant is aggrieved by the measures initiated by Respondent No. 1 under Section 14 of the SARFAESI Act (hereinafter referred to as the Act).

3. According to the Appellant, an application under Section 14 of the SARFAESI Act was moved by the Respondent No.

1 namely M/s Asset Reconstruction Company (India Limited) before the Chief Metropolitan Magistrate, Rajahmundry by making untrue and baseless allegations. Pursuant to the Application, an order under Section 14 of the SARFAESI Act was issued by the Learned Magistrate on 03.12.2020 for taking physical possession of the schedule property.

4. An application under Section 17 of the SARFAESI Act was filed by the Appellant before the Learned DRT Visakhapatnam stating that the schedule property is a running hotel having 200 employees. Schedule property, which was earlier being run by an another lessee from 2015 to 2018. Thereafter, Appellant is running the hotel by name and style “Anand Regency”, situated at D. No. 26-3-7 Jampet, Rajahmundry on lease basis. A lease agreement was executed on 8th January, 2019 for a period of four years. An amount of Rs.65,000/- per month was payable towards monthly rent in addition to the profit sharing.

5. Third Respondent borrowed a term loan of Rs.30,00,00,000/- and another Term Loan of Rs.2,06,00,000/- in the year 2006 from Oriental Bank of Commerce by securing land and building bearing D. No. 17 and 18 situated at Arcot Road, Saligramam, Chennai following an extent of 58,157,76 square feets of undivided share of and in total extent measuring 3.81 acres together with commercial building at TSN No. 08,12,14,15 old S. No. 1941A, 1A, 1A2, 193/ 1F2, 7.8, and 10 situated at D.No. 17 and 18 Chennai belongs to borrower i.e. 3rd Respondent which is a more valuable security the present outstanding and also primary security for the loan and also secured by an extent of 20,069 sq.ft of and in total extent measuring 3.81 acres together with commercial building at T.S. No. 8,12,14,15 Old serial No. 194 1A, IA2, 193/ 1F2, 7,8 and 10 situated at D. No. 17 and 18 Chennai and also secured an extent of 74,794 sq.ft. i.e. undivided share of 44.35% in the total extent measuring 1,68,625 sq. ft. together with commercial building at D. No 110 Chennai including the schedule property as collateral security for the loan availed by the third Respondent.

Thereafter, Oriental Bank of Commerce purported to assign the debt to the 1st Respondent. Second Respondent has other securities which are more valuable and are unincumbered to realize all its alleged dues in Chennai.

6. It is further stated that the negotiations for settlement are also continuing.

7. Possession notice was issued on 24.06.2016. In the affidavit annexed with application u/s 14 of the Act, it is stated that the schedule property is vacant site belonging to 2nd Respondent. Orders under Section 14 of the Act were passed while the property is not vacant site. Rather five- star hotel is running with all buildings and structures thereon. There is suppression of material facts which is a violation of the SARFAESI Act as well as Security Interest (Enforcement)Rules, 2002.

Procedure required under Section 14 of the SARFAESI Act is not followed.

No opportunity of hearing was afforded to the Appellant.

Earlier the schedule property was on lease with some other person. Hence, the property was leased out prior