Proper service of notices under the SARFAESI Act is established through substantial compliance, and borrowers must inform lenders of address changes.

ORDER

1. This appeal is filed under Section 18 of SARFAESI Act, challenging the order of Learned Presiding Officer, DRT-II, Bangalore passed in SA 185/2018 dated 14.7.2021.

2. SA No.185/2018 was filed by the respondent challenging the action and the measure taken by the appellant bank under SARFAESI Act, 2002 , especially, the order of Learned 44^th Addl. CMM, Bengaluru dated 2.7.2018 passed in a petition fled under Section 14 of the SARFAESI Act, 2002 by the appellant bank. After contest, Learned Presiding Officer allowed the said SA, therefore, this appeal is filed by the appellant financial institution.

3. It is submitted by the Learned Counsel for appellant bank that Possession Notice sent to the respondent has been returned with endorsement ‘no such person’ in the address. Therefore, paper publication had been effected. Even thereafter, there is no representation for the respondent. It is informed by the Learned Counsel for appellant that possession notice was sent to the respondent to the address given in the loan documents. If at all any change in the address of the respondent, it is for the respondent to inform the appellant institution for further communication.

It appears that no such information was intimated to the appellant.

4. Learned Counsel further submitted that Learned Presiding Officer allowed the SA on the following two grounds.

a) There was no affixture of Section 13(2) notice on the outer door or some other conspicuous part of subject property under Rule 3(1) of Security Interest(Enforcement) Rules, 2002.

b) No proof of personal service of possession notice issued under Section 13(4) of SARFAESI Act was produced.

5. Learned Counsel further submitted that there is no specific plea in the SARFAESI application that demand notice was not served on the respondent. Respondent, relying on the submission made in the petition filed under Section 14 of the SARFAESI Act 2002 stated that personal notice taken for issuance of demand notice under Section 13(2) was not served on the respondent. Respondent contended that appellant failed to effect affixture of possession notice. Affixture and paper publication are required only if the Authorised Officer believes that borrower was avoiding service of notice. Though notice issued under Section 13(2) was taken to the respondent to all the three addresses given in the loan documents, it was returned with endorsement ‘no such person.’ Demand notice was also published in newspapers i.e., in English and vernacular languages. Respondent sent a representation dated 7.8.2015 wherein he specifically referred to the demand notice dated 12.5.2015. It means that respondent received demand notice dated 12.5.2015. When receipt of demand notice dated 12.5.2015 is mentioned in the representation of the respondent dated 7.8.2015 itself, it is not required to publish the same in newspapers.

6. It is further submitted that Possession Notice dated 24.7.2015 had been duly served on the respondent and proof of service is produced by production of postal receipt with acknowledgment card. Possession notice was also affixed and published in newspapers. Without considering the proper service of Section 13(2) Notice and Section 13(4) Notice, Learned Presiding officer wrongly allowed the SA. Thus, Learned Counsel for appellant bank prayed the Tribunal for setting aside order impugned in this appeal.

7. No representation for respondent. Respondent called absent and set ex parte.

8. I have considered the submissions made by Learned Counsel for appellant bank and perused the records.

9. It is seen from the SARFAESI application filed by the respondent in paragraph V(2), that respondent contended that without valid reasons, the appellant bank classified the respondent’s account as a NPA and issued demand notice dated 12.5.2015 under Section 13(2) of SARFAESI Act, followed by possession notice dated 24.7.2015 under Section 13(4) of SARFAESI Act. As rightly pointed out by Learned Counsel for appellant bank, there is