The appeal was allowed because the SARFAESI Act cannot be invoked after prior claim rejection; demand notice lacked required details of debt.

ORDER

1. Aggrieved against the order dated 14.05.2024 passed in TSA No.566/2016 by Learned Presiding Officer, DRT-II, Mumbai, this Appeal is filed under Section 18 of the SARFAESI Act, 2002 .

2. Appellants filed TSA No.566/2016 to set aside the symbolic possession dated 14.12.2010; to set aside the notice issued by the Learned Assistant Registrar dated 10.10.2011 and for other relief.

3. The main ground taken by the Appellants in the TSA is that the very initiation of proceedings under the SARFAESI Act, issuance of Demand Notice followed by other measures are clearly barred under the law of limitation. Respondents filed Recovery Application in RA No.3441/2004 before Learned Assistant Registrar under Section 101 of the Maharashtra Co-operative Societies Act, 1960 for recovery of a sum of Rs.83,36,854.66р against the Applicants in TSA, for the alleged loan facility granted by the Respondents. The Learned Assistant Registrar rejected the claim of the Respondents vide its order dated 21.02.2007 stating that Loan Demand Application was dated 18.10.1999 and the Loan Sanctioned Letter was dated 08.06.1999 and doubted the very loan transaction. Respondents initiated proceedings before the Divisional Joint Registrar against the order passed by the Assistant Registrar in Revision Petition No.193/2007, which had been dismissed for non-prosecution. Other ground is that when competent Forum had rejected the claim on the basis of loan transaction, for the same loan transaction, proceedings under SARFAESI Act, cannot be initiated. Demand Notice has no details about the classification of loan account as NPA and the mandatory provisions of SARFAESI Act had not been complied with.

4. Learned Presiding Officer, DRT-II, Mumbai, on considering the materials produced and the rival submissions of Learned Counsel for parties, dismissed the TSA, thus this Appeal.

5. Learned Counsel for the Appellants submitted that Respondents had also initiated a Criminal Complaint against the husband of the second Appellant in CC No.43/2003 and СС No.79/2003 in connection with dishonor of Cheques under Section 138 of N.I. Act. These cases ended in conviction in the Trial Court and that was upheld by Sessions Court. In the Criminal Revision Petition filed before the Hon'ble High Court of Bombay, there had been a settlement in respect of the transaction only in connection with the Cheques dishonor cases. There was no settlement in respect of the loan transaction. Learned Presiding Officer, on the basis of the conviction in the Criminal Cases and that it had not been pleaded in the SARFAESI Application, dismissed the TSA, without considering the main issue as to whether SA proceedings are legally maintainable at all, in view of the rejection of Respondents' claim before the competent Forum.

6. It is submitted further that Section 13(2) Demand Notice has no mention of the Authorised Officer, there is no segregation of principal amount and interest due, and the objections sent to Section 13(2) Notice was not properly considered by theатс Respondents. Respondents have not filed any reply to the Securitization Application but only filed reply in the Application filed to condone the delay. Reply does not deal with the loan transaction and other aspects raised in the TSA. He reiterated that Criminal Revision Application Nos.390/2007 and 391/ 2007 were disposed of in terms of consent terms raised for settling the transaction under Section 138 of N.I. Act alone. In the said circumstances, Learned Counsel for the Appellants submitted that order of Learned Presiding Officer, DRT-II, Mumbai passed in TSA No.