Appeal No. 227 of 2007. Case: Anushree Sah Vs Bombay Mercantile Bank Ltd.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 227 of 2007
Party NameAnushree Sah Vs Bombay Mercantile Bank Ltd.
JudgesS.S. Parkar, J. (Chairperson)
IssueRecovery of Debts Due To Banks and Financial Institutions Act, 1993 - Section 21; Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13, 13(2), 13(4), 13(4)(d), 14, 17, 18, 2, 2(1)(f), 2(1)(zb), 31
Judgement DateSeptember 14, 2007
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

S.S. Parkar, J. (Chairperson)

  1. A short question that arises in this appeal is whether a guarantor or his heir like the appellant is entitled for a notice under Sec. 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SRAFESI Act). That, this is the only question which is raised for decision in the appeal has been made clear by the counsel for the appellant while commencing his arguments. Even before the D.R.T. that was the only question which was raised as is obvious from the observations made in para. 8 of the impugned order that although in the securitisation application certain grounds are taken by the applicant her counsel had at the time of arguments pressed into service only one ground, namely, non-issuance of notice under Sec. 13(2) of the SRFAESI Act. The said question arises in the following factual matrix.

  2. An overdraft facility was availed of in the name of a registered company by name Car Mart Pvt. Ltd. from the respondent bank some time in November, 1993. The said loan was secured by guarantees executed by the then directors of the company Rajiv Sah, father of the appellant (since deceased), Smita Sah, mother of the appellant and Roop Narayan Sah, grandfather of the appellant. While the parents of the appellant were the Directors of the company, grandfather is the share holder of the company. The loan was also secured by execution of an equitable mortgage by the grandfather in respect of his flat being flat No. 52/A, in Meherina Co operative Housing Society Ltd., at Nepean Sea Road, Mumbai-400026 which stood in his name. Appellant's father, Rajiv Sah, was the Managing Director of the company who expired on 29th October, 1994. After his death the management of the company was taken over by his wife Smita. As the company failed to pay the debt due to the respondent bank the latter initiated proceeding under the provision of the SRFAESI Act by serving notice dated 27th December, 2003 under Sec. 13(2) of the SRFAESI Act on borrower company, Managing Director Smita and mortgagor Roop Narayan who was also the guarantor and mortgagor of the residential flat. After service of the notice Smita, who is the mother of the appellant, challenged the notice by filing proceeding under Sec. 17 of the SRFAESI Act being S.A. No. 7 of 2006 which was dismissed. Thereafter, the appellant filed S.A. No. 10 of 2007 in the D.R.T.-II, Mumbai raising a question that since she is an heir of her deceased father, who was guarantor, the notice under Sec. 13(2) of the SRFAESI Act ought to have been served on her also. That application having been dismissed by the impugned order dated 23rd May, 2007 passed by the Presiding Officer, D.R.T.-II, Mumbai the present appeal has been filed challenging the said order.

  3. On behalf of the appellant it is contended that since the appellant is a daughter of a guarantor she was entitled to the notice under Sec. 13(2) of the SRFAESI Act. It is also argued that there was a family arrangement arrived at' between her parents and grandfather sometime in the year 1983 whereby all the Mumbai properties and business so also the flat in question were allotted to the share of her deceased father and her mother and the properties situated in the State of Rajasthan were allotted to the share of the grandfather Roop Narayan and his wife Ayodhya and their children.

  4. Reliance is placed on the suit filed by the appellant's grandmother Ayodhya in the Bombay High Court being Suit No. 2310 of 1995 against the appellant and her mother for administration of the estate of the said deceased Rajiv in which the flat in question was not mentioned. However, in the written statement filed by the appellant's mother is was stated that the flat was also part of the estate of the appellant's deceased father.

  5. Reference is also made to the suit filed by the appellant's grandfather Roop Narayan in the Bombay High Court being Suit No. 4162 of 1995 against the appellant's mother for a declaration that Roop Narayan was the owner of the said flat and her mother was a trespasser in the said flat and for possession. It is also pointed out that the respondent bank filed a dispute under the provisions of the Co-operative Societies Act in the Co-operative Court being Dispute No. C.C.-1-40/1996 impleading the company, the appellant and her mother as heirs and legal representatives of the deceased Rajiv besides impleading her mother in her capacity as a guarantor and Roop Narayan as guarantor and mortgagor.

  6. Reference is also made to the interim order of status quo granted in the High Court suit on 15th November, 1995 in a notice of motion taken out in the suit filed by the grandfather, which is as follows.

    Para. 5 Both parties are restrained from disturbing possession of each other in respect of the bedrooms which are separately and exclusively used by the plaintiffs on the one hand and by the defendant on the other hand as indicated above. Both parties to use common room in a reasonable manner so as not to cause inconveniences and harassment to other side.

  7. Secondly, reliance is placed on an interim order dated 29th June, 1996 passed in the Suit No. 2301 of 1995 filed by the grandmother Ayodhya. The relevant portion of the said order is as follows:

    ...However, if any such assets are there, the plain tiff shall maintain status quo in respect of those assets till further order.

  8. It is vehemently contended on behalf of the appellant that since the order of status quo was passed with regard to the property in question until rights of the appellant are decided the respondent bank cannot take any action under the provisions of the SRFAESI Act so as to prejudice rights of the appellant. It would be relevant here to mention that the afforested interim orders are passed...

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