Securitisation Application No. 7 of 2006. Case: Car Mart Pvt. Ltd. and Anr. Vs Bombay Mercantile Co-operative Bank Ltd. and Anr.. Mumbai Debt Recovery Tribunals

Case NumberSecuritisation Application No. 7 of 2006
CounselFor Appellant: Nitin Thakkar, Sr. Counsel and Bhalchandra Palav, Adv. i/b., Uswadia and Udeshi, Advs. and For Respondents: Rishabh Shah, Adv., i/b., T.N. Tripathi & Co. and A.A. Joshi, Adv., i/b., L.J. Law
JudgesK.J. Paratwar, Presiding Officer
IssueSecuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 2(1), 13(2), 13(4) and 17; Maharashtra Co-operative Society's Act - Sections 91 to 96
CitationIV (2006) BC 195
Judgement DateSeptember 01, 2006
CourtMumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. The respondent No. 1''s taking possession [symbolic] of Flat No. 51/A, Meherina Cooperative Housing Society Ltd., Nepean Sea Road, Mumbai 400 026 under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short 'SRFAESI Act'] has aggrieved the applicant.

  2. It is necessary to know following facts for understanding the dispute in the matter. In November 1993, the respondent No. 1 sanctioned to the applicant No. 1 Overdraft Facility of Rs. 90 lacs partly for clearing dues of Rs. 83 lacs of the applicant's the then lender State Bank of Hyderabad. The facility was granted on Guarantee of applicant No. 2, her husband (since deceased) and respondent No. 2 as also Equitable Mortgage by respondent No. 2 of the Flat.

  3. The applicant No. 2's husband who was in Management of the applicant No. 1 unfortunately met with an accidental death on 29.10.1994 whereafter the applicant No. 2 took the charge of the applicant No. 1. At that time, the account was being continuously overdrawn. The applicant No. 1 through applicant No. 2 requested by letter dated 2.1.1995 to accept arrangement of repayment of Rs. 1 lac before 10.1.1995 and Rs. 26,500/- per week, from first week, of January in addition to 10% deduction from the receivables. The applicants contend that the respondent No. 1 Bank accepted the arrangement pursuant to which surplus amount of Rs. 15,36,703/- was deposited between January to May 1995.

  4. The respondent No. 2 by letter dated 22.4.1995 protested the respondent No. 1's continuation of the Credit Facilities beyond the sanctioned period which was till the end of 1994. He in fact raised grievance that the Bank contrarily allowed the facilities to the overdrawn. The plea was that he would be liable for outstandings as on the date on which the sanction was to expire. The respondent Bank by reply dated 16.5.1995 refused to release the flat and discharge as Guarantor but froze the account. The unilateral freezing of the account is said to be illegal. The applicant No. 2 vide letter dated 6.6.1995, while hoping that respondent No. 2 will continue to be Guarantor and Mortgagor, requested for continuation of the limit. The respondent No. 1 recalled the outstanding and in April 1996 filed dispute under Sections 91 to 96 of Maharashtra Co-operative Society's Act in the Co-operative Court. The applicants' contention is that the respondent No. 1 Bank never contended that the account had become NPA which is why provisions of SRFAESI Act are not attracted.

  5. In the meanwhile, respondent No. 2 filed suit against applicant. No. 2 and other in Hon'ble High Court of Judicature at Bombay. The status quo with reference to the respective portions in possession of the flat was ordered to be maintained. This was because the applicant No. 2 is in possession of certain part of the Flat while the respondent No. 2 is in...

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