S.A. No. 35/2008. Case: Chaitanya Pharma and Others Vs Union Bank of India. Mumbai Debt Recovery Tribunals

Case NumberS.A. No. 35/2008
CounselFor Appellant: Mr. H.A. Narohna, i/b. Legaleye Asso., Adv. and For Respondents: Mr. Rajesh Nagori, i/b. Prakash Panjabi & Co., Adv.
JudgesK.J. Paratwar, Presiding Officer
IssueSecuritisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13(2), 13(4), 17
Judgement DateMarch 04, 2009
CourtMumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. The Respondent's taking possession u/s. 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short 'SARFAESI Act'] of property bearing Plot No. E-51, Additional Ambernath Area, MIDC, Jambivali Village, Ambernath, District Thane is challenged in this application u/s. 17 of SARFAESI Act. By notice u/s. 13(2) of SARFAESI Act Dt. 13.10.2007, the Respondent called upon the Applicants to pay Rs. 1,37,35,434.25 with interest from 01.10.2007. The Applicants did not respond to the notice and also failed in complying the same. Consequently, the Respondent gave possession notice Dt. 31.12.2007 whereafter letter Dt. 03.01.2008 was given on behalf of the Applicants to the Respondent stating inter alia that the basis of classifying the account as NPA is not classified. The Applicants' requested the Respondent not to take possession. The Respondent Bank gave a reply Dt. 04.01.2008 denying the contentions of the Applicants and took physical possession on 08.07.2008 with the help of the District Magistrate.

  2. The Respondent's action is challenged and is said to be bad on the ground that the Respondent did not classify the account as NPA. The Applicant No. 1 is a Small Scale Industrial [SSI] Unit started in 2002. The Applicant No. 1 obtained two Term Loans of Rs. 95 Lacs and Rs. 45 Lacs and one Cash Credit Facility of Rs. 30 Lacs in 2004. Though the commercial production has not yet commenced, the Applicant No. 1 has paid inter alia substantial amount by raising funds from friends and relatives as well as by selling their personal effects thereby showing bonafide intention. The Applicant No. 1 has deposited Rs. 88 Lacs though it was facing teething problems. The Respondent had calculated interest by compounding of penal interest against the judgement of the Apex Court. The possession notice has not been published in the local news paper. The application is sought to be allowed on the aforesaid grounds.

  3. During the pendency of the S.A., the Applicants filed application [Exh. 13] for direction to the Respondent to make loss of goods for the theft taken place after the Respondent Bank took possession. The application was ordered to be heard alongwith final hearing. The Bank initially opposed the application by contending that no theft had taken place. At the time of final arguments however, the Bank filed affidavit of Mr. A.S. Bhatkal [Exh. 29] and the copy of the inspection report of joint inspection [with the Applicant] of the secured asset held on 26.02.2007 and the valuation report regarding lost five stolen items as shown in the valuation report aggregating to Rs. 29,000/-. The Bank has shown readiness to...

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