SARFAESI Appeal No. 25 of 2004. Case: K. Inbarajan Vs Tamilnad Mercantile Bank Limited. Chennai Debt Recovery Tribunals
| Case Number | SARFAESI Appeal No. 25 of 2004 |
| Counsel | For Appellant: O.F. Raju, Adv. and For Respondents: T. Poornam and P. Neelakantan, Advs. |
| Judges | A. Vijay Kumar, Presiding Officer |
| Issue | Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4) and 39; Security Interest (Enforcement) Rules, 2002 - Rules 2, 4, 8, 8(1) and 8(2) |
| Citation | III (2005) BC 92 |
| Judgement Date | June 08, 2005 |
| Court | Chennai Debt Recovery Tribunals |
Order:
A. Vijay Kumar, Presiding Officer
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This appeal has been filed by the appellants seeking an order of this Tribunal to place appellants in possession with regard to two immovable properties mentioned in the possession notice dated 18.11.2004 and call for the statement of accounts relating to the transactions, rate of interest, etc. from the respondent. It is further prayed that notice issued under Section 13(2) of the SARFAESI Act, 2002 by the respondent be declared as illegal and quash all the proceedings taken by the respondent in pursuance of the same and for costs in this application.
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The brief facts of the case are as follows:
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The appellant is a partner of the partnership firm M/s. Leela Agencies and the authorised signatory of the partnership firm M/s. Leela Traders. This appeal has been filed on behalf of the appellant and also on behalf of all the signatories of loan documents, as borrowers, guarantors or property owners, for the loans availed from the respondent Bank in his favour and in favour of M/s. Leela Agencies and M/s. Leela Traders. The appellant is a partnership firm engaged in the business of stockists and traders of consumer goods and also manufacturers of sugar candy as a small scale industrial unit. The appellants availed loan facilities from the respondent Bank for their business. Further on the strength of assurances given by the respondent Bank for grant of financial facilities, the appellants offered immovable properties as security for the loans granted from the year 1987 onwards, during the year 2003 due to fraud committed by the manager of the appellant's sugar candy unit, the petitioner suffered loss and this fact is known to the respondent Bank. However, the Bank did not co-operate with the appellants and with ulterior motive compelled the appellants to execute various renewal documents.
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Further, while negotiations were going on with the respondent Bank for amicable settlement of the loans, the Bank initiated proceedings under Section 13(2), of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) and issued notice on 28.7.2004 demanding a sum of Rs. 17,96,048.02. The said notice was issued by a 'Manager' of the Bank who is not an authorised officer under the Act and hence the same is illegal, null and void. The appellant sent objections on 16.9.2004 through their Counsel to the Bank in the light of judgment of the Apex Court in Mardia Chemicals Ltd. v. UOI. But the respondent Bank failed to reply within the stipulated period of one week on receipt of objections, but sent a ritual reply only on 10.11.2004 without giving any details regarding statement of account, interest, etc., which reached the appellant's Counsel on 17.11.2004. In spite of the attempts by the appellants for compromise, the respondent made false publication in 'Dhinamalar' paper on 18.11.2004 claiming to have taken possession of the two residential immovable properties on the same day. The possession notice was actually served only at 10.30 a.m. and 11.00 a.m. on 18.11.2004 to the appellants. The possession notice was issued by the Branch Manager of the respondent Bank who is the secured creditor of the Bank. The same officer cannot become the authorised officer for the same branch for invoking the provisions of the Securitisation Act. The respondent Bank did not comply with the formalities prescribed under Rules 4 and 8 of the Security Interest (Enforcement) Rules, 2002 for taking possession and hence the action taken by the Bank in taking possession and its publication are illegal and invalid. It is apprehended that the respondent Bank assumes unlimited powers and put up the dwelling secured properties for sale causing loss to the appellants.
(c) The other grounds of the application are as follows:
(i) As per the...
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