Appeal No. 147 of 2012 and M.A. Nos. 682 of 2008, 596, 683, 685 of 2009 and 516 of 2011. Case: Kamalkishor Kachrulal Upadhye Vs Cosmos Co-Operative Bank Ltd.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 147 of 2012 and M.A. Nos. 682 of 2008, 596, 683, 685 of 2009 and 516 of 2011
Party NameKamalkishor Kachrulal Upadhye Vs Cosmos Co-Operative Bank Ltd.
CounselFor Appellant: Party-in-person and For Respondents: H.N. Kulkarni, Advocate and Deepak Parikh
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueSecuritisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13(2), 13(3), 13(3A), 13(4), 14, 17, 18, 18(1)
CitationIV (2013) BC 66 (DRAT)
Judgement DateMarch 05, 2013
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

Raj Mani Chauhan, J. (Chairperson)

  1. This Appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") has been filed by the original applicant (for convenience hereinafter referred to as the "appellant") against the judgment and order dated 22nd May, 2008 passed by Shri Prem Mohan Mishra, the then learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT), Nagpur in Securitisation Applications (S.A.) No. 04/2007 (Kamalkishor Kachrulal Upadhye v. Dr. Devi Singh Shekhawat, Mukhya Prashask, the Chief Administrator of the Amravati Peoples Co-operative Bank Ltd.), whereby he has dismissed the S.A. filed by the appellant. The relevant facts giving rise to the present appeal may be summarized as under:

    The appellant who is the proprietor of a cinema theatre known as Kamal Talkies situated in Chandur Bazar, District Amravati as well as members of the Amravati People's Co-operative Bank Ltd. applied for Term Loan of Rs. 10.00 lacs to the Amravati People's Co-operative Bank Ltd. for construction of shopping complex in front of his theatre, which was sanctioned by the Chandur Bazar Branch of the Bank on 30th August, 2005. The Bank communicated to the appellant about the sanctioned loan through its letter dated 16th September, 2005.

  2. It is alleged by the respondent-Bank that the amount of loan sanctioned by it was guaranteed by the guarantors and the appellant to secure the amount of loan had executed a registered Mortgage Deed creating mortgage of his following immovable properties in favour of the Bank to secure amount of term loan:

    Description of the mortgaged properties--Landed property of Mauje Chandur Bazar F.S. No. 76/1B of Ward No. 7, property No. 41, admeasuring about 23925 sq. ft. (2223.52 sq. mtrs.) with constructed building and other things bounded by the following boundaries-

    East: field of Suresh Pawar

    West: field of Nagar Parishad, Chandur

    North: road

    South: field and house of Kisan Nathmal Rathi

    (hereinafter referred as the Suit property).

  3. It is further alleged that in pursuance to the loan sanctioned by the Bank to the appellant, the appellant and the guarantor executed the following documents:

    (a) Demand Promissory Note dated 16th September, 2005;

    (b) Continuing Security Letter dated 16th March, 2005;

    (c) Letter of guarantee dated 16th March, 2005;

    (d) Letter of Lien and set-off dated 16th March, 2005;

    (e) Loan Agreement dated 16th March, 2005;

    (f) Hypothecation of tangible goods dated 16th March, 2005;

    (g) Undertaking of appellant dated 16th March, 2005.

  4. Admittedly, the Bank issued notice to the appellant on different dates, calling upon him to pay the instalments of interests due on the sanctioned loan. But the appellant did not pay any amount (while as per allegation of the appellant, no amount of loan was disbursed to him). The respondent-Bank thereafter classified the account of the appellant as Non-Performing Asset (NPA) and proceeded under the SARFAESI Act to recover its dues from the secured assets.

  5. The Authorized Officer of the Bank on 27th July, 2006 issued demand notice under Section 13(2) of the SARFAESI Act to the appellant and the guarantors, indicating outstanding dues of Rs. 9,30,408/- due as on 30th June, 2006 calling upon them to pay the amount as indicated in the notice along with interest and other charges. The notice was received by the appellant on 4th August, 2005. But the appellant did not pay the outstanding dues as demanded by the Bank in its notice. The Authorized Officer of the Bank thereafter on 11th December, 2006 took over the possession of the cinema theatre of the appellant, serving notice under Section 13(4) of the SARFAESI Act to the son of the appellant.

  6. The appellant feeling aggrieved by the measures taken by the Bank under Section 13(4) of the SARFAESI Act, filed Appeal/Securitisation Application (S.A.) under Section 17 of the SARFAESI Act before DRT, Nagpur.

  7. The appellant in the aforesaid S.A. has alleged that respondent-Bank had never disbursed any loan to him. The Bank prepared forged and false documents as well as made false and frivolous entries in their records showing the outstanding dues against him. The Bank has wrongly issued demand notice dated 27th July, 2006 under Section 13(2) of the SARFAESI Act to him, demanding outstanding dues as indicated therein. He after receipt of the notice, sent his representation on 3rd September, 2006 to the respondent-Bank, which was received by it. But the respondent-Bank did not care to reply to his representation, while the respondent-Bank was required to inform him about the decision taken by it on his representation. Therefore, the measures taken by the Bank under Sections 13(2) and 13(4) of the SARFAESI Act is illegal.

  8. The appellant has further alleged that on 11th December, 2006 the matinee show (noon show) was going on in his theatre. The viewers were watching the movie. The Authorized Officer of the Bank along with other Officers of the Bank and the Police Force came to his cinema theatre in his absence. He forced the employees of the appellant to stop the movie show. He forcibly took over the possession of the cinema theatre, furnitures, fire instrument unit, lens, valuable amplifier and speakers, battery chargers, generator, bundle of wires, and other valuable articles lying in the theatre premises. The Authorized Officer of the Bank had taken this measure only to humiliate and defame him at the instance of his political opponents, while he had been Mayor of the city and enjoyed high standard of respect/reputation. The viewers were forced to leave the cinema hall. His son was present at the time when the Authorized Officer of the Bank along with the Police force was taking over the possession of his cinema hall along with the articles lying therein. He asked the Authorized Officer of the Bank, as to what was going on. The Authorized Officer thereafter gave him possession notice bearing the same date i.e. 11th December, 2006.

  9. The appellant has further alleged that the income from the cinema theatre was the only source of his livelihood as well as livelihood of his family. The Authorized Officer by taking forceful possession of the cinema theatre has deprived him of his livelihood as well as the livelihood of his family. He has suffered huge financial loss, mental pain and suffering on account of the wrongful act of the Bank. The appellant has therefore challenged the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act by filing S.A. under Section 17 of the SARFAESI Act, praying for the following reliefs:

    (a) That the Hon'ble Appellate Tribunal be pleased to set aside the order passed by DRT, Nagpur dated 22nd May, 2008 in S.A. No. 04/2007 allow the Appeal with costs to the appellant.

    (b) Declare that the Bank is not entitled to recover any amount from the appellant on the basis of the notice issued under Section 13(2) of the Act and that the said action of the Bank is absolutely illegal and arbitrary.

    (c) To direct the Bank to return the property seized by the Bank under Section 13(4) of the SARFAESI Act in the same condition it was taken possession.

    (d) That the Hon'ble Appellate Tribunal be pleased to grant to the appellant such other and further reliefs that the applicant may pray for from time-to-time and this Hon'ble Tribunal may deem fit and proper to grant.

    (e) That the appellant be granted the cost of this Appeal from the Bank.

  10. The respondent Nos. 1 to 4, 6 and 9 opposing the aforesaid S.A. filed by the appellant filed their written reply. They alleged that the respondent-Bank had issued demand notice under Section 13(2) of the SARFAESI Act on 27th July, 2006 to the appellant which was received by the appellant on 4th August, 2006. But the appellant has filed the present S.A. on 23rd January, 2007. The period for filing the Appeal under Section 17 of the SARFAESI Act, is 45 days from the date of the measures taken by the Bank under Section 13(4) of the SARFAESI Act. In this way, the S.A. filed by the appellant is barred by limitation. The respondent-Bank after issuing Demand Notice under Section 13(2) of the SARFAESI Act to the appellant, proceeded under Section 13(4) of the SARFAESI Act to take over possession of the secured assets, as the appellant did not pay the amount demanded by the respondent-Bank in its notice issued under Section 13(2) of the SARFAESI Act.

  11. The respondent-Bank on 11th December, 2006 had taken over the possession of the secured assets and prepared Panchanama on the spot and informed the Police Station, Chandur Bazar, that it had taken over the possession of the secured assets. The respondents have further alleged that the Amravati People's Co-operative Bank Ltd. is registered under the Maharashtra State Societies Act, 1960 and involved in carrying on Banking business as per the direction of R.B.I. It has its head office at Jalaram Market, Jawahar Road, Amravati and branch office at Chandur Bazar, State of Amravati. The appellant is a member of the Amravati People's Co-operative Bank Ltd. and is resident of Chandur Bazar. He had applied for Term Loan on 1st July, 2005 for construction of shopping complex. The Bank had sanctioned to the appellant a term loan of Rs. 10.00 lacs on 30th August, 2005 as per Resolution No. 1 of its Meeting of the Board of Directors. The Bank thereafter vide its letter dated 16th September, 2005 informed the appellant about the sanctioned loan. The appellant as per requirement of the Bank had executed the relevant documents i.e. Demand Promissory Note, Continuing Security Letter, etc. The amount of loan was guaranteed by two guarantors, who had also executed deed of guarantee and other documents. The appellant had created mortgage of his Suit properties in favour of the Bank to secure the amount of the loan. He accordingly, executed mortgage deed. He had...

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