Appeal No. 163 of 2011 with M.A. No. 754 of 2011. Case: Navalakha Agencies & Anr. Vs Indian Bank & Ors.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 163 of 2011 with M.A. No. 754 of 2011
Party NameNavalakha Agencies & Anr. Vs Indian Bank & Ors.
CounselFor Appellant: Mr. S.G. Aney, Sr. Advocate Along with Mr. Rishabh Shah and Mr. Puneet Gogad i/b M/s. Raval Shah and Co., Advocates and For Respondents: Mr. Ratina Maravarman, Advocate for the Respondent Nos. 1, 2 and None for the Respondent No. 3
JudgesRaj Mani Chouhan, J. (Chairperson)
IssueBanking
CitationII (2013) BC 83
Judgement DateSeptember 28, 2012
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

Raj Mani Chouhan, 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 the SARFAESI Act) has been filed by the appellants (original applicants) (hereinafter referred to as the appellants) against the judgment and order dated 26th August, 2011 passed by Shri Shrikant G. Kulkarni, the learned Presiding Officer, Debts Recovery Tribunal, (DRT) Pune, in the Securitisation Application (S.A.) No. 22/2011 (Navalakha Agencies v. Indian Bank) by which the learned Presiding Officer, DRT, Pune, has dismissed the S.A. filed by the applicants with costs. Most of the relevant facts are not in dispute between the parties which may, in nutshell, be stated as follows:

Admittedly, the appellant No. 1 Navalakha Agencies, a registered partnership firm, having its place of business at 1379, Bhavani Peth, Pune, availed certain credit facilities in the year 1990 towards Working Capital business of the firm which was sanctioned by the respondent. No. 1, the Indian Bank, a Banking company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, from its branch at Nana Peth, Pune. The appellant No. 2 Mr. Ghanshyam Lalchand Navalakha, one of the partners of the firm, stood guarantor to the above loan sanctioned by the respondent No. 1 Bank. He to secure the amount of loan created equitable mortgage of his land bearing Sub-Plot No. 4, Hissa No. 4, admeasuring 1060 sq. mtrs, out of Final Plot No. 493-B, CTS No. 1118/B admeasuring 64.85 hectares, situated in Shivaji Nagar, Bhamburda, within limit of Taluka and District and Sub-District Haveli, District Pune (hereinafter referred to as the said plot). The respondent No. 1 Bank from time-to-time further extended the credit facility to the appellant No. 1 but the appellant No. 1 could not keep the said account update, therefore, its account was classified by the respondent No. 1 Bank as Non Performing Asset (N.P.A.) on 31st March, 1993.

2. The respondent No. 1 Bank thereafter filed a Special Civil Suit No. 952/1995 in the Court of Civil Judge (Sr. Division), Pune, against the borrower and the guarantors, for recovery of its dues along with future interest. In the meantime the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDBFI Act) came into force. Consequently the Debts Recovery Tribunal, Pune, was established. In pursuant to the provision under the RDDBFI Act, the above Special Civil Suit No. 952/1995 pending in the Court of Judge (Sr. Division), Pune, stood transferred to DRT, Pune, where it was registered as Original Application No. 792/2001.

3. The said O.A. was contested by the defendants. The parties filed documentary evidence and claim affidavit in support of their contentions. The learned Presiding Officer, DRT, Pune, vide judgment and order dated 7th October, 2003 allowed the O.A. for Rs. 28,59,305.10 with future interest @ 17.50% p.a. till full and final realization of the decretal amount. The learned Presiding Officer further ordered that there will be charge of the Bank on the said plot. The learned Presiding Officer consequently ordered for issuance of Recovery Certificate (R.C.). When the Defendants failed to pay the decretal amount, the respondent No. 1 Bank moved an application before the learned Recovery Officer, DRT, for initiating the Recovery Proceeding on the basis of the Recovery Certificate by the learned Presiding Officer. The R.O. accordingly initiated the Recovery Proceeding (R.P.) No. 46/2004 for recovery of the amount in the R.C.

4. The defendants being aggrieved by the impugned judgment and order dated 7th October, 2003 passed by the learned Presiding Officer, DRT, preferred an appeal No. 136/2004 under Section 20 of the RDDBFI Act before Debts Recovery Appellate Tribunal, Mumbai (hereinafter referred to as the DRAT, Mumbai). The R.O. in the recovery proceeding issued warrant of attachment of the said plot on 9th September, 2004 and accordingly attached the said plot on 13th September, 2004. The respondent No. 1 Bank got the said plot valued. The valuer valued the market value of the said plot as Rs. 1,99,67,000/-. The R.O. on 20th December, 2004 ordered for issuance of proclamation of sale notice.

5. Accordingly, the sale notice was published on 27th December, 2004 for sale of the said plot. In appeal filed by the defendants before the DRAT, Mumbai the DRAT, Mumbai, vide its order dated 14th January, 2005 stayed the recovery proceeding subject to deposit of Rs. 14,29,903/- made by the appellant i.e., 50% of the amount shown in the R.C. The defendants communicated the order passed by the DRAT, Mumbai, to the R.O. who adjourned the sale upto the 16th March, 2005. The defendants thereafter informed the R.O. that they had deposited the amount as per the order of the DRAT, Mumbai, which was condition precedent to continue the order of stay.

6. Admittedly the respondent No. 1 Bank in addition to filing of the above O.A. for recovery of its dues invoked the provision under SARFAESI Act too, to recover its dues. The respondent No. 1 Bank on 3rd December, 2008 issued a demand notice under Section 13(2) of the SARFAESI Act to the borrower and its partners demanding an amount of Rs. 2,78,68,301/-. The partners of the appellant No. 1 replied to the notice but they did not make any payment. The respondent No. 1 Bank thereafter sent a rejoinder to the reply of the notice sent by the appellant and thereafter they further proceeded under the SARFAESI Act and issued possession notice under Section 13(4) of the SARFAESI Act on 19th January, 2011 to the borrower and the guarantors. The respondent No. 1 Bank thereafter issued possession-cum-sale notice on 21st January, 2011. The said plot i.e., the secured asset was sold by the Authorized Officer of the respondent No. 1 Bank under the SARFAESI Act on 25th February, 2011 by way of public auction.

7. The appellants being aggrieved by the measures taken by the respondent No. 1 Bank under the SARFAESI Act filed Securitisation Application No. 22/2011 before the DRT, Pune challenging the measures taken by the respondent No. 1 Bank under Sections 13(2) and 13(4) of the SARFAESI Act. The appellants in their S.A. alleged that six brothers of Navalakha family viz., (1) Popat Lalchand Navalakha, (2) Mr. Birchand Lalchand Navalakha, (3) Mr. Nayansukh Lalchand Navalakha, (4) Bansilal Lalchand Navalakha, (5) Mr. Ghanshyamdas Lalchand Navalakha, and (6) Mr. Kesharchand Lalchand Navalakha had purchased approximately 5,616 sq. mtrs. i.e., 60,450 sq. ft. of land forming part of the C.T.S. No. 1118/B situated in Bhamburda, Shivajinagar, Pune, by separate sale deeds dated 23rd February, 1973. They got their purchased plots through sale deeds amalgamated into one unit in accordance with provisions under the Bombay Provincial and Corporation Act, 1949 read with Developer Control Orders. In this way, the total land purchased by the six brothers of Navalakha family became one unit. There is a building of Navalakha family on the said land which is jointly owned by them. They wanted to raise further constructions. Consequently they got the plan of two buildings sanctioned and raised the construction upto the plinth level. Since it was one unit of all the Navalakha brothers which was indivisible, therefore, none of the co-owners could transfer or mortgage of any portion of the said plot No. 493/B.

8. The appellants have further alleged that the respondent No. 1 Bank issued demand notice under Section 13(2) of the SARFAESI Act on 3rd December, 2008 to Navalakha Agencies and its seven partners i.e., (1) Mr. Ghanshyam Lalchand Navalakha, (2) Smt. Shantabai Biradhichand Navalakha, (3) Pushpa Bansilal Navalakha, (4) Smt. Lalitabai Kesarchand Navalakha, (5) Shri Narendra Nayansukhlal Navalakha, (6) Dhananjay Nayansukhlal Navalakha, (7) Mr. Prakash Nayansukhlal Navalakha (partners at Sr. Nos. 5, 6 and 7 being legal heir of the late Mr. Nayansukh Lalchand Navalakha). The respondent No. 1 Bank thereafter issued possession notice under Section 13(4) of the SARFAESI Act.

9. The appellants have challenged the measures taken by the respondents under the SARFAESI Act, firstly on the ground that the description of the said plot i.e., the mortgaged property shown by the respondent No. 1 Bank in the said Special Civil Suit, the notice issued under Section 13(2) of the SARFAESI Act and the possession notice issued under Section 13(4) of the SARFAESI Act does not match with each other. The said plot has been described in the Special Civil Suit. No. 952/1994 referred above as follows:

all that piece and parcel of Land at S. No. 493-B, Sub Plot No. 4, Hissa No. 4 (New 1118) Shivaji Nagar, Bhamburda, within the limits of Taluka and Registration Sub-District Haveli and limit of District and Registration District Pune, admeasuring about 60,000 sq. ft. out of which one-sixth share of 10,000 sq. ft.

The respondent No. 1 Bank in the demand notice issued to the borrower and the guarantor, under Section 13(2) of the SARFAESI Act, has described the said plot as follows:

Plot No. 493 B, Hissa No. 4, Sub Plot No. 4 admeasuring about 1060 sq. mtrs. out of CTS No. 1118, Lakaki Road, Bhamburda (Shivaji Nagar), Tal. Haveli, Dist. Pune belonging to 2nd notice viz., Mr. Ghanshyam Lalchand Navalakha is mortgaged with the respondent Bank.

Whereas the respondent No. 1 Bank in the possession notice dated 19th January, 2011 issued to the borrower and the guarantor, under Section 13(4) of the SARFAESI Act, has described the said plot as follows:

Plot No. 493 B, Hissa No. 4, Sub Plot No. 4, admeasuring about 1060 sq. ft. out of CTS No. 1118, Lakaki Road, Bhamburda (Shivaji Nagar), Tal, Haveli Dist. Pune, belonging to Shri G.L. Navalakha, which is bounded as follows:

On or towards the east: By final Plot No. 493 A.

On or towards the south: By Div. No. 5...

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