Appeal No. 141 of 2013. Case: NKGSB Co-operative Bank Ltd. Vs Trinity Enterprises and Anr.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 141 of 2013
Party NameNKGSB Co-operative Bank Ltd. Vs Trinity Enterprises and Anr.
CounselFor Appellant: Mr. Jay Choksi i/b., Law Frame and For Respondents: Mr. Raju U. Shinde, Advocate
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueConstitution of India - Article 12; Indian Contract Act, 1872 - Section 171; Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13(2), 13(4), 14, 17, 18
CitationI (2014) BC 58 (DRAT)
Judgement DateJuly 11, 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 directed by the original respondent (hereinafter referred as the "Appellant") against the impugned order dated 25th March, 2013 passed by Mr. V.N. Lothey Patil, the learned Presiding Officer (learned P.O.), Debts Recovery Tribunal-III (DRT), Mumbai in Securitisation Application (S.A.) No. 50/2013, whereby the learned Presiding Officer has allowed the aforesaid S.A. filed by the respondents in the following terms:

    S.A. No. 50 of 2013 is allowed--

    The respondent No. 1 is directed to handover the possession of shop in question and their title deeds to the applicants.

    The respondent No. 1 further directed to pay compensation of Rs. 1,000/- per day from the date of taking physical possession till the date of restoration of possession to the applicants.

    The stay for one month on this judgment is granted to enable the respondent Bank to challenge the order before the Hon'ble appellate Forum.

    The relevant facts giving rise to the present Appeal may be briefly stated as under:

    The respondent No. 1 which is a Proprietary concern of Mr. Trevor Merlin Pinto, carrying on its business in Shop Nos. 22 and 23, Vishnu Building, Sector 15, CBD Belapur, Navi Mumbai-400614, as a car dealer, had availed as many as five credit facilities sanctioned by the appellant. The respondent No. 2, Mrs. Rupali Trevor Pinto had created equitable mortgage of her aforesaid Shop Nos. 22 and 23, Vishnu Building, Sector 15, CBD Belapur, Navi Mumbai-400614. (hereinafter referred as the "said shops") in favour of the appellant by depositing title deeds to secure the amount of credit facilities of Rs. 8.00 lacs and Rs. 10.00 lacs respectively sanctioned by the appellant. The respondent No. 2 further availed credit facilities of Rs. 12.00 lacs, Rs. 20.00 lacs and Rs. 16.00 lacs sanctioned by the appellant, The equitable mortgage of the above shops was further extended for credit facilities availed by respondent No. 1 for Rs. 12.00 lacs. The respondent No. 2 had created equitable mortgage of her Pent House No. 1003, B-Wing, Shree Balaji Krupa Co-operative Housing Society Ltd., Plot No. 19-A, Sector-20, Kharghar, Navi Mumbai, and hypothecated her vehicle TATA SAFARI, Registration No. MH-43-L-5752 in favour of the appellant to secure the amount of other credit facilities i.e. for Rs. 16.00 lacs and Rs. 20.00 lacs availed by the borrower.

  2. The appellant after classifying the account of the respondent as Non-Performing Asset (NPA), proceeded under the SARFAESI Act to realize its dues. The Authorized Officer of the appellant issued two demand notices on 1st February, 2011 under Section 13(2) of the SARFAESI Act to the borrowers, calling upon them to pay the outstanding dues sanctioned under various credit facilities as mentioned therein. But the borrowers could not pay the amount and as per the demand notice, the Authorized Officer took over the symbolic possession of the said shops on 2nd August, 2011. The Authorized Officer of the appellant Bank accordingly, published the possession notice in the newspaper.

  3. The appellant thereafter moved an application before the District Magistrate, Thane, under Section 14 of the SARFAESI Act to take over the physical possession of the said shops and thereafter hand over the possession of the shops to him. The application was allowed by the District Magistrate, Thane, vide order dated 18th June, 2012. The Authorized Officer of the appellant thereafter took over the physical possession of the said shops on 5th December, 2012 and published possession notice in two newspapers.

  4. The respondents feeling aggrieved by the measures taken by the Authorized Officer, taking over the physical possession of the said shops, on the basis of the aforesaid order passed by the District Magistrate, Thane., filed Appeal/Securitisation Application (S.A.) No. 50/2013 under Section 17 of the SARFAESI Act in the DRT-III, Mumbai.

  5. The respondents in the aforesaid S.A. challenged the measures taken by the Authorized Officer under Sections 13(2) and 13(4) of the SARFAESI Act, mainly on the ground that they had already paid the entire outstanding dues, shown in their three accounts. The respondent No. 2 had created equitable mortgage of the said shops for two accounts i.e. loan of Rs. 8.00 lacs and Rs. 10.00 lacs, which was later on extended for another account of Rs. 12.00 lacs. They had repaid the entire outstanding dues of their aforesaid loan accounts and those accounts had been closed.

  6. The Authorized Officer of the appellant suppressing this material fact, obtained an order from the District Magistrate, Thane., under Section 14 of the SARFAESI Act to take over the physical possession of the said shops, while those shops were not mortgaged by the respondent to secure the loan of the other two accounts, which are not fully paid up. Since respondent No. 2 had paid the entire outstanding dues of two accounts for which the said shops were mortgaged, therefore, the Bank could not take over the physical possession of the said shops.

  7. The respondents further alleged that they as car dealer were carrying on their business from the said shops. The Bank on the basis of the order passed by the District Magistrate, Thane, had illegally put their locks and sealed the said shops. The new cars are lying in the shops. The respondent No. 2 has got only source of...

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