Appeal No. 36 of 2004. Case: Prafulla Shankerrao Shirke and Ors. Vs The Mahanagar Co-op. Bank Ltd. and Ors.. Mumbai Debt Recovery Tribunals

Case Number:Appeal No. 36 of 2004
Party Name:Prafulla Shankerrao Shirke and Ors. Vs The Mahanagar Co-op. Bank Ltd. and Ors.
Counsel:For Appellant: S.P. Chavan, Adv. and For Respondents: K.G. Vaidya, Adv. for Respondent Nos. 1 to 3
Judges:K.J. Paratwar, Presiding Officer
Issue:Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13, 13(4), 17 and 31
Citation:IV (2005) BC 60
Judgement Date:March 24, 2005
Court:Mumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

1. The subject matter of this Appeal under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short "SRFAESI Act") is Flat admeasuring 625 Sq. ft. and bearing No. 6, Plot No. 51, Ruturanjan Co-operative Housing Society Limited, Tarun Bharat Co-operative Housing Society Limited, Chakala, Andheri (East), Mumbai-400099 which belonged to deceased appellant (Smt. Leela Shankarrao Shirke) who was surety having mortgaged the flat for securing outstanding of the 4th respondent.

2. In November 1985, the 4th respondent had obtained Bridge Loan of Rs. 30 lacs from the respondent No. 1, inter alia, against the equitable mortgage of the flat. It seems that Fixed Deposit Receipt of Rs. 3.75 lacs was kept and shares worth Rs. 50,000/- were purchased at the time of the loan. After about 26 months i.e. in January 1998, Government of Maharashtra through SICOM gave subsidy under Special Capital Incentive Package of said amount which was deposited with the respondent No. 1 Bank. By that time, however, interest of Rs. 12,000/- and odd amount had accumulated which went up to become Rs. as on 14.3.2002. On that date, the Bank prematurely retired the Fixed Deposits Receipts and proceeds of Rs. 8,15,414/- were credited (after first maturation sale proceeds of Fixed Deposit Receipt of Rs. 3.75 lacs having been kept in fresh Fixed Deposits Receipt).

3. The respondent Bank in view of the above served the impugned notice under Section 13 of SRFAESI Act calling upon the appellants and the respondent No. 4 to pay Rs. 22,11,798/- being dues as on 31.5.2003. The appellant gave reply to the notice dated 16.7.2003, inter alia, contending that the claim amount is inflated. By rejoinder dated 22.7.2003, the Bank refuted the contentions and once more requested to pay the amount as per OTS Scheme.

4. This appeal is filed seeking to restrain the respondent Bank from taking symbolic or actual possession. The main ground of appeal is that if payments/credit entries are considered, the amount due would be less than 20% which is why the provisions of the SRFAESI Act would not apply in the view of the Section 31(j) of the said Act. The appellant had challenged the date of the N.P.A. and the calculations. It is pointed out that there is infirmity in the claim made by the respondent Bank in the suit filed before the Co-operative Court and in the impugned...

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