Application No. 72 of 2007. Case: Swastik Metal Corporation Vs Dena Bank and Others. Mumbai Debt Recovery Tribunals

Case NumberApplication No. 72 of 2007
JudgesK.J. Paratwar, Presiding Officer
IssueSecuritisation and Reconstruction of Financial Assets and Enforcement Of Security Interest Act, 2002 - Sections 13(2), 13(3A), 17
Judgement DateOctober 23, 2008
CourtMumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. This is an application u/s. 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short 'SARFAESI Act']. The two flats in Mumbai described in Exh. A to the Securitisation Application [S.A.], subject matter of this Application, are sold by the Respondent Bank under SARFAESI Act by public auction held on 29.09.2008. The Applicants however did not endeavor to make the purchasers as parties to the S.A. even when it was clearly indicated that the S.A. would fail on that ground since the purchasers' right, title and interest cannot be decided in their absence.

  2. The Applicants' case as culled out by their lawyer during the course of final arguments is couched on following three grounds:

  3. The notice u/s. 13(2) is silent on the date of NPA.

  4. The Bank did not communicate within one week of receipt of the representation Dt. 19.11.2005 u/s. 13(3A) of SARFAESI Act the reasons for non-acceptance of the representation/objection. The reply given beyond 7 days Dt. 05.12.2005 is no reply in the eye of law;

  5. The Respondent Bank accepted the Applicant's One Time Settlement [OTS] proposal Dt. 13.03.2007 by its letter Dt. 26.03.2007. In fact, the Respondent Bank accepted a sum of Rs. 20 Lacs paid towards release of third party as and by way of the Applicants' offer accepted by it. Having accepted the OTS, the Respondent Bank could not have in law proceeded to take possession of the properties which it did on 22.09.2007; The Bank's action under SARFAESI Act is said to be bad on the above grounds.

  6. By reply in the nature of affidavit of Mr. S.N. Shetty [Exh. 11], the Respondent has resisted the S.A. and grounds therein. The Respondent has stated that the Bank's claim against the Applicant has been adjudicated in O.A. No. 416 of 2001 by this Tribunal which has by order Dt. 10.03.2006 issued Recovery Certificate [R.C.] for a sum in excess of Rs. 7.35 Crores with interest. This Tribunal has also declared that the out standings are secured by the mortgage of the flats in question. The Applicants did not pay any amounts even thereafter. They have been just protracting the matter making assurances to sale the properties and pay proceeds thereof. The Respondent Bank sanctioned the OTS under which payment was to be made within stipulated time but the Applicants did not either sale the flats or pay their own contribution. The Applicants went on sending the...

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