Ashok Menon, Chairperson
1. The Appellant is an Urban Co-operative Bank registered under the Multi-State Co-operative Societies Act, 2002. The bank was originally known as Surendranagar Mercantile Co-operative Bank which was amalgamated with Urban Co-operative Bank. The Respondent was an erstwhile employee of the bank and is a borrower who is being proceeded against by the Appellant Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(‘SARFAESI Act’, for short).
2. The Respondent had defaulted in repayment of the debt due and he also resigned from the bank on 30.09.2010. A notice was issued on 14. 02.2012 demanding a sum of ₹4,67,484/-. A reply was sent to the representation made by the Respondent on receipt of the notice since there was no effort made by the Respondent to repay the debt. A demand notice under Sec. 13(2) was issued to the Respondent on 14.03.2012. The Respondent replied to that notice but failed to pay the dues and his account was classified as a non-performing asset (NPA) on 31.03.2012. Steps were initiated under Sec. 13(4) of the SARFAESI Act against the secured asset. Symbolic possession was taken on 14.06.2012. The Respondent sent a letter to the Appellant on 30.06.2012 to which the bank sent a reply on 12.07.2012. The Respondent filed an application to the Labour Court against the bank and the same was allowed vide order dated 16.04.2014 directing the bank to pay a sum of ₹47,788/- with interest to the Respondent concerning the insurance claim of the Respondent. The bank had discharged that liability. Moreover, the bank has also discharged the payment of gratuity due to the Respondent and a cheque for ₹47,216/-was paid.
3. The bank preferred an application under Sec. 14 of the SARFAESI Act before the District Magistrate and it was allowed vide order dated 02.02.2022. The said order was modified by the District Magistrate on 10.03.2022.
4. The Respondent filed Securitisation Application (S.A.) No. 239 of 2022 before the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) challenging the Sarfaesi measures initiated by the Appellant. The S.A. was allowed and the Sarfaesi measures were quashed and set aside by the D.R.T. vide impugned order dated 26.06.2023 holding that the demand notice under Sec. 13(2) dated 14.03.2022 was defective and invalid. The Appellant is aggrieved and hence, in appeal.
5. The Appellant contends that the D.R.T. went wrong in applying the principles of the decision in Punjab National Bank vs. Mithilanchal Industries Pvt Ltd. MANU/GJ/1069/2020 for not providing the breakup of the debt due. The facts are different in the instant case. The Respondent herein had availed a staff housing loan of ₹5 lakhs agreeing to repay the same with interest at the rate of 9% per annum. Being an employee of the bank, he was aware of the rate of interest and breakup of the principal amount and interest due. The account extract was also provided together with the demand notice to the Respondent and therefore, there is no violation of the mandatory provisions of Sec. 13(3) of the SARFAESI Act. The Respondent had initiated several litigations against the bank to avoid repayment of the debt. Hence, the Appellant has sought interference in the appeal.
6. The Appellant has applied to stay of the impugned order which directs the restoration of the symbolic possession of the property.
7. The Respondent appeared in person and filed the reply denying his liability to pay any amount to the Appellant. Certain documents are also produced in support of his contentions in the reply.
8. Heard the Ld. Counsel appearing for the Appellant and the Respondent in person. Records perused.
9. The Ld. Counsel appearing for the Appellant has relied upon the decision of the Hon’ble Supreme Court in Indian Bank vs. Blue Jaggers Estates Ltd. & Ors (2010) 8 SCC 129 to argue for the proposition that the Tribunal cannot lose sight of the fact that the bank is a trustee of public funds and it cannot compromise the public interest for benefiting private individuals.
10. The decision of the Supreme Court in L & T Housing Finance Ltd. vs. Trishul Developers and Ano. (2020) 10 SCC 659 to argue that the technical defects in the demand notice when trivial and do not prejudice the debtor, it should not be a reason to reject the entire Sarfaesi action.
The impugned order of the D.R.T. will have to be examined in detail. Hence, it is only essential that the operation of the impugned order be put on hold till the appeal is determined. The parties are directed to maintain the status quo till the determination of the appeal.
Post on 12.07.2024 for hearing.
