Chetan Singh vs State Bank Of Patiala

Ranjit Singh, J

Pleading that notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) was not served upon the appellant, as it was sent to a wrong address, but still the liability has been fastened on him, the appellant had filed an S.A. before DRT-II, Chandigarh. His plea was rejected and, therefore, the appellant has filed the present appeal to impugn the order passed by the Tribunal below.

A very short and crisp question which thus arises for consideration in appeal is that whether the appellant was served with notice under section 13(2) of the SARFAESI Act at right address or not.

The appellant, who is a guarantor along with another person, namely, Mr. Baldev Singh, had mortgaged his property, Residential House No. 123, measuring 240 sq. yds. situated at Pratap Nagar, District Ludhiana for the loan facilities provided by the bank to Mr. Harjeet Singh, S/o Mr. Manghar Singh. Appellant claims that he was under the impression, as was conveyed by the borrower, that the borrower was regularly paying the due amount to the bank. The appellant, however, saw to his shock the sale notice dated 24.9.2006. The appellant statedly rushed to respondent No. 3 to enquire as to why his shop was being sold. The appellant, states that the Bank did not entertain him. His request for supply of documents was also declined. This forced him to file a Civil Writ Petition (No. 17028/2006) whereas other guarantors filed S.A. on 26.10.2006. The respondent bank could not succeed in auctioning the property and so the auction was postponed.

Thereafter, the appellant claims to have requested the respondent bank to settle the matter through OTS. In the meanwhile, the principal borrower deposited an amount of Rs. 50,000/- with the bank on 12.1.2006 and another Rs. 1 lac at the time of filing the S.A. The appellant, however, filed the S.A. before the Tribunal on the ground that the bank had not followed due procedure, as notices under sections 13(2) and 13(4) of the SARFAESI Act were never issued to him. Some other pleas were also raised in this S.A. On being put to notice, the respondent bank appeared before the Tribunal below and raised objection regarding the maintainability of the S.A. being hopelessly time-barred. As per the bank, there was gross suppression of facts besides distortion of the facts. As per the bank, it had served a legal notice dated 20.8.2002 when various communications including oral messages to the borrower as well as to the appellant received no response. The respondent bank, thereafter, issued notice under section 13(2) of the Act to the appellant on 13.12.2002 and again on 31.1.2003. As per the bank, the appellant did not acknowledge or respond to the said notices, but still the bank in order to ensure fairness got published notices under section 13(2) in two daily newspapers, i.e., The Times of India dated 13.11.2005 and Punjab Tribune dated 15.11.2005. Notice under section 13(4) was also got published in two newspapers, i.e., The Hindustan Times on 4.8.2006 and in Jagbani on 5.8.2006. Copy of the notice was also affixed on the spot. Accordingly, the bank has justified its action as well as the impugned order and has termed the present approach by the appellant to be a delaying tactics only.

As already noticed, the solitary limb of submissions made before me is that the notices under section 13(2) as well as under section 13(4) of the SARFAESI Act was issued giving a wrong address of the appellant and hence was not served on him. The counsel for the appellant has made reference to the copy of the notices annexed with the appeal. This legal notice was addressed to the appellant giving his address as "R/o 692, Sector 49A, Chandigarh". Similarly, the notice under section 13(2) of the SARFAESI Act was sent to the appellant giving his address as "Flat No. 692, Sector - 49A, Chandigarh". As per the counsel, this was not the complete postal address of the appellant. According to him, the appellant's complete address is 'Flat No. 692, P.S.B. Complex, Sector - 49A, Chandigarh'. The submission of the appellant thus flows from the fact that 'appellant's address was incomplete in the notices which, according to him, was not the correct address and hence the service of these notices were not effected on him and cannot be assumed to have been effected on him as well.

The counsel for the appellant has also relied on some precedents in support of his plea. He has first referred to the case of Subedar Amar Singh vs. Avtar Singh, (2003) 135 PLR 562. This was a case where summons sent to the applicant were received back with the report of incomplete address. The Court has thus observed that it was the duty of the respondent to indicate the correct address and the respondent to locate the correct address of the applicant and he cannot shield himself saying that this was the address mentioned in the litigation earlier pending between him and the other party. In my view, the ratio of this case will not apply to the facts in the present case. This was a case where the registered cover was received with the specific remark 'Incomplete address'. The Court thus viewed that the burden was upon. the respondent for furnishing correct and complete address of the applicant, which he failed.

In the present case, the notices issued to the appellant admittedly have not been received back or returned with any such report. The case set up by the bank is that these notices were not received back or returned with the report and thus it is to be assumed that these notices were served upon and received by the appellant. The counsel for the appellant cannot take advantage of the observations made in this case that the address given was a vague. This observation came to made by the Court by noticing that the address given in the said case to be Haibowal Kalan, Teh. & Distt. Ludhiana as Haibowal Kalan, Teh. & Distt. Ludhiana which is a much bigger area and without mentioning the house number it is not easy to locate a person. This address was termed as vague, whereas in the case of appellant flat number and sector number of city Chandigarh is clearly mentioned in the notices. P.S.B. Complex, in my view, is superfluous part of address in the modern city of Chandigarh. House number and the Sector number are the only features which are sufficient to take a communication to its destination and such house or flat being a part of the complex is nothing but a superfluous part of the address. The submission made by the counsel for the respondent bank that if there is any other house with this number in this sector, then his plea may be rejected outright on this ground is a serious poser. No counter came from the side of the appellant in response.

Counsel has then referred to the case Mohd. Yousuf vs. Director General of Fire Services, Andhra Pradesh & Ors., (2013) 4 Supreme Court Cases 265. In this case, the challenge was to the ex parte enquiry on the ground of non-supply of enquiry report. The respondent had tried to justify the same on the ground that whereabouts of the appellant was not known. The Court took notice of the fact that notice regarding the departmental enquiry was sent at the address - House No. 177. This was a case of clear-cut wrong address. There is no allegation in the present case that house number of the appellant has been written wrongly. In fact, the house/ flat number of the appellant is correctly recorded, so is the sector number as well as the name of city. The ratio of this judgement also thus would not apply to the facts of the present case.

Counsel would then refer to two more judgments in the case of Parimal vs. Veena Alias Bharti, (2011) 3 Supreme Court Cases 545 and Rabindra Singh vs. Financial Commissioner, Cooperation, Punjab & Ors., (2008) 7 Supreme Court Cases 663. The observations made in Parimal's case (supra) about the presumption which would arise in view of the provisions of section 114 of the Evidence Act is highlighted. This Section provides that there is a presumption that the addressee has received the letter sent by Registered Post. Of course, this presumption is rebuttable on consideration of evidence of impeccable character. Reference is also made to Gujarat Electricity Board vs. Atmaram Sungomal Poshani, 1989 (2) SCC 602, where it is held that there is a presumption of service of letter sent under Registered cover if the same is returned back with postal endorsement' that the addressee refused to accept the same. This presumption being a rebuttable one, it is open to the party concerned to place evidence before the court to rebut the presumption by showing that the address mentioned on the cover was incorrect. As observed by the Apex Court, the burden to rebut the presumption is on the party challenging the factum of service. Thus, the burden was on the appellant to prove that there was no service in case he wanted to rebut the presumption arising from service of notice. By merely pleading that in the part of address 'P.S.B. Complex' was not mentioned would not be enough to rebut the presumption arising from the fact that the letter was addressed to the appellant giving correct house and sector numbers and the name of city. The flat being part of any complex in the modern city of Chandigarh is not essential part of the address and all the addresses in the city go by house and sector numbers as well as the name of the city alone. Going by the ratio of this judgement, the appellant has remained unsuccessful in discharging the burden of proving that he had not received the notices. There were never returned with the remark of postal authority and so the presumption would arise that these notice were received by the appellant unless the appellant could show that the usual course of the post was interrupted in any manner. The appellant, in my view, cannot take any advantage of the observation relied upon by the counsel in Rabindra Singh's case. This was a case where the defendant was residing in a foreign country for the last 25 years and was never served with any notice though the plaintiff had full knowledge of his correct address. A substituted service was effected at the village address, which was not held to be sufficient and effective service. No such question arises in the present case.

There is a substance in the submission made by the counsel for the respondent bank. Firstly the appellant has remained unsuccessful to show that these notices were not received by him. Except for so stating and making an attempt to substantiate that the address was wrong nothing else is done. This part of the submission is totally misconceived as the correct address has been mentioned in the notices. The counsel appearing for the bank would further submit that still in order to ensure proper service, the bank published the notice under section 13(2) of the SARFAESI Act in newspapers, as already noted. As per the counsel this is the procedure which is prescribed in the rules and has made reference to rule 3 of the Security Interest (Enforcement) Rules, 2002 in this regard. This rule reads as under:-

Demand notice- (1) The service of demand notice as referred to in sub-section (2) of section 13 of the Act shall be made by delivering or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgement due, address to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

Provided that where authorized officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or, his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.

(2) Where the borrower is a body corporate, the demand notice shall be served on the registered office or any of the branches of such body corporate as specified under sub-rule (1).

(3) Any other notice in writing to be served on the borrower or his agent by authorized officer, shall be served in the same manner as provided in this rule.

(4) Where there are more than one borrower, the demand notice shall be served on each borrower.

Accordingly, the service of demand notice under section 13(2) is required to be made at the place where borrower or his agent actually and voluntarily resides or carries 'on business or personally works for gain, by registered post with acknowledgement due or by Speed Post or by courier. This could be by any other means of transmission of documents like fax message or electronic mail service. The proviso contained in the rule empowers the authorized officer, where he has reason to believe that the borrower or his agent is avoiding service of notice, to effect service by affixing copy of the demand notice on the outer door or on some other conspicuous part of the house or building in which the borrower or his agent resides or carries on business or personally works for gain. This is an addition to publishing contents of the demand notice in two leading newspapers of which one in vernacular language, having sufficient circulation in the locality. It is on this basis that the respondent bank had taken this action to publish notice under section 13(2) of the Act in two leading newspapers and so also notice under section 13(4) of the Act. To me, this action seems to be for over-ensuring the service and may not have been required. Assuming that the appellant had not received the earlier notices, which were not returned to the bank unserved, the bank could presume that the appellant was avoiding service of notice and so service cannot be made by other means and thus took action to effect service in the manner which it is fulIy authorized by rule. I am thus not at all convinced with the submissions made by the counsel for the appellant that notice under section 13(2) was not served or effected on the appellant. This seems to be only a ploy to delay the proceedings of recovery.

I do not find any infirmity in the impugned order passed by the Tribunal below and, therefore, would dismiss the appeal.