Dewan Housing Finance Corporation vs Suresh Kumar Sharma

Ranjit Singh, J

This appeal has been filed by M/s. First Blue Home Finance Ltd. formerly known as Deutsche Postbank Home Finance Ltd.) and is now being prosecuted by M/s. Dewan Housing Finance Corporation. The impugned order has been passed by DRT-I, Chandigarh, whereby the process initiated by the appellant under the SARFAESI Act has been set aside. The facts noticed, in brief, would reveal that the respondent Suresh Kumar Sharma had obtained a home loan from ICICI Home Finance Co. Ltd. for construction of a house in the year 2003. Thereafter, the respondent got sanctioned another loan of Rs. 8,99,476/- from BHW Birla Home Finance Ltd. BHW Birla Home Finance Ltd. issued two cheques in favour of ICICI Home Loans Finance Co. Ltd. amounting to Rs. 8,99,476/-, which issued a foreclosure certificate dated 3.1.2005. Claiming that the respondent was making regular payment to BHW Birla Home Finance Ltd. till they started presenting three cheques for encashment in one month in respect of monthly instalments. The respondent was, therefore, constrained to issue legal notice to them and the matter was resolved.

BHW Birla Home Finance Ltd. was taken over by M/s. Deutsche Postbank Home Finance Ltd. The respondent states that he was making monthly instalments to the appellant Bank and the Bank had wrongly issued notices dated 8.5.2009 and 21.8.2009. Respondent submitted reply to the notice and the notice was withdrawn. Plea further is that the appellant Bank demanded post-dated cheque from April 2010 for an amount of Rs. 9,880/-, which the respondent submitted. It is alleged that the appellant stopped the presentation of the cheques for encashment of monthly instalments and the respondent issued a letter to the appellant asking it to present the cheques for payment towards monthly instalments. On 8.12.2010, the respondent was informed that orders were obtained from the District Magistrate, Rewari under Section 14 of the SARFAESI Act for taking possession of the House No. 1121, Sector-3 Part-2, Rewari. The respondent was also directed to make payment of the outstanding dues immediately and hand over the peaceful possession of the secured assets. On this basis, the respondent approached the Tribunal below by filing an S.A impugning the action taken by the Bank.

In response to the notice, Bank had put in appearance and dented all the allegations made in the S.A. The averment made in the application that respondent was regularly paying the instalments were denied and it was submitted that the respondent was irregular m paying his monthly instalments and repeatedly defaulted in payment of many monthly instalments. The relevant averments made in this regard in para 3 of the reply to indicate that the respondent was irregular in making payments and it reads as under:

"3. That the application of the applicant is based on false, frivolous and baseless grounds and the applicant has not appeared before the Hon'ble Tribunal with clean hands and has suppressed the material facts from this Hon'ble Tribunal that from the very beginning the loan was sanctioned to the applicant, the applicant has been very irregular in payment of due instalments and the sorry state of affairs can be seen from the Detail Party Ledger and Statement of Accounts of the loan taken by the applicant that the applicant was sanctioned a loan of Rs. 8,96,054 on 8.11.2004 and the first instalment (Pre-EMI) of Rs. 516/- was bounced and then his monthly instalments bounced continuously up to August, 2005 then the applicant paid Rs. 8382/- on 20.9.2005 and Rs. 8382/- on 21.9.2005. Rs. 8382/- on 27.10.2005 and then did not pay any monthly instalments from November, 2005 to March 7, 2006. The applicant paid Rs. 8,382/- on 12.4.2006 and Rs. 8,500/- on 19.5.2006 and then again did not pay any instalment up to February, 2007. The applicant then paid Rs. 1,00,000/- on 8.3.2007 and then the applicant did not pay and defaulted in monthly instalments up to December, 2007 and paid Rs. 1,10,000/- on 15.1.2008 and now again the applicant defaulted in payment of his monthly instalments up to May, 2008 and then paid Rs. 60,000/- on 23.6.2008. That the amount paid by the applicant from 4.6.2009 to 10.9.2010 has been adjusted to the loan account towards settlement of the total amount due as the loan account has been declared NPA and, the applicant has to repay the total withstanding amount. A true copy of the Detail Party Ledger and the Statement of Account of the loan account of the applicant are attached herewith as Annexures R-1 and R-2 respectively."

The Tribunal, after hearing the Counsel for the parties, has held that the respondent was asked through letter dated 5.3.2010 to furnish post-dated cheques. Respondent had furnished these cheques, but the Bank did not encash the same saying that full outstanding amount of the loan has been recalled under Section 13(2) of the SARFAESI Act. These cheques were sent by the respondent once the order dated 3.3.2010 by the District Magistrate, Rewari for taking possession was passed. The Tribunal accordingly formed a view that once the Bank had asked for cheques from the respondent, it was not justified in obtaining the order from the District Magistrate, Rewari for taking possession of the property.

The Counsel for the appellant would contend that this letter requiring the respondent to furnish post-dated cheques was inadvertently issued by the Bank, whereas the notice under Section 13(2) of the SARFAESI Act was issued due to repeated default of the part of the respondent to adhere to the schedule of payment.

I have considered the submissions made before me. Even if it is accepted that the Bank had asked the respondent to furnish some post-dated cheques, whether this action on the part of the Bank would lender the entire proceedings initiated under the provisions of the SARFAESI Act bad would be a question which would require consideration. I do not see anything illegal or arbitrary even if it is opted that the respondent herein had been asked to furnish post dated cheques. The repeated non-payment of instalments can be seen from the statement of account as well as from the reply filed by the Bank before the Tribunal below. In my view, mere issuing a letter to the respondent due to inadvertence would not lead to nullifying the proceedings initiated under the SARFAESI Act. Once there is default, the Bank was entitled to initiate proceedings under the SARFAESI Act. It is rightly highlighted by the Counsel for the appellant that no allegation were made by the respondent about violation of any procedure followed by the Bank in issuing notice and subsequent action taken in this case.

It may need a mention here that efforts were made by this Tribunal to resolve this issue by making the parties to sit together to see whether the issue can be amicably resolved. This was only on the asking of the respondent who had even agreed to deposit a demand draft for Rs. 2 lacs. It is now disclosed that the said demand draft could not be deposited with the Registrar of this Tribunal as it was not in the name of this Tribunal. Though the Counsel for the respondent today states that such draft is ready, but, in my view, it will be now a futile to accept the same since the efforts for an amicable settlement have failed. The impugned order passed by the Tribunal below does not appeal to reason and logic. No legal submission has been advanced before me to justify that the procedure adopted by the Bank under the SARFAESI Act was bad on any ground. Only plea is that some letter had been issued by the Bank to the borrower to furnish some post-dated cheques and this has been held to be enough to quash proceedings. It may be due to inadvertence that such letter had been issued. The respondent cannot be permitted to escape liability on this ground and be absolved of his liability to repay. The Bank apparently was justified in initiating steps under the SARFAESI Act, which, has been interfered with by the Tribunal below. The impugned order, therefore, cannot be sustained and is set aside. The case will go back to the Tribunal for being decided on merit, if any other ground is raised by the respondent.

The appeal is disposed of in above terms.