Federal Bank Ltd vs S. Selvaraj & Anr

Justice S. Ravi Kumar, Chairperson

This Appeal is preferred under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) against order dated 24.3.2015 in SA 145/2013 on the file of DRT, Coimbatore, wherein respondents herein challenged the action of appellant bank.

One of the grounds raised in SA 145/2013 is that appellant bank herein suppressed the fact that applicants filed a case before Hon’ble National Consumers Disputes Redressal Commission, New Delhi in Compliant No.49/2011 against Insurance Company as well as bank alleging deficiency of service and sought settlement of claim as well as damages from both and the said compliant is still pending and in spite of that bank initiated proceedings under SARFAESI Act and issued Section 13(4) Notice and served on respondents herein and for that reason possession notice is bad. Appellant herein filed counter disputing the claim of respondents herein and Tribunal below on consideration of contentions and rival contentions of both parties, without deciding the correctness of measures initiated by appellant allowed the Securitisation Application on the sole ground that Complaint is pending before Hon’ble National Consumers Dispute Redressal Commission, New Delhi and it will have a direct bearing on recovery proceedings, therefore, ordered that all steps taken by bank against applicants shall be kept in abeyance till the outcome of complaint before the said Forum. Aggrieved by the said order, appellant bank preferred the present appeal.

Heard both sides.

Advocate for appellant bank submitted that without going into merits of the case, direction of Tribunal below restraining the bank from taking any steps till complaint before Hon’ble National Consumers Dispute Redressal Commission, New Delhi is decided is, prima facie, without jurisdiction and scope of enquiry under Section 17 of SARFAESI Act is only to examine the correctness of measures initiated by the bank, therefore, on that ground itself, order of Tribunal below is liable to be set aside.

On the other hand, Ld. Advocate for respondents submitted that action initiated by appellant bank is not in accordance with the provisions of SARFAESI Act and Rules made thereunder and respondents are ready to substantiate the same before this Tribunal. But, as Tribunal below has not given any finding as to the correctness of measures taken by appellant bank, I am not inclined to decide that issue because if that issue is decided at Appellate stage, one party will lose its statutory right of appeal. For that reason, I am of the view that this is a fit case where matter can be remitted back to Tribunal below for a fresh decision, by giving opportunity to both parties to place their contentions in support of their pleadings and evidence.

For these reasons, impugned order dated 24.3.2015 passed in SA 145/2013 is set aside and matter is remitted back to Tribunal below, viz., DRT, Coimbatore with a direction to decide the matter afresh without being influenced by any of the observations made herein and also finding recorded earlier in SA 145/2013, by giving opportunity to both parties within three months from the date of receipt of this order.

Accordingly, Appeal RA (SA) 25/2015 is disposed of, with no order as to costs. All pending IAs, if any, stand closed.