Gupta Brothers Conduit Pipe Mfg. Co. And Ors. vs State Bank Of India And Ors.

Ranjit Singh, J

Aggrieved against the action initiated by the respondent Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act), the appellants had approached the Tribunal by filing an S.A., which has been dismissed by the Tribunal. In the present appeal, the appellants have impugned the said order dated 10.5.2012. The appellant No. 1 is a private limited company and is carrying on the business of manufacturing ERW Steel Tubes. In the year 2005, the appellants obtained statement of account and found that there were a number of entries showing withdrawals through cheque which were not issued by the authorized signatory. They accordingly wrote a letter on 1.2.2005 to the branch manager of the Bank asking him to provide details. The issue was also reported to the Vigilance Department of the Bank, but the grievance of the appellants was never redressed Rather, they were served with a notice under Section 13(2) of the SARFAESI Act on 19.12.2007.

The appellants impugned the said notice by filing civil suit which they withdraw as the civil Court did not have jurisdiction to entertain the civil suit. In the meantime, the Bank also issued notice under Section 13(4) of the SARFAESI Act on 19.5.2008.

The present S.A. was filed with the grievance that the notices under Sections 13(2) and 13(4) of the SARFAEI Act were illegal, arbitrary and were issued without any cause. The appellant also pleaded that the part of the property was agricultural land and hence was not amenable for being dealt with under the SARFAESI proceedings. Plea also was that notices were not published in two newspapers as required under Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 (for short, the Rules). As per the appellant the Bank failed to comply with the requirement of Section 14 of the Act white taking possession of the property.

Notice was issued to the respondent Bank, which filed reply stating that the appellants had not raised any objection to the notice issued under Section 13(2) of the SARFAESI Act. As per the Bank, this dispute raised by the appellants in regard to the signatures on the cheque was a misplaced one. As per the Bank, the appellants could not be expected to sit without taking any legal recourse after an amount of Rs. 14 lacs had been misappropriated from their account. The Bank also denied having violated any rules and regulations in issuing notices under Sections 13(2) and 13(4) of the SARFAESI Act.

The Tribunal, thereafter, considering the pleadings, and the documents placed before it, has dismissed the S.A. filed by the appellants.

Before me also the Counsel for the appellants only pleaded that while considering the objections raised by the appellants the Tribunal has failed to adjudicate the issue raised by the appellants regarding misappropriation of Rs. 14 lacs, for which they had given notice to the Bank in the year 2005. The appellants otherwise had enjoyed the CC Limit and Book Debt Account and was dealing with the Bank for the last so many years. Appellants claim to have learned about certain cheques having been wrongly debited to their account in January 2005. As per the appellants, they wrote to the Bank on 1.2.2005 and also filed a civil suit, which they had withdrawn later. The claim of the appellants is that they had never withdrawn these amounts. Inquiry was also conducted, but nothing fruitful could come out of it.

The observation made by the Tribunal and the stand of the Bank that is that if a sum of nearly Rs. 14 lacs had been withdrawn over a period of nine months from the account of the appellants through 29 different cheques, an inaction in this regard would not be justified on the part of the appellants. They have also not set the criminal law in motion so far. The forgery of cheques would be beyond the scope of adjudication before the Tribunal. It may need to be noticed that the forged cheques were issued in the year 2005 and the notice under Section 13(2) of the SARFAESI Act was issued on 19.12.2007 followed by notice under Section 13(4) of the Act on 19.5.2008. There does not seem to be any connection with what had happened in the year 2005 and the notice which was issued nearly two years thereafter. The Counsel also could not connect all these issues by way of evidence. Otherwise, the appellants could not point out to any defect in the notices that were issued to them. If, indeed, wrong withdrawal was the cause of these notices, the appellants were bound to submit so in reply to the notices under Section 13(2) of the SARFAESI Act, which they never filed. The Counsel for the appellants has made submission before me by stating that before issuing notice under Section 13(2) of the SARFAESI Act, the appellants were never apprised about any case. When asked whether there was any need or requirement under law to do so, the Counsel would concede that it was not needed.

In fact, the Counsel for the appellants could not point out any infirmity in the notices issued under Sections 13(2) and 13(4) of the SARFAESI Act and against notice for taking possession of the property in question which claims to be an agricultural land. The appellants also could not place on record any evidence/material which would show that the land in question was agricultural in nature. No submission worth consideration was advanced by the Counsel for the appellants who otherwise have paid the entire NPA amount as well. Under the circumstances, I find no merit in the appeal and would dismiss the same.