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Judgment
This order shall dispose of Misc. Appeal No. 134/2024 whereby the interim order dated 23.10.2023 in Securitization Application (S.A.) No. 237/2020, passed by the Learned Presiding Officer, DRT-II, Ahmedabad has been challenged.
By impugned order, Learned DRT has rejected the interim relief and directed the Respondent Bank to proceed in accordance with law.
The Learned Counsel for the Appellants/Borrowers would submit at bar that he will restrict his arguments only on three points.
That the notice issued by the Respondent Bank under Section 13 (2) of the SARFAESI Act was illegal.
That the Chief Judicial Magistrate, Rajkot by passing order dated 29.05.2023 did not record his satisfaction about the documents and his order has wrongly recorded that no reply was given by the Appellants/Borrowers to notice issue to the Appellants/Borrowers by bank under Section 13 (2) of the SARFAESI Act. Notwithstanding the fact that Respondent bank itself says an affidavit that reply was filed.
That the symbolic possession was taken without following the mandatory provisions of the Rule 8 of Sub-Rule (1) and (2) of Security Interest (Enforcement) Rules 2002.
The Learned Counsel would further submit that the notice issued under section 13 (2) of the SARFAESI Act did not state the complete details as mandatory under section 13 (3) of SARFAESI Act. He would draw the attention of this Appellate Tribunal to the language of the section and rely upon the judgment of Hon’ble Gujrat High Court passed in “Punjab National Bank V/s Mithilanchal Industries Pvt. Ltd., MANU/GJ/1069/2020” and judgment of Hon’ble Bombay High Court at Bombay in “Saraswat Corporative Bank Ltd. V/s National Flank Industries Ltd. & Ors., 3025: BHC-AS: 39724-DB”.
The Learned Counsel for the Appellant would further draw the attention of this Appellate Tribunal to the judgment passed by the Chief Judicial Magistrate of Rajkot. The relevant part (as stated in the translation of the order of attachment at page no. 550) is as under:
“ He has stated in the affidavit that, the applicant bank has given a loan of Rs. 7,00,00,000/- to the opponents, whereby a legal due of Rs. 9,37,08,762.87/- is outstanding on the date of moving of the application, and the application is moved within limitation of time, and has security interest on the over the asset, and the borrowers have failed to repay the amount of the loan, and their loan account has become N.P.A., and they a notice under section 13 (2) was issued to them, whereby they haven’t replied to the same nor have repaid any amount of the loan, and have obeyed the provision and rules of the SARFAESI Act”. (Emphasis supplied)
The Learned Counsel for the Appellants/Borrowers would submit that in this part of the para 5 of the translated version of the order, the CJM has observed that the Authorized Officer of the Respondent Bank has stated in the affidavit that the Appellant/Borrower have not replied the notices under section 13 (2) of the SARFAESI Act; that, this fact stated in the order of the CJM is contrary to the affidavit filed by the Authorized Officer of the Respondent Bank and to his argument he would draw the attention of the Appellate Tribunal to page no. 535 of the affidavit of the bank, wherein para no. 7, it is specifically stated that the objection or representation in reply to the notice was received from the borrower and same was replied by the applicant bank”.
Apparently, the observation made by the CJM in impugned order dated 29.05.2023 is incorrect; therefore, it is hard to believe that on the basis of the incorrect fact, the Learned CJM could have satisfied himself about the correctness of all ingredients necessary for the issuance of the order to permit the taking of possession under section 14 of the SARFAESI Act.
Per Contra, the Learned Counsel for the Respondent Bank would fairly admit at bar that the Learned CJM has wrongly stated in para 5 of his order dated 29.05.2023 that no reply was filed by the Appellant/Borrower, however, he would further submit that in fact the reply was filed by appellant after the expiry of the 60 days within which the Appellant/Borrower was to file the reply in pursuance to the notice under section 13 of the SARFAESI Act. However, he would further fairly admit at bar that though it was filed after the expiry of 60 days but it was filed before the application under section 14 was filed before the Learned CJM for issuance of the order regarding the possession.
Therefore, in the considered view of this Appellate Tribunal that the observation made by the CJM is incorrect.
On the point of the details of the notice to be given in notice, the Hon’ble Gujarat High Court in judgment on “Punjab National Bank V/s Mithilanchal Industries Pvt. Ltd., MANU/GJ/1069/2020” has observed in para 29 and 30 as under.
“29.Insofar as the first part is concerned i.e. regarding the amount payable by the borrowers, if the intention of the legislature was only to provide the total outstanding amount or the aggregate amount outstanding and payable by the borrowers, the language would have been different. It would not have been necessary to incorporate Sub-Section (3) in Section 13 of the SARFAESI Act. In Sub-Section (2) of Section 13 of the SARFAESI Act, it is also mentioned that the Secured Creditor may require the borrower by notice in writing to discharge in full his liabilities to the Secured Creditor. The said liabilities would be mentioned in view of the provisions of Sub-Section (2) itself. But, consciously, Sub-Section (3) was incorporated so as to ensure that the details of the amount payable are provided in the notice. Such details would include the relevant calculations made by the Bank under different heads which had become due and payable at the end of the borrower.
30.There is another reason for incorporating Sub-Section (3). Sub-Section 3(A) gives right to the borrower to make a representation or raise an objection against the notice under Sub-Section (2). Unless the borrower has the details of the amounts found due and payable by the Secured Creditor and being demanded as such under a notice under Sub-Section (2), the borrower would not be in a position to make any representation or raise any objection. It is only when the amounts under different heads are provided to the borrower that it could raise objection under any of the heads where the borrower finds that the amount quantified is not correct. Without there being any details mentioned in the notice, the very purpose of Sub-Section 3(A) would also be lost to a large extent.”
Per contra, the Learned Counsel for the Respondent Bank would rely upon the judgment of Gujarat High Court passed in “Sugarwala Tradelink Pvt. Ltd. V/s Authorized officer, Bank of India, 2021 SCC Online Guj 3011” and would submit that this subsequent judgment differentiated the Mithilanchal case (Supra) and in the peculiar circumstances of the present case, the Mithilanchal case (Supra) relied upon by Appellant/Borrower, shall not be applicable.
After consideration of the respective submissions by the Learned Counsel, this Appellate Tribunal is of the considered view that the judgment passed by the Gujarat High Court in Mithilanchal case (Supra) is very clear that the detail should contain the calculation also. The judgment in Mithilanchal case (Supra) is passed by division bench and the judgment is in “Sugarwala Tradelink Pvt. Ltd. V/s Authorized officer, Bank of India, 2021 SCC Online Guj 3011” relied upon the Learned Counsel for the Respondent Bank is single bench judgement, consequently the division bench judgement in Mithilanchal case (Supra) shall prevail over.
In view of the facts and law discussed above, this Appellate Tribunal is of the considered view that the impugned order dated 23.10.2023 is S.A. No. 237/2020 passed by DRT-II, Ahmedabad, is not sustainable, hence liable to be set aside.
In light of the above, the present Misc. Appeal No. 134/2024 is allowed and the impugned order dated 23.10.2023 is set aside.