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Judgment
Ashok Menon, Chairperson
The Appellant Piramal Capital and Housing Finance Ltd. is pursuing the appeal originally filed by Dewan Housing Finance Ltd. (DHFL) the original creditor which had lent money to the Respondents on a mortgage created to secure the loan. The Respondents filed Securitisation Application (S.A.) No. 28 of 2018 on the files of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) under Sec. 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) challenging the Sarfaesi measures initiated by DHFL. The S.A. was allowed vide judgment and order dated 16.05.2018. The Appellant is aggrieved and hence, in appeal.
The facts can be summarised thus:
DHFL is a housing finance company and is also a secured creditor under the provisions of the SARFAESI Act. The first Respondent is a proprietorship represented by the third Respondent. On 04.03.2015, the secured asset was mortgaged by the third Respondent by executing a simple mortgage deed. The said loan was repaid, and thereafter, on 19.01.2016 a fresh loan for ₹11,53,50,000/- was sanctioned and disbursed to the Respondents on 27.01.2016. The earlier mortgage created on 04.03.2015 was agreed to be continued as security. The debt was to be repaid in 240 equated monthly instalments (EMIs) of ₹14,14,191/- each at 13.65% interest per annum subject to variation from time to time. A demand promissory note and loan agreement were executed on 27.01.2016.
The Respondents defaulted payment of the debt and the account was classified as a non-performing asset (NPA) on 15.08.2016. Thereafter, on 12.09.2016 a demand notice was issued under Sec. 13(2) demanding a sum of ₹12,20,33,951/-. The Respondents did not respond and hence, further Sarfaesi measures were initiated under Sec. 13(4) and symbolic possession of the secured asset was taken on 17. 04.2017. Thereafter, the application was filed under Sec. 14 of the SARFAESI Act before the District Magistrate, Rajkot and an order was obtained on 01.11.2017 authorising the Mamlatdar to take physical possession of the property. A notice was issued by the Mamlatdar on 30.12.2017 intending to take physical possession of the property on 05.02.2018. The Respondents filed the S.A. before the 4. The Ld. Presiding Officer vide the impugned order allowed the S.A. on the ground that the notice issued under Sec. 13(2) is vague and unsustainable and consequently, quashed the notice.
It is contended that there is no infirmity in the notice and therefore, the notice was quashed without any sufficient reason.
The Respondents appeared and filed a reply defending the impugned order.
Heard both sides. Records perused.
The Ld. Counsel appearing for the Appellant Mr Rajesh Nagory has pointed out that the Ld. Presiding Officer went wrong in appreciating the evidence from the proper perspective. It is pointed out that the Ld. Presiding Officer has observed that the demand notice is silent regarding the rate of interest claimed and therefore, the mandatory provisions under Sec. 13(3) has not been complied with.
It is pertinent to note that as per the agreement, the rate of interest is 13.65% per annum, subject to variation from time to time. The principal and interest payable were to be repaid in equated monthly instalments. The notice under Sec. 13(2) gives the breakup of the amount due. The EMI includes interest. Penal interest is levied in case of default in payment of EMIs. The notice gives a breakup of the outstanding amount and the interest which was claimed on default. The loan balance demanded is ₹11,45,79,851/-. The outstanding EMIs claimed is ₹70,70,955/- and the additional interest on outstanding EMIs is calculated at ₹3,81,645/-. Other charges demanded is ₹1,500/-.The total amount claimed is thus ₹12,20,33,951/-. The finding of the Ld. Presiding Officer regarding breakup not being given does not appear to be correct. The Respondents had sent an objection on receipt of the demand notice raising all these contentions on 21.12.2016 to which the DHFL sent a reply giving the details of the total due as per the loan account, the defaulted EMIs and the interest on defaulted EMIs. There could not, therefore, have been any ambiguity regarding the amount due and payable. There is no infirmity in the demand notice issued under Sec.13(2) of the SARFAESI Act.
For the foregoing reasons, the appeal is to be allowed. S.A. No. 28 of 2018 stands dismissed.