The Regional Manager, IDBI Bank Ltd. & Anr. vs Rajiv Ranjan Rao @ Rajiv Ranjan Pratap Rao & Ors.

JUSTICE R. D. KHARE, CHAIRPERSON

The present appeal has been filed by the appellant under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act") against the order dated 26.08.2019, whereby the S.A. No. 80/2019 filed by the respondent no. 1 has been allowed.

The brief facts of the present case are that the respondent no. 2 was granted financial assistance by the appellant-Bank, to which the respondent no. 1 created equitable mortgage over his property by depositing title deed with the appellant-Bank and also signed and executed guarantee agreement. Since the respondents-borrowers did not adhere to the terms of the loan agreement, therefore, the account was classified as NPA on 30.01.2017 and demand notice dated 19.05.2017 was issued under section 13(2) of the SARFAESI Act for a sum of Rs. 68,75,067/-. Since the respondents-borrowers did not pay any heed to the said demand, therefore, the appellant-Bank issued possession notice dated 21.09.2017, which was published in the newspapers on 26.09.2017. Thereafter the appellant-Bank filed an application before the DM, Champaran, Bettiah, Bihar, which was allowed vide order dated 20.02.2019 fixing the date for taking over the physical possession of the property in question on 01.03.2019. Accordingly, the same was taken. Being aggrieved by the actions of the Bank, the respondent no. 1 filed a Securitization Application No. 80/2019, which was allowed vide order impugned, setting aside the entire SARFAESI actions including symbolic possession notice dated 20.07.2017 and physical possession taken on 01.03.2019 and further the respondent-Bank was directed to restore back the physical possession of the property to the S.A.-applicant. Being aggrieved by the said order, the present appeal has been filed by the appellant-Bank.

Learned counsel for the appellant has referred to page No. 192 and 193 paper book, which is a letter dated 20.07.2017 of the appellant-Bank and has argued that in the last para of the said letter, the Bank has demanded the possession of the secured assets within 7 days, but the Tribunal below considering it to be possession notice has allowed the S.A. filed by the respondents-borrowers holding that there is violation of Rule 8(2) of the Security Interest (Enforcement) Rules, 2002, whereas the said letter was not possession notice but only a letter demanding the possession of the secured assets. The possession notice was issued by the Bank on 21.09.2017, which is appended as annexure No. 6 at page No. 255 of the paper book. Learned counsel further submitted that the said possession notice was not appended as annexure to the S.A. by the respondent-borrower before the Tribunal below. The said possession notice was sent through registered post, postal receipts of which are placed at page No. 258 to 261 of the paper book and the same was also published in the newspapers as per the provisions of the Act and Rules made thereunder. The learned counsel also submitted that the physical possession of the secured assets was taken, therefore, the order impugned cannot be sustained and is liable to be quashed.

Considered the arguments and perused the record.

As regards non-mentioning of the date of NPA in the demand notice, admittedly, the date of NPA was not mentioned in the demand notice. In this regard, Section 13(3) of the SARFAESI Act says as under:-

Thus it is clear that the date of NPA is not necessary to be mentioned in the demand notice and non-mentioning of the same does not cause any prejudice to the borrower, therefore, the Tribunal below has erred in holding that the appellant-Bank has committed illegality in non-mentioning the date of NPA in the demand notice.

So far as the alleged possession notice dated 20.07.2017 is concerned, a copy of the said notice has been placed at 192 to 193. The notice under Section 13(4) is issued in Appendix IV, format of which has been given in the Act and Rules made thereunder. While going through the contents of both, the contents of the said letter/notice is entirely different to the contents of the Appendix IV, in which the notice under Section 13(4) of the SARFAESI Act is issued. While going through the contents of the notice dated 20.07.2017, it is clear that the said notice was not issued in the format as given in the Act and Rules made thereunder, but the appellant itself had claimed before the Tribunal below while filing the reply to the S.A. that the notice dated 20.07.2017 is a possession notice issued u/s 13(4) of the SARFAESI Act, thus there was no option before the Tribunal below but to scrutinize it as to whether the same was issued in accordance with the provisions of the Act and Rules made thereunder. As such the appellant cannot be permitted to blame the Tribunal below for considering the said notice to be a possession notice because the appellant himself has claimed it to be a possession notice.

So far as the possession notice dated 21.09.2017, copy of which has been placed at page no. 255 to 257 of the memo of appeal, is concerned, the same has directly been filed before this Tribunal. For the sake of argument, if it is taken into consideration, the said notice was affixed at the conspicuous place of the property in question, which is evident from the page no. 264 to 272 of the paper book, the said notice was also published in two newspapers on 26.09.2017, one in vernacular language, copies of which are placed at page nos. 279 to 280 of the paper book, but the said notice was not served upon the borrowers because the postal receipts filed at page no. 258 shows the date of dispatch as 24.07.2017, which is prior to the issuance of the said possession notice, even then there is non-compliance of the Rule 8(1) of the Rules, 2002. The said possession notice contains the signature of only Rinki Kumari, who is respondent no. 3 in the present case. So far as the service of the same upon the respondents no. 1, 2, 4, 5 & 6 is concerned, there is nothing on record, which may show service of the said notice upon the said borrowers. The appellant himself has admitted that the said notice was not filed before the Tribunal below, as the appellant has stated in para (i) of its reply to the S.A. that the notice of possession dated 20.07.2017 was sent to the borrower through registered post and also published in the newspapers on 26.09.2017. Thus the Tribunal has rightly held that there is non-compliance of Rule 8(1) & 8(2) of the Rules, 2002.

With regard to taking over the physical possession of the property in question, it is to be seen that the physical possession of the property in question was taken by the Bank on 01.03.2019 and the Panchnama and Inventory were made and copies of the same have been placed at page nos. 227 to 232 of the memo of appeal and it has to be intimated to the borrowers in view of Rule 4(2) and (2-A) of the Rules, 2002. Admittedly, the notice under Rule 4(2-A) was prepared, copy of which has been placed at page no. 226 to the memo of appeal, but there is nothing on record, which may show that the same has ever been intimated or delivered to the borrowers. Thus, the appellant-Bank has failed to comply the Rule 4(2) and (2-A) of the Rules, 2002.

In view of the discussions as held in the preceding paragraphs of this case, the order impugned is set aside to the extent of setting aside the demand notice, but rest part of the same with regard to setting aside the possession notice as well as physical possession taken on 01.03.2019 is affirmed. However, the appellant-Bank may proceed further for recovery of its dues from the stage of issuing the possession notice.

The appeal filed by appellant-Bank is accordingly disposed off with no order as to costs.

A copy of this judgment be forwarded to the parties as well as DRT concerned and be also uploaded on e-DRT portal.