R.A(S.A):96/2010
1. This appeal impugns the order dated 10.7.2009 passed by the Learned Presiding Officer, DRT-I Chennai in SA No. 158/2009.
2. The case of the appellants may be stated as follows:
It is stated that the first appellant is a public limited company engaged in the business of marketing agriculture produce for exporting rice, maize and wheat etc., and textiles to foreign countries and that it approached the respondent bank for certain credit facilities and that the respondent bank by its sanction letter dated 29.3.2005 sanctioned credit facilities of Rs.19.8 crores, out of which Rs.13 crores was for the agriculture produce marketing business and the remaining Rs.6.8 crores was towards the textile export business. It is stated that the respondent bank released only Rs.10 crores as against the sanctioned limits of Rs.19.8 crores. It is stated that the respondent bank issued the notice under Section 13(2) of the SARFAESI Act on 21.4.2008 and that the appellants also sent a reply vide their letter dated 29.5.2008 pointing out the various refund claims and had also submitted an OTS proposal for a sum of Rs.150 lakhs. It is stated that the said proposal for OTS was rejected by the respondent bank by their letter dated 26.6.2008 without considering the aspects brought out by them and that the respondent bank thereafter issued the possession notice on 31.7.2008. The appellants have averred various irregularities on the part of the bank and they have stated that the present position of the appellants is only due to the action of the respondent bank. It is stated that the total loss incurred by the appellants is Rs.915.42 lakhs and that the said amount exceeds the demand made by the respondent bank and in fact the respondent bank has to refund the balance amount to the appellants. It is stated that the loans availed by the appellants are for marketing of agricultural produce and therefore the respondent bank ought not to have initiated action under the SARFAESI Act. It is stated that the account of the appellants is said to have been classified as NPA on 31.8.2006 and if that was true then the respondent bank could not have sanctioned fresh packing credit of Rs.150 lakhs during the month of January 2007. It is stated that the respondent bank denied the OTS which the appellants were entitled to under the RBI guidelines. It is stated that the valuation of the hypotheca itself would be more than Rs.2.5 crores and that the respondent bank cannot proceed to sell the immovable property of the appellants without taking an inventory of the movable goods and assessing their value. It is stated that the sale notice issued in this case is contrary to law and that it has been issued with malafide intentions. It is stated that the sole intention of the respondent bank is to bring the valuable properties of the appellants for sale for a throw away price and that the respondent bank has not valued the property correctly. It is stated that the notices issued under Section 13(2) and 13(4) of the SARFAESI Act are not in accordance with law. It is stated that respondent bank even after debiting the premium payable to ECGC for the pre-shipment failed to claim the amount from ECGC. It is stated that the appellants aggrieved by the order of the Ld. Presiding Officer, DRT-I Chennai dated 10.7.2009 made in SA No.158/2009 have filed this appeal and prayed that the appeal be allowed.
3. The Ld. Counsel for the appellants stated that the provisions of Section 13(3A) of the SARFAESI Act has not been complied with by the bank and that for this reason alone the proceedings of the Authorized Officer is liable to be set aside. The Ld. Counsel stated that though this ground was taken in the grounds of the SA filed before the tribunal below and in the written arguments filed on behalf of the appellants the Ld. Presiding Officer has chosen not to refer to the violation of the provisions under Section 13(3A) of the Act. The Ld. Counsel for the appellants stated that the respondent bank did not disburse the entire amount sanctioned by it, and that even after declaring the appellants’ account as a ‘NPA’ the respondent bank went ahead to sanction further loans though they did not disburse the same. The Ld. Counsel also drew the attention of this Tribunal to paragraph 9 of the order of the Ld. Presiding Officer and stated that the Ld. Presiding Officer has failed to consider the aspect of violation of Section 13(3A) of the Act by the Authorized Officer and that the same has caused serous prejudice to the appellant and prayed that the appeal be allowed.
4. The appellants filed their written arguments and the same forms part of the record. The appellants relied upon the judgment of the Hon’ble High Court of Madras
5. The Ld. Counsel for the respondent bank drew the attention of this tribunal to the notice issued under Section 13(2) of the SARFAESI Act and the communication addressed by the appellants to the Chairman and Managing Director of the bank with a copy to the Authorized Officer and stated that the receipt of the said communication by the Authorized Officer can in no way be said to be under the provisions of Section 13(3A) and added that therefore there cannot be any violation of Section 13(3A) of SARFAESI Act. The Ld. Counsel drew the attention of this tribunal to the letter dated 29.5.2008 sent by the appellant and stated that a reading of paragraph 3 at Page of the said letter would reveal that the appellants have admitted that they have utilized the limits to the extent of Rs.10 crores out of Rs.17.26 crores. The Ld. Counsel stated that no amount was sanctioned after the issuance of notice under Section 13(2) of SARFAESI Act. The Ld. Counsel further drew the attention of this Tribunal to the reply sent by the appellants to Section 13(2) notice at page 89 of the typed set of papers and stated that it is not a reply to Section 13(2) notice as the appellants have not raised any objections to the Section 13(2) notice and that the same can be considered only as a representation made by the appellants to the Chairman of the bank for the grant of a OTS. The Ld. Counsel added that the appellants have not taken any ground regarding the violation of Section 13(3A) in the SA. The Ld. Counsel prayed that the appeal be dismissed. The Ld. Counsel for the Respondent Bank relied upon the following judgments in support of his contentions:
i) Industrial Finance Corporation of India Limited (IFCI) Vs. DRAT, Chennai – CDJ 2011 MHC 4916.
ii) Kalpesh P.C. Surana Vs. Indian Bank – 2010 (3) CTC 287.
iii) B. Shanmugam Vs. Union Bank of India
iv) Industrial Development Bank of India Ltd. Vs. Kamaldeep Synthetics Ltd. 2007 (2) CTC 397.
6. The respondent bank filed its written arguments and the same forms part of the record.
7. Heard the Ld. Counsel for the appellants and the respondent bank.
8. It is seen that the appellants have based their case firstly on the violation of Section 13(3A) of the SARFAESI Act by the Authorized Officer and secondly on the exercise of choice of the Authorized Officer in selecting a particular secured asset for taking possession under the provisions of the SARFAESI Act.
9. It is seen that the notice under Section 13(2) of the SARFAESI Act was issued by the Authorized Officer empowered by the Cathedral Branch of Indian Overseas Bank, 762 Anna Salai, Chennai-600002 to the appellants and the first appellant represented by its Managing Director had sent a letter to the Chairman and Managing Director, Indian Overseas Bank, Central Office, Chennai-600002 and in the said letter the first appellant has stated that the appellants are in receipt of the notice dated 21.4.2008 issued by the Cathedral Branch, Indian Overseas Bank regarding payment of the dues to the bank and the first appellant has prayed that an OTS be given to it in view of the difficult financial position of the first appellant.
10. From a reading of the letter of the first appellant dated 29.5.2008 addressed to the Chairman and Managing Director, Indian Overseas Bank, Central Officer, Chennai-600002 the following are revealed:
i) The said letter is neither addressed to the Authorized Officer nor to the secured creditor in this case being the Cathedral Branch, Indian Overseas Bank, 762 Anna Salai, Chennai-600002.
ii) The first sentence of the letter reveals that the first appellant was aware that the payment is due to the Cathedral Branch, Indian Overseas Bank, Chennai-2 and though the first appellant is in knowledge of the fact that the objection / representation pursuant to the Section 13(2) notice has to be made only to the said branch of the bank or to the Authorized Officer of the said branch chose not to give a representation or raise an objection to the notice issued under Section 13(2) to the Authorized Officer of the said branch or to the said branch.
iii) The letter was addressed to the Chairman and Managing Director, Indian Overseas Bank, Central Office, Chennai and it was only a letter consisting of only pleas for grant of OTS to the first appellant and that only a copy of the same is marked to the Cathedral Branch, Indian Overseas Bank, Chennai-600002.
11. Therefore from the above it can be seen that the appellants though were aware of the fact that the Section 13(2) notice emanated from the Authorized Officer, Indian Overseas Bank, Cathedral Branch, 762, Anna Salai, Chennai-600002 had chosen not to make the objection/ representation with respect to the said notice but chose to plead for grant of OTS before the Chairman and Managing Director. Therefore in view of the above fact the letter dated 29.5.2008 can in no way be considered as an objection or a representation made in response to the Section 13(2) notice issued by the Authorized Officer, Indian Overseas Bank, Cathedral Branch and such being the case the contention raised by the appellants that the bank had violated Section 13(3A) has to be brushed aside.
12. In so far as the second point with respect to the choice exercised by the Authorized Officer with respect to the property that he took possession of, the same cannot be questioned by the appellants as the Authorized Officer is empowered under the provisions of the SARFAESI Act to pick and chose any of the secured assets for the purpose of enforcement of the security interest of the secured creditors under the provisions of the SARFAESI Act.
13. Therefore from the fact that the letter dated 29.5.2008 addressed to the Chairman and Managing Director, Indian Overseas Bank, Central Office, Chennai cannot be taken to be a representation or an objection made to the Authorized Officer or to the branch in response to Section 13(2) notice, from the fact that the Authorized Officer is well within his powers to pick and chose any of the secured assets for the recovery of public money under the provisions of the SARFAESI Act and from the fact that no contravention of the provisions of the SARFAESI Act or the Rules made thereunder have been countenanced in this case and from the fact that that the Ld. Presiding Officer has considered in detail and has arrived at a proper conclusion that the SA has to be dismissed this tribunal is driven to conclude that the order of the Ld. Presiding Officer does not suffer from any infirmity and proceed to dismiss the appeal.
14. Accordingly the appeal is dismissed. No costs
The above order was delivered by the Honble Chair person of DRAT Chennai on 29th Feb 2012
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