V.K. Mathur, Chairperson

1. This Appeal has been preferred by the Appellant-Bank under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SRFAESI Act") against the order dated 16th October, 2014 passed by the learned DRT, Allahabad by which the learned DRT allowed the Securitization Application No. 92 of 2013 filed by the Respondents and the entire process as initiated by the Bank on the strength of first demand notice issued under Section 13(2) of the SRFAESI Act, dated 9th October, 2012 was quashed.

2. The brief facts of adjudication of the present case are that the Respondent company was granted credit facilities by the Appellant Bank under various heads for a total sum of Rs. 27.67 crores. The Respondent company had mortgaged the immovable property and also plant and machinery for availing the credit facilities. The account of the Respondent company became irregular and the Appellant Bank classified the account as non performing asset (NPA) on 26th May, 2012 as per the R.B.I. Guidelines.

3. The Appellant-Bank issued a demand notice under Section 13(2) of the SRFAESI Act on 9th October, 2012 demanding an outstanding amount of Rs. 22,96,84,087.42 with interest towards various credit facilities availed by the Respondent company. The Appellant Bank specifically mentioned the details of secured assets (Immovable properties) against which the Bank intended to proceed for recovery in case the borrower failed to discharge liability within the specific period. As per contention of the Appellant, the Respondent company did not raise any objection under Section 13 (3A) of the SRFAESI Act against the said demand notice.

4. The Respondent company failed to liquidate the outstanding dues of the Appellant Bank and thereafter the Appellant Bank issued possession notice on 29th December, 2012 under Section 13(4) of the SRFAESI Act with regard to the mortgaged immovable property (land & building) situated at Kanpur and another possession notice dated 24th January, 2013 under Section 13(4) of the SRFAESI Act with regard to mortgaged immovable property situated Moradabad.

5. The Respondents preferred a Securitization Application on 13th March, 2013 under Section 17 of the SRFAESI Act before the D.R.T., Allahabad wherein it was prayed that the demand notice dated 9th October, 2012 under Section 13(2) of the SRFAESI Act and the possession notice dated 29th December, 2012 and 24th January 2013 under Section 13 (4) be quashed.

6. It has been further stated by the Appellant that during the pendency of the Securitization Application No. 92/2013, the Appellant-Bank on 29th March, 2014 issued another demand notice under Section 13(2) of the SRFAESI Act to demanding the outstanding amount of L 22,96,84,087.42 along with interest. In this notice the Appellant-Bank mentioned the details of the secured asset (movable property-plant and Machinery) against which the Bank intended to proceed for recovery.

7. The Appellant-Bank proceed for auction sale of secured immovable properties-Land & Building of the Respondent company, since despite demand notice dated 9th October, 2012 and possession notice dated 29th December, 2012 and 24th January, 2013 the Respondent had failed to pay the outstanding dues. An "E" auction notice dated 15th September, 2014 was issued for auction of the immovable properties of the Respondent company on 20th October, 2014. The Respondent also challenged the "E" auction dated 15th September, 2014 before the D.R.T., Allahabad.

8. The learned D.R.T., Allahabad vide impugned order dated 16th October, 2014 allowed the S. A. of the Respondent company and accordingly, the entire process as initiated by the Appellant-Bank in pursuance of the demand notice dated 9th October, 2012 under Section 13(2) of the SRFAESI Act was quashed. It was also held that the Appellant will be liberty to proceed further either by issuing fresh demand notice or may proceed on second demand notice. Being aggrieved by this order the Appellant-Bank has preferred the present Appeal before this Tribunal praying that the said order be quashed.

9. The learned Counsel for the Appellant-Bank submitted that the Learned Tribunal has erred in quashing the first demand notice dated 9th October, 2012 issued under Section 13(2) of the SRFAESI Act and also the entire process initiated by the Bank in pursuance of this notice. It was submitted that the first demand notice under Section 13(2) of the SRFAESI Act, dated 9th October, 2012 was in respect of mortgaged immovable properties (Land & Building) of the Respondent company in pursuance of which auction was initiated while the second demand notice under Section 13(2) of the SRFAESI Act, dated 29th March, 2014, was in respect of mortgaged movable properties (Plant & Machinery) of the Respondents and as such the first demand notice dated 9th October, 2012 could not be quashed.

10. Learned Counsel for the Appellant has placed reliance in the case of Wasan Shoes Ltd. v. Chairperson, Debts Recovery Appellate Tribunal, Allahabad, A.I.R. 2009 Allahabad 163, wherein it was held that it is open to secured creditor to move against any secured assets and it is not essential that all secured properties should be put to sale simultaneously. It was also held that if by sale of one property substantial recovery could be made, it is not necessary that all properties should be sold or possession be taken under Section 13(4) of the SRFAESI Act.

11. Learned Counsel for the Respondent company submitted that the learned D.R.T. has rightly quashed the first demand notice dated 9th October, 2012 since the Appellant-Bank had issued a second demand notice dated 29,th March, 2014 under Section 13(2) of the SRFAESI Act which implies that Bank has withdrawn the earlier demand notice and the Bank after issuance of second demand notice cannot revive first demand notice. It was also averred that the second demand notice under Section 13(2) of the SRFAESI Act was for the same outstanding amount and the Bank cannot differentiate between the movable and immovable property of the Respondents. It was also submitted that in the present case the plant and machinery were part of portion of the plant and machinery were part of portion of the structures fitted therein and could not be held to be movable goods since the building was custom made for fixing the plant and machinery. In support of the contention, the learned Counsel for the Appellant-Bank placed reliance in the case of Dauji Farms Ltd. v. Dena Bank, 2009 (1) D.R.T.C. 569 (Chhat.) andCommissioner of Central Excise, Ahmadabad v. Solid and Correct Engineering Works, in Civil Appeal No. 960-966 of 2003 decided by Honble Supreme Court on 8th April, 2010.

12. I have heard the learned Counsels for both the parties and perused the record.

13. In the present case, the first notice under Section 13(2) of the SRFAESI Act was issued by the Appellant-Bank to the Respondent company on 9th October, 2012 (Annexure-1) for a sum of Rs. 22,96,84,087.42 and further interest @ 17.50% per annum w.e.f. 1st June, 2012. The Respondents filed an application under Section 17 of the SRFAESI Act before the D.R.T., Allahabad on 13th March, 2013 for quashing the demand notice under Section 13(2) of the SRFAESI Act, dated 9th October, 2012 and possession notice under Section 13(4) of the SRFAESI Act, dated 29,h December, 2012 and 24th January, 2013. During the pendency of the said application in S.A. No. 92/2013 before the D.R.T., the Appellant-Bank issued second demand notice under Section 13(2) of the SRFAESI Act, on 29,h March, 2014 (Annexure-5) demanding a sum of Rs. 22,96,84,087.42 and further interest @ 17.50% per annum w.e.f. 1st June, 2012.

14. In the above facts and circumstances of the present case, the Appellant-Bank issued first demand notice under Section 13 (2) of the SRFAESI Act on 9th October, 2012. The Bank issued a second demand notice under Section 13(2) of the SRFAESI Act on 29th March, 2014 without taking the first demand notice to its logical conclusion. As such, when the Bank has issued second demand notice for the same outstanding amount without withdrawing the first demand notice, it will be deemed that the Bank has withdrawn the first demand notice dated 9th October, 2012.

15. Thus, the learned D.R.T. below has rightly quashed the entire process initiated by the Bank in pursuance of first demand notice under Section 13(2) of the SRFAESI Act dated 9th October, 2012 and given liberty to the Bank to proceed further on the basis of the second demand notice or to issue fresh demand notice in accordance with law.

16. Consequently, there is no manifest infirmity or illegality in the impugned order dated 16th October, 2014. The Appeal filed by the Appellant-Bank is dismissed with no order as to costs.

Appeal allowed.