R.M. Kushawaha, (Presiding Officer)

1. The present SARFAESI Application has been filed by the S. Applicant challenging the Demand Notice dated 13.08.2018 and Symbolic Possession Notice dated 22.12.2015, issued by the respondent Bank. The entire SARFAESI actions have been initiated by the Respondent bank for recovery of Rs. 42,077,608.17 plus interest and other charges as on 30.07.2015.

2. Reply of the S.A. has been filed by the Respondent bank, denying all the allegations as alleged by the S. Applicant.

3. Heard Ld. Counsels for the parties on merits of the case.

4. It is submitted by the Ld. Counsel for the S. Applicant that the S. Applicant is a proprietorship firm of Mrs. Gazala Parveen. The Applicant firm purchases paddy from the farmers directly and after production sells rice, rice bran and husk etc. in the market through retailers. It is submitted that the respondent Bank has issued the Demand Notice dated 13.08.2015 (Annexure No. -1 to the application). It is submitted that the Demand Notice dated 13.08.2015 was served to the S. Applicant only on 28.09.2015 (postal receipt filed at page No. 19 & 20 of the application).

5. It is submitted that against the said demand notice dated 13.08.2015 which was sent to the S. Applicant on 23.09.2015 and was received by the S. Applicant on 28.09.2018. The S. Applicant filed representation dated 02.11.2015 which was sent to the S. Applicant on 03.11.2015 and as per tracking report, the same was delivered to the respondent No. 1 Bank on 07.11.2015. It is further submitted that the date of disposal of the representation submitted by the borrowers/S. applicant against the demand notice is shown as 17.11.2015 is manufactured with oblique intent to defeat the purpose of law, justice & statute. It is submitted that the representation submitted by the borrowers/S. Applicant against the demand notice has not been decided by the respondent Bank as per the provisions of Rule3-A of the Security Interest (Enforcement) Rules, 2002.

6. Thereafter, the respondent Bank has issued Symbolic Possession Notice dated 22.12.2015. It is submitted that the respondent Bank has not served its Symbolic Possession Notice U/s. 13(4) of the SARFAESI Act, 2002 through registered post or courier. As such, the affixation alone is infirm as per provisions of Rule 8(1) of the Security Interest (Enforcement) Rules, 2002. The Symbolic Possession Notice was not served to the S. Applicant but it was affixed on the secured asset on 22.12.2015. The symbolic possession notice dated 22.12.2015 has not been published in two widely circulated newspapers. Request is made that since the respondent Bank has not followed the proper procedure while undertaking the recovery proceedings against the S. Applicants, therefore, the SA may be allowed.

7. On the other hand, the Ld. Counsel for the respondent Bank has submitted that the entire SARFAESI actions, initiated by the respondent Bank are in accordance with law as contained in SARFAESI Act and Rules made thereunder. It is further submitted that the respondent Bank has issued Demand Notice on 13.08.2015 (photocopy of the notice filed as annexure No. 1 to the reply) which was sent to the S. Applicants on 19.08.2015 by post however, the same was received back un-served and thereafter again on 23.09.2015 the above mentioned demand notice dated 13.08.2015 was sent (postal receipts filed as Annexure No. 5 to the reply). It is submitted that the representation under section 13(3-A) was sent by the S. Applicant after expiry of the period prescribed under law as the objection/representation against the demand notice dated 13.08.2015 was received by the respondent bank on 16.11.2015 and thereafter, the same was decided by order dated 17.11.2015 and the same was sent to the S. Applicant by post on 30.11.2015 however, the same was returned back to the respondent Bank on 08.12.2015 and thereafter, it was again resent on 09.12.2015 (photocopy of the envelope is enclosed as Annexure No. 4 to the reply).

8. It is further submitted that the S. Applicant failed to liquidate the dues of the bank as demanded in the above mentioned notice as such the respondent Bank took symbolic possession of the property in question by issuing the possession notice dated 22.12.2015 (photocopy of the notice filed as annexure No. 2 to the reply). It is submitted that the possession notice dated 22.12.2015 was sent to the S. Applicant and it was also affixed on the secured asset but the proofs of service/affixation of possession notice are not available. The said Symbolic Possession Notice dated 22.12.2015 was publication in "Umar Ujala" Hindi newspaper and "Time of India" English newspaper on 31.12.2015 which are widely circulated newspapers in the locality (publication papers filed as Annexure No. 3 to the reply). Request is made that since the respondent Bank has followed proper procedure while undertaking SARFAESI actions against the S. Applicants, therefore, the SA may be dismissed.

9. Considered the rival contentions of the parties and perused the records.

10. The Tribunal has to examine as to whether any of the measures referred to in sub-section (4) of section 13 of SARFAESI Act, taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

11. From perusal of record, it appears that since the applicants did not maintain the financial discipline and their account was irregular therefore, their account was classified as NPA on 06.08.2015 and the respondent bank issued demand notice u/s. 13[2] of the SARFESI Act on 13.08.2015, which was sent to the S. Applicants on 19.08.2015 by post however, the same was received back un-served and thereafter again on 23.09.2015 the above mentioned demand notice was sent to the S. Applicant (postal receipts filed). The borrowers/S. Applicant filed objection/representation against the demand notice dated 13.08.2015 which was received by the respondent bank on 16.11.2015 and thereafter, the same was decided by the respondent Bank vide letter/order dated 17.11.2015 and the same was sent to the S. Applicant by post on 30.11.2015 however, the same was returned back to the respondent Bank on 08.12.2015 and thereafter, it was again resent on 09.12.2015 (postal receipts/envelopes are enclosed).

12. Thereafter, the respondent bank has taken symbolic possession of the property in question on 22.12.2015, by issuing symbolic possession notice and the possession notice has been sent to the S. Applicant and it was also affixed on the secured asset but proofs of service/affixation of the symbolic possession notice have not been brought on record. Thereafter, the said Symbolic Possession Notice dated 22.12.2015 was publication in "Umar Ujala" Hindi newspaper and "Time of India" English newspaper on 31.12.2015 which are widely circulated newspapers in the locality (publication papers filed).

In this regard, the relevant Rules 8[1] and 8(2) of the Security Interest [Enforcement] Rules 2002 are being quoted herein below-

8. Sale of immovable secured assets- [1] Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property."

The Rule 8[2] of the Security Interest [Enforcement] Rules 2002 which reads as under-

"The possession notice as referred to in sub-rule [1] shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorized officer."

13. On perusal of records, it appears that the demand notice dated 13.08.2015 was not properly served upon the S. Applicant and the symbolic possession notice dated 22.12.2015 was neither served upon the S. Applicant nor it was affixed on the secured asset but it was publication in two newspapers namely "Umar Ujala" Hindi and "Time of India" English on 31.12.2015 i.e. beyond 07 days from the date of issuance, therefore, there is a clear cut violation of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

14. In this regard, the Hon'ble Supreme Court of India in the case of Rajiv Subramaniyam reported in [2014] 5 SCC page 651 in it's para 15 was pleased to hold as under:

Para 15 - As noticed above, this Court in Mathew Varghese case also examined Rules 8 and 9 of the 2002 Rules. On a detailed analysis of Rule 8 and 9[1], it has been held that any sale effected without complying with the same would be unconstitutional and, therefore, null and void.

This judgment is squarely applicable in the present matter as the demand notice dated 13.08.2015 was not served upon the S. Applicant and the Symbolic Possession Notice dated 22.12.2015 was neither served to the S. Applicant nor it was affixed on the secured asset and it was also published in the newspapers after 07 days which are clear cut violation of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

15. In view of the above facts, circumstances and SARFAESI Act & Rules, 2002 and the judgment mentioned above, Respondent Bank has failed to take proper actions as per the SARFAESI Act and Rules while issuing the demand notice dated 13.08.2015 as the same was not served upon the S. Applicant and the Symbolic Possession Notice dated 22.12.2015 which was neither served to the S. Applicant nor it was affixed on the secured asset and it was also published in the newspapers after 07 days which is clear cut violation of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 and, as such, the same is liable to be set aside.

ORDER

16. The SARFAESI Application filed by the S. Applicants, is allowed, the demand notice dated 13.08.2015 and the Symbolic Possession Notice dated 22.12.2015 are, hereby, set aside.

17. Interim I.A./interim order, if any, stands disposed off/vacated.

18. A copy of this order be given to the parties.

19. Judgment signed, sealed, dated and pronounced in the open court on this 19th Day of August, 2023.