Decided on February 08,2006



K.J.Paratwar, - (1.) BEING aggrieved by the respondent Bank's taking possession of Unit No. 2, Vardhman Complex, L.B.S. Marg, Vikroli (W), Mumbai 400083 belonging to applicant No. 3 in the name of M/s. Deepan Elastomer under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SRFAESI Act), this applicant (Appeal) is preferred.
(2.) The applicant No. 1 is the respondent's constituent since from 2001 enjoying certain credit facilities including cash credit from the respondent. The applicant Nos. 2 and 3 are guarantors from amongst whom applicant No. 3 created equitable mortgage of the aforesaid property and thus the property is secured asset within the meaning of SRFAESI Act. The applicant's contention is that he applicant No. 1 was satisfactorily operating the cash credit account. But, it was shocked to receive the Bank's letter dated 26.5.2005 contending that the account has been termed unsatisfactory due to excess drawing as per the auditor's report dated 27.3.2005 and the account as such has been classified as Non Performing Asset (NPA). Vide said notice, the respondent called upon applicant No. 1 to clear within 7 days outstandings of Rs. 84,98,801.69 in the books of the Bank account as on 25.5.2005. The applicant No. 1 by letter dated 5.7.2005 clarified that the stock was more than one years old and also informed that most of the stock does not deteriorate in quality due to passage of time and that none of the stocks was unpaid. Yet, the Bank issued notice dated 17.8.2005 under Section 13(2) of SRFAESI Act and demanded the then outstandings of Rs. 88.05 lacs within 60 days. In letter dated 22.8.2005, the applicant No. 1 has stated that the Bank has classified the account as NPA on some minor technical grounds and that during the meeting between the parties to the application it was mentioned that the auditor had shown the account as NPA since it would have otherwise looked odd that from out of advance of Rs. 1800 crores no account was NPA. It was also stated that the matter will be reviewed and the NPA classification will be removed before 30.6.2005 whereupon the account which was temporarily suspended was allowed to be operated.
(3.) AT the instance of respondent, other audit for the period from January to July 2005 was conducted by M/s. Ashra and Co., Chartered Accountants who in report dated 13.7.2005 has stated that the account was already classified as NPA by statutory audit as on 31.3.2005. The statement of the balance in account of the applicant No. 1 for the relevant period clearly showed that it was not out of order and was not liable to be classified as NPA. The reversal entries pertaining to the interest (earlier debited from time to time) of Rs. 7,39,432/- on 20.4.2005and of Rs. 1,05,138/- on 23.7.2005 are said to have been taken behind the applicant No. 1's Bank. This is said to have been done deliberately to classify the account as NPA. The applicant No. 1 vide reply dated 6.9.2005 protested the respondent's action of classifying the account as NPA. Ultimately, the respondent Bank refused to be persuaded and took symbolic possession of the property on 28.11.2005.;

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