C.S. HOTEL PVT. LTD. AND ANR. Vs. AHMEDABAD PEOPLE CO-OPERATIVE BANK LTD. AND ANR.
LAWS(DR)-2006-6-10
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on June 07,2006

C.S. Hotel Pvt. Ltd. And Anr. Appellant
VERSUS
Ahmedabad People Co -Operative Bank Ltd. And Anr. Respondents

JUDGEMENT

S.T.Mahadik, Presiding Officer - (1.) APPELLANTS have filed this appeal under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of the Security Interest Act, 2002, in short the SRFAESI Act whereby they have challenged the actions/measures under Section 13 of the SRFAESI Act, read with Rule 8 of the Security Interest (Enforcement) Rules, 2002, in short, the Rules. The salient features of this appeal are as follows: 1. Respondent No. 1 is the Co -operative Bank established and registered under the Gujarat Co -operative Societies Act, 1961. Appellant No. 1 is engaged in the hospitality business. Appellant No. 1 is the owner of a hotel known as "Karnavati Hotel". Appellant No. 2 is engaged in entertainment business. Appellant No. 2 runs a cinema house known as "Shree Cinema". Both the appellants had taken loans from the respondent No. 1. The properties, described in the schedule, were charged to the respondent No. 1. Appellants suffered setback in their respective businesses. Appellants were unable to repay the loans of the respondent No. 1. Appellants had requested the respondent No. 1 to extend the benefit of One Time Settlement Scheme. However, respondent No. 1 for the reason best known to it, frowned the genuine and bona fide offer of the appellants. Respondent No. 1 had wrongly classified the account as Non Performing Asset (N.P.A.). Respondent No. 1 issued demand notice under Section 13(2) of the SRFAESI Act on 16th January, 2004 on both the appellants. Appellants approached the respondent No. 1 and prayed to settle the accounts. Respondent No. 1 did not heed to the offer made by the appellants. Appellants were shocked to read in the newspaper that respondent No. 1 and taken the possession of the secured properties on 22nd December, 2004 by invoking Section 13(4) of the SRFAESI Act. Appellants were eager to get the accounts settled and wriggle out of the crisis. Respondent No. 1 was bent upon to sell the high valued assets for paltry dues. Respondent No. 1 had issued sale notice dated 26th January, 2005, 30th March, 2005 and 1st October. 2005 under Rule 8 of the Rules for selling the secured properties. Since the respondent No. 1 could not get the buyers the first two notices proved to be futility. Respondent No. 1 had not obtained the valuation report from the approved valuer. Notice dated 1st October, 2005 is illegal, void and invalid. Respondent No. 1 had not incorporated the necessary terms in the sale notice dated 1st October, 2005. Respondent No. 1, therefore, could not proceed with sale of the secured properties on the basis of the defective notice. Appellants had filed Civil Suit No. 1805 of 2005 in the City Civil Court, Ahmedabad for injunction. However, appellants could not succeed because of lack of jurisdiction of the City Civil Court. Ahmedabad. Appellants have, therefore, prayed that the actions/measures under Section 13 of the SRFAESI Act and the sale notice under Rule 8 of the Rules be set aside. It is further prayed that the respondent No. 1 be ordered to restore the possession of the secured properties to the appellants.
(2.) RESPONDENT No. 1 has filed, in extenso, reply at Exhibit R/01. Respondent No. 1 has denied the material averments made in the appeal. It is the case of the respondent No. 1 that the appellants had taken huge financial assistance from it. However, appellants could not repay the loans because of severe setback in the business. Respondent No. 1 had obtained decree against the appellant No. 1 in Lawad Case No. 1689 of 2001 from the Board of Nominees. Appellant No. 1 had failed to satisfy the decree passed by the Board of Nominees. Appellant No. 2 is also indebted to the respondent No. 1. Liability of both the appellants is about Rs. 185 lakh. Since the appellants were not interested in clearing the dues of the respondent No. 1, respondent No. 1 had no option but to exercise the powers conferred on it by Section 13 of the SRFAESI Act. Respondent No. 1 had issued sale notice from time -to -time under Rule 8 of the Rules. Respondent No. 1 was not interested in disposing off the secured properties because of the assurance of payment given by the appellants. In other words, respondent No. 1 was interested in the recovery of its dues rather than selling the secured properties. Respondent No. 1 noticed that the promises made by the appellants for clearing the dues were false, empty and illusory. Respondent No. 1 was shocked to know that the appellants had borrowed moneys from other sources. Further, they had failed to discharge the liability towards the Government and other public bodies. Since the appellants were not at all interested in clearing the legitimate dues, respondent No. 1 was constrained to issue sale notice dated 1st October, 2005. Sale notice is legal, proper and valid. Since the sale as per the earlier notices were deferred at the behest of the appellants, appellants now, cannot deny the legality of the notice dated 1st October, 2005. Sale notice is legal, proper and valid. Since the sale as per the earlier notices were deferred at the behest of the appellants, appellants now, cannot deny the legality of the notice dated 1st October, 2005. Appeal filed by the appellants is burred by limitation. Appeal is filed with an ulterior motive to dupe the respondent No. 1 of huge funds. It is, therefore, prayed that appeal be dismissed with cost. Appellants have filed rejoinder to the reply of the respondent No. 1 at Exhibit A/02.
(3.) RESPONDENT No. 1 has filed further affidavit at Exhibit R/08.;


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