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Allahabad High Court · body

2009 DIGILAW 2574 (ALL)

Kanta Devi v. Allahabad Bank

2009-07-15

J.M.MALIK

body2009
JUDGMENT : J.M. MALIK (Chairperson) 1. Vide order dated 1st November, 2006, the learned Debts Recovery Tribunal dismissed the application moved by the appellant under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, hereinafter to be referred to as SRFAESI, Act). Aggrieved by that order the appellant has preferred this appeal. 2. I have heard the Counsel for the parties. The first submission made by the learned Counsel for the appellant was that notices under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 were issued on 7th September, 2002 and 28th November, 2002 respectively. The said notices were given/issued after repeal of the Ordinance. Section 42(1) of SRFAESI Act reads: 42(1) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 (Ord. 3 of 2002) is hereby repealed. Section 1(3) of SRFAESI Act further clarifies the position: It shall be deemed to have come into force on the 21st day of June, 2002. It was argued that both the notices are bad in law and the same should be declared to be invalid. 3. Instead of touching the heart of the problem, the learned Counsel for the appellant just skirted it. These arguments reveal a lack of realism. The learned Counsel for the appellant invited my attention towards Section 42(1) but did not read Clause 42(2) of the SRFAESI Act which is reproduced as hereunder: 42(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of this Act. It is, thus, clear that Section 42(2) proposes to repeal the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Second) Ordinance, 2002. It further proposes to save the things done or action taken under the said Ordinance. Succinctly stated Section 42 has got retrospective effect. The notices issued under Section 13(2) are protected by Section 42(2) of SRFAESI, Act. 4. The second submission made by the learned Counsel for the appellant was that the borrower or/and the guarantor have never deposited the sale deed with the Bank. There is no document of valid mortgage. The Bank is trying to dispose of the personal property and shop of the borrower or guarantor. 4. The second submission made by the learned Counsel for the appellant was that the borrower or/and the guarantor have never deposited the sale deed with the Bank. There is no document of valid mortgage. The Bank is trying to dispose of the personal property and shop of the borrower or guarantor. 5.I see no merit in this feeble argument. The case of the appellant herself as detailed in the appeal itself is as follows: 3(b) That the appellant further stated that she has never stood guarantor for the repayment of the loan of Vikas Engineering Corporation nor the appellant has ever created any equitable mortgage of her house to secure the said loan hence the house of the appellant is not a secured asset. Again, under the caption “Grounds and the Legal Provisions of Appeal” in para C, the appellant has averred: (C) Because the Hon’ble DRT Lucknow has failed to observe that the respondent Bank has not filed any document to prove that the appellant has ever stood guarantor for the repayment of the loan taken by Vikas Engineering Corporation from the respondent, Allahabad Bank. The respondent Bank has further failed to prove that the appellant ever created any security interest over her residential house by depositing title deed of the house with the Bank with the intention of creating any equitable mortgage of the said house. It is pertinent to mention here that the Hon’ble Apex Court of India in 274056 , has specifically held that the proceeding in appeal under Section 17 of SRFAESI Act, 2002 are like the proceeding of a suit, hence the Hon’ble DRT, Lucknow should have decided the disputed question of guarantor and mortgage on the basis of evidence on record. The Hon’ble DRT Lucknow has completely failed to decide the appeal according to the observations of the Hon’ble Apex Court. The order and judgment of the Hon’ble DRT, Lucknow dated 1st November, 2006 is liable to be quashed. 6. It must be borne in mind that the above said pleadings of the appellant are supported by an affidavit which is appended with the above said appeal. 7. The order and judgment of the Hon’ble DRT, Lucknow dated 1st November, 2006 is liable to be quashed. 6. It must be borne in mind that the above said pleadings of the appellant are supported by an affidavit which is appended with the above said appeal. 7. On the other hand, the case of the respondent Bank as set out in the objection on behalf of the respondent to the appeal filed by the appellant before the DRT, Lucknow dated 28th December, 2004 as per para 9, which is duly verified by Shri Lakshmi Narayan Chaudhary, Assistant General Manager (Zonal Head), Allahabad Bank, Zonal Office Dehradun runs as follows: That contents of para 5.3B of the appeal are denied. It is further submitted that the applicant had mortgaged her house and the paper are available with the branch which may be produced whenever Hon’ble Court may desire to see. It is wrong to say that the appellant never stood guarantor for repayment of loan granted to Vikas Engineering Corporation and it is wrong to say that the appellant never created any equitable mortgage of her house to secure the said loan or that the house of the appellant is not a secured asset. Record reveals that the appellant stood guarantor for the loan granted to the borrower aforesaid. She executed various documents in the Bank premises. The appellant is bound by the contents of the Deed of Guarantee and the mortgaged property is liable to be sold for recovery of the Bank dues. 8. It must be borne in mind that the production of the document before the Court is not at all essential. The requirement of law is that an affidavit filed by the Bank carries enough weight and it cannot be brushed aside merely on the ground that the original documents were never produced. Moreover, the affidavit filed by the appellant is admissible in evidence as per Rule 12(6) and (7) of the Debts Recovery Tribunal Procedure Rules, 1994. There is no evidence on the record that the appellant had made an attempt/application to summon the Bank witness for cross-examination. 9. Again, the Counsel for the appellant vehemently argued that the original sale deed is with them. There is no evidence on the record that the appellant had made an attempt/application to summon the Bank witness for cross-examination. 9. Again, the Counsel for the appellant vehemently argued that the original sale deed is with them. If the original registered sale deed is with the appellant firstly, it should have been produced before the Court arid request should have been made that the action should be taken against Shri Lakshmi Narayan Chaudhary, Assistant General Manager for giving false affidavit before this Court and secondly, if the original document is with the appellant she could not have come to the Court at all: The Bank can take action only on the above said security document and not otherwise. 10. It must be borne in mind that the appellant has alleged that she never deposited the title deeds under the SRFAESI Act. The appellant Smt. Kanta Devi is the real mother of the borrower. As a matter of fact, the appellant has been taking diverse and conflicting stands. On the one hand, she submitted that no title deed was given by the borrower or guarantor for mortgage purposes, on the other hand, the Counsel for the appellant argued that even if the title deeds were submitted there should be evidence that the same were handed over for creating an equitable mortgage. 11. The appellant’s case is not very clear. In case, the title deeds were given to the Bank, its obvious purpose is that it was given for creating an equitable mortgage, if there is something contrary this is for the appellant and no body else to carry the ball in disproving this fact. Unfortunately, the appellant was not herself sure about her case. In case, the Bank has got her title deeds, no allegation was made against them regarding theft/missing of documents, etc. The but and been stand set up by her is rather confusing aimed at gaining more time. This argument urged by the learned Counsel for the appellant is too, sans merit and deserves no consideration. However, it is made clear that the auction of the property will be made only on the basis of original sale deed belonging to Smt. Kanta Devi. No attempt be made to involve her personal property which was not mortgaged with the Bank. 12. However, it is made clear that the auction of the property will be made only on the basis of original sale deed belonging to Smt. Kanta Devi. No attempt be made to involve her personal property which was not mortgaged with the Bank. 12. The last submission made by the learned Counsel for the appellant was that the accounts of the appellant were declared NPA on 5th September, 2002 and after two days, notice under Section 13(2) was issued on 7th September, 2002. Requisite 90 days’ time was not granted. Again, the notice dated 7th September, 2002 does not mention on what date the facility of loan was provided to Vikas Engineering Corporation. It also does not mention on which date the deed of guarantee was executed by the appellant. The notice under Section 13(4) was issued on 5th March, 2003. It was argued that the recovery of loan due to be paid by Vikas Engineering Corporation is barred by limitation against the appellant hence the above said notices are hit by the provisions of Section 36 of the SRFAESI Act. 13. All these arguments are devoid of force. Under Articles 19, 20, 26, 36 or 37, the limitation period is uniformly three years, though it begins to run from a different point of time. Whichever of these entries applies to the transaction between the borrower and the Bank or financial institution, the secured interest of the lender (Bank or financial institution) arising from such transaction is enforceable under Section 13(4) within a period of three years computed from the applicable point of time. As for Article 62 which prescribes a period of 12 years, no doubt a lender can avail himself of this longer period of limitation when he files a suit to recover a loan secured by a mortgage or otherwise charged upon immovable property. This view further draws support from an authority by the Hon’ble High, Court reported in 420738 wherein it was held: 7. A plain reading of Section 36 of the Act clearly shows that provision of the Limitation Act, 1963 is applicable to actions provided under the Act. Article 62 of the Limitation Act, 1963 prescribes the limitation for enforcing the right of a mortgagee where immovable property is offered as collateral security by way of mortgage for a loan advanced. The period prescribed under the said Article is 12 years. Article 62 of the Limitation Act, 1963 prescribes the limitation for enforcing the right of a mortgagee where immovable property is offered as collateral security by way of mortgage for a loan advanced. The period prescribed under the said Article is 12 years. Admittedly, in this case, the period prescribed for enforcing the mortgage created by the petitioner as guarantor to the loan, expires some time in the year 1993. Hence, we find that the action of opposite party-Bank in issuing notice to the petitioner under Section 13(2) of the Act is clearly barred by time and such action is prohibited under Section 36 of the Act. 14. Similar view was taken in Ivee Injecta, etc. v. Junagadh Vibhagiya Nagrik Sahakari Bank Ltd. (2007) 74 S.C.L. 147, (Guj.) which also lays down that the enforcement of a decree debt under Section 13, limitation is of 12 years and will be computed from the date of the passing of the decree. 15. There is one more aspect to be considered. In case the secured creditor institution issues notices against the borrowers under Section 13(4) it must be within 3 years from the date on which notice under Section 13(2) was issued. The notice under Section 13 (2) was issued on 7th September, 2002 and the notice under Section 13(4) was issued on 5th March, 2003 i.e. within a period of three years. Viewed from any angle, the case of the Bank is found to be filed within the period of limitation. 16. Moreover, I have perused the notice issued under Section 13(2) on 7th September, 2002. No notice was given on 5th September, 2002. However, there is a mention in notice dated 7th September, 2002 that the outstanding due from date of advance as on 5th September, 2002 came to the tune of Rs.11,19,989.76. The account of the appellant was declared Non Performing Assets. Vide notice dated 7th September, 2002 the appellant was given 60 days’ time for discharging the entire liabilities. 17. Notices dated 23rd November, 2009 was just a reminder of the notice under Section 13(2) whereas notice under Section 13(4) of SRFAESI Act was given on 5th March, 2003 i.e., after expiry of 60 days even after the expiry of 90 days. 18. I see no illegality in the said notice. These arguments do not create propitious conditions for the appellant. 18. I see no illegality in the said notice. These arguments do not create propitious conditions for the appellant. No other argument was raised by the appellant. The appellant has made a feckless attempt to assail the order of the learned DRT. The appeal is dismissed with costs. Advocate’s fees as per fixation of his fee by his Bank. 19. Copies of this order be furnished to the parties as per law. Another copy be dispatched to the learned DRT forthwith.