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2017 (2) TMI 702 - HC - Indian LawsRecovery proceedings initiated by the respondent Bank - non repayment of the loan - Held that - In totality of the circumstances as noticed this Court is of the opinion that the respondent Bank cannot proceed on the basis of the publication made under Section 13(4) of the SARFAESI Act, only for the reason of the respondent Bank having not considered the objections filed before it, pursuant to the notice under Section 13(2), which was before it; before a decision was taken to proceed under section 13(4); though filed by the defaulter after the 60 days period as prescribed under the SARFAESI Act. It is hence declared that the respondent bank cannot proceed for sale of the properties as per the publication impugned before this Court in the above writ petition and the writ petition would stand allowed leaving open the remedy of the respondent bank to proceed against the defaulter/petitioner in accordance with the provisions of the SARFAESI Act or any other law in force. If the further proceedings are taken under the SARFAESI Act,then it would have to commence from the consideration of objections and a reply given on that count.
Issues:
Recovery proceedings initiated by the respondent Bank, commencement of repayment, consideration of objections under SARFAESI Act. Analysis: 1. The petitioner challenged the recovery proceedings initiated by the respondent Bank due to a loan default. The petitioner sought a higher loan amount for a resort project but was disbursed a lesser amount, leading to a significant investment from the petitioner's end. The respondent Bank declared the loan as non-performing and initiated recovery proceedings against the petitioner for default. 2. A key contention raised by the petitioner was that repayment should start only after the last disbursement of the sanctioned loan amount, which had not occurred. However, the respondent Bank argued that the sanctioned amount had been fully disbursed in stages, and the repayment obligation should begin irrespective of project completion status. The respondent Bank proceeded with recovery actions upon default, considering the loan as a non-performing asset. 3. The court focused on the legality of the recovery proceedings under the SARFAESI Act, disregarding factual disputes. The petitioner objected to the sale of property without the Bank considering the objection filed within the specified timeframe. The court examined whether the Bank's actions were appropriate under the SARFAESI Act, specifically regarding the consideration of objections raised by the defaulter. 4. The court scrutinized the timeline of events, particularly the filing and receipt of objections by the Bank. The Bank argued that the petitioner's objection, though filed within the stipulated period, was received after the prescribed 60 days. The court emphasized the importance of the Bank considering objections before proceeding with sale under Section 13(4) of the SARFAESI Act. 5. Despite the Bank's claim that the objection was filed beyond the allowed period, the court held that the Bank's acknowledgment of receiving the objection invalidated this argument. The court reasoned that since the Bank had the objections before deciding to sell the property, it was imperative for the Bank to consider the objections before initiating further proceedings under the SARFAESI Act. 6. Consequently, the court ruled in favor of the petitioner, declaring that the Bank could not proceed with the sale of properties based on the publication under Section 13(4) of the SARFAESI Act without considering the objections filed within the specified timeframe. The court allowed the writ petition, preserving the respondent Bank's right to proceed lawfully under the SARFAESI Act after duly considering objections and providing a response. Each party was directed to bear their respective costs in the matter.
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