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TMI Blog2019 (1) TMI 2055X X X X Extracts X X X X X X X X Extracts X X X X ..... especially sub-Rule (1) to (4) and (6) of Rule 8 and sub-Rule (1) of Rule 9, it becomes explicitly clear that the secured asset, upon its turning into a non performing asset, cannot be dealt within a highhanded manner and disposed of in a casual manner, without adhering to the procedure prescribed by the Act and Rule 2002. It is evident that the possession notice dated 13.04.2010 was not published in the newspaper, as is envisaged by Rule 8(2). Thus, there is total noncompliance of Rule 8(2) of the Rules 2002. The publication of the notice dated 31.03.2011, thus, does not salvage the position. Award of interest at the rate of 8% per annum - HELD THAT:- The justifiability of the claim of interest at 30% per annum is required to be appreciated. There are two impediments which the petitioner needs to surmount. Firstly, the learned Presiding Officer, DRT, observed, more than once, that the parties had consented that the rate of interest which may be determined by the Tribunal would be acceptable to both of them. Even in the operative part of the impugned order in OA No. 31 of 2010, the learned Presiding Officer, DRT, made it abundantly clear that the rate of interest was determined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended to Defendant No. 1. ii) The Defendants committed default in repayment. The Bank of India declared the loan and financial facilities extended to the Defendants, as nonperforming assets. Thereupon action under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFAESI Act'), was initiated. iii) On 30.03.2011 the debts came to assigned in favour of the Petitioner-an asset reconstruction company. On 31.03.2011, the Petitioner claimed to have taken possession of the secured assets. iv) In the meanwhile, the predecessor in-title of the Petitioner had filed OA No. 31 of 2010, claiming an amount of Rs. 4,50,65,000/ with interest at the rate of 13.60 % per annum from the Defendants. The Petitioner assignee got itself substituted in the said O.A.. During the pendency of the said OA No. 31 of 2010, I.A. No. 321 of 2011 came to be filed for recording the settlement arrived at between the Petitioner and Defendant Nos. 1, 3, 5, 7 and 8, and passing order in terms thereof. Vide order dated 25.07.2011 in I.A. No 321 of 2011, the DRT recorded the terms of settlement and it was directed that the Def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the said Rules 2002 ). Thirdly, the Petitioner failed to comply mandatory provisions of Rule 8(2) of the Rules 2002 which warranted that the notice of taking possession of the secured assets shall be published in newspapers not later than 7 days from the date of taking possession. x) After hearing the parties, and upon perusal of the material tendered by both the parties on record, the learned Presiding Officer DRT negatived the first and second challenge, namely, that the secured asset was not amenable to sale being an agricultural land and that there was breach of Rule 8(6) of the Rules 2002. The DRT, however, came to the conclusion that the possession notice dated 31.03.2011 relied upon by the Petitioner could not be considered a notice contemplated by section 13(4) of the SARFAESI Act. Thus in the opinion of DRT, the notice was not published in the newspaper in conformity with the Rules 8 (2) of the Rules 2002. Even otherwise, if the notice dated 31.03.2011 is construed as a notice of taking possession, yet its publication in the newspaper on 11.04.2011, according to the DRT, was in br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the security interest under the SARFAESI Act. A notice under section 13(2) of the Act was issued on 19.01.2010. The borrowers failed to discharge their liability within the period specified in sub section (2) of section 13. The Bank of India took possession of the secured assets, under section 13(4) of the SARFAESI Act on 30.04.2010. The Petitioner entered into the shoes of the Bank of India, as the debts came to be assigned in favour of the Petitioner on 30.03.2011. The Petitioner claimed to have taken possession of the secured assets on 31.03.2011. An effort was made to settle the loan accounts by entering into the settlement agreement on 06.04.2011. The Petitioner published purported notice of possession in the newspaper on 11.04.2011. The Petitioner issued sale notice on 08.11.2012. Auction notice was issued on 24.11.2012. In the meanwhile, in IA No.321 of 2011 in O.A. No. 31 of 2010, an order came to be passed on 25.07.2011, based on the consent terms executed by and between the parties. 7 The learned counsel for the Petitioner strenuously urged that the DRT as well as DRAT committed manifest error in quashing and setting aside the action initiated by the Petitioner for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and delivery of possession notice to the borrower, (ii) Affixing the possession notice on the outer door or other conspicuous place of the secured assets. (iii) Publication of the possession notice in two leading newspaper. However, according to the learned counsel for the Petitioner, the prescription of time i.e. not later than seven days from the date of taking possession is not a mandatory requirement but its substantial compliance would be in order. 11 The aforesaid inference that the stipulation with regard to the time is directory, was sought to the justified on two grounds (i) no penal or other consequence is prescribed for nonobservance of the condition of publication within the stipulated time, (ii) holding the condition, as regards the publication within the stipulated time, mandatory will lead to general inconvenience. Thus such an interpretation needs to be avoided. 12 In order to bolster up the aforesaid submission, the learned counsel for the Petitioner placed a strong reliance upon the judgment of this court in the case of Clarity Gold Pvt. Ltd. Vs. State Bank of India Ors. 2011 (2) Mh.L.J. 778 wherein the nature of the provision, which stipulated time of one week ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of taking possession prescribed for publication, is directory. 14 Reliance was also placed on the judgment of the Supreme Court in the case of Topline Shoes Ltd. vs. Corporation Bank, (2002) 6 SCC 33 wherein it was enunciated that section 13 of the Consumer Protection Act, 1986, which provide 45 days time for filing reply by the opponent was directory in nature and the time limit was not peremptory. 15 The learned counsel for the Petitioner also placed a strong reliance upon another judgment of this court, dated 21.02.2018, in the case of Global Aviation Services Pvt. Ltd., Vs. Airport Authority of India Commercial Arbitration Petition No.434 of 2017 in; wherein after reference to a number of judgments, it was enunciated that the provision of section 34(5) 34(6) of the Arbitration Conciliation (Amendment) Act, 2015, which provide for issuance of prior notice and disposal of the application under section 34, within a period of one year, respectively, were not mandatory but directory. The learned single Judge of this court observed, inter-alia , that since no consequence was provided for the noncompliance with the aforesaid provisions i.e. prior notice and disposal within one year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere it is written that it is issued to the applicant / appellant, nowhere it is mentioned that it is notice under section 13(4) and from the entire perusal of the said notice it cannot be considered as notice issued under section 13(4) of SARFAESI Act by M/s. Phoenix ARC Pvt. Ltd. To the applicant/ appellant. As such, said notice cannot be considered as a notice of possession. 19 In the backdrop of the aforesaid reasoning, we have carefully perused the purported possession notice dated 31.03.2011. It is indisputable that the predecessor in-title of the Petitioner had issued the possession notice under section 13(4) of the Act and also taken possession of the secured assets on 13.04.2010. The said possession notice was in the Form prescribed in Appendix IV appended to the Security Interest (Enforcement) Rules 2002. It is nobody's case that the said possession notice dated 13.04.2010 was published either by the predecessor-in-title of the Petitioner or the Petitioner. 20 In contrast to this, the purported possession notice dated 31.03.2011, relied upon by the Petitioner, indicates that the possession was taken by the authorised officer of the Petitioner from the authorised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court after adverting to the provisions of section 13 of the SARFAESI Act and Rule 8 of the Rules 2002, observed that while on the one hand secured creditor may be entitled to enforce the secured asset created in its favour on its own without resorting to any court proceedings or approaching the Tribunal, such enforcement should be in conformity with the other provisions of the SARFAESI Act. The Court further observed that, unless and until a clear 30 day's notice is given to the borrower, no sale or transfer can be resorted to by secured creditor. 24 The observations of the Supreme Court in para 31 indicate the nature of the provisions, especially rule 8 and 9 of the Rules, 2002, which read as under : 31. Once the said legal position is ascertained, the statutory prescription contained in Rules 8 and 9 have also got to be examined as the said rules prescribe as to the procedure to be followed by a secured creditor while resorting to a sale after the issuance of the proceedings under Section 13(1) to (4) of the SARFAESI Act. Under Rule 9(1), it is prescribed that no sale of an immovable property under the rules should take place before the expiry of 30 days from the date on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice are mandatory or directory, does not warrant determination. It is evident that the possession notice dated 13.04.2010 was not published in the newspaper, as is envisaged by Rule 8(2). Thus, there is total noncompliance of Rule 8(2) of the Rules 2002. The publication of the notice dated 31.03.2011, thus, does not salvage the position. 27 As regards the challenge to the impugned order with reference to the award of interest at the rate of 8% per annum, the learned counsel for the Petitioner would urge that the learned Chairperson, DRAT, committed a gross error in adverting to the irrelevant and inappropriate clause of the consent terms, executed by and between the parties. It was submitted that the basis of the consent terms was the letter of acceptance, executed by the borrower on 06.04.2011. The following stipulation therein clearly provides that in the event of default in payment of any installment, in accordance with the consent terms, the borrower would be liable to pay penal interest at the rate of 30% per annum (compounded monthly) 8. The Addressees undertake, confirm and agree that on or before 31st July 2011, SSEL shall pay a minimum amount on Rs. 40,00,000/ (Rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concession and accordingly the Applicant shall be entitled to get the Recovery Certificate issued without any further delay. The Consenting Defendants, jointly and severally, further agree that the Applicant shall be entitled to take such other remedial measures against the Consenting Defendants as it may deem fit and best to preserve and protect its rights and interests in order to recover the settlement amount at the cost and risk of the Consenting Defendants. k. In the Event of Default in payment of any one installment out of the agreed payment schedule, the Applicant shall be entitled to a recovery certificate, forthwith, from this Hon'ble Tribunal , in terms of the Settlement Amount, payment of which is hereby agreed to by the Consenting Defendants, after adjusting the amounts already received by the Applicant. 29 It is true that the learned Chairperson, DRAT, extracted the aforesaid clause (k) only. On the basis of the aforesaid clause, the learned Chairperson, DRAT, came to the conclusion that the there was no stipulation of rate of interest in the event of default in payment, as per the terms of the settlement. Though, the aforesaid clause (g) and (h) have a bearing up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it was enunciated that statements of fact as to what transpired at the hearing, recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. The relevant observations of the Supreme Court, in para 4 of the aforesaid judgment, are instructive in nature. They read as under : 4. . . The principle is well settled that statements of fact as to what transpired at the hearing, recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is' incumbent, upon the party, while the matter is still fresh in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. Per Lord Buckmaster in Madhusudan v. Chanderwati A.I.R. 1917 P.C. 30 That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. Of course a party may resile and an Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given case if the Court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced the Court may exercise its discretion in awarding interest pendente lite and postdecree interest at a lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner. 38 The learned Chairperson, DRAT observed that the learned PO, DRT, exercised the discretion to award interest at the rate of 8% per annum correctly and not arbitrarily. We are inclined to agree with the learned Chairperson, DRAT. In the totality of the facts and circumstances, we are of the view that the award of interest at the rate of 8% per annum is just and proper. Thus the challenge to the impugned order on this count also falls through. 39 Resultantly, on a careful analysis of the legal position, in the backdrop of the facts, we are impelled to hold that no interference is warranted by this court in exercise of writ jurisdiction. The Petitions, therefore, deserve to be dismissed. Hence, the following order : ORDER : i. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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