Santosh Laxman More & Anr. v. Bank of Baroda

…Appellant

Bank of Baroda

…Respondent

Case No: Appeal on Diary No. 1948/2023

Date of Judgement: 22/12/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr. Sunil Humbre, i/b Mr. Veer Shitore, Advocate.

For Respondent: None.

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Facts:

Arguments by the Parties:

The Appellants contended that they have a good prima facie case in challenging the SARFAESI measures. They argued that the mandatory provisions of Sub-Section 3 of Section 13 of the SARFAESI Act were not complied with because the demand notice did not provide a breakup of the principal and interest due, only stating the aggregate amount. The Appellants further contended that the mortgage was not registered. They claimed that the mortgage was purportedly created by the deposit of title deeds, but the memorandum of the deposit of title deeds, which is the agreement about the creation of the mortgage, is compulsorily registrable under Section 17(1f) of the Registration Act, as per the Maharashtra amendment. Since this was not complied with, the mortgage is defective. Additionally, the Appellants argued that the order under Section 14 of the SARFAESI Act is improper and challenged it in the S.A. They also challenged the classification of the account as a Non-Performing Asset (NPA), stating that there was no default for 90 days as contemplated under the Reserve Bank of India (RBI) guidelines, and therefore, the account could never have been classified as an NPA. The Appellants submitted that they are under financial strain, and income certificates of both Appellants (husband and wife) were obtained from the Tahsildar to demonstrate their limited income, making it difficult to comply with the mandatory provisions of Section 18(1) of the SARFAESI Act. The Appellants sought the indulgence of the Tribunal by exercising the discretion available under the third proviso to Section 18(1) of the SARFAESI Act, which allows for a reduction in the mandatory pre-deposit amount.

The Respondent bank did not appear before the Tribunal, and no arguments were presented on their behalf.

Cases Cited:

Sections and Laws Referred:

Section 13(2), Section 13(3), Section 13(4), and Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

Section 18(1) of the SARFAESI Act (regarding mandatory pre-deposit)

Section 17(1f) of the Registration Act (regarding the compulsory registration of the memorandum of the deposit of title deeds)

Reserve Bank of India (RBI) guidelines (regarding the classification of Non-Performing Assets)

The court disposed of the Interim Applications (I.A. Nos. 829/2023(WoD) and 830/2023(WoD)) with the above directions and observations. The Appeal on Diary No. 1948/2023 was listed before the Registrar, and the Appeal on Diary No. 1949/2023 was listed for reporting compliance before the bench on 08.01.2024.