TaxTMI 
TaxTMI 
2020 (10) TMI 1058
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act") followed with the possession notices dated 09th November, 2017 and 10th November, 2017. 2. Brief facts of the case are that the appellant is a Housing Finance Company under National Housing Bank Act, 1987 and is notified as Financial Institution by the Department of Finance (Central Government) in exercise of the powers conferred by sub-clause (iv) of clause (m) of subsection (1) of Section 2 of the SARFAESI Act. The appellant indeed falls within the definition of "secured creditor" under the provisions of the SARFAESI Act and is entitled to initiate measures under the provision of the SARFAESI Act for enforcement of security interest created on the secured assets by the respondents (borrower/guarantor) in favour of the appellant (secured creditor). 3. Section 2(zd) of the SARFAESI Act which defines "secured creditor", reads as follows: "2. Definitions. - (1) In this Act, unless the context otherwise requires, .... (zd) "secured creditor" means (i) any bank or financial institution or any consortium or group of banks or financial institutions holding any right, title ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een taken in use for correspondence at all later stages when the proceedings against the respondents herein were initiated under Sections 13(2), 13(4) and 14 of the SARFAESI Act. 6. It reveals from the record that the respondents at a later stage failed to maintain financial discipline and subsequently became a defaulter and because of the alleged breach of the terms and conditions of the Facility Agreement executed between the appellant (L&T Housing Finance Ltd.) and the respondents (M/s. Trishul Developers through its Partners) towards completion of its project, the appellant served a demand notice dated 16th December, 2016 to the respondents to pay the outstanding dues within the stipulated period mentioned in the demand notice. Since the respondents failed to make their outstanding payment, under the given circumstances the appellant classified the account of the respondents as Nonperforming Assets (NPA) on 15th April, 2017 and sent a notice of demand dated 14th June, 2017 under Section 13(2) of the SARFAESI Act calling upon the respondents to pay the outstanding dues i.e. Rs. 16,97,54,851/( Rupees Sixteen Crores Ninety Seven Lakhs Fifty Four Thousand Eight Hundred and Fifty O....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2018 came to be challenged by the appellant in appeal before the Debt Recovery Appellate Tribunal(DRAT) and after the parties being heard, DRAT vide its order dated 16th April, 2019 set aside the order of Debt Recovery Tribunal which came to be challenged by the respondents in a writ petition before the High Court of Karnataka. The High Court while setting aside the order of DRAT returned its finding in conformity with what was observed by the DRT in its order, which is the subject matter of appeal before us. 10. Learned counsel for the appellant submits that from the initial stage until the demand notice being served under Section 13(2) of the SARFAESI Act or even the later correspondence was on the same letterhead of the appellant from where the proceedings for the term loan was sanctioned in favour of the respondents and further submits that the selfsame authorised signatory, being there of both the companies use common letterhead having its registered office and details of the sanction letter and of Facility Agreement coupled with default committed by the respondents are in reference to "L&T Housing Finance Ltd." and only at one stage, due to oversight, the appellant inadvert....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and later their account became NPA on 15th April, 2017 and prior thereto, the appellant (secured creditor) served a notice on 16th December, 2016 demanding its outstanding dues sanctioned under the seal of their authorised officer on behalf of the lender, which has been informed to this Court was a selfsame authorised signatory of both the companies namely "L&T Housing Finance Ltd." and "L&T Finance Ltd". Indisputedly, the notice under Section 13(2) of the SARFAESI Act was served by the authorised signatory on behalf of the appellant on the letterhead commonly used by "L&T Housing Finance Ltd." and "L&T Finance Ltd." but inadvertently, the authorised signatory put his signature under the seal of the company "L&T Finance Ltd". In this backdrop, from reply dated 08th August, 2017 of the respondents, it becomes clear that repayment was demanded by the appellant(secured creditor) only and the respondents tried to justify and assigned reasons for which the Facility Agreement dated 11th August, 2015 could not have been carried out and only thereafter, the appellant (secured creditor) has initiated further proceedings under Section 13(4) read with Section 14 of the Act. 15. Notably from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in regard to the defect if any, in the demand notice dated 14th June, 2017 which was served by the secured creditor i.e. "L&T Housing Finance Ltd." in compliance to the provisions of the SARFAESI Act or in furtherance to the proceedings initiated at the behest of the appellant under Section 13(4) read with Section 14 of the Act, for the first time, a feeble attempt was made in raising the alleged technical objection in a Securitisation Application filed before the DRT and succeeded. 18. It may be relevant to note that the respondents (borrower) did not deny advancement of loan, execution of Facility Agreement, their liability and compliance of the procedure being followed by the secured creditor (appellant) prescribed under the SARFAESI Act. 19. In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stan....