IN THE DEBT RECOVERY TRIBUNAL, JAIPUR

SECURITISATION APPLICATION No. _______ OF 2021

APPLICATION UNDER SUB-SECTION 1 OF SECTION 17 OF

THE OF THE SECURITISATION AND RECONSTRUCTION OF
FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY
INTEREST ACT, 2002 (AS AMENDED BY THE
ENFORCEMENT OF SECURITY INTEREST AND RECOVERY
OF DEBTS LAWS (AMENDMENT) ACT, 2004

FOR USE IN TRIBUNAL'S OFFICE

Date of Filing :

Registration Number :

Signature of the Registrar

BEFORE DEBTS RECOVERY TRIBUNAL, JAIPUR

S.A. NO. / 2021

1. M/s ___________.

Through Director

.……Applicant
 VERSUS

1. State Bank of India

…………Non Applicant/Respondent Bank

 APPLICATION UNDER SECTION 17 OF
SECURITSATION AND RECONSTRUCTION OF
FINANCIAL ASSETS AND ENFORCEMENT OF
SECURITY INTEREST ACT 2002 READ WITH SECURITY
INTEREST (ENFORCEMENT RULES), 2002, AGAINST
THE POSSESSION NOTICE DATED 14.09.2021,
WHEREBY NON APPLICANT BANK HAS TAKEN THE
POSSESSION OF THE SUBJECT PROPETIES

IN THE DEBT RECOVERY TRIBUNAL, JAIPUR

SECURITISATION APPLICATION No. _______ OF 2021

BETWEEN

M/S _____________.
… APPLICANT

AND -

STATE BANK OF INDIA & ANR.

… DEFENDANTS

DETAILS OF THE APPLICATION:

1. Particulars of the Applicant:

i. Name of the M/s __________
Through
Applicant:

ii. Address of
registered office:
iii. Address for Same as above
service of all
notices:

2. Particulars of the Defendants:

i. Name of the
Defendants:
ii. Office address of
 the Defendants:
iii. Address for Same as above
service of all
notices:

3. Jurisdiction of the Tribunal:

The Applicant declares that Applicant is challenging the

action taken by the Defendants whereby the Defendants

have purportedly taken over the symbolic possession of the

(i) Land and Building situated at 217(A), 218, 219, 220 and

230(A), MIA Alwar, Rajasthan; (ii) Industrial Land and

Building situated at C-21, Industrial Area, Sikandara, Agra,

Uttar Pradesh; (iii) Industrial Land and Building situated at

D-25, Industrial Area, Sikandara, Agra, Uttar Pradesh; (iv)

Industrial Land and Building situated at D-26, Industrial

Area, Sikandara, Agra, Uttar Pradesh; (iv) Industrial Land

and Building situated at B-50, 51, 52 and 53, EPIP, UPSIDC,

Agra, Uttar Pradesh (v) C-21, Industrial Area, Sikandara,

Agra, Uttar Pradesh; (vi) Factory Land and Building situated

at E-1 to E- 12 and D-9 to D-16, Bajpur Uttarakhand

(hereinafter referred to as “Secured Assets”) under sub-

section 4 of Section 13 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 ( hereinafter “SARFAESI Act”)

and its corresponding Rules. Since, some of the Secured

Assets of the Applicant are located within the territorial

jurisdiction of this Hon’ble Tribunal, therefore this Hon’ble

Tribunal has the jurisdiction to adjudicate the present

 application under sub-section (1A)(b) of Section 17 of the

SARFAESI Act.

4. Limitation:

The Applicant further declares that the present application

is delayed by _____ days of the statutory period of limitation

as provided under sub-section 1 of Section 17 of the

SARFAESI Act and for which a separate application is being

filed. It is declared that the Defendants issued the

Possession Notices dated September 14, 2021, purportedly

under sub-section 4 of Section 13 of the SARFAESI Act in

gross violation of the provisions of the SARFAESI Act. The

Applicant submits that vide the order dated September 23,

2021, the Hon’ble Supreme Court in Re: Cognizance for

Extension of Limitation [Misc. Application No. 665/2021 in

SMW(C) No. 3/2020] directed that while computing the

period of limitation inter alia for filing of any suit, appeal,

application of proceeding, the period from March 15, 2020,

till October 02, 2021, shall stand excluded. Therefore, in

terms of the said order passed by the Hon’ble Supreme

Court, the present application is filed after _____ days from

the date of expiry of the statutory period of limitation, under

Section 17(1) of the SARFAESI Act.

5. Facts of the case:

a. The instant application is being filed by the Applicant,

challenging inter alia the wrongful classification of the

loan account of the Applicant as Non-Performing Asset

(NPA) on November 11, 2020, in contravention to the

order and direction passed by the Hon’ble Supreme Court

in The Small Scale Industrial Manufactures Association,

Haryana Vs. Union of India & Ors. [WP (C) No. 476/2020],

whereby the Apex Court directed that accounts that are

not declared as NPA as on August 31, 2020, should not be

declared as NPA by the banks/financial institutes, till the

matter is disposed-off. The said matter was finally

adjudicated on March 23, 2021.

That pursuant to the aforesaid wrongful classification, the

Defendants issued the Demand Notice dated June 18,

2021, under sub-section 2 of Section 13 of the SARFAESI

Act, demanding payment of an exorbitant lump-sum

amount of Rs. ________, without providing the detailed

break-up, in stark violation of the mandatory provisions of

the statue. Subsequently, the Defendants took over the

symbolic possession of the Secured Assets of the

Applicant, purportedly under Sub-Section 4 of Section 13

of the SARFAESI Act, after mechanically rejecting the

objections/representations submitted by the Applicant,

invoking its rights under sub-section 2 of Section 13 of

the SARFAESI Act, for want of authority of the person

 allegedly adjudicating the objections/representations of

the Applicant and on the ground that the said

objections/representations are beyond the scope of the

provisions of Section 13(2) of the SARFAESI Act. That

since the classification of the loan account of the

Applicant was illegal and unlawful, and the Demand

Notice issued thereafter was void ab initio, the

objections/representations of the Applicant has not

considered or purposefully decided, all subsequent action

taken by the Defendants purportedly under Section 13(4)

of the SARFAESI Act, in furtherance of their Demand

Notice dated June 18, 2021, are vitiated, unlawful and

illegal.

b. The facts leading to filing of the present Application inter

alia are summarised as under:

i. The Applicant, M/s ________, is a company

incorporated under the provisions of the Companies

Act, having its registered office at __________. The

instant application is being filed by the Applicant

challenging the illegal and unlawful taking over of

the possession of the Secured Assets of the

Applicant by the Defendants under the garb of

enforcement of security assets under SARFAESI Act

in contravention to inter alia the prevailing laws,

through Mr. ________, who has been duly authorized

 vide the Board Resolution dated ______. Copy of the

Board Resolution dated _____ is annexed herewith

and duly marked as Annexure-A/___ and the

Master Data of the Applicant, as downloaded from

the website of the Ministry of Corporate Affairs

(“MCA”) is annexed herewith and duly marked as

Annexure-A/___.

ii. The Applicant carries on the business inter alia of

_____.

iii. The State Bank of India (“SBI”), the Defendant No. 1

herein, was constituted under the provisions of the

State Bank of India Act, 1955, for carrying on the

banking business and other businesses in

accordance with the provisions of the said Act. While

the Defendant No. 1 is the Stressed Assets

Management unit/department of the SBI, the

Defendant No. 2 is the unit disbursing loan primarily

to the small and micro enterprises.

iv. The Applicant availed financial facility from the

Defendants, which was subsequently sanctioned by

the latter vide the sanction letter dated _______.

Since, the Applicant has been servicing the principal

loan amount and the interest accrued thereupon on

 or before the due date, the Defendants had been

renewing the said facility from time to time. The

credit facility of the Applicant was last renewed by

Defendants vide the sanction letter dated _________.

A copy of the sanction letter dated _______ is

annexed herewith and duly marked as Annexure-

A/___ and the copy of the last sanction letter dated

____ is annexed herewith and duly marked as

Annexure-A/___.

(Copy of sanction letter

v. That the Applicant had a long-term relationship with

the Defendants, which dates back to the year 1978,

when the account of the Applicant was maintained

by the State Bank of Bikaner and Jaipur (“SBBJ”).

The Applicant had availed financial assistance to the

tune of Rs. 108.50 crores, from SBBJ towards fund-

based and non-fund based credit facilities and had

been regularly servicing the interest and the loan

amount.

vi. Pursuant to the merger of SBBJ with the SBI, on April

01, 2017, the Applicant’s account, which was

maintained by the SBBJ, Alwar branch, was

transferred overnight, to the SBI, MIS, Jaipur branch,

without any prior intimation or consent of the

 Applicant, despite assurances that the said account

would remain at the Alwar branch. The said transfer

of the Applicant’s bank account to SBI, MIS, Jaipur,

from Alwar, without prior notice and consent caused

inconvenience to the Applicant. Since the Applicant

operates from Alwar, the Applicant faced difficulties

in operating the said bank account, because of

which the Applicant suffered losses due to delay in

operating the account.

Therefore, the Applicant requested the concerned

branch to transfer its account to SBI, MSE branch,

Sanjay Palace, Agra. After much delay, the said

bank account was finally transferred to SBI, MSE

branch only on July 01, 2017, as an overdraft

liability account (“OD Account”).

vii. The adversarial conduct of the Defendants started

to manifest from the year 2018, when the

Defendants abruptly, under the garb of an

undisclosed RBI notification suspended the credit

limit account of the Applicant for import under the

Usance Letters of Credit (“LC”), although the

Applicant still had unexhausted credit limit of Rs.

800 lakhs for its Foreign Letter of Credit (“FLC”)

facility. As a result, the Applicant was forced to

 advance the payment of Usance LC, which resulted

in wiping-out of the working capital of the Applicant,

which in turn adversely affected the business cycle

of the Applicant. Copies of letter dated 13.12.2018

and email dated 15.12.2018 are showing the

unilateral suspension of the credit limit account of

the Applicant and is annexed herewith and duly

marked as Annexure-A/___.

viii. Thereafter, the Defendants unilaterally without any

prior intimation to the Applicant blocked the

Applicant’s BGs, LCs, and cash credit accounts (“CC

accounts”) and substantially increased the margin

money for issuance of BG/LC, which adversely

affected the business operation of the applicant.

Due to said arbitrary and unilateral decision of the

Defendants, the business operation of the Applicant

almost came to a standstill.

The Applicant approached the concerned officials of

the Defendants, requesting them to reconsider the

said decision. However, the Defendants turned a

blind eye to the same, which further led to

deterioration of the fiscal health of the Applicant.

Copies of the email correspondences dated

(4.12.2018) ________ by the Applicant to the

Defendants requesting them to reconsider their

 decisions are annexed herewith and collectively

marked as Annexure-A/___ (Colly).

It is imperative to mention here that apart from the

above said disruptions, the Applicant further

requested the Defendants for granting an additional

and temporary BG facility which would enable the

Applicant the latter to get the refund of security

money lying with the buyers of the Applicant.

However, despite being aware of the Applicant’s

profound need of financial assistance, the

Defendants emphatically denied grant of additional

and temporary BG limit. The said despotic act of the

Defendants caused further financial setback to the

Applicant, which is solely attributable to the

Defendants. It is pertinent to mention here that in

case the Defendants had acted upon the request of

the Applicant, the amount of security deposit would

have been utilized by the Applicant to pay-off the

Defendants and also to some extent the same would

have also been utilized in working capital.

ix. The Applicant states that in usual course of business

and to facilitate smooth commercial transactions,

Applicant was maintaining current account with

other banks such as Axis Bank, HDFC Bank, ICICI

Bank and Standard Chartered Bank. However, the

Defendants without assigning any reason,

whatsoever, called upon the Applicant to close all

the current accounts maintained with the other

banks. It is pertinent to mention that the Applicant

vide letter dated May 29, 2018, apprised the

Defendants that the current account with the other

banks do not have significant credit and assured to

submit periodical statement of the said accounts.

But the Defendants without appreciating the

necessity to maintain these accounts by the

Applicant and in the most arbitrary and highhanded

manner imposed a hefty penalty of Rs. 17.16 lakhs,

on the latter, on account of delay in closing of the

current accounts, without appreciating the fact that

the said accounts were necessary for the smooth

functioning of the business operations of the

Applicant. Thus, it is evident from the said conduct

of the Defendants met out towards the Applicant,

who was facing acute financial hardships, that the

Defendants were adamant to push the Applicant

towards its corporate death. Copy of the letter dated

May 29, 2018, issued by the Applicant is annexed

herewith and duly marked as Annexure-A/___.

x. That the Defendant did not pay any heed to the

problems faced by the Applicant, which were

brought to their knowledge from time to time. On

the contrary, the Defendants abjectly denied

extension of any coordination, whatsoever, to

enable the Applicant to streamline its operations.

The antagonising conduct of the Defendants can be

ascertained from the fact that sometimes in mid-

2020, the Applicant submitted a requisition with the

Defendants, for reduction in margin and increase in

cover period of receivables on account of the

outbreak of Covid-19 pandemic. It was categorically

brought to the notice of the Defendants that the

manufacturing plant of the Applicant was shut down

from third week of March, 2020 till third week of

May, 2020, due to the ongoing lockdown across the

country. Thus, the business operation of the

Applicant came to a sudden halt and there was no

revenue generation during this period. Thereafter,

the Applicant, though resumed its operation with 20-

25% of the total working strength, as per the

government guidelines, however, since most of the

customers of the Applicant had closed their sites,

therefore, the work of installation of transformers at

the customer site, was put on hold, indefinitely.

Furthermore, most of the customers, invoking the

force majeure clause in their respective contracts,

either refused to receive the delivery of the finished

products, which were lying at the Applicant’s

warehouse or suspended the work orders. Thus, not

only the Applicant’s sales figures dripped all time

low but also the Applicant’s working capital got

stuck, as the latter had invested capitals in

manufacturing the customized products, as per the

specific requirements of the Applicant’s customer,

but the customers revoked/suspended the contracts

invoking force majeure clause.

It is imperative to mention here that the above facts

were brought to the notice of the Defendants vide

communication dated July 27, 2020, and August 19,

2020. In fact, the Applicant requested the

Defendants to extend their support by allowing the

interchangeability of non-fund based credit facilities

(“NFB”) to fund based facilities (“FB”). The Applicant

also requested the Defendants to permit the

Applicant to open vacant LC limits of Rs. 900

approx. for buying the mismatch materials.

However, the Defendants refused to extend any

support to the Applicant, enabling the latter to make

good of the business losses and tide over the

unprecedented financial crunches, imposed by the

 pandemic situation. Copy of the communication

dated July 27, 2020, and August 7, 2020 & August

19, 2020, are annexed herewith and duly marked as

Annexure-A/___ collectively.

xi. That sometimes in February 2020, the Defendants

erroneously reported the loan account of the

Applicant as Special Mention Account-1 (SMA-1)

instead of Special Mention Account-0(SMA-0), to

CIBIL, which was subsequently rectified after a year,

in the month of February, 2021, after much cajoling,

persuasion and follow-up by the Applicant. It is

imperative to mention that such erroneous,

inaccurate and misclassification of the loan account

of the Applicant had far reaching consequences.

It is pertinent to mention here that due to the

aforesaid wrong reporting of the status of account of

the Applicant, disbursement of the loan by the

Punjab National Bank (“PNB”) and Small Industries

Development Bank of India (“SIDBI”) to the

Applicant, under the ECLGS 2.0 got delayed.

Further, due to the wrong reporting, which lead to

the delay in disbursal of said loan, the Applicant was

put in a disadvantageous position, which ultimately

 led to non-execution of work orders aggregating to

Rs. 50 Crore, in a timely manner. Some of the orders

were subsequently cancelled due to delayed

execution. That due to the shortage of funds, the

Applicant was unable to procure new orders, thus

moving a step towards corporate death. Copies of

the correspondences dated 1.01.2021, 4.01.2021

and 6.01.2021, pertaining to the wrong reporting is

annexed herewith and collectively marked as

Annexure-A/___ (Colly).

xii. That in and around April 2020, when the account of

the Applicant was erroneously reported as SMA-1,

the Applicant had applied for restructuring proposal

under the RBI Circular No. RBI/2020-21/16, dated

April 06, 2020, related to revival/restructuring of

Covid-19 affected industries and enterprises. One of

the major conditions therein was that the applicant

had to obtain RP-4 rating from an Independent

Credit Rating Agency. It is stated that the Applicant

had submitted its restructuring proposal with the

Defendants with the sanguine hope that the

Defendants would sanction and disburse funds

under the ECLGS, which was essential for the revival

of the Applicant. However, the Defendants rejected

the proposal of the Applicant, as a result whereof

 the Applicant was unable to secure funds under the

ECLGS 2.0 Scheme. Thus, due to the lack of support

and gross negligence of the Defendants, the

Applicant suffered adversely at the hands of the

Defendants. Copy of the restructuring proposal

submitted by the Applicant under RBI Circular No.

RBI/2020-21/16, dated April 06, 2020, is annexed

herewith and duly marked as Annexure-A/___ and

the copy of the correspondence dated ______ by the

Defendants, rejecting the said proposal is annexed

herewith and duly marked as Annexure-A/___.

xiii. It is pertinent to mention that COVID RBI ECLGS 2.0

financial support of 20% was not granted to the

Applicant on account of illegal and unlawful

classification of the loan account of the Applicant as

NPA. It is stated that the Hon’ble Supreme Court

vide an order passed in the month of September,

2020, in the case of The Small Scale Industrial

Manufactures Association, Haryana (Supra) directed

that accounts that are not declared as NPA as on

August 31, 2020, should not be declared as NPA by

the banks/financial institutes, till the matter is

disposed-off. The said matter was finally adjudicated

on March 23, 2021. However, in the instant case,

the Defendants, in stark violation of the said order

and direction passed by the Apex Court, classified

the account of the Applicant as NPA on November

11, 2020, as result whereof the restructuring

proposal of the Applicant under COVID RBI ECLGS

2.0, was declined as RP-4 rejected and Basel 2

rating was converted as D as on March 31, 2021,

which was B+ as on August 2020. It shall not be out

of place to mention here that the Applicant was not

informed about the aforesaid illegal and wrongful

classification of its account as NPA by the

Defendants, until May 21, 2021. Thus, it is apparent

that the Defendants with mala fide, high

handedness, and gross misuse of its dominant

position, in very scrupulous and clandestine

manner, prevented the Applicant from availing the

benefits announced by the Central Government to

provide respite to the sectors, which were adversely

affect the Applicant during the lockdown period and

led to its premature corporate death. Copy of the

letter dated ______ rejecting the Applicant’s proposal

under COVID RBI ECLGS 2.0, is annexed herewith

and duly marked as Annexure-A/___. Copy of the

correspondence dated May 21, 2021, is annexed

herewith and duly marked as Annexure-A/___.

xiv. It is pertinent to mention that since the Applicant

was in dire need of funds, as its working capital had

eroded, for reasons enumerated in various

paragraphs of this Applicant, the Applicant vide the

email dated March 31, 2020, requested the

Defendants to release the excess margin for

opening LCs, otherwise kept with the Defendants, to

tide over the financial crunch that the Applicant is

currently suffering. However, the Defendants

outrightly rejected the proposal of the Applicant to

retain the margin in the form of mutual funds after

breaking the FDs, retained by the Defendants as

margin against issuance of the LCs. The said action

of the Defendants is directly responsible for the

immediate deterioration of the financial losses of

the Applicant. Copy of the email dated March 31,

2020, is annexed herewith and duly marked as

Annexure-A/____.

xv. That the Defendants had put the account of the

Applicant on hold since January 13, 2020, as a

result, all banking transactions of the Applicant had

come to a standstill. The Applicant had been

repeatedly requesting the Defendants to permit the

Applicant to operate its bank account with a 5%

fund holding under holding of Operation in separate

 account. It was repeatedly brought to the notice of

the Bank, and finally vide the email dated January

21, 2021, the Applicant apprised the Defendants

that it is not being able to meet its business and

statutory expenses like payment of salary & wages

to its staffs and employees, purchase of raw

materials, payment of legal dues etc., hence, it will

not be able to keep itself a going concern. However,

the said plea fell on the deaf ears of the Defendants,

despite it is the statutory obligation of the

Defendant to ensure that its borrowers, including

the Applicant remains a going concern.

xvi. That pursuant to the wrongful classification of the

loan account of the Applicant as NPA on November

11, 2020, as revealed by the Defendants vide the

correspondence dated May 21, 2021, the Applicant

tried to contact with the concerned bank officials to

find out the grounds and reasons, basis which the

said account was so classified. However, the

Defendants paid no heed to the request of the

Applicant. On the contrary, the Defendant No. 2

issued the Demand Notice dated June 18, 2021,

purportedly under Section 13(2) of the SARFAESI

Act, alleging that an exorbitant lump-sum amount of

Rs. 96,36,96,693/- (Rupees Ninety Six Crore Thirty

Six Lakh Ninety Six Thousand Six Ninety Three Only)

is due and recoverable from the Applicant. Copy of

the Demand Notice dated June 18, 2021 is annexed

herewith and duly marked as Annexure-A/___.

That the said Demand Notice was not in conformity

with the mandatory provisions of the SARFAESI Act.

As per Section 13(3) of the SARFAESI Act, a secured

creditor is obligated to give the details of the

amount alleged to be payable by the borrower, in

case of non-payment of the secured debts by the

latter. The relevant extract of Section 13(3)

SARFAESI Act is reproduced hereunder:

“13. Enforcement of Security Assets.

3. The notice referred to in sub-section (2)

shall give details of the amount payable

by the borrower and the secured assets

intended to be enforced by the secured

creditor in the event of non-payment of

secured debts by the borrower.”

(Emphasis Supplied)
It is submitted that the “details of the amount”

includes clear break-up of the amount payable in

the form of the principal amount outstanding,

interest payable on it during the different periods

whether at floating rate or fixed rate, any penal rate

of interest, the amount of costs etc. or any other

amount under any other head which would be

chargeable from the delinquent borrower. The

Hon’ble High Court of Gujarat in Punjab National

Bank Vs. Mithilanchal Industries Ltd.

[C/LPA/159/2020] has held that notice under Section

13(2) of the SARFAESI Act has to necessarily contain

the details of the amount payable by the borrower.

If the intention of the Legislature was only to

provide the total outstanding amount or the

aggregate amount outstanding and payable by the

borrowers, the language would have been different.

Sub-Section (3) of Section 13 would not have been

incorporated. The relevant extract from Punjab

National Bank (Supra) is reproduced as under:

“28. The words used in Section 13(3) of the

SARFAESI Act are “details of the

amount payable by the borrower as

also the details of the secured assets

 intended to be enforced by the

Secured Creditor.” So, the notice under

Section 13(2) of the SARFAESI Act has

to necessarily contain the details on

the above two counts.

29. Insofar as the first part is concerned

i.e. regarding the amount payable by

the borrowers, if the intention of the

Legislature was only to provide the

total outstanding amount or the

aggregate amount outstanding and

payable by the borrowers, the

language would have been different. It

would not have been necessary to

incorporate Sub-Section (3) in Section

13 of the SARFAESI Act. In Sub-Section

(2) of Section 13 of the SARFAESI Act, it

is also mentioned that the Secured

Creditor may require the borrower by

notice in writing to discharge in full his

liabilities to the Secured Creditor. The

said liabilities would be mentioned in

view of the provisions of Sub-Section

(2) itself. But, consciously, Sub-Section

(3) was incorporated so as to ensure

 that the details of the amount payable

are provided in the notice. Such details

would include the relevant calculations

made by the Bank under different

heads which had become due and

payable at the end of the borrower.

30. There is another reason for

incorporating Sub-Section (3). Sub-

Section 3(A) gives right to the borrower

to make a representation or raise an

objection against the notice under Sub-

Section (2). Unless the borrower has

the details of the amounts found due

and payable by the Secured Creditor

and being demanded as such under a

notice under Sub-Section (2), the

borrower would not be in a position to

make any representation or raise any

objection. It is only when the amounts

under different heads are provided to

the borrower that it could raise

objection under any of the heads

where the borrower finds that the

amount quantified is not correct.

Without there being any details

 mentioned in the notice, the very

purpose of Sub-Section 3(A) would also

be lost to a large extent.”

(Emphasis Supplied)

However, in the instant case, though the Defendants

alleged that exorbitant lump sum amount of Rs.

96,36,96,693/- as outstanding and payable by the

Applicant, the Defendants failed to provide the

mandatory details of the alleged outstanding

amount, as per Section 13(3) of the SARFAESI Act.

Hence, the alleged Demand Notice dated June 18,

2021, issued by the Defendants is not maintainable.

xvii. That pursuant to the receipt of the said Demand

Notice, the Applicant vide the communications

dated 20.07.2021, 2,08.2021 and 06.08.2021

requested the Defendants to provide the Applicant

with copies of the loan documents relied upon by

the Defendants, as enumerated in the delinquent

Demand Notice and after repeated pleas, requests,

follow-ups, and reminders, both verbally and in

writing, the copies of some of the documents were

shared with the Applicant on August 06, 2021, i.e.

only 10 days prior the expiry of 60 days’ notice

 period as per Section 13(2) of the SARFAESI Act. The

rest of the documents have not been supplied by

the Defendants till the date. Thus, the Defendants

deliberately deprived the Applicant from verify the

claims and contentions of the Defendants and

controvert the allegations levelled against the

Applicant in the said Demand Notice, which is

violative of the principles of natural justice. Copy of

the email dated 20.07.2021, 2,08.2021 and

06.08.2021 are annexed herewith and collectively

marked as Annexure-A/___.

xviii. The Applicant, in exercise of its rights under the

statue submitted its Representation/Objection dated

August 16, 2021, explaining the reasons why no

coercive measures should be taken by the

Defendants against the Applicant under Section

13(4) of the SARFAESI Act. Copy of the

Representation/Objection dated August 16, 2021, is

annexed herewith and duly marked as Annexure-

A/___.

xix. The Defendants, rejecting all

representations/objections of the Applicant in a

mechanical manner, without giving any meaningful

consideration, whatsoever vide the correspondence

dated August 31, 2021, proceeded to take drastic

measures under sub-section 4 of Section 13 of

SARFAESI Act.

It is pertinent mention that the Defendants rejected

the Representations/Objections dated August 16,

2021, without even considering majority of the

representations/objections, for want of authority of

the person issuing the correspondence dated August

31, 2021, and on the pretext that the same is

beyond the scope of the provisions of Section 13(2)

of the SARFAESI Act, without referring to any

provision of law, to substantiate the said contention.

The said correspondence of the Defendants is in

contravention to law laid down by the Hon’ble

Supreme Court in the case of Mardia Chemicals Ltd.

Vs. Union of India [(2004)4 SCC 311], where the

Hon’ble Supreme Court has held that creditors must

apply their mind to the objections raised in reply to

the notice under Section 13(2) of the SARFAESI Act.

There must be some meaningful consideration of

the objections raised by the borrower rather than

rejection of the same, in a routine manner. The

relevant extract from Mardia Chemicals Ltd. (Supra)

is quoted as under:
“45. ... The purpose of serving a notice upon the

borrower under sub-section (2) of Section 13 of the

Act is, that a reply may be submitted by the

borrower explaining the reasons as to why

measures may or may not be taken under sub-

section (4) of Section 13 in case of non-compliance

with notice within 60 days. The creditor must apply

its mind to the objections raised in reply to such

notice and an internal mechanism must be

particularly evolved to consider such objections

raised in the reply to the notice. There may be some

meaningful consideration of the objections raised

rather than to ritually reject them and proceed to

take drastic measures under sub-section (4) of

Section 13 of the Act.”

(Emphasis Supplied)

The vague, ambiguous, and evasive response by the

Defendants clearly reveals the abject opacity in the

conduct and functioning of the Defendants, being a

custodian of public money. Such conduct is

prejudicial not only towards the Applicant but also

detrimental to the economic fabric of the country, as

such the captioned proceedings as initiated by the

Defendants are liable to be quashed. Copy of the

 communication dated August 31, 2021, is annexed

herewith and duly marked as Annexure-A/__.

xx. That since the Defendants did not give any due

consideration to the objections/representations

raised by the Applicant vide the

Objections/Representations dated August 16, 2021,

the Applicant vide the Rejoinder dated October 12,

2021, reiterated its objections/representations while

controverting the contentions of the Defendants

raised in their correspondence dated August 31,

2021 and specifically mentioning that the said

communication is violative of the prevailing law,

hence, any action taken in furtherance thereto shall

be illegal and unlawful. Copy of the Rejoinder dated

October 12, 2021, is annexed herewith and duly

marked as Annexure-A/___.

It is imperative to mention herein that till date the

Defendants have not submitted the statement of

account, details qua rate of interest charged or the

grounds for classifying the loan account as NPA.

xxi. The Defendants without any heed to the requests

and reminders of the Applicant to provide all the

loan documents relied upon by the Defendants at

 the time of issuance of the Demand Notice dated

June 18, 2021 and/or the objections/representations

dated August 16, 2021, of the Applicant explaining

why no action should be taken against the Applicant

under sub-section 4 of Section 13 of the SARFAESI

Act, the Defendant proceeded to take the

possession of the Secured Assets of the Applicant

under Section 13(4) of the SARFAESI Act, vide the

Possession Notices dated September 14, 2021.

Copies of the Possession Notices dated September

14, 2021, are annexed herewith and collectively

marked as Annexure-A/___ (Colly).

xxii. Pursuant to the issuance of the Possession Notices

dated September 14, 2021, and taking over the

symbolic possession of the Security Assets by the

Defendants, the Applicant vide the Reply dated

October ____, 2021, objected to the said actions

initiated by the Defendants under the SARFAESI Act,

as the entire process for purported enforcement of

the security assets of the Applicant is illegal,

arbitrary, and unlawful. However, the Defendants

neither restored the loan account of the Applicant,

as it existed as on November 10, 2021, nor

withdrew its Notices against the Secured Assets of

the Applicant. In fact, the Defendants, till date has

 failed to reply to the said communication. Copy of

the Reply dated October ___, 2021, issued by the

Applicant in reply to the Possession Notices dated

September 14, 2021, is annexed herewith and duly

marked as Annexure-A/___.

xxiii. It is pertinent to mention that the Demand Notice

dated June 18, 2021 and the letter/correspondence

dated August 31, 2021, rejecting the

Objections/Representation of the Applicant dated

August 16, 2021, has also been issued on behalf of

the Defendants, allegedly by their “Authorized

Officer”. Interestingly, the signatories to the said

Notices are two different persons, who have

concealed their respective names and designations.

The said Demand Notice and the correspondence

dated August 31, 2021, are contradictory to the

provisions of Rule 3 and Rule 3A of the Security

Interest (Enforcement) Act, 2002, which provides

that the demand notice under Section 13(2) of the

SARFAESI Act and reply to the

representation/objection made by the borrower,

thereafter, must be examined and decided by the

Authorised Officer. Thus, any person, other than the

Authorised Officer, as defined under Rule 2 of the

Security Interest (Enforcement) Act, 2002, taking

any action purportedly for the enforcement of the

security interest on behalf of the secured creditor is

non est.

Assuming for the sake of argument, without

admitting that the Defendants indeed have more

than one officer superintending, directing, and

controlling its business and affairs, who has been

authorized to enforce the security interest of the

borrower under the SARFAESI Act, yet only one of

them can pursue the matter against a borrower. The

intention of the legislature is very clear that only

one authorized officer will take the necessary

measures for enforcement of the security interest

on behalf of the bank, else the statute would have

provided that “authorized officers” and not an

“authorized officer”, of the secured creditor may

take the necessary actions under the Security

Interest (Enforcement) Rules, 2002. Therefore, the

Possession Notice purportedly issued under Section

13(4) of the SARFAESI Act, arising out of the Notice

dated June 18, 2021, allegedly issued under Section

13(2) of the SARFAESI Act is illegal and unlawful,

being in violation of the provisions of the SARFAESI

Act and its corresponding Rules.

xxiv. Since the delinquent Demand Notice purportedly

issued under Section 13(2) of the SARFAESI Act is

itself bad in the eyes of law for all the above reasons

and the irregularities were neither rectified nor

objections/representations of the Applicant was not

meaningfully decided, hence, all subsequent actions

of the Defendants, including the Possession Notice

purportedly issued under Section 13(4) of the

SARFAESI Act, is illegal, unlawful and liable to be set

aside.

xxv. That even otherwise the actions of the Defendants

are bad in the eyes of law and is liable to be set

aside in light of the above narrated facts and

circumstances.

xxvi. That being aggrieved by malicious and unjust

actions of the Defendants, the Applicant begs to

move to this Hon’ble Tribunal under Section 17(1) of

the SARFAESI Act, 2002, inter alia, on the following

amongst other grounds:

Grounds for Relief

a. Because, it is an admitted fact that the outrageous

outbreak of novel Coronavirus (COVID-19) pandemic
has caused worldwide economic distress causing
hardships to all the elements of the global society.
b. Because, the classification of Loan account of the
Applicant as NPA is bad, arbitrary, invalid and bad in
the eyes of law, in view of the facts and
circumstances narrated above.

c. Because, the loan account of the Applicant has been

classified as NPA on November 11, 2021, in gross
violation of the directions of the Hon’ble Supreme
Court passed in the matter of The Small Scale
Industrial Manufactures Association, Haryana
(Supra), when the Hon’ble Apex Court directed that
accounts that are not declared as NPA as on August
31, 2020, should not be declared as NPA by the
banks/financial institutes, till the matter is disposed-
off. The matter was finally disposed-off on March 23,
2021.

d. Because, the discrepancy in the dates of NPA

classification cannot be overlooked as there is a
reasonable apprehension that the alleged
classification has been done in an irregular manner
and such malpractices cannot be allowed.

e. Because, since the NPA classification has been done

by the Defendants under suspicious circumstances,
the Defendants are not entitled to initiate
proceedings under the SARFAESI Act, 2002 against
the Applicant.

f. Because, the Defendants have miserably failed to

exhibit the grounds/reasons of classifying the loan
account as NPA, as such the classification has been
done in a whimsical and mechanical manner without
 paying due consideration to the guidelines issued by
the Reserve Bank of India.

g. Because, in the wake of global outburst of COVID-19

pandemic, and the far reaching market disruptions
caused by the pandemic, the Reserve Bank of India,
issued circulars/notifications to mitigate the burden
of debt servicing upon the borrowers, brought about
by the disruptions caused by COVID 19 pandemic, to
ensure the continuity of viable businesses, and the
same has been abjectly ignored by the Defendants.

h. Because, the Defendants suspended the credit limit

oof the Applicant for import under LC despite the
Applicant having an unexhausted limit of Rs. 8
Crore, which is not only arbitrary but also against
the principle of Banking ethics and code of conduct.

i. Because, the Defendants blocked the LC, BG, and

the Cash Credit account of the Applicant and
substantially increased the margin money for
issuance of BG/LC, without any prior intimation to
the Applicant or providing any reasons for doing the
same. As such, the Defendants are responsible for
putting the Applicant in a labyrinth of financial
hardships.

j. Because, the Defendants had negligently and

erroneously classified the loan account of the
Applicant as SMA in February 2020 and April 2020.
Such negligence was gravely prejudicial to the fiscal
wellbeing of the Applicant.

k. Because, the loan account of the Applicant was

erroneously reported to CIBIL as Special Mention
 Account-1 (SMA-1) instead of Special Mention
Account-0(SMA-0) in February 2020. Such erroneous
classification of the loan account in the careless
manner led to the ineligibility of the Applicant to
take the benefit of relief packages announced by
the central government and RBI.

l. Because, the loan account of the Applicant was

erroneously reported as SMA-1, it rendered the
Applicant ineligible to apply for restructuring of the
loan account under RBI Circular No. RBI/2021-21/16
and availing the benefit of ECLGS Scheme 2.0.

m.Because, the Defendants though classified the loan

account of the Applicant as NPA on November 11,
2020, the Defendants concealed the said fact from
the Applicant, let alone providing any reason/ground
for the said classification. The Applicant was
informed about the said NPA classification, for the
first time vide the letter dated May 21, 2021. Same
reveals the opacity in the conduct of the
Defendants.

n. Because, the margin rate for LC and BG has been

unilaterally changed which is completely against to
the terms and condition mutually agreed between
the parties. It clearly establishes the existence of
greed and malice on the part of the Defendants.

o. Because, the Defendants in order to further inflate

the liability of the Applicant and to take undue
advantage of the deteriorating market conditions
started to prematurely remit the BGs to the
respective beneficiaries before the expiry of the
term of BG or duration of the contract.
p. That the exorbitant and unexplained amount as
claimed in the Demand Notice dated June 18, 2021,
is not only whimsical and arbitrary but also is devoid
of any clear break-up, as mandated under Section
13(3) of the SARFAESI Act.

q. That the contents of the Demand Notice dated June

18, 2021, falls short of the mandatory requirement
of disclosure as mandated under Section 13(3) of
the SARFAESI Act, 2002 and upheld by the Hon’ble
High Court of Gujarat in the matter of Punjab
National Bank (Supra). The said Demand Notice fails
to provide clear break-up of the amount payable in
the form of the principal amount outstanding,
interest payable on it during the different periods
whether at floating rate or fixed rate, any penal rate
of interest, the amount of costs etc. or any other
amount under any other head which would be
chargeable from the Applicant. As such, the said
Notice is void ab initio, being in contravention to the
prevailing law and is therefore liable to be
dismissed.

r. Because the impugned Demand Notice dated June

18, 2021 issued under Section 13(2) of the
SARFAESI Act, 2002, has been wrongfully and
maliciously issued against the provisions, letter and
spirit of the SARFAESI Act, 2002 and is liable to be
quashed with exemplary costs.

s. Because the Defendants have miserably failed to

establish how the Applicant is liable to pay the
amount as mentioned in the delinquent Demand
Notice, as the same has been reached at by the
 officials of the Defendants in a whimsical manner
and has capitalized interest, which has been strictly
prohibited by the Hon’ble Supreme Court in the
matter of Central Bank of India vs. Ravindra and
Ors. [(2002) 1 SCC 367].

t. Because the Defendants in order to further inflate

the liability of the Applicant has added plethora of
unjustified charges, detailed break-up of which has
not been provided, clearly establishes the fact that
the proceedings as initiated against the Applicant is
motivated solely by greed and malice as such the
present Application is liable to be dismissed.

u. That the said NPA classification of loan account as

NPA on November 11, 2020, is in abject and
deliberate contempt of the order of the Hon’ble
Supreme Court in the matter of The Small Scale
Industrial Manufacturers Association (Supra),
wherein it was held by the Hon’ble Apex Court in
September 2020 that the loan accounts not
classified till date shall not be classified till the final
disposal of the matter. The matter was finally
adjudicated upon on March 23, 2021. As such, the
alleged classification of the loan account as NPA on
November 11, 2020, is in stark violation of the said
order of the Apex Court.

v. Because, the Defendants want to wrongfully usurp

the mortgaged properties in the loan account of the
applicants and deliver them to some influential
person which further certifies the greed and malice
on the part of the Defendants.
w. Because, the Defendants failed to provide copies of
all the loan documents relied upon by them at the
time of issuance of the delinquent Demand Notice
dated June 16, 2021, to the Applicant, despite
repeated request by the Applicant vide the
letter/correspondences dated ______, ______, thereby
incapacitating the Applicant to exercising its right
under sub-section 3A of Section 13 of the SARFAESI
Act, and submit an exhaustive representation with
the Defendants. Thus, the proceedings initiated by
the Defendants in furtherance of the delinquent
Demand Notice, under the SARFAESI Act ought to be
quashed and set aside.

x. Because, the Applicant vide

Objections/Representations dated August 16, 2021,
submitted its preliminary objections/representations
against the delinquent Demand Notice June 18,
2021, explaining why the delinquent Notice is bad in
the eyes of law and why no action should be
initiated by the Defendants under Section 13(4) of
the SARFAESI Act. However, the Defendants, in
violation of the law laid down by the Hon’ble
Supreme Court in Mardia Chemicals (Supra) and
sub-section 3 of Section 13 of the SARFAESI Act,
mechanically rejected the
objections/representations of the Applicant.

y. Because, vide the reply dated August 31, 2021, the

Defendants mechanically rejected the
objections/representations raised by the Applicant
vide the Objections/Representations dated August
16, 2021, without any consideration, inter alia for
want of authority of the person issuing the
correspondence dated August 31, 2021, and on the
 pretext that the same are beyond the scope of the
provisions of Section 13(2) of the SARFAESI Act,
without referring to any such provisions of law,
which prohibited or prevented the alleged
authorized officer to deal with any of the assertions
of the Applicant.

z. Because, since the NPA classification of the loan

account belonging to the Applicant is arbitrary and
invalid, and the Demand Notice under Section 13(2)
of the SARFAESI Act dated June 18, 2021, has been
issued in a mechanical manner wherein the amount
has been computed in a whimsical fashion, the
Defendants cannot be allowed to proceed further
against the applicants and the alleged Possession
Notices dated September 14, 2021 is invalid and has
become non est.

aa. Because, Possession Notice dated September

14, 2021, are in abject contravention to the
provisions of the SARFAESI Act, and Rule 8(1) & Rule
8(2) of the Security Interest (Enforcement) Rules,
2002 and the Defendants have miserably failed to
deliver the same upon the Applicants as per the
procedure established by law.

bb. Because, in the Demand Notice purportedly

issued under Section 13(2) of SARFAESI Act, the
Defendants failed to show the breakup of amount as
being claimed and shown outstanding amount viz.
principle, interest, penal interest, amount deposited,
charging of rate of interest etc., further respondent
bank failed to show the details of documents on
basis of which, Defendants are claiming the alleged
 mortgage of the properties in question, which is
clearly violation of mandatory provisions of law.

cc. That no valid and or legal mortgage was ever

created in the favour of the Defendants, as such,
respondent bank is not entitled to claim any charge
on & over the properties in question.

dd. That the Defendants were not entitled to

covert the contingent liability into current liability,
by remitting the amount of B.G. to respective
beneficiaries, before expiry of performance period,
as such, inclusion of amount in outstanding amount
is totally gross violation of principles of natural
justice, by demanding the amount, which arises due
to illegal action on part of the bank officials.

ee. That the Demand Notice dated June 18, 2021

& Possession Notices dated September 14, 2021,
have been issued without any proper authorization.
A collated reading of Section 13(12) of SARFAESI
Act, 2002 read with Rule 2(a) of the Security
Interest (Enforcement) Rules 2002, states that the
steps taken by the Bank are to be taken in the name
of the authorised officer, and the authorised officer
as defined under Rule 2(a) of the Security Interest
(Enforcement) Rules 2002, means an officer not less
than a chief manager, but the alleged notices has no
mention if the same has been issued with valid
authority.

ff. Because the Defendants instead of helping the

industry, tried to satisfy their ego, thereby resulting
the entire business operations of the Applicant come
to standstill.
 gg. Because, the Defendants, even after the
existence of abundant relief measures as given by
the RBI, Central & State governments & other
concerned authorities classified the loan account of
the Applicant as NPA, as such the SARFAESI
proceedings as initiated is not only arbitrary and
whimsical but also against the provisions of law and
tenets of natural justice.

hh. That the Applicant reserve its right to submit

any additional documents, affidavit and/or
amend/modify the captioned securitization
application as and when need so arises.

ii. That the other points shall be urged at the time of

arguments.

6. Reliefs sought:
In view of the facts mentioned in paragraph 5above, the
Applicant prays for the following reliefs:

i. That the Demand Notice dated June 18, 2021, issued

under Section 13(2) of the SARFAESI Act and the

Possession Notices dated September 14, 2021, issued

under Section 13(4) of the SARFAESI Act, for taking

over the symbolic possession of the Secured Assets of

the Applicant may kindly be quashed and set aside;

 ii. The classification of loan account as NPA on November

11, 2020, be held declared illegal and all

consequential proceedings and notices be declared

illegal and same be quashed and set aside;

iii. That the Defendants be appropriately penalized in

terms of Section 19 of the SARFESI Act, 2002 for the

wrongful action on their part and the Applicant be

appropriately compensated;

iv. That the costs and incidentals of the instant

Application including Application Fees, Advocate’s

Fees and other charges to be borne by Defendants;

v. That the Authorised Officer of the Defendants may be

punished in terms of Section 29 of SARFAESI Act, 2002

for contravention of provisions of SARFAESI Act, 2002

and rules made thereunder;

vi. That the appropriate action be initiated against the

erring officials of the Defendants, who have initiated

illegal action under the SARFAESI Act, 2002 and rules

made thereunder; and

vii. Pass any other order or direction, which this Hon'ble

Tribunal may deem fit and appropriate in the facts and

 circumstances of the present case in favour of the

Applicant and against the Defendants.

7. Interim order, if prayed for:

Pending final decision on the application, the Applicant
seeks issue the following interim order:

i. Stay the operation of the Demand Notice dated June

18, 2021, issued under Section 13(2) of the SARFAESI
Act and Possession Notices dated September 14,
2021, issued under Section 13(4) of the SARFAESI Act,
by Defendants and all subsequent and consequential
proceeding, with immediate effect and till the final
disposal of the present Application;

ii. Direct the Defendants not to take any other or further

steps under the provisions of the SARFAESI Act, 2002
and rules made thereunder, against the Applicant and
its assets till the final disposal of the instant
Application;

iii. Direct the Defendants to maintain status quo in

respect to the Secured Assets of the Applicant, which
are the subject matter of the present application, with
immediate effect and till the disposal of the instant
Application;

iv. Direct the Defendants to produce all original loan

documents, correspondences, SARFAESI proceedings
etc. before this Hon’ble Tribunal and provide copy of
the same to the Applicant; and
 v. Pass such further and other order(s) as this Hon'ble
Tribunal may deem fit and proper in the facts and
circumstances of the case.

8. Matter not pending with any other court, etc:

The Applicant declares that the Applicant has not filed any
other Suit and/or Application on the self-same cause of
action before any other Court and/or Authority or any other
Bench of the Tribunal.

9. Particulars of Bank Draft/Postal Order in respect of

the application fees in terms of Rule 13 of these
Rules:

1. Name of the Bank on which :

drawn
2. Demand Draft No. :
3. Date of Issue :
4. Amount :

10. Details of Index:

An Index in duplicate containing the details of the
documents to be relied upon is enclosed.

11. List of enclosures:

As per Index enclosed.

VERIFICATION

I, __, S/o __________ do hereby verify that the contents of para 1

to 11 of the Application are true and correct to my knowledge
based on record of the Applicant. Legal submissions in para 6
(a) to ____ are true as per legal advice. I have neither
suppressed any material fact therein and no part of it is false.
So help us GOD.

Humble Applicant

Through Counsel