DRAT held that the respondents' failure to prove the service of the representation under Section 13(3-A) of the SARFAESI Act led to the reversal of the DRT’s order.
The Debts Recovery Appellate Tribunal (DRAT), Allahabad Bench headed by Justice R.D. Khare (Chairperson) addressed an appeal and held that the absence of credible evidence to substantiate the claim of serving the representation under Section 13(3-A) of the SARFAESI Act rendered the finding of non-compliance by the DRT erroneous, and the appeal was allowed, setting aside the impugned order.
The Debts Recovery Appellate Tribunal (DRAT) adjudicated an appeal under Section 18 of the SARFAESI Act, 2002, challenging the order dated 17.01.2019 issued by the DRT, Lucknow. In the original proceedings, the DRT had allowed S.A. No. 528/2016 filed by the respondents, proprietors and guarantors associated with an overdraft facility of ₹2 crore, granted by the appellant bank. The dispute arose when the account was declared a Non-Performing Asset (NPA) on 27.02.2015, following which a demand notice under Section 13(2) was issued on 22.04.2015. Subsequently, a possession notice under Section 13(4) was served and published after the respondents failed to repay the dues. The respondents contested these notices, alleging non-compliance with Section 13(3-A) and certain provisions of the SARFAESI Rules.
The DRT ruled in favour of the borrowers, finding that the appellant bank had failed to address the borrowers' objections dated 17.06.2015 as mandated under Section 13(3-A), thereby rendering the demand and possession notices invalid. Aggrieved, the bank filed the present appeal, asserting that the alleged representation was fabricated and never served.
The DRAT, after an ex-parte hearing due to the respondents’ absence, scrutinized the available evidence. It observed that the respondents failed to substantiate their claim of serving the representation with any documentary proof, such as postal receipts. Mere oral assertions or reliance on the General Clauses Act could not establish service of the representation. Consequently, the DRAT found the DRT's conclusion of non-compliance with Section 13(3-A) erroneous, given the absence of credible evidence to support the borrowers’ claims.
Regarding the alleged non-compliance with Rules 8(1) and 8(2) of the SARFAESI Rules, the DRAT noted that the DRT had already decided this issue in the bank's favour, and the respondents had not contested that finding. As a result, this aspect of the dispute was deemed to have attained finality, and the respondents were barred from raising it in the appeal.
Based on these findings, the DRAT set aside the DRT's impugned order and allowed the appeal, affirming the validity of the bank’s actions under the SARFAESI Act. The tribunal also directed that the judgment be communicated to the parties and uploaded on the e-DRT portal. No order as to costs was passed.
Mr. N.K. Srivastava, Advocate represented the Appellant.
None of them appeared for the Respondent.
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