BEFORE THE HON’BLE COURT OF DISTRICT MAGISTRATE

INDORE(M.P)

IN REFERENCE

Union Bank of India ……………. Applicant

Versus

1. Rahul Patodi S/o Raj Kumar Patodi

2. Raj Kumar Patodi S/o Manakchand Patodi
3. Smt. Vidhi Patodi W/o Rahul Patodi ……..Non Applicants

Preliminary reply to the application filed by the applicant under

section 14 of the SARFAESI Act,2002.

The Non-applicants begs to submit as under:

1. That, the applicant has filed this present application U/s 14 of

the Securitization And Reconstruction of Financial Assets and
Enforcement Of Security Interest Act, 2002, while filing this
present application the applicant has not complied with the
mandatory provisions of the Securitization And Reconstruction
of Financial Assets and Enforcement Of Security Interest Act,
2002, Resultantly the present application is not maintainable in
law and deserves to be dismissed for non observance of the
mandatory and prescribed provisions of law.
2. That, it has been alleged in the application that the non-
applicants have availed the credit facility under Union Mortgage
of Rs. 2,10,00,000/- and a Housing loan of Rs. 2,00,00,000/-.
Further the applicant alleged that the non-applicants have
violated the terms of the loan agreement, where by the fact is
non-applicants have made valuable efforts to repay the loan
amount and paying the same as per the terms of the loan
agreement, despite that the applicant issued the notice U/s
13(2) of the SARFASEI inconsistent to the guidelines laid down
by the Reserve Bank of India. Notice under section 13(2) of
Securitisation Act, in these circumstances is not bonafide and the
same has been given to twist the arms of my client therefore the
notice issued by the applicant is illegal, therefore this present
application deserves to be dismissed.

3. That, the applicant while filing this present application has not
complied with the mandatory provisions of the section 13(2) and
13(4) of the SARFAESI Act, 2002, Mandatory notices have not
been served and no evidence of service of the notices has been
brought on record, failing which this present application
deserves to be dismissed.

4. That, the applicant while filing this present application has filed
the notice under section 13(4), but no admissible evidence for
service of notice and photographs to obtain the possession of
the properties have been filed along with the application, hence
in this scenario this present application is not maintainable.

5. That, the applicant has filed this present application while

clubbing two different cause of actions, based on two different
transactions. Applicant in contravention to the guidelines of RBI,
 issued to notices under section 13(2) of SARFAESI Act and out of
two one notice was not duly served, despite this fact the
application was filed. Therefore, for want of compliance of
mandatory provisions this application is premature and deserves
to be dismiss.

6. That, this present application has been filed by Mr Ashok Kumar

claiming to be the authorized person of the Bank, but no
resolution or authority letter has been filed along with this
application to prove his claim and without filing any of such
mandatory documents this application deserves to be quashed.

7. Section 2 of Securitisation Act deals with definitions of various

words, establishments and expressions, which have been used
by legislature in making provisions authorizing you to invoke
provisions of Securitisation Act. Definition of ‘borrower’ is
provided in Clause (f) of Sub-section (1) which means any person
who has been granted financial assistance by any bank or
financial institution or who has given any guarantee or created
any mortgage or pledge as security to obtain financial assistance.
Clause (ha) of Sub-section (1) provides definition of the word
‘debt’ which means any liability which is claimed due from any
person by a Bank or Financial Institution or their consortium
during the course of any business activity undertaken by them
under any law for the time in force in cash or otherwise, secured
or unsecured which is legally recoverable on the date of
application. Clause (l) of sub-section (1) deals with ‘financial
asset’ which means debt or receivables which includes any debt
or receivables secured by mortgage of, or charge on, immovable
property or a mortgage, charge, hypothecation or pledge or
movable property. Clause (zb) of sub-section (1) deals with
‘security agreement’ which means an agreement, instrument or
any other document or arrangement under which security
 interest is created in favour of the secured creditor inclu ding the
creation of mortgage by deposit of title deeds with the secured
creditor. Clause (zc) of sub-section (1) deals with ‘secured asset’
which means the property on which security interest is created.
Clause (zd) of sub-section (1) deals with ‘secured creditor’ which
means any bank or financial institution or their consortium or
group includes securitization or reconstruction company, any
other trustee holding security in whose favour security interest
is created for due repayment. Clause (ze) of sub-section (1) deals
with ‘secured debt’ which means a debt which is secured by any
security interest. Clause (zf) of sub-section (1) deals with
‘security interest’ which means right, title and interest of any
kind whatsoever upon property, created in favour of any secured
creditor and includes any mortgage, charge, hypothecation,
assignment other than those specified in Section 31.

8. Section 13 of Securitisation Act contained in Chapter III deals

with Enforcement of Security Interest defined in clause (zf) of
sub-section (1) of Section 2. Sub-Section (1) of Section 13
provides a provision that notwithstanding anything contained in
Section 69 or 69A of the Transfer of Property Act, any security
interest created in favour of any secured creditor may be
enforced, without intervention of the court or tribunal under the
provisions of Securitisation Act. Sub-section (2) provides that any
borrower, who is under a liability to a secured creditor; (a) under
a security agreement, (b) makes any default in repayment of
secured debt or any instalment thereof, (c) and his account in
respect of such debt is classified by the secured creditor as non-
performing asset, (d) the secured creditor may require the
borrower by notice in writing to discharge in full his liabilities to
the secured creditor within sixty days from the date of notice,
failing which the secured creditor shall be entitled to exercise all
or any of the rights under sub-section (4). Sub-section (3)
 provides that such a demand under 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. Sub-
section (3A) is a provision which has been inserted by way of
amendment in 2004 applicable with effect from 11/11/2004 to
the effect, if on receipt of the notice under sub-section 2, the
borrower makes any representation or raises any objection, the
secured creditor shall consider such representation or objection
and if the secured creditor comes to the conclusion that such
representation or objection is not acceptable or tenable, he shall
communicate within fifteen days of receipt of such
representation or objection the reason for non-acceptance of
the representation or objection to the borrower. Sub-section 4
provides that in case the borrower fails to discharge his liability
in full within the period specified in sub-section 2, the secured
creditor may take recourse to one or more of the measures
provided in sub-section 4 to recover his secured debt.

9. Section 29 provides for punishment with imprisonment for a

term which may extend to one year, or with fine, or with both, if
any person contravenes or attempts to contravene or abets the
contravention of the provisions of Securitisation Act or of any
rules made there under. Section 30 provides that such offence
shall be cognizable by the Metropolitan Magistrate or a Judicial
Magistrate of the First Class.

10. Section 31 of Securitisation Act finds place in Chapter VI which

contains miscellaneous provisions and provides for, that the
provisions of Securitisation Act shall not apply to a lien of any
goods, money or security given by or under the Indian Contract
Act, 1872, pledge of movables within the meaning of Section 172
 of the Indian Contract Act, 1872, any conditional sale, hire-
purchase or lease or any other contract in which no security
interest has been created etc.

11. That, in the light of the above mentioned facts it is crystal clear
that the applicant has not complied with the mandatory
provisions of the Securitization And Reconstruction of Financial
Assets and Enforcement Of Security Interest Act, 2002, failing
which application filed U/s 14 of the Act is not Maintainable and
deserves to be quashed.

Indore Counsel for Non-Applicant No.1

24/02/2020 Atul Kumar Gupta