Application under Section 17(1) of the SARFAESI Act, 2002
[Application under Section 17(1) of the SARFAESI Act, 2002]
IN THE DEBT RECOVERY TRIBUNAL – II, AT MUMBAI
INTERIM APPLICATION NO. OF 2023
IN
INTERIM APPLICATION 556 OF 2023
IN
SECURITIZATION APPLICATION NO. 81 OF 2023.
Mrs. Premlata Shikharchand Jain
(Joint-borrower with proprietary firm of M/s. Shree Vimal Silk Mills)
Aged 73 years, having residential address at
Flat Nos. 8A & 8B, Building No. 2 CHSL, 25/31, Dr. Atmaram Merchant Road, Bhuleshwar, Mumbai – 400 002.
…Applicant
V/s.
1. Bharat Co-operative Bank (Mumbai) Ltd.,
The Board of Directors of the Bharat Co-operative Bank (Mumbai) Ltd
Having its registered office at Mohan Terrace, 64/72, Mody Street, Fort, Mumbai -400001.
Central Office at ‘Maruti’, Plot No. 13/9A, Sonawala Road, Goregaon (East), Mumbai – 400063.
2. Shri. Gopal Kotian
Authorised Officer
Bharat Co-operative Bank (Mumbai) Ltd.,
Having its registered office at Mohan Terrace,64/72, Mody Street, Fort, Mumbai -400001.
Central Office at ‘Maruti’, Plot No. 13/9A, Sonawala Road, Goregaon (East), Mumbai – 400063.
3. Shri. Abhishek S. More
Court Commissioner
R/o. 20/72, B.I. T. Chawl, R. B. Chandorkar Marg, Agripada, Mumbai – 400011.
4. Station House Officer
In Charge of L. T. Marg Road Police Station,
27, R Champsi Rd, Tak Wadi, Lohar Chawl, Kalbadevi, Mumbai, Maharashtra 400002.
5. Deputy Commissioner of Police (Operations)
5th Floor, CP Office Compd. Dr. D N Rd., Mumbai 400001.
6. Union of India
Represented by its Secretary in Ministry of Finance
Department of Financial Services, Government of India, Jeevan Deep Building, Parliament Street, New Delhi - 110 001.
7. Ministry of Micro, Small and Medium Enterprises
Government of India,
Represented by its Hon’ble Secretary, Udhyog Bhavan, New Delhi – 110011.
9. The Governor
Reserve Bank of India,
New Central Office Building, Shahid Bhagat Singh Rd, Fort, Mumbai - 400001.
10. State of Maharashtra
Represented by its Chief Secretary to Government of Maharashtra Mantralaya,
Madam Cama Road, Hutatma Rajguru Chowk, Nariman Point, Mumbai 400032.
11. Mrs. Elina Varun Jain alias Ms. Elina Surendrakumar Jain
Proprietress of M/s. Shree Vimal Silk Mills
Flat Nos. 8A & 8B, Building No. 2 CHSL, 25/31, Dr. Atmaram Merchant Road, Bhuleshwar, Mumbai – 400 002.
12. Mr. Shikarchand Mohanlal Jain/Paharia
Flat Nos. 3A & 3B, Building No. 2 CHSL, 25/31, Dr. Atmaram Merchant Road, Bhuleshwar, Mumbai – 400 002.
…Respondents
Application for review/recall of the order dated 2.5.2023 which was not pronounced in the open court but was uploaded on 30.05.2023 in violation of the elementary principle of jurisprudence that authentication, uploading, etc. of an order will not give life to it without pronouncement in the open court
1. Way back in 1791, in Thomson v. Church, it was held:
“The business of the court is to try the case and not the man; and a very bad man may have a very righteous cause”.
2. The function of a court is to adjudicate the dispute between the parties based on their respective legal rights, and where adjudication is strictly on law leads to injustice and hardship, to render real justice by application of the principles of equity. Equity prevails over law, though equitable principles are not to be applied completely divorced from law. The Applicant, a lady, a senior citizen aged 74 years, feels that agonised that when she approached this Hon’ble Tribunal for justice, this Tribunal without even recording fairly her contentions which are largely based on strict law, her rights based on the MSMED Act of 2006 and the notification dated 29.5.2015, went on looking for reasons to deny her justice, where none existed. The order of this Tribunal dated 02.05.2023, the Applicant is afraid to say, does not contain the true memorial (record) of what has transpired in court. On the contrary, it amounts to a complete failure to record what was argued in the court and is contrary to what was argued. The Applicant is afraid to say that literally everything which is recorded in the order dated 2.5.2023 are factual mistakes and contradictions. It is difficult to imagine of a memorial in form of an order which contains more mistakes than the order dated 2.5.2023.
3. The Applicant’s case is founded on two aspects. The primary being based on law. To state it in the briefest and simplest way, her case is that M/s. Shree Vimal Silk Mills (principal borrower) is an MSME within the meaning of Section 9 of the MSMED Act 2006. It was registered in the year 4.02.2012 under UAM –II (Udyog Aadhar Memorandum), it re-registered in the year 2021 under Udyam. In terms of the notification dated 29.5.2015 which received the assent of both Houses of Parliament, the account of the principle borrower which is an MSME could not have been classified as NPA.
4. No notice under Section 13(2) can be issued unless an account is classified as NPA. MSMED Act which is a later law and a special law qua the SARFAESI Act, prohibits the banks from classifying an account as NPA without extending the benefit of the scheme for resolution of stress in terms of the notification dated 29.5.2015.
5. The Applicant’s case is that being a guarantor her liability is joint and several as with the principal debtor. The bank can recover from her without proceeding against the principal debtor. But if the principal Debtor is not liable, which is the impact of the protection under the MSMED Act, the Applicant, the guarantor is not liable. The Applicant’s counsel, Shri Nedumpara, a seasoned lawyer, primarily raised this contention alone. He went into the issue of the protection under the Act and the notification and the protection against the very classification of the account as NPA exhaustively, tracing the entire background of the legislative policy on the protection of MSMEs since independence. The Respondent bank did not utter a word contradicting the Applicant’s claim. Short and sweet, the Applicant’s case was that the MSMED Act protects her completely from all forms of recovery action under the SARFAESI Act, RDB Act, from operational creditors and even tax. The Applicant’s counsel repeatedly asserted that she would stand or fall on that ground and nothing else. To repeat, the Bank’s lawyer did not utter a word contradicting the Applicant’s case based on the MSMED Act. It was the duty of this Hon’ble Tribunal to truthfully record the contentions and either accept it or reject it giving reasons. For reasons difficult to be fathomed, this Tribunal failed to do so. This Hon’ble Tribunal is a court of record. It is duty bound to record the contentions which the parties before it address and to adjudicate the issue before it based on the inter se rights and obligations. This Tribunal is also a court of record invested of equitable jurisdiction, to do justice where the mechanical application of law will result in injustice.
6. To err is human. The error committed by this Tribunal is on account of the frailties which no human is immune from. This Hon’ble Tribunal has the inherent jurisdiction to correct its error ex debito justitiae. Section 22(e) of the Recovery of Debts and Bankruptcy Act, 1993 expressly provides for review. The failure of this Tribunal to extend the benefit of the MSMED Act is an error apparent on the face of record.
7. The instant is a case where the brutality and arbitrariness on the part of the Bank has taken its most horrifying face. M/s. Shree Vimal Silk Mills, the principal borrower is an MSME. The officials of the bank, namely, Mr. Pravinkumar S. Suvarna and Chandrakant kept on harassing the Applicant and her husband without any rhyme or reason by charging excessive interest and by other means. Shri Chandrakant threatened the principal borrower who is none other than the Applicant’s daughter-in-law and her husband who were running the business that they will classify the account as NPA unless an amount of Rs. 2.19 crores is paid. The Applicant’s daughter sold her home deposited Rs. 2.19 crores in light of the bank’s threat. However, on the very next day after the payment of Rs. 2.19 was made, the credit limit was reduced from Rs. 4 crores to 2.43 crores. This was an act of malice ex facie, a fraud. It was a fraud to brand an otherwise regular account as irregular/NPA even after the Borrower had paid almost 50 percent of the amount due. After an amount of Rs. 2.19 crores was paid, the Bank still insisted that further amount of Rs. 25 lakhs be paid. The Applicant's daughter who had sold her house and made the deposit as aforesaid, died in a car accident on 19.07.2019. Shri Chandrakant, the Bank Manager, in the most merciless and inhumane manner insisted that a further amount of Rs. 25 lakhs plus 3.95 lakhs be paid. The Applicant paid a further amount of Rs. 2 lakhs on 19.07.2019, 1.95 lakhs on 20.07.2019, 15 lakhs on 22.07.2019 and 10 lakhs on 30.07.2019, the very next day after the death of the Applicant's daughter. These facts were narrated in great elaboration by the Applicant’s counsel. The Respondent Bank did not dispute it during the course of the hearing. However, in the order which was uploaded, it is stated that the credit limit was reduced at the Applicant’s request, which is wholly incorrect. One could understand the Bank lawyer contending that the credit limit was reduced at the Applicant’s request. If it was so said, the Tribunal is duty bound to record so, but this Tribunal is invested of no power not to record the Applicant’s plea that the Bank maliciously reduced the credit limits because the Applicant/family members questioned the arbitrary charging of excessive interest.
8. The Tribunal has failed to record the contentions of the Petitioner correctly, if not fairly. This Hon’ble Tribunal being a court of record, what it records as the contentions advanced before it cannot be questioned before any other forum, not even in appeal or by way of a writ, but by an appropriate application before this Tribunal alone. Hence the instant application for correction of the absolutely incorrect record of what was argued.
9. As stated at the outset, this Tribunal is a court of law, not a ecclesiastical court dwelling on the purity of soul. This Tribunal has completely misunderstood the meaning of the concept that one who seeks equity must do equity, and must come with clean hands. This Hon’ble Tribunal is not a Chancery court which was not concerned about law, sole business of which was to do justice where the judicial decrees of common law courts and ecclesiastical courts resulted in injustice. The job of the Chancery Court was to do justice by amending the law where it led to injustice. The Tribunal has completely failed to comprehend the pristine principles of equitable jurisdiction. Such misconception of law is an error apparent on the face of record. This Court is duty bound to correct itself by recalling it's order.
10. The Applicant’s hands are absolutely clean. This Tribunal has without any rhyme or reasons adjudged that her hands are unclean, condemned her unheard. There is nothing on record, on affidavit by the Bank alleging any kind of unethical deal on her part. Instituting this S.A so too, moving the High Court under Article 226 cannot be a reason to brand her as one who has approached this Tribunal with unclean hands and a sinful heart. Nobody is presumed to be bad, nemo praesuimitur malus. This Court is duty bound to rectify the error in condemning her unheard, nay branding an innocent person as unclean. The fact that this Tribunal did so without any material on record as a justification for denying injunction amounts to great miscarriage of justice which no words can express.
11. Paragraph 7 which makes a reference about the Applicant’s counsel does not constitute to be a correct record of what has transpired. The whole paragraph was wholly irrelevant to the lis which this court was called upon to decide. The Applicant approached this Court asserting her right under the MSMED Act. That is the only issue which is relevant. The order of this court dated 2.5.2023 discusses everything other than the actual issue. This is an error which this Hon’ble Tribunal is not competent to have made.
12. Almost every observation in the order dated 2.5.2023 is factually incorrect and founded on premises which are entirely alien to the issue which was required to be decided. The Applicant approached this Court because the Bank sought to forcefully dispossess her of her home. It is difficult to conceive of a greater injury or prejudice which will justify invoking the jurisdiction of this Court. In granting injunction, this Court ought to have considered only three issues:
a) whether a prima facie case is made out made on the legal rights. The Applicant’s plea based on the MSMED Act constitutes a prima facie case.
b) irreparable injury. There can be no greater irreparable injury than the Applicant, a woman a septuagenarian, being thrown out of her home.
c) balance of convenience. The balance of convenience is undoubtedly in favour of the Applicant.
13. However, the Tribunal did not consider any of these issues. It, unfortunately, misdirected itself and went at a tangent and holding that the notice under Section 13(4) and order of the Magistrate under Section 14 is time barred. It was not competent for the Tribunal to have erred on such fundamental principles of law that a cause of action is a bundle of rights and in a proceedings under Sections 13(2), 13(4), 14 of the SARFAESI Act and the Security Interest (Enforcement) Rules, a new cause of action in continuation of the long chain of cause of action arises with each action on the part of the Bank, and that such cause of action becomes extinct only with a final judgement of this Tribunal in the above S.A. It was held so in innumerable judgements, namely, Ashok Saw Mill, AIR 2009 SC 2420 and in a recent judgment of the Madras High Court in Review Application no. 8 of 2020, B. Vivekanandan versus J. Janorious Fausta & Ors. This Tribunal has erred grievously. It is its duty to rectify it's error. Hence the instant application for review/recall of its order dated 2.5.2023.
14. This Court heard the parties on 2.5.2023 but did not pronounce any order, but only later uploaded an order. Uploading an order can be no substitution for pronouncement in the open court. The order of this Tribunal therefore is a nullity, not being pronounced in the open court which was a duty cast upon this Tribunal of which no deviation could have been made (Surendra Singh Versus State of U.P , AIR 1954 SC 194).
15. For the reason stated in the accompanying affidavit and those to be urged at the time of hearing, the Appellant/ Applicant most humbly prays that this Hon’ble court be graciously pleased to:
a) To review/recall its order dated 2.5.2023 and to hear the matter afresh and to adjudicate the same on merits
b) To grant an injunction restraining the Respondents, its officers agents from proceeding any further in furtherance of Sections 13(4) and 14 of the SARFAESI Act, so too the Security Interest (Enforcement) Rules
c) Pass such further and other orders as the nature and circumstances of the case may require.
Advocate for the Applicant Applicant
VERIFICATION
I, Mrs. Premlata Shikharchand Jain, Aged 73 years, (Joint-borrower with proprietary firm of Shree Vimal Silk Mills) the Applicant abovenamed, residing at Flat Nos. 8A & 8B, Building No. 2 CHSL, 25/31, Dr. Atmaram Merchant Road, Bhuleshwar, Mumbai – 400 002, do hereby solemnly declare that what is stated in the paragraphs of the foregoing Application and the Affidavit are true to my own knowledge and belief and what is stated in the remaining paragraphs are based on information, which I believe to be true and correct.
Solemnly declared at Mumbai ]
This day of June, 2023 ]
Applicant
Before me,
Nedumpara & Nedumpara
Advocate for the Applicant
[Application under Section 17(1) of the SARFAESI Act, 2002]
IN THE DEBT RECOVERY TRIBUNAL – II, AT MUMBAI
INTERIM APPLICATION NO. OF 2023
IN
INTERIM APPLICATION 556 OF 2023
IN
SECURITIZATION APPLICATION NO. 81 OF 2023.
Mrs. Premlata Shikharchand Jain
…Applicant
V/s.
Bharat Co-operative Bank (Mumbai) Ltd & Ors.
…Respondents
INTERLOCUTORY APPLICATION
=============================
Dated day of June, 2023.
NEDUMPARA & NEDUMPARA ADVOCATES
Advocates for Applicant
101, 1st Floor, Gundecha Chambers,
Nagindas Master Road,
Fort,Mumbai-400023
(Mobile: 9820535428/9447165650)
Email id :nedumparaassociates@gmail.com
Reg no. MAH- LF-261/2021