Chandrakala Deshpande v. JM Financial Asset reconstruction company

IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

DATED THIS THE 23RD DAY OF APRIL, 2026

PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB. (Hons.), M.A.

PRESIDING OFFICER

Securitization Application No. 11g7 (Old S,A, No.57/20\7)

1. Chandrakala Deshpande W/o Late prabhakar Rao Deshpande, Aged 75 years, Occ. Household

2. Rajan Deshpande S/o Late Prabhakar Rao Deshpande, Aged 45 years, Occ. Business

3. Prathima Deshpande D/o Late Prabhakar Rao Deshpande, Aged 41 Years, Occ. Household {All R/o H.No. 2-2-1137/B/3,1st Ftoor, New Nallakunta, Hyderabad)

4. Yogitha D/o Late prabhakar Rao Deshpande, Aged 44 Years, R/o Flat No. 103, Ramakrishna Nagar, Bagh Amberpet, Amberpet, Hyderabad, Occ. Household. Versus

1. JM Financial Asset Reconstruction Company (P) Ltd., Rep by its Authorised Signatory

7th Floor, Cnergy,

Appasaheb Marathe Marg,

oF 20t7

.......Applicants

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Prabhadevi, Mumbai. fiBc,

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2.

Page 2 of 10 Karur Vysya Bank Ltd., Secunderabad Branch, Rep by its Branch Manager, H.No. 6-5-49, R.P Road, Secunderabad.

VMC Systems Ltd.,

(Formerly VuPPulamritha Magnetic ComPonents Ltd.,), # 23A, SurveY No.^1/1, Hardware Park, RavirYal Village Maheshwaram Mandal, R.R District, Rep by its Managing Director. Counsel for the APPlicant Counsel for ResPondent^No.1 Counsel for ResPondent No'2 Counsel for ResPondent No'3 M/s. Rakesh Sanghi

Mrs. Kalpana Ekbote Mr. P. Rajesh Babu

Ex-parte

sA No. 1187/2017

......Respondents

3.

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-: q8-LE[!:-

The present Securitization Application is filed by the Applicants u/s.17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Act"

hereinafter for short) assailing possession notice dated t9.12.2016 issued by the 1't respondent against the SA Schedule Property.

The case of applicants in brief is, that they created mortgage over the SA schedule property vide document dated l5-L2-2015 bearing No. 1380/2015 in favour of the 2nd Respondent Bank to secure fresh credit facilities of 742 Crores. Whereas the possession notice issued by the 1st respondent pertains to loans extraneous to the mortgaq deed. Further, ,r.7,Sou{b

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sA No. Lt87 /2OL7 when applicants came to know that the respondent bank had not released the credit loan facilities covered in the mortgage deed, they caused to issue a regar notices to the render bank and the borrower on 06.03.2016, L4.04.20L6 and 11.05.2016 calling for information and documents pertaining to a, the roans availed by 3rd respondent viz., inventory, invoices, insurance, valuation, inspection reports, stock reports, incoming_outgoing movement of hypothecated assets, list of sundry debtors, unauthorized diversion of funds, details of repayment of bill_ wise installments discounted bills, transactions routed through loan accounts, drawing power, terms and conditions of various loans availed by borrower, defaults in repayments, penalties imposed, irregularities noticed by other consortium members statements of loan accounts from inception, proof of each and every debit entry reflected in the statements of accounts besides seeking forensic audit of bank/borrower accounts, details of bank officials associated with the loans of 3d respondent, etc., to dissect the performance of the borrower, and the functioning of the lender bank in the compliance of terms and conditions of the loan agreements so as to find out the legally enforceable liability. The respondent virtually refused to furnish the information/documents. Therefore, in the absence of any sanction or disbursar of fresh credit facirities mentioned in the mortgage deed dated 15.12.2015, the very subject deed itself is a null and void document in terms of the settled position reported in 1995 (3) ALT 61 (DB) and 2016 (1) ALT (SC) 57. Applicants unsuccessfully attempted for cancellation of the mortgage deed dated 15.12.2015 by the Registrar's office. Thereafter, applicants filed Civil Suit being OS No.7 of 2016 u/s 77 of the Indian Registration Act, 1908 for Zrmn /,,;u.r\

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Page 4 of 10 SA No. 1187/2017 cancellationofthemortgagedeedandtheSameispending adjudication. At this stage, 1st respondent issued demand notice u/s 13(2) dated 02.08'2016 recalling the entire^loan account. Applicants issued reply legal notice dated 01'10'2016 seeking information and documents from the respondents 1 and 2 as was already sought in the notices cited supra' Respondents have sent two separate replies dated¹⁷'70'2016^and lB.lo.20l6refusingtoconsidertheissuesandproviding information, As per the demand notice, respondent bank^has not disbursed any loan pursuant to mortgage dated 15.12.2015. Therefore, applicants are entitled to be dlscharged from any liability towards the loans availed by the^3'd respondent. Since the 1't respondent issued the impugned possession notice bypassing the bonafide and legitimate issues' itconstitutestoViolationofthesettledlawinMardiaChemicals - AIR 2004 SC 237t.^The 2nd Respondent Bank assigned "debt"

to the 1't Respondent Company (ARC) without applicants knowledge.

3. The 1tt Respondent filed reply statement and the^2"d respondent adopted the same' The 1tt Respondent submits that the SA is not maintainable, as the applicants have approached the Tribunal with unclean hands by suppressing important material facts and raised false, baseless and concocted issues. Further, the applicants have suppressed an important material fact of executing "Confirmation letter for 1't Additional Charge"

over the mortgaged property against the existing loans. In addition to this, applicants also suppressed the fact of execution of guarantee pre-existing debts. Both the additional 1tt charge and guarantee were executed simultaneously on the date of execution of mortgage deed dated 15.12.?015 itself . The &"*

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.̂.1. Page 5 of 10 SA No. 1187/2017 respondent bank disbursed Rs.12 crore and Rs.12.8 crore under two heads after the execution of mortgage deed dated 15.12.2015. Therefore, applicants contention there being^no disbursal after 15.12.2015 is incorrect and baseless, The facts and circumstances of the cited judgements in the SA are^not applicable to the applicants'case herein. The applicants have no cause of action to file the present SA. The present SA is filed at the instance of the 3td respondent with a view to escape the lawful liability. Accordingly, the respondent company prays for dismissal of the SA.

Summon served on 3'd defendant through registered post and was set exparte on 07.08.2017 as called absent and^no representation. The 3'd respondent company has reportedly gone into liquidation and a Resolution Professional has been appointed.

Heard the Learned Counsel for the Applicants and the learned counsel for the Respondents L and 2. Perused the written arguments filed by the Applicant and the 1't Respondent and perused the material brought on record.

Learned counsel for the Applicants, while reiterating^the pleadings in the SA, would contend that CBI had registered^a case against the 3td respondent and its conspirators^for irregularly creating, floating, circulating and encashing a number of fake L.Cs. Learned counsel further submits that^the transactions of the 3'd respondent company require a Forensic Audit to unearth the involvement of SBI and 2nd respondent bank officials' in the fraud. Once the fraud of the borrower^is proved, applicants-guarantors would be absolved of their liability. The respondent bank is not entitled to enforce ffis*u

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SA No. U87l2017 mortgage on the strength of an unregistered "Confirmation Letter for 1st Additional Charge". The respondent bank induced applicants to execute Mortgage Deed dated 15.12.2015 without disclosing the default status of the 3d respondent. Therefore, non-disclosure of said information at the time of execution of mortgage deed dated 15.L2.2015 is against the ratio decided in Ram Narain Popli Ys. CBI (AIR 2OO3 SC 2748). It is the further contention of the learned counsel that the applicants have every reason to suspect that the respondent bank in collusion with the borrower presented a rosy picture on the creditworthiness of the borrower despite it being a defaulting company. This act of respondent bank is hit by the provisions of Sections 142 and 143 of the Indian Contract Act, 1872 and therefore, the guarantee provided by the applicants is invalid and nonest and unenforceable under the law. Learned counsel would further contend that the entire loan amount spelt out in the mortgage deed in fact has been illegally applied against the other loans of the chronic defaulter-borrower. These acts of the respondent bank vitiate the entire transacUon and flout the RBI norms governing the field. Learned counsel would further contend that the applicants defence and grievances are perfectly legitimate and in accordance with the ratio of law in AIR 1967 SC 1105 and AIR 1980 SC 1528. Learned counsel would further contend that when the very mortgage was embodied in the deed dated L5.l2.2OtS, an unregistered

"Confirmation Letter for 1tt Charge,, is inadmissible in evidence as per Section 50 of the Indian Registration Act, 1908. Per contra, learned counsel for the 1st respondent, would submit that after creating lst additional charge and guarantee deed on the same date of execution of mortgage deed i.e., ,,/)*-.,-p,rb,. -l-t ,-

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SA No. 1187/2017 15.12.2015, applicant cannot raise the bogey of registration of documents particularly when the documents were signed on their own volition. In fact, the applicants have not disputed the authenticity of the documents till date. It is further submitted by the learned counsel that in view of release of Rs.24.8 crore after 15.12.2015, applicants cannot allege non-disbursement of loan in the post mortgage. Further, when applicants 6xecuted two separate documents relating to the existing loans of the 3rd respondent, they cannot attribute suppression of information or material facts on the creditworthiness of the borrower. Therefore, the allegations are baseless and invented for the purpose of evasion of liability flowing out of the additional 1st mortgage and the guarantee for existing debt. The points for consideration are as follows : - Whether the applicants made out any

valid ground for quashing the

possesslon notice dated 19.12.2016

issued under section 13(4) of the Act?

To what relief?

Point No.(l):

Applicants are the guarantors and mortgagors to the loan availed by 3td respondent Company. The 2nd respondent is the original lender and it assigned the debt to 1st respondent Company. The 1't respondent Company initiated securitization proceedings against the 3'd respondent and in this process it issued the impugned possession notice. However, applicants assailed the possession notice on the grounds of inadmissibility :::"nn"n"

deed and suarantee r., rn"Eiw;ffted in the

ii)

9.