Case: M/S. L&amp;T HOUSING FINANCE LIMITED Vs. M/S. TRISHUL DEVELOPERS AND ANR

appellant vide sanction letter dated 07th August, 2015 (P1), the letterhead which was used for the purpose clearly indicates that on the top of the letterhead towards right, it reflects L&T Finance (Home Loans) and on the bottom towards left, is of L&T Housing Finance Ltd. with their registered office in Mumbai and this has been duly signed by the authorised signatory of the borrower for M/s. Trishul Developers and by its guarantors. 16. It manifests from the record that the respondents from the initial stage are aware of the procedure which is being followed by the appellant in its correspondence while dealing with its customers and that is the same practice being followed by the appellant when demand notice dated 16th December, 2016 was served at a later stage. The demand notice in explicit terms clearly indicates the execution of the Facility Agreement dated 11th August, 2015 between the appellant (L&T Housing Finance Ltd.) and the respondents (M/s. Trishul Developers through its partners) and of the default being committed by the respondents (borrower/guarantor) in furtherance thereof, a notice under Section 13(2) of the SARFAESI Act was served on the same pattern of the letterhead which is being ordinarily used by the appellant in its correspondence with its customers and the demand notice dated 14th June, 2017 without leaving any iota of doubt is in reference to the non-fulfillment of the terms and conditions of the Facility Agreement dated 11th August, 2015 executed between the parties and even the schedule of security profile which has been annexed thereto is in reference to the execution of Facility Agreement dated 11th August, 2015 and its non-compliance of the provisions of the SARFAESI Act. 17. Even in the reply to the demand notice which was served by the respondents through their counsel dated 08th August, 2017 in compliance to Section 13(3A) of the SARFAESI Act, there was no confusion left in reference to the correspondence taken place between the appellant (secured creditor) and the respondents (borrower) tendering their justification and assigning reasons for which compliance could not have been made and no objection was indeed raised by the respondents in regard to the defect if any, in the demand notice dated 14th June, 2017 which was served by the secured creditor i.e. L&T Housing Finance Ltd. in compliance to the provisions of the SARFAESI Act or in furtherance to the proceedings initiated at the behest of the appellant under Section 13(4) read with Section 14 of the Act, for the first time, a feeble attempt was made in raising the alleged technical objection in a Securitisation Application filed before the DRT and succeeded. 18. It may be relevant to note that the respondents (borrower) did not deny advancement of loan, execution of Facility Agreement, their liability and compliance of the procedure being followed by the secured creditor (appellant) prescribed under the SARFAESI Act. 19. In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions. 20. Adverting to facts of the instant case, we are of the view that the objection raised by the respondents was trivial and technical in nature and the appellant (secured creditor) has complied with the procedure prescribed under the SARFAESI Act. At the same time, the objection raised by the respondents in the first instance, at the stage of filing of a Securitisation Application before DRT under the SARFAESI Act is a feeble attempt which has persuaded the Tribunal and the High Court to negate the proceedings initiated by the appellant under the SARFAESI Act, is unsustainable more so, when the respondents are unable to justify the error in the procedure being followed by the appellant (secured creditor) to be complied with in initiating proceedings under the SARFAESI Act. 21. The submission made by the respondents counsel that the notice under Section 13(2) of the Act was served by the authorised signatory of L&T Finance Ltd. and that was not the secured creditor in the facts of the case, in our considered view, is wholly without substance for the reason that L&T Finance Ltd. and L&T Housing Finance Ltd. are the companies who in their correspondence with all its customers use a common letterhead having their self-same authorised signatory, as being manifest from the record and it is the seal being put at one stage by the authorised signatory due to some human error of L&T Finance Ltd. in place of L&T Housing Finance Ltd.. More so, when it is not the case of the respondents that there was any iota of confusion in their knowledge regarding the action being initiated in the instant case other than the secured creditor under the SARFAESI Act for non-fulfillment of the terms and conditions of the Facility Agreement dated 11th August, 2015 or any substantial prejudice being caused apart from the technical objection being raised while the demand notice under Section 13(2) was served under the SARFAESI Act or in the proceedings in furtherance thereof no interference by the High Court in its limited scope of judicial review was called for. Consequently, in our view, the judgment of the High Court is unsustainable and deserves to be set aside.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. The indisputed fact which emerges from the record is that the respondents borrowed a term loan from the appellant (L&T Housing Finance Ltd.) of Rs.20 crores vide sanction letter dated 07th August, 2015 and later their account became NPA on 15th April, 2017 and prior thereto, the appellant (secured creditor) served a notice on 16th December, 2016 demanding its outstanding dues sanctioned under the seal of their authorised officer on behalf of the lender, which has been informed to this Court was a self- same authorised signatory of both the companies namely L&T Housing Finance Ltd. and L&T Finance Ltd. Indisputedly, the notice under Section 13(2) of the SARFAESI Act was served by the authorised signatory on behalf of the appellant on the letterhead commonly used by L&T Housing Finance Ltd. and L&T Finance Ltd. but inadvertently, the authorised signatory put his signature under the seal of the company L&T Finance Ltd. In this backdrop, from reply dated 08th August, 2017 of the respondents, it becomes clear that repayment was demanded by the appellant(secured creditor) only and the respondents tried to justify and assigned reasons for which the Facility Agreement dated 11th August, 2015 could not have been carried out and only thereafter, the appellant (secured creditor) has initiated further proceedings under Section 13(4) read with Section 14 of the Act.15. Notably from the very inception at the stage, when the proposal of taking a term loan from the appellant was furnished by the respondents vide their application dated 15th May, 2015 and accepted by the appellant vide sanction letter dated 07th August, 2015 (P1), the letterhead which was used for the purpose clearly indicates that on the top of the letterhead towards right, it reflects L&T Finance (Home Loans) and on the bottom towards left, is of L&T Housing Finance Ltd. with their registered office in Mumbai and this has been duly signed by the authorised signatory of the borrower for M/s. Trishul Developers and by its guarantors.16. It manifests from the record that the respondents from the initial stage are aware of the procedure which is being followed by the appellant in its correspondence while dealing with its customers and that is the same practice being followed by the appellant when demand notice dated 16th December, 2016 was served at a later stage. The demand notice in explicit terms clearly indicates the execution of the Facility Agreement dated 11th August, 2015 between the appellant (L&T Housing Finance Ltd.) and the respondents (M/s. Trishul Developers through its partners) and of the default being committed by the respondents (borrower/guarantor) in furtherance thereof, a notice under Section 13(2) of the SARFAESI Act was served on the same pattern of the letterhead which is being ordinarily used by the appellant in its correspondence with its customers and the demand notice dated 14th June, 2017 without leaving any iota of doubt is in reference to the non-fulfillment of the terms and conditions of the Facility Agreement dated 11th August, 2015 executed between the parties and even the schedule of security profile which has been annexed thereto is in reference to the execution of Facility Agreement dated 11th August, 2015 and its non-compliance of the provisions of the SARFAESI Act.17. Even in the reply to the demand notice which was served by the respondents through their counsel dated 08th August, 2017 in compliance to Section 13(3A) of the SARFAESI Act, there was no confusion left in reference to the correspondence taken place between the appellant (secured creditor) and the respondents (borrower) tendering their justification and assigning reasons for which compliance could not have been made and no objection was indeed raised by the respondents in regard to the defect if any, in the demand notice dated 14th June, 2017 which was served by the secured creditor i.e. L&T Housing Finance Ltd. in compliance to the provisions of the SARFAESI Act or in furtherance to the proceedings initiated at the behest of the appellant under Section 13(4) read with Section 14 of the Act, for the first time, a feeble attempt was made in raising the alleged technical objection in a Securitisation Application filed before the DRT and succeeded.18. It may be relevant to note that the respondents (borrower) did not deny advancement of loan, execution of Facility Agreement, their liability and compliance of the procedure being followed by the secured creditor (appellant) prescribed under the SARFAESI Act.19. In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions.20. Adverting to facts of the instant case, we are of the view that the objection raised by the respondents was trivial and technical in nature and the appellant (secured creditor) has complied with the procedure prescribed under the SARFAESI Act. At the same time, the objection raised by the respondents in the first instance, at the stage of filing of a Securitisation Application before DRT under the SARFAESI Act is a feeble attempt which has persuaded the Tribunal and the High Court to negate the proceedings initiated by the appellant under the SARFAESI Act, is unsustainable more so, when the respondents are unable to justify the error in the procedure being followed by the appellant (secured creditor) to be complied with in initiating proceedings under the SARFAESI Act.21. The submission made by the respondents counsel that the notice under Section 13(2) of the Act was served by the authorised signatory of L&T Finance Ltd. and that was not the secured creditor in the facts of the case, in our considered view, is wholly without substance for the reason that L&T Finance Ltd. and L&T Housing Finance Ltd. are the companies who in their correspondence with all its customers use a common letterhead having their self-same authorised signatory, as being manifest from the record and it is the seal being put at one stage by the authorised signatory due to some human error of L&T Finance Ltd. in place of L&T Housing Finance Ltd.. More so, when it is not the case of the respondents that there was any iota of confusion in their knowledge regarding the action being initiated in the instant case other than the secured creditor under the SARFAESI Act for non-fulfillment of the terms and conditions of the Facility Agreement dated 11th August, 2015 or any substantial prejudice being caused apart from the technical objection being raised while the demand notice under Section 13(2) was served under the SARFAESI Act or in the proceedings in furtherance thereof no interference by the High Court in its limited scope of judicial review was called for. Consequently, in our view, the judgment of the High Court is unsustainable and deserves to be set aside.