M/s. L&T Housing Finance Limited vs M/s. Trishul Developers and another. Civil Appeal 3413/2020 decided on 27 October 2020. Justice L. Nageswara Rao, Justice Hemant Gupta and Justice Ajay Rastogi.
Judgment Link: https://main.sci.gov.in/supremecourt/2019/25979/25979_2019_38_1501_24436_Judgement_27-Oct-2020.pdf
HELD: 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 nonfulfillment 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
noncompliance 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.
Compiled by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 