KOTAK MAHINDRA BANK LTD Vs. DISTRICT MAGISTRATE, LUDHIANA

JUDGEMENT

(1.) Challenge in this writ petition is to the order dated 17.05.2017 (Annexure P-l) passed by the Additional District Magistrate, Ludhiana, exercising the powers of District Magistrate, rejecting the application of the petitioner filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act").

(2.) Briefly the facts are that petitioner-Kotak Mahindra Bank Limited is a banking company under the provisions of the Banking Regulation Act, 1949 and incorporated under the Companies Act, 1956. Various credit facilities have been provided to M/s Oswal Spinning and Weaving Mills Limited(the company) by way of financial assistance by UCO Bank, IFCI Limited, State Bank of Patiala, Life Insurance Corporation of India, General Insurance Corporation and United India Insurance Corporation. To secure the credit facilities sanction, the company credited security interest by way of creation of mortgage in favour of the lenders on its immovable and movable properties. These financial facilities were also secured by the personal guarantees of Mr. D.P. Oswal, Mr. Ashok Oswal, Mr. R.P. Oswal-respondent No.2 herein.

(3.) Due to defaults of the company, the account became irregular and at the request of the company for revised statement of debts, a second letter of acceptance dated 30.09.2009 was signed by the company and its guarantors/pledgers. Further to secure the outstanding dues, charge was credited in favour of Kotak Mahindra Bank on the residential premises in favour of the petitioner. Despite all this, company again committed defaults in repayment of the agreed instalments and at their request, bank issued permissions from time to time for sale of charged properties subject to various terms and conditions. Company sold major portion of the charged properties and deposited aggregated amount of Rs. 49,82,00,000/- from time to time towards part payment of the dues. The company failed to adhere to the repayment schedule and, therefore, the account of the company, as per the directives and guidelines of the RBI was declared as NPA on 07.12.2013.