SPEED POST/COURIER

Dated: 17.2.17

REPLY / OBJECTIONS TO DEMAND NOTICE UNDER SECTION

13 (2) OF THE SECURITIZATION AND RECONSTRUCTION OF
FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY
INTEREST ACT, 2002 ON BEHALF OF ALL THE NOTICEES.

To,
The Authorised Officer
Capital First,
401-407, Technopolis Knowledge Park,
Chakal Road, Andheri(E)
Mumbai-93

Dear Sir,

Your notice dated 22.12.2016 under section 13 (2) of the

Securitization Act which has been received by our clients (i) Anil

Chadha (ii) Satvik Chadha (iii) Mr. Ankit Chadha (iv) M/s Chadha

Engineering Pvt. Ltd. has been placed under our hands and under

instructions of our aforementioned clients we wish to represent

against the captioned notice and raise the following objections:

PRELIMINARY OBJECTIONS:
a) At the outset, It is submitted that Notice under reply has not

been duly served timely to our clients and the same has been

hold it back deliberately by your`s officials for their vested

interest.

b) That the issuance of notice under reply is not tenable and bad

in laws as it is settled position of laws that NBFC i.e. Non-

Banking Financial Companies is not entitled to invoke the

provisions of SARFAESI Act and it`s allied rule. Since,

admittedly, you are designated as NBFC and hence cannot

invoke the provisions of SARFAESI laws. In view of this settled

legal position, the notice dated 22.12.2016 is non est and null

and void ab initio.

c) That it is also pertinent to mention here that, in facts, you and

your authorized representatives approached us for obtaining

the loan at very competitive rates @ 6%, but despite repeated

requests and in pursuance of your hidden agenda you did not

issue any sanction letter for grant of the loan in question.

d) That it is also not out of context to mention here that your

authorized representatives has obtained certain blank

agreements signed by us on the pretext that the same will be

mere formality for the sanctioned of loan.

e) That you have already invoked the arbitration clause of alleged

agreements, and therefore the notice under section 13(2) of

SARFAESI Act is not tenable and null and void ab initio.

f) That the notice under reply is bad and non-maintainable as it is

well settled law that the lenders owe a duty to act fairly and

reasonably while dealing with the borrower and they are not

free to act in arbitrary and capricious manner. In Mardia

Chemicals vs. Union of India [2004 (4) SCC 311] the Apex

Court has stated that while exercising powers under Section 13

the responsibility and onus to act fairly and reasonably is very

high as Section 13 of the SARFAESI Act gives power and

discretion to the secured creditor to take coercive recovery

action as contemplated under Section 13(4) of the SARFAESI

Act without the intervention and / or supervision of any judicial

or quasi judicial authority.

g) That the notice under reply is bad and non-maintainable as the

same has not been signed by any officer equivalent to the rank

of Chief Manager and above which is mandatory for such a

notice.
h) That it is stated that the notice under reply has been issued in a

casual and mechanical manner disregarding the mandatory

pre-requisite as provided under the SARFAESI Act thereby

making the same bad in law.

i) That the notice under reply is bad and non-maintainable as the

details of the alleged liabilities as contemplated under Section

13 of the Securitization Act have not been provided to our

client. The statement of account in respect of each of the

alleged NPA accounts has not been provided which is also

mandatory before proceeding under Section 13(4) of the

Securitization Act. It is submitted that the notice under reply

has not been accompanied by the detailed statement of

accounts thereby preventing our client from ascertaining the

correctness of the alleged liability/alleged outstanding amounts

stated in the notice which is one of the important conditions for

a legal notice under Section 13(2) of the Securitization Act.

j) That the notice under reply is bad and is liable to be withdrawn

as the value of the alleged securities is more than the alleged

outstanding amounts which outstanding amount is also

disputed by our client. It is settled legal position in view of the

judgment of the Apex Court in M/s Transcore Vs Union of India

and another reported as 2006 (12) SCALE 585 wherein it has

been held that the secured creditor may take an action under

Section 13(2) / 13(4) of the Securitization Act where the debtor

has failed to maintain the value of the security which is not

there in the present case.

k) That the notice under reply is bad and is liable to be withdrawn

as the bank has charged interest at the rates and rests which

was never agreed upon by our client and the same is also not
 in consonance with the practice prevalent in the banking

industry.
l) That the notice under reply is bad and is liable to be withdrawn

as the statement of accounts are wrong and non justifiable as

the same have not been maintained in the ordinary course of

banking business; and each and every entry is disputed,

individually and specifically. All alleged transactions including

the balances pleaded in the notice or otherwise, are

vehemently denied individually and specifically. The ledgers

have not been maintained correctly by the bank. It is made out

from the notice under reply that the bank has charged interest

at exorbitant, excessive and usurious rates. The bank is not

entitled to either charge or claim interest at the rates and rests

as claimed in the present notice. According to the guidelines

and directions of Reserve Bank of India, interest at such

exorbitant rates and rests as charged and claimed by the bank

as stated in the notice under reply is not permissible. The bank

cannot charge interest at such excessive rates and rests and

also without express consent of our client.

m) That the notice under reply is bad, unwarranted, uncalled for as

there has not been any cause of action for the issuance of the

said notice under section 13 (2) of the Securitization Act.

n) That our client deny all allegations of default or alleged liability

as stated in the notice under reply and/or the right of you to

 enforce security interest under Section 13 of the Securitization

Act.

PARAWISE REPLY

That unnumbered para of the notice under reply in so far as the

submissions with regard to sanction and disbursement of loan to our

client is concerned the same are specifically denied to the extent of

inconsistency with the records.

1. That Para (1) of the notice under reply is wrong and hence

denied. It is specifically denied that our clients have been

irregular towards repaying the outstanding dues along with

contractual dues and inspite of repeated requests and demands

our clients have failed to repay the outstanding loan dues along

with contractual dues and charges due to which loan account of

our clients has been classified as NPA in accordance with the

directives and guidelines set by the RBI as alleged.

2. That Para (2) of the notice under reply is wrong and hence

denied. It is specifically denied that in view of the default made

by our client the loan granted to our clients is recalled as

alleged. it is also specifically denied that our clients are liable to

pay any amount leave aside the alleged outstanding amount of

Rs.21,976,509.55/- as on 19.11.16 as alleged. It is submitted

that our clients approached on several occasions to your office

 and meet your official concerned to sort out the matters.

However, it was always assured by your official to my client that

matter would be sorted out at the earliest after considering all

the concessions as per prevailing policies.

3. That Para (3) of the notice under reply is wrong and hence

denied. It is specifically denied that our clients have neglected

and failed to pay the dues outstanding to Capital First Ltd. with

respect to the said loan duly secured by the securities as

alleged. It is also specifically denied that our clients are liable to

pay the alleged outstanding amount of Rs.21,976,509.55/- as

on 19.11.16 within 60 days from the date of the said notice

together with future interest at the alleged contractual rate with

additional interest on the alleged amount and all related dues,

charges, cost and expenses incurred w.e.f. 21.11.6 onwards till

realization as alleged. It is also specifically denied that any

action U/s 13(4) including power to take possession of the

secured asset pursuant to the notice under reply is maintainable

against our client as alleged.

4. That Para (4) of the notice under reply is wrong and hence

denied. It is specifically denied that our client could be

restricted from transferring the secured asset or creating any

interest or rights by way of tenancy or license or any other rights

whatsoever in or over the secured asset without obtaining

 written consent of the secured creditor as alleged. It is also

specifically denied that our client is punishable under section 29

of the Act in the condition of non-compliance of the above

provision under section 13(13) of the said Act as alleged.

5. That Para (5) of the notice under reply is wholly misconceived

and hence the same is denied. It is specifically denied that our

clients are obliged to comply with the demand notice to avoid

further action under the SARFAESI Act as alleged.

In view of the above we hereby call upon you to withdraw the notice

under reply the same being false, frivolous, illegal, coercive, non-

maintainable and violative of RBI guidelines We further maintain that

this reply should also be treated as representation/objection u/s

13(3A) of the Securitization and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002.

Copy retained for necessary action.