In a significant order, Mumbai-based Debt Recovery Appellate Tribunal (DRAT) has ruled that a bank seeking to recover money from a borrower cannot proceed further on a faulty notice without correcting the mistake and issuing a fresh modified notice.

Justice Allah Rahman of the appellate tribunal recently pronounced the order while acting on an appeal filed by a Gujarat-based company, M/s Cham Trading Organisation, against the Bank of Baroda.

According to the details of the matter, the bank had issued a notice to the company for recovering dues of around Rs 13.26 crore under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. Though, in reply to this notice, the company had stated that the bank did not give it credit of Rs 2.01 crore for the sale of certain property of the company. Following this reply from the company officials, the bank admitted it had not given the company credit of Rs 2.01 crore. Though, subsequently, the bank moved ahead with the procedure of taking symbolic possession of various properties of the company to recover the dues after revising the money to be recovered without issuing any fresh notice under the provisions of the SARFAESI Act.

The company challenged the bank’s action in the Debt Recovery Tribunal (DRT) to get the notice of the bank to recover the dues quashed since it does not comply with the provisions of the SARFAESI Act. The Ahmedabad-based DRT had dismissed the petition, following which the company challenged the DRT order at the DRAT in Mumbai through their lawyer Hitesh Dave.