Issue of notice under SARFESI Act by L & T Housing Finance Limited wrongly on the letter head of L & T Finance Ltd- Challenge by the borrower as illegal- Supreme Court holds the challenge to be baseless.

The Apex Court on 27th October, 2020 in the case of L & T Housing Finance Ltd Vs Trishul Developers & Another in Civil Appeal No 3413 of 2020 was dealing with a rather unusual case where the high court had agreed with the borrower who had defaulted in repayment of loan of more than Rs 16 crore that the notice issued by L & T Housing Finance Ltd on the letter head of L& T Finance Ltd, even though was signed correctly by the officer was illegal. The Apex Court held that the borrower had understood what the notice was all about and 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, 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.

Whenever procedural lapses occur the facts have to be seen when deciding legality or otherwise of the action.

Ramesh Patodia
27-10-2020