M S FIROZABAD COLD STORAGE PVT LTD vs BANK OF BARODA on 16 January 2024

**JUDGMENT**

1. 1. This is a time bound matter by the Hon'ble High Court of Allahabad.

2. 2. This M. A. has been filed by the M. Applicants praying therein that this Tribunal be pleased to declare the sale deed dated 03.09.2014 as void and also direct the respondents to comply with the order dated 23.10.2013 passed by this Tribunal in S. A. No. 153 of 2009 so that the justice may be done otherwise, the M. Applicants will suffer irreparable loss and injury.

3. 3. The reply of the M. Application has been filed by the respondent Bank, denying all the allegations leveled by the M. Applicants. Rejoinder to the reply/objection filed by the respondent Bank has also been filed on behalf of the M. Applicants.

4. Heart the learned counsels appearing for the parties on merits of the M. A.

6. It is submitted by the Ld. Counsel for the M. Applicants that the respondent bank illegally and malafidely locked cold storage under the SARFAESI, Act 2002 against which applicants had filed S.A. No. 153 of 2009, challenging the entire proceeding. It is submitted that during the pendency of aforesaid S.A., respondent bank illegally published the auction notice dated 05.07.2010 and on the basis of said auction notice, respondent bank issued sale certificate regarding property in question in favour of respondent No. 2 to 6 against which the M. Applicant have filed Misc. Stay application in the said S.A. in which DRT has passed order of stay on 10.01.2011. It is further submitted that even on the interim order, the respondent No. 2 to 6 in collusion with the bank has took away all the machinery, plant as well as building material by demolishing the same.

7. It is further submitted that the aforesaid S.A. has been decided in favour of the M. Applicant vide order dated 23.10.2013 with the observation quoted herein below:- "I have gone through the ruling cited by the applicants and in view of above discussion and in the light of law referred, I find merits in the present S.A. and same is allowed. The auction sale, sale certificate and sale deed issued or executed by bank and all other ancillary and subsequent steps taken by the bank qua the auction of secured assets are hereby set aside. As the representation submitted on behalf of the borrower has not been disposed of by the authorized officer as required under section 13(3A) of Securitization & Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002, so the notice under section 13(4) is also quashed. However, bank will be at liberty to initiated fresh process after disposal of representation dt. 1.6.2009 and to proceed further under the Securitization Act to recover its public money. The auction purchasers are directed to restore the possession within 15 days to the person from whom they had taken possession and status of the secured asset to maintain the possession of property as on the date of auction.

8. It is further submitted that against the order dated 23.10.2013, the respondent No. 2 to 6 filed appeal R-214 of 2013 before D.R.A.T. Allahabad and the D.R.A.T. Allahabad by vide order dated 19.11.2013 directed the respondent bank to return the auction amount along with 10% simple interest. Further, against the order dated 19.11.2013, passed by the DRAT and order dated 23.10.2013 passed by this Tribunal, the respondent Nos. 2 to 6 approached before the Hon'ble High Court by way of writ petition No. 10936 of 2014 and the Hon'ble High Court Allahabad vide order dated 20.02.2014 stayed both the orders. It is further submitted that during the pendency of aforesaid writ petition, respondent Nos. 2 to 6 in collusion with the bank has got registered sale deed in favour of themselves on 03.09.2014 without any order or direction of any authority concern in violation of mandatory provision of section 52 of T.P.A. It is submitted that the aforesaid writ petition has been dismissed on 23.10.2021.

9. Ld. Counsel for the M. Applicants further submitted that the M. Applicants have served an application to the Branch manager for withdrawal of the possession of property in question on 07.12.2021 and 17.12.2021 to the Chief manager Bank of Baroda. It is further submitted that after restoration of aforesaid writ petition, the Hon'ble High Court has passed the order dated 22.08.2023 holding that "The outcome of above discussion is that impugned order dated 19.11.2013 passed by DRAT is erroneous and therefore, is liable to be set aside, hence, set aside.

10. It is further submitted that the respondent bank has also filed the appeal No. 8 of 2014 before the Hon'ble DRAT. The DRAT Allahabad vide order dated 18.10.2023 disposed of the appeal of the bank holding that the "meaning thereby, the process, which was set aside by the tribunal below has been held to be valid. It is submitted that on perusal of the order of the Hon'ble High court dated 22.08.2023 and Hon'ble DRAT dated 18.10.2023, it is very much clear that the order dated 23.10.2013 of DRT has not been set aside hence, the said order is still in existence, accordingly, applicants have filed present M.A. with the prayer "it is therefore most respectfully prayed that this Hon'ble Tribunal may be pleased to declared the sale deed dated 03.09.2014 as void and also direct the respondents to comply with the order dated 23.10.2013 passed by this Hon'ble tribunal in S.A. No.153 of 2009 as justice be done."

11. It is submitted that since the aforesaid order dated 23.10.2013 of DRT has not been stayed nor set aside hence, compliance of order dated 23.10.2013 must be done by this Hon'ble Tribunal. It is further submitted that this Hon'ble Tribunal has passed the order dated 10.06.2022 in said M.A. which is as under "considered the contentions of the parties. Despite notice, the auction purchaser failed to appear before this Tribunal, therefore, in the interest of justice, it would be appropriate that respondent purchaser may be restrained from creating third party interest. Accordingly, all the parties maintain quo till next date of hearing. It is further submitted that on the fact it is prayed that this Hon'ble Tribunal be pleased to direct the respondents to comply with the order dated 23.10.2013 passed by this Hon'ble Tribunal in S.A. Nos. 153 of 2009 as well as declared the sale deed dated 03.09.2014 as void as justice be done.

12. On the other hand, the Ld. Counsel for the respondent Bank submitted that the present Misc. Application is based on wrong fact and grounds and is liable to be dismissed with cost. It is further submitted that the order dated 23-10-2013 passed by this Tribunal has been challenged by the respondent Bank by filing Appeal before Hon'ble DRAT, Allahabad. Ld. Counsel for the respondent Bank submitted that the order dated 19-11-2013 passed by Hon'ble DRAT, Allahabad was challenged by the auction purchasers by filing Writ Petition before Hon'ble High Court Allahabad and the Hon'ble High Court, Allahabad vide order dated 20-02-2014 passed an interim order by which the order dated 19-11-2013, passed in Appeal No. R-214 of 2013 and order dated 23-10-2013 passed by S.A. No. 153 of 2009 were stayed. It is further submitted that since the orders passed by Hon'ble DRT & DRAT were stayed by Hon'ble High Court so no permission was required from DRT & DRAT before execution of Sale Deed in favour of auction purchasers. Further, the Hon'ble High Court, Allahabad vide order dated 23-11-2021 has dismissed the Writ Petition due to non-presence of counsel for the petitioners and not on merits of the case. After coming to know about the dismissal of Writ Petition, the petitioners have filed restoration application which is pending adjudication before Hon'ble High Court. It is submitted that admittedly the order passed by this Hon'ble Tribunal has been challenged by the respondent Bank by filing Appeal No. 08 of 2014 before Hon'ble DRAT, Allahabad and after due service upon respondents and after exchange of pleadings, the aforesaid appeal was listed on 27-03-2023 for hearing and on the said date the counsel for the applicants - respondents no. 1 to 6 (In Appeal) sought adjournment and 14-07-2023 was fixed for arguments. Further, on 14-07-2023, the arguments could not take place due to paucity of time and now 11-10-2023 is fixed for hearing. It is further submitted that since the order dated 23-10-2013 is under challenge in Appeal filed by respondent Bank before Hon'ble DRAT, Allahabad and in Writ Petition filed by auction purchaser so there is no question of compliance of order, passed by this Hon'ble Tribunal unless and until the Appeal and Writ Petition are finally decided. Request is made that in view of the aforesaid facts and circumstances the M. Application of the applicants which is filed with malafide intentions and the M. Application is devoid of merit and as such, the same may be rejected with heavy cost.

13. Ld. Counsel for the Auction Purchaser submitted that the important and contentious issues raised by the Borrower in the Appeal under Section 18 of the SARFAESI Act 2002, filed by the Auction Purchaser before the DRAT Allahabad, as well as in the Securitisation Application under Section 17 of the SARFAESI Act 2002 filed by the Borrower before the DRT Allahabad, had been challenged on merits by the Respondent No 4 (in M.A. 46 of 2023 2022)/Auction Purchaser by way of Writ C No: 10936 of 2014, Arun Kumar Jain And 3 Others versus PO, DRT & 7 Others. This writ filed by the Auction Purchaser has finally been allowed by a well-reasoned order dated 22.8.2023, passed by the Hon'ble High Court Allahabad on merits dismissing as erroneous the Order dated 19.11.2013, passed by DRAT Allahabad in Regular Appeal No. R-214 of 2013. It is further submitted that the, M.A. No 46 of 2022 has been filed by the Borrower mainly for the purposes of compliance of the order dated 23.10.2013, passed in SA No 153 of 2009 in his favour. It is a well-established principle of law that when an appeal is provided from a decision of a tribunal and the Appellate court after hearing the appeal passes an order, the order of the original court ceases to exist and is merged in the order of the Appellate court, and although the appeal court may merely confirm the order of the trial court. The order that stands and is operative, is not the order of the trial court but the order of the Appellate court. Thus, by operation of the Doctrine of Merger, the order dated 23.10.2013, passed in SA No 153 of 2009 by DRT Allahabad has merged with the Order dated 19.11.2013, passed by the DRAT Allahabad in Regular Appeal No. R-214 of 2013, confirming the aforesaid order of DRT Allahabad. However, the order of DRAT Allahabad in Regular Appeal No. R- 214 of 2013 was further challenged on merits by the Respondent No 4 (in M.A. 46 of 2022)/Auction Purchaser by filing Writ

C No: 10936 of 2014, Arun Kumar Jain And 3 Others versus PO, DRT & 7 Others and this writ petition filed by the Auction Purchaser has finally been allowed by a well-reasoned order dated 22.8.2023, passed by the Hon'ble High Court Allahabad on merits discussing in detail the contentious issues raised by the Borrower. Thus, vide Order dated 22.8.2023, the Hon'ble High Court Allahabad has dismissed as erroneous the order dated 19.11.2013, passed by DRAT Allahabad in Regular Appeal No. R-214 of 2013. As a consequence of the Order dated 22.8.2023, passed by the Hon'ble High Court Allahabad, dismissing as erroneous the order dated 19.11.2013, passed by DRAT Allahabad (in Regular Appeal No. R-214 of 2013), the aforesaid Appellate order of DRAT has been demolished, and is no longer in existence.

14. Since, the Order dated 23.10.2013, passed in SA No 153 of 2009 by DRT Allahabad has merged with the Order dated 19.11.2013, passed by the DRAT Allahabad in Regular Appeal No. R-214 of 2013 (confirming the aforesaid Order of DRT Allahabad), and the Order dated 19.11.2013 passed by the DRAT Allahabad having been set aside by the Order dated 22.8.2023, passed by the Hon'ble High Court Allahabad; by operation of law, neither of the aforesaid Orders passed, either by the DRT Allahabad dated 23.10.2013, or by the DRAT Allahabad dated 19.11.2013, are in existence as on date. Hence, the compliance of the Order dated 23.10.2013 passed in SA No 153 of 2009 by DRT Allahabad, as sought by the Applicant / Borrower in the instant M.A has become illusory; and the instant M.A is rendered infructuous at this stage of the proceedings. However, the Applicant / Borrower is free to proceed against the well reasoned Order of the Hon'ble High Court Allahabad dated 22.8.2023 passed on merits (dismissing the Order dated 19.11.2013 passed by DRAT Allahabad) before the Hon'ble Supreme Court.

15. Considered the rival contentions of the parties and perused the records.

16. On perusal of record, it is observed that against the order dated 23.10.2013, passed by this Tribunal allowing the SA No. 153 of 2009, the respondent No. 2 to 6 filed appeal No. R-214 of 2013 before DRAT and the Hon'ble DRAT vide order dated 19.11.2013 directed the respondent bank to return the auction amount along with 10% simple interest to the auction purchaser. Against this order dated 19.11.2013, passed by the DRAT and order dated 23.10.2013 passed by this Tribunal, the respondent Nos. 2 to 6 approached before the Hon'ble High Court by way of writ petition No. 10936 of 2014 and the Hon'ble High Court Allahabad vide order dated 20.02.2014 stayed both the orders. During the pendency of aforesaid writ petition, respondent Nos. 2 to 6 have got executed a sale deed in their favour on 03.09.2014. However, the aforesaid writ petition had been dismissed by the Hon'ble High Court on 23.10.2021. After, restoration of this writ petition, the Hon'ble High Court passed order dated 22.08.2023 holding that "The outcome of above discussion is that impugned order dated 19.11.2013 passed by DRAT is erroneous and therefore, is liable to be set aside, hence, set aside.

17. On perusal of record, it is also observed that the respondent bank has also filed appeal No. 8 of 2014 before the Hon'ble DRAT and the

DRAT Allahabad vide order dated 18.10.2023 disposed of the said appeal holding that "meaning thereby, the process, which was set aside by the tribunal below has been held to be valid. On perusal of the order of the Hon'ble High court dated 22.08.2023 and Hon'ble DRAT dated 18.10.2023, it is very much clear that the order dated 23.10.2013 of DRT has not been set aside hence, the said order is still in existence, accordingly, applicants have filed present M.A. with the prayer "it is therefore most respectfully prayed that this Hon'ble Tribunal may be pleased to declared the sale deed dated 03.09.2014 as void and also direct the respondents to comply with the order dated 23.10.2013 passed by this Hon'ble tribunal in S.A. No. 153 of 2009 as justice be done."

18. Further, the perusal of record shows that on a correction application filed for incorporating the figures and words "order dated 23.10.2013" before figures "19.11.2013" in paragraph 35 of the order dated 22.08.2023, passed by the Hon'ble High Court of Allahabad, the Hon'ble High Court vide order dated 07.12.2023 was pleased to correct the para 35 of the order dated 22.08.2023, passed by it earlier, as under:- *"35. The outcome of above discussion is that impugned orders dated 23.10.2013 and 19.11.2013 passed by the DRT and DRAT respectively are erroneous and are liable to be set aside, hence, set aside."*

19. On perusal of record, it appears that through present M. Application, the M. Applicant has sought declaration of the sale deed dated 03.09.2014 as void and also direction from this Tribunal to the respondents to comply with the order dated 23.10.2013, passed by this tribunal in S.A. No.153 of 2009. But after perusal of above order dated 07.12.2023 passed by the Hon'ble High Court of Allahabad, it is crystal clear that the order dated 23.10.2013, passed by this Tribunal has also been set aside therefore, the application filed by the M. Applicant become infructuous and the same is liable to be dismissed.

ORDER

The M. Application, filed by the M. Applicant is, hereby, dismissed.

This order shall not prejudice any order, passed by higher Courts.

A copy of this order be furnished to the parties as per Rules.

Judgment signed, sealed, dated and pronounced in the open court on this 16^th Day of January, 2024.

Dictated & Corrected by me.

[R. M. Kushawaha]

Presiding Officer

Debts Recovery Tribunal, Allahabad

[R. M. Kushawaha]

Presiding Officer

Debts Recovery Tribunal, Allahabad

VK