Mr. SHASHI RANJAN vs STATE BANK OF INDIA on 31 December 2021

ORDER

1. 1. The present Miscellaneous Application has been filed by the Applicant to direct the Respondent Bank to comply the Order dated 02.11.2017 passed in SA 220 of 2016 with immediate effect and seek explanation how the Bank is entitled for settlement amount as well as auction amount, which is not part of settlement amount.

2. 2. It is stated in the misc. application that the SA No.220 of 2016 filed by the Respondent No.2 was disposed off in terms of the scheme for One Time Settlement of NPA & AUCAs (SBI OTS 2017) and in terms of OTS the Respondent Bank vide its letter 2DRT, PatnaM.A. 04 of 2018 [2]

dated 11.09.2017 communicated to the Respondent No.2 to settle the account for an amount of Rs.2,07,02,080/- against ledger outstanding of Rs.3,38,44,159/- as on 31.03.2017. Respondent No.2 Bank vide its letter dated 31.10.2017 accepted the terms of SBI OTS 2017 and deposited 5% of the ledger outstanding as on 31.03.2017. Since the compromise was being reached between the parties, writ petition CWJC No. 10569 of 2016 was not pressed by the Respondent No.2 and consequently the IA No. 6358 of 2017 filed by the present Applicant for impleadment of party was not allowed but this Tribunal was directed to look into the matter and pass an order in accordance with law by the Hon'ble High Court.

3. It is further stated that on 02.11.2017 the SA 220 of 2016 was taken up for final hearing and with consent of the parties it was disposed off. On being prayer made by the Auction Purchaser that the Respondent Bank may be directed to return the entire auction amount deposited by the auction purchaser, the bank submitted that the Bank was ready to return the amount to the auction purchaser and on that basis, the SA was disposed off being infructuous. After that the Applicant vide letter dated 07.11.2017 requested the bank to refund the entire amount deposited i.e. Rs.64 Lakh and even after the expiry of more than 60 days and even thereafter also on repeated requests made by the Applicant, the Bank has not been refunding the auction amount, which they undertook to refund in SARFAESI proceedings and requested to direct the bank to comply the order dated 02.11.2017 passed in SA 220 of 2016.

4. The Respondent Bank has filed objection to the present MA requesting therein to dismiss the MA. It is stated therein that the instant MA is not maintainable since there is no provision of filing the Miscellaneous Application under the SARFAESI Act, 2002 and against the order passed in SARFAESI Application. It is further stated that the order by this Tribunal was passed on incorrect submissions and on suppression of facts by the borrower and the applicant itself. The applicant has suppressed the material fact of non-payment of balance amount in time.

5. It is further stated that property mentioned in lot no.2 of sale notice was sold to one Shri Shashi Ranjan (Herein the Applicant) who was the highest bidder, for an amount of Rs.1.14 Crore and 25% of the sale price was deposited immediately but the rest 15% of the confirmation of sale was not deposited by the Applicant. Further the auction purchaser/applicant has failed to deposit the balance amount even with the extended time given by the Authorized Officer i.e. on 29.08.2017. In the meantime, the Bank by its letter dated 11.09.2017 communicated the respondent no.2 / borrower to settle the account for an amount of Rs.2,07,02,080/- against the outstanding of Rs.3,38,44,159/- in terms of SBI OTS 2017 and the borrower by its letter dated 31.10.2017 accepted the terms of SBI OTS and deposited 5% of ledger outstanding i.e. Rs.16,92,208/-.

6. It is further stated that on 02.11.2017, the SA bearing no. 220 of 2016 was taken up before this Tribunal and during the course of arguments, Id. Counsel for the Bank has admittedly accepted to return the amount of auction-purchaser in view of the fact that the counsel for the borrower had made an averment that the borrower had already deposited 5% of ledger amount under OTS 2017 and had undertaken to deposit the remaining amount of compromise as per time prescribed in the compromise. But the fact remains otherwise as the borrower failed to honour the settlement within time as stated in the compromise dated 11.09.2017. However, the Respondent Bank in order to ensure compliance of order dated 02.11.2017 passed in SA 220 of 2016 found that the auction purchase had failed to deposit the balance amount even with the extended time i.e. 29.08.2018 given by the Authorized Officer, hence the averments made by the Id. Counsel cannot supersede the mandatory provisions made in the Rule 9(5) of the SARFAESI Act and requested to dismiss the MA.

7. The Respondent Bank has filed a supplementary affidavit of Shri Nand Kishore Kumar, Chief Manager, State Bank of India, SAMB, Patna affirming that being aggrieved with the Order dated 02.11.2017 and further order dated 24.12.2018 passed by this Tribunal, the Respondent Bank has filed an Appeal before the Hon'ble DRAT, vide Appeal No. 14 of 2019 and requested that pending disposal of the said Appeal, the present matter may be kept in abeyance. The said Appeal No. 14 of 2019 was disposed off by the Hon'ble DRAT, Allahabad vide order dated 15.02.2019, whereby the Hon'ble DRAT had directed that "this Tribunal below would decide the misc. application after affording opportunity to the parties in accordance with law, without being influenced by the observations made hereinabove".

8. The Respondent Bank further filed reply in terms of the order dated 15.02.2019 passed by the Hon'ble Debts Recovery Appellate Tribunal, Allahabad and has taken the same plea as already taken in their objections with a request to dismiss the present MA.

9. It is further stated in the reply that Id. Counsel for the auction purchaser who intervened into the SARFAESI Application concealed the fact that total deposit to the tune of Rs.64 Lakhs being the sale price had already been forfeited by the Bank in terms of Rule 9(5) of the Security Interest (Enforcement) Rules, 2002 under intimation to the Auction Purchaser much before the date of passing of the order dated 02.11.2017 in SA 220 of 2016. It is further stated that the auction purchaser after having suppressed the material fact relating to forfeiture at the stage of passing the order dated 02.11.2017 as also later on preferred to file MA No. 04 of 2018.

10. The Respondent bank has also filed written arguments and has relied upon the judgment.

11. On the point of forfeiture passed by the Hon'ble High Court of Jharkhand at Ranchi in L.P.A. No. 243 of 2018 in the case of Dhirendra Prasad Vs. the State Bank of India.

12. On the point of concealment of facts, passed by the Hon'ble Supreme Court of India, in SLP (Civil) 8479 of 1999 in the case of United India Insurance co. Ltd. Vs. Rajendra Singh & Order, decided on 14.03.2020.

13. Heard the parties and perused the record. If the chronology of the events of the present case are seen it is apparent therefrom that the Respondent No.2 had filed writ Petition being No. CWJC No. 10569 of 2016 challenging the second notice under Section 13 (2) of SARFAESI Act by the Respondent Bank, which was disposed off vide order dated 01.11.2017 with the liberty granted thereby to pursue SA No.220 of 2016 before Debts Recovery Tribunal, Patna challenging the very act of the Respondent Bank in taking possession of its property under Section 13 (4) of SARFAESI Act. It is the contention of the Applicant that its impleadment application was pending before Hon'ble High Court, but eventually the said writ petition was withdrawn consequent upon settlement, hence the impleadment application could not be pressed. The said SA No. 220 of 2016 was disposed off vide order dated 02.11.2017 on the statement of the parties that matter stood settled between the borrower and the Respondent Bank. The statement on behalf of the Bank was categorically recorded therein, "that the bank is ready to return the amount of the auction purchaser." Thereafter the Respondent Bank filed an appeal being 14 of 2019 before Hon'ble DRAT Allahabad, which was disposed off vide order dated 15.02.2019 thereby directing this Tribunal to decide the Miscellaneous Application filed by the present Applicant, the Auction Purchaser.

14. On this context the certain documents are required to be examined. The Applicant herein had requested the Respondent Bank vide its letter dated 30.06.2017 to extend the time period for payment of the residue amount of the auction sale held on 23.06.2017. The Respondent Bank reciprocated thereto vide letter dated 01.07.2017 and extended the period for deposit till 29.08.2017. A memorandum of meeting held on 30.06.2017 between the Respondent Bank and the Applicant was duly recorded. Subsequent thereto the Respondent Bank arrived into a settlement with the Borrowers, the Respondent No.2 in view of its offer letter dated 11.09.2017. The Respondent No.2 accepted the same and pursuant thereto deposited the 5% of ledger outstanding as on 31.03.2017.

15. Considering the rival contents made by the parties it emanates that the Applicant had placed its bid for purchase of the secured assets involved in lieu of the account of the Respondent No.2 on 23.06.2017 and had deposited a sum of Rs.64,00,000/- in respect thereof and had further sought extension of time for deposit DRT, Patna6M.A. 04 of 2018 [J]

of the rest amount vide his communication dated 30.06.2017. The Respondent Bank issued letter dated 01.07.2017 to the Applicant enclosing therewith the minutes of meeting held between the Respondent Bank and the Applicant. Para 4 of the said memorandum reads; *"Accordingly, it has been resolved mutually between both the parties (Auction Purchaser and the Bank) to extend the period upto 29.08.2017 to credit/deposit the remaining amount of the sale proceeds. As per recent amendment in SARFAESI Act, 2002 extension can be allowed maximum upto 3 months from date of auction."*

16. Subsequently on 11.09.2017 the Respondent Bank issued a communication to the Respondent No.2 for settlement of the account under OTS Scheme and further on 02.11.2017 had made a statement before the Debts Recovery Tribunal, Patna that it was ready to return the amount of the Auction Purchaser and pursuant thereto the Applicant vide its communication dated 07.11.2017 sought refund of its amount from the Respondent Bank. Subsequently the settlement between the Respondent Bank and Respondent No.2 failed on 27.05.2018. Thereafter the Applicant filed present MA on 19.01.2018. In reply to the said MA very first time the Respondent Bank referred to Rule 9 (5) of the Security Enforcement Rules, 2002 and in a bid of afterthought and to substantiate its contention the order dated 02.11.2017 was assailed in Appeal No.14 of 2019. It is apparent from the record that the Respondent Bank never intended to impound the amount deposited by the Applicant herein and has not given adjustment thereof in the loan account of the Respondent No.2, much less has not placed on record any evidence thereof. Therefore during hearing before this Tribunal on 02.11.2017 the Respondent bank readily submitted that it was ready to return the money deposited by the Applicant.

17. The Respondent Bank kept its stand same till the Applicant filed the present M.A., in reply whereof the Respondent Bank for the very first time retracted from its stand and in the garb of Rule 9 (5) of Security Interest Rules, 2002 intended to impound the money deposited by the Applicant.

18. Considering the sequence of events it transpires therefrom that the Respondent Bank had given extension of time to the Auction Purchase, the Applicant DRT, Patna7M.A. 04 of 2018 [J]

upto 29.08.2017, which in fact was extendable upto 22.09.2017. In the meantime on approaching by the main borrower i.e. Respondent No.2 the letter of OTS was issued on 11.09.2017. In such communication also the Respondent Bank did not make any whisper about the amount realized towards auction sale and adjustment thereof towards confiscation. Even the Respondent made a statement before DRT Patna on 02.11.2017 that it was ready to return the money of the Auction Purchaser (Applicant herein). Subsequent thereto the representation dated 07.11.2017 was made on behalf of the Applicant to refund the money to which no reply of any kind was given by the Respondent Bank. Thereafter the Respondent Bank kept mum and on filing of the present MA and failure of the settlement with the Respondent No.2, the Respondent Bank all of a sudden took the plea of confiscation under Rule 9 (5) of the Security Enforcement Rules, 2002 and approached Hon'ble DRAT in appeal against order dated 02.11.2017 in SA No. 200 of 2016, retracting therein from its submission made before this Tribunal and for the first time sought to confiscate the money deposited by the Applicant giving reference of Rule 9 (5) of the Security Enforcement Rules, 2002.

19. In view of this Tribunal the Respondent Bank is estopped from taking any such plea at a belated stage, while from its expressed and implied acts it is undisputedly established that the Respondent Bank was obliged to return the money deposited by the Applicant towards purchase of the property in auction. All actions before failure of the settlement between the Respondent No.2 and the Respondent Bank suggest that the Respondent Bank always wanted to refund the money of the Applicant and had therefore made a statement before this Tribunal, however, on failure of the settlement between the parties the Respondent Bank with the view to appropriate the money deposited by the Applicant very first time took resort of Rule 9 (5) of the Security Enforcement Rules, 2002.

20. In view of the above discussions the MA No. 04 of 2018 stands allowed. The Respondent Bank is therefore directed to return Rs.64,00,000/-. Since no interest thereon has been sought in the MA, no interest is liable to be paid by the Respondent Bank in lieu of keeping the money. Parties to bear their own cost.

21. A Copy of this order be sent to the parties through speed post and through electronic mode as well. Order be uploaded on the website of the Tribunal. File be consigned to the Record room.

**Ranchi 31.12.2021**

**(Sanjiv Kumar) Presiding Officer DRT, Ranchi Additional Charge, Patna 31.12.2021**