M S Sarajit Food Products Pvt Ltd vs CANARA BANK on 22 July 2022

**FINAL ORDER**

Delivered on 22^nd July, 2022

This present Review Application has been filed on 12.05.2021 by the Applicants for directing the defendants not to proceed with the alleged sale notice where the date of sale was fixed on 16.03.2021 and to restore peaceful possession to the Applicant No. 1; an order cancelling/setting aside/quashing the sale notice dated fixing date of sale on 16.03.2021 and for other reliefs more detailed in the application. The instant RA arises out of SA/110 of 2021 which was dismissed vide order of the Ld. Tribunal dated 13.08.2021. The copies of the aforesaid notices were served upon the Defendants in their above mentioned addresses.

2. In the Review Application, Applicants stated that –

(i) The applicant no. 1 is the company who had availed loan from defendant no. 1. The applicant no. 2 is the director of applicant no. 1 and also the mortgagor. The Applicant borrowed money from the defendant bank few years back. The said loan was secured by deposit of five numbers of Title Deeds, out of which one of the property is the subject-matter of the instant application.

(ii) The Applicant states that the Defendant No. 2 invoked Section 13(2) of the SARFAESI Act, 2002 (hereinafter referred to as the said Act) on 06.04.2015 claiming that the cash credit loan with outstanding balance of Rs. 14,9

2RA/01 of 2022 - DRT-2/Kol

(iii) The Applicant states that suddenly on 19.03.2021 the Applicant No. 2 came across the purported sale notice dated 11.02.2021 pasted on the wall of the factory. From the said purported sale notice the applicant came to know about the sale which was conducted on 16.03.2021 by the defendant no. 2 where the Reserve price was Rs. 3.50 crore. However, no sale notice was issued to the Applicant nor the applicants are aware of any publication of the same. Copy of the sale notice dated 11.02.2021 is annexed as **Annexure A-2**.

(iv) The Applicant states that the exorbitant outstanding amount of Rs. 14,98,04,001.62p. only as shown in 13(2) possession notice and sale notice had been arisen out of application of higher rate of interest than that of the agreed rate of interest. The Applicant on number of occasions orally requested the defendant bank to rectify the same but that was not given effect to. The Applicant submits that he is not willful defaulter but the circumstances have forced the applicant to this miserable condition.

(v) The applicant states that the cause of action arose on 16.03.2021 when the defendant no. 2 has sold the property through e auction. The cause of action started from issuance of 13(2) notice to sale notice and the same are continuous cause of action. The Applicant prays that the defendant no. 2 should withdraw the sale notice and to return possession to the Applicant No. 1 by paying suitable compensation. The Applicant further states that they could not procure the complete statement of account from defendant no. 1 bank in spite of requests made on several occasions. The scrutiny of statement of account reveals that the bank charged higher rate of interest than that of eligible rate and also made some unauthorized debits. The Applicants are ready to pay the reserve price of Rs. 3.50 crores to the defendant bank and wants to release the property.

3. In the instant case the Defendant Bank filed affidavit in opposition on 25^th April, 2022 affirmed by one Sri Prakash Verma, Law Officer of the Defendant Bank wherein it was stated inter alia, that –

(a) That the Review Application filed by the Applicants is not maintainable either in law or on facts. The said application is filed with an ulterior motive to disrupt and delay the due process of law initiated by the Respondents. A review application can be filed only upon the discovery of new and important matter or evidence, some apparent mistake or error on the face of the record or any sufficient reason. In the instant case, none of the pre-conditions for preferring a review application have been met and hence the instant application is liable to be dismissed, as the same is not maintainable.

(b) The Defendants submit that the Review Applicant earlier filed two SARFAESI applications being SA/306 of 2015 and SA/110 of 2021 being aggrieved and dissatisfied with the recovery measures taken by the Defendant Bank way back on 06.04.2015. The second SARFAESI Application being SA/110 of 2021 was filed during the pendency of the first SA and both the said applications were disposed of finally on 13.08.2021. In the instant case the Defendant No. 2 not only invoked the provisions of Section 13(2) on 06.04.2015 but also took measures under Section 13(4) of the said Act on 13.06.2015. The applicants are totally silent about the proceedings they initiated in the year 2015 by filing the case being No. SA/306 of 2015.

(c) It is submitted by the Defendants that the documents which the applicants now seek to rely upon were annexed by the defendants to the affidavit in opposition and hence formed a part of the record. The ground of alleged non-compliance of Rule 9(3) or 9(4) were raised by the Applicants at the time of hearing of the SA and the same were duly considered and rejected. Rule 9(4) provides for a maximum period of three months to deposit the sale proceeds and the sale amount has been duly deposited by the successful auction purchaser well within the said period. In the instant case the 3RA/01 of 2022 – DRT-2/Kol main allegation of Sarfaesi Applicant was non-receipt of notice under Section 13(4) of the Act, exorbitant rate of interest beyond the agreed date, non co-operation from the end of the Defendant Bank, non-receipt of the statement of account, unauthorized debits by the Bank etc. .

(d) That in the instant case the Ld. Tribunal after perusing all documents and pleadings of the parties passed final order on 20.01.2022 wherein it was observed that the Sarfaesi applicant has deliberately avoided to settle the loan account and has been filing false and frivolous application only to drag the matter and to frustrate the recovery proceedings of the Defendant Bank and such vexatious litigation shall not be encouraged. There are neither any infirmities nor illegalities in the SARFAESI measures initiated by the Defendant Bank. The acts of the applicant amounts to gross abuse of judicial process which shall be seriously viewed. This Tribunal is not inclined to interfere with the SARFAESI measures initiated by the Defendant Bank as the same are proper and in order.

(e) It is submitted that the right of redemption of the borrower stands closed once the notice of publication of sale was issued as per amendment of Section 13(8) of the SARFAESI Act, 2002. It is specifically mentioned in Section 13(8) that " where the amount the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor together at any time before the publication of notice of public auction inviting quotations or tender for public or private treaty for transfer by way of lease, assignment or sale of the secured assets, the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor and in case any step has been taken by the secured creditor or transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease of assignment or sale of such secured assets. Hence, it is submitted that there is no scope for the Applicant to pay the reserve price and redeem his property after a considerable period of time. Hence it is prayed that the instant application is liable to be dismissed for untenable grounds which are made on concocted and non-maintainable stories.

4 In the instant matter the Defendant Bank filed supplementary affidavit in objection to the SARFAESI application on 24^th August, 2021 wherein it was inter alia stated that –

i) It is submitted that the present application filed by the Applicants is not maintainable either in law or on facts. The present application was filed with ulterior motive to disrupt and delay the due process of law initiated by the Defendant. It is submitted that the sale notice dated 12.02.2021 was posted on 12.02.2021 itself and the Sarfaesi Applicant have annexed the covering letter to the Sale Notice in their SARFAESI application thereby making it crystal clear that they have received the sale notice by post rather than the copy obtained from the wall of the factory. Furthermore the said sale notice was published on 12.02.2021 in two newspapers. Although the Sarfaesi Applicant approached the Bank on 21.08.2021 but no concrete proposal was forwarded along with upfront money by the Sarfaesi Applicant, hence the same was not accepted by the Defendant Bank. It is pertinent to mention that the previous Sarfaesi Application, i.e. SA/306 of 2015 filed by the SARFAESI Applicant was disposed of by the Hon'ble Tribunal on 13.08.2021.

5. In the instant case in terms of the direction of the Tribunal both the Applicants and the Defendant Bank filed their respective written notes of argument and the same were considered by the Ld. Tribunal at the time of passing the final order.

4. I have gone through the pleadings of both the Applicant and the Defendant Bank and perused the documents annexed and pass the following order :

4RA/01 of 2022 – DRT-2/KolORDER

The instant Review Application filed by the Applicant for a) review/modify the order/judgment dated 20.01.2022 and quash the sale held on 16.03.2021 and b) allow applicant to pay the reserve price of Rs. 3.52 crores and settle the account.

The SA No. 110 of 2021 has been decided on merit, after hearing both sides and on perusal of the affidavits. Therefore, there cannot be any review or modification of the order/judgment dated 20.01.2022.

That in respect of quashing the sale held on 16.03.2021, the same has also been dealt with and decided on merit as there were no merits to interfere in the sale proceedings initiated by the Respondent Bank. The sale has been completed in all respects and Sale Certificate was also issued on 27.04.2021 in favour of the successful bidder.

The prayer of the Applicant to pay the reserve price and settle the account does not arise since Section 13(8) cannot be invoked, as the right of redemption of the borrower stands closed on issuance of notice of publication of sale.

Section 13(8) of the Sarfaesi Act provides –

*(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,*

*(i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and*

*(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets."*

The Respondent Bank referred to the Hon'ble Supreme Court judgment in Civil Appeal No. 363 of 2022 (Bank of Baroda Vs. M/s. Karan Trading Co. & Another.) wherein it is observed that – "*unless and until the borrower was ready to deposit/pay the secured creditor the entire amount payable together with all costs and expenses, the borrower cannot be discharged from the entire liability outstanding*".

In view of the above, the instant RA is not maintainable and hence liable to be dismissed and accordingly RA/01 of 22 is dismissed.

File be consigned to Record Room.

This order is dictated and corrected by the undersigned and pronounced on this the 22^nd day of July 2022 in presence of Mr. Abhik Chakraborty, Lt. Counsel for the Defendant Bank.

Copy of the Order be uploaded in the Tribunal's Website.

Sd/-

(M.S. Rao) Presiding Officer DRT-2, Kolkata

Sd.