SUGANTHI EDUCATIONAL TRUST vs CFM ASSET RECONSTRUCTION PRIVATE LTD on 29 February 2024

: - O R D E R - :

In this review petition filed under section 22(2)(e) of RDB Act 1993, the petitioners pray for reviewing the orders dt 10.07.2023 in SA No.14/2023.

SA-14/2023 challenged the sale notice dt 29.6.2023 on several grounds. The date fixed for sale was 17.7.2023. The said SA came to be disposed as becoming infructuous since the respondent herein has withdrawn the auction sale notice.

GROUNDS FOR REVIEW

a) Intimation given by the respondent to the Tribunal on the hearing date i.e, 10.7.2023 in SA -14/2023 mentioned that the sale notice cancelled but the Tribunal disposed the SA as becoming infructuous and also observed as the sale notice „withdrawn‟.

b) The main relief granted is for cancelling the notice and the consequential relief is to withdrawn. Such relief cannot be granted as per the observations of Supreme Court in State of Punjab vs Bal Karan Singh 2006(12) SCC 709(citation not provided).

c) Cancelling the sale notice amounts to abandonment of relief as provided under order 23 Rule 1 of CPC. Thus they are estopped from proceedings further to the second sale. After cancellation, the defendants proceeded to issue another sale notice within 48 hours.

d) Consequent to the final orders one more OTS proposal was made which was declined. The demand is barred by limitation. RBI guidelines issued to ARCs regarding settlement of dues under OTS is not followed.

e) The SA filed after paying Court fee which was disposed had deprived the compensation to the applicant/petitioners. Applicants have a right under section 13(8) of SARFAESI Act for redemption and time is not the essence. On the above grounds the order dt 10.7.2023 is sought to be reviewed and the prayer is to pass such other orders as this Tribunal may deem fit in the circumstances.

Upon notice the respondent herein appeared and the matter is heard. The ld Counsel have filed their written submissions also. The applicant had retreated the averments made in the review petition in the written arguments. However in the written arguments he submits that the words withdrawn and cancelled are to be distinguished and understood according to the general clauses act. The ld Counsel brings to the notice of the Orders of Ld.DRT, Cochin in SA no-206/2015 dt 19.11.2016 and also the ruling of the Gujarat High Court in Doongarsee and Sons and Ors Vs. State of Gujarat and Ors AIR 1971 Guj 46. The written argument details the principles of interpretation based on several rulings and the principles of interpretation namely “casus omissus”.

In the written submissions filed by the defendant it is pointed out that the petitioner is trying to bring in half-baked attempt to somehow keep some litigation pending against the secured creditor. The intimation of cancellation issued clearly stated that the Auction is cancelled and the notice of sale is withdrawn. The intimation of cancellation at Para-5 is very clear and it requires no further interpretation. These words are not found in the SARFAESI act defined. The provisions for CPC cannot be borrowed. The law mentioned by the petitioner in Sarguja Transport vs State transport dealt with the withdrawal of the suit and the present proceedings cannot be equated with a suit. The respondents as a secured creditor have a right to reject the OTS proposal.

In the written arguments of the respondent it is urged that the impugned order is clear “SA stands disposed of as becoming infructuous since the impugned sale notice is withdrawn”. This cannot be termed as an error apparent on the record. The respondent prays for dismissal of the review petition.

Having heard the ld Counsel for the parties, this Tribunal is to find out whether the petitioner has made out any grounds for review to entertain this petition under section 22(2)(e) of RDB Act 1993.

The Rule 5A of the Debt recovery Tribunal (Procedure) (rules) 1993 provides for filing a review petition. Rule 5 A (1) reads “any party considering itself aggrieved by an order made by the Tribunal on account of some mistake or error apparent on the face of the record, desires to obtain a review of the order made against him, may apply for a review of the order to the Tribunal which had made the order.

The Ld. Counsel appearing for the review petitioner submits that the order under review disposing the SA requires review. The Tribunal according to him erred in stating that the SA as becoming infructuous since the impugned sale notice is withdrawn. According to him, the impugned sale notice is not “withdrawn but cancelled”. The Ld. Counsel strenuously argues that while disposing the SA, it was pointed out by the Review Petitioners that the impugned sale notice had suffered many illegalities and upon pointing out such illegalities, the same was cancelled. Since the same is cancelled, there is error in mentioning the same as withdrawn in the order dated 10.07.2023.

The Ld. Counsel submits to establish that there is a total and vast difference between the meanings of the words “withdrawn and cancelled”. He tried to emphasise that if the sale notice is treated as cancelled, the respondents are ever prevented for good to initiate further proceedings like second sale notice, etc. Only if it is withdrawn they may be in a position to proceed further. He tried to invite the attention of this Tribunal to the opinion of Ld. DRT, Ernakulam to submit that “purposive interpretation” to the provisions of SARFAESI Act to be followed as held in South Indian Bank Limited Vs. Union of India, AIR (2011) KER 35. He also relied on Doongarsee and Sons & Ors. Vs. State of Gujarat & Ors AIR (1971) GUJ 46 to emphasis the same point. The ruling in Doongarsee and Sons (Supra) applied are incomplete and the ruling starts from Para-5. However what could be gathered from the ruling is that the Hon‟ble Gujarat High Court was dealing with Land Acquisition Act. “The conferment of the power to withdraws from the acquisition under Section 48 sub-section (1) does not exclude the exercise of the power of cancellation under Section 21 of the General Clauses Act, 1897; In fact the cancellation of the notification under Section 6 under Section 21 of the General Clauses Act, 1897 would be one of the modes in which the Government may withdraw from the acquisition under Section 48 sub-section (1). There is no rigid dichotomy between the exercises of the two powers; one in certain circumstances may coincide with the other.”

According to legal Lexicon, Cancellation means to destroy the force, effectiveness or validity of. To annul, abrogate or terminate. Defacement of mutilation of instrument. Words of revocation written across instrument. (Law Lexicon by P.Ramanatha Aiyar [1997]).

Withdrawal finds the meaning in the same dictionary with the verb withdraw as to take back or a way something that has been given, allowed, possessed, experienced or enjoyed.

It is in this context the Ld. Counsel submits that since the sale notice was cancelled, it has the effect of nullifying the entire measures to be initiated under the SARFAESI Act and did not give any liberty to the Defendants to initiate further proceedings under Rule 9 of the SIE Rules framed under SARFAESI Act. This Tribunal while disposing the SA No.14/2023 noted as under:

3. “The Ld counsel appearing for the caveator has filed a photocopy of the intimation of the defendant. By this intimation it is made clear that the impugned sale notice dt 17.7.2023 concerning the properties of the borrower, mortgager, guarantors are being withdrawn.

5. The ld counsel for the defendant bank submits that the entire gamut of events were taken note of and the defendant has the liberty to withdraw the sale notice. It is also submitted that earlier sale notice issued was also challenged and the same came to be disposed of as becoming infructuous in SA-439/2022 dt 31.3.2023.”

14. In view of the above clear disposition of the situation and the express words used in the order under review, there remains no error apparent on the face of record.

15. Furthermore, the Rule 9(1) of the SIE Rules, 2002, which is amended with effect from 04.11.2016 makes it clear that 30 days notice is required for the sale to be held in first instance. The proviso to the said Rule is also clear that if the sale is required to be conducted again, the notice of 15 days is prescribed for any subsequent sale. In view of the mandate of the law, the argument advanced by the Ld. Counsel for the review petitioner that if the earlier sale notice is held as cancelled, the Respondents are prevented forever in conducting the subsequent sale. The Tribunal finds the contention as illegal and against the scheme of SARFAESI Act and SIE Rules. Hence this Tribunal is of the considered opinion that there is no error apparent on the face of the record. The rulings urged by the Ld. Counsel are of no help in view of the order under Review making it very clear that the sale notification challenged in SA is withdrawn and this Tribunal noted that the respondent has the liberty to withdraw. The mere withdrawal does not prohibit the subsequent sale notifications under the amended provisions of Rule 9 of the SIE Rules, so long as the debt remains unredeemed. Suffice it to say there is no merit in the review petition, Accordingly the following:-

: - O R D E R - :

The RA 3/2023 stands dismissed. Parties to bear their own costs.

Sd/- (A.S.JAYACHANDRA)

PRESIDING OFFICER

DRT-I, CHENNAI

(Dictated to Assistant who typed in the system, corrected, signed and pronounced in open court on this 29th Day of February, 2024)