RAJESH KUMAR SHARMA AND ORS. vs CANARA BANK on 29 December 2020

JUDGMENT

Date of Decision: 29.12.2020 R. S. KULHARI, CHAIRPERSON

1. This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) against the order dated 03.12.2019 passed by the Presiding Officer, DRT, Allahabad, whereby

the securitization application (S.A.) filed by the appellants was dismissed.

2. The respondent-Bank granted a housing loan of Rs. 12.00 lacs to Nathuram Sharma, who died on 03.05.2011 leaving behind the present appellants. In order to secure the loan, the borrower had created equitable mortgage over his property by depositing the title deed with the Bank. The borrower committed default in repayment of the loan, hence the account was classified as NPA on 28.03.2008 and the respondent-Bank issued demand notice dated 08.04.2008 under section 13(2) of the SARFAESI Act for a sum of Rs. 14,06,754/-. Since the borrower did not pay any amount against the said demand, the Bank issued the possession notice and thereafter, sale notice, which were challenged by the appellant nos. 1 to 3 by filing the S.A. No. 62 of 2017. The same was dismissed as having been infructuous vide order dated 28.02.2017 because the Bank had withdrawn its process due to some technical error in the possession notice.

3. Thereafter, the auction sale notice was issued, which was also challenged by the appellants no. 1 to 3 by filing the S.A. No. 235 of 2017. The said S.A. was allowed by the Tribunal below vide order dated 12.05.2017 quashing the sale notice on the ground that the Bank had not issued any fresh possession notice after 28.02.2017. The respondent- Bank issued again possession notice and the same was

published in the newspapers, which was challenged by the appellant nos. 1 to 3 by filing the S.A. No. 333 of 2017. The said S. A. was also allowed with the cost of Rs. 7000/- by the Tribunal below vide order dated 19.07.2017 holding the possession notice to be defective.

4. Subsequently, the possession notice dated 17.08.2017 under section 13(4) of the SARFAESI Act was again issued by the Bank and the same was also challenged by the appellant nos. 1 to 3 by filing S.A. No. 479 of 2017, which was disposed off vide order dated 25.10.2017 on the ground that the Bank did not proceed further as the same was neither affixed nor published in any newspapers.

5. The respondent-Bank issued a fresh possession notice dated 18.09.2017, which was challenged by the appellants by filing the S.A. No. 535 of 2017. Thereafter, e-auction notice dated 23.10.2018 was issued scheduling the auction of the property on 30.11.2018, which was also challenged by the appellants by way of filing the amendment application. The Tribunal below vide order dated 30.11.2018 dismissed the said S.A. observing that the respondent-Bank has served all the statutory notices, while proceeding against the secured asset in accordance with Law and Rules. The appellants have challenged the said order by filing the appeal before this Tribunal, which is stated to be pending.

6. During the pendency of the aforesaid S.A., the respondent- Bank preferred an application before the District Magistrate, Varanasi under section 14 of the SARFAESI Act, which was allowed vide order dated 16.03.2019 with the direction to the Administrative Authorities for giving the peaceful possession of the property in question. The appellants challenged the said order by filing the S.A. No. 230 of 2019 before the Tribunal below on the ground that no opportunity of hearing was provided by the learned A.D.M.

7. It transpires that the appellants filed a Civil Misc. Writ Petition No. 24442 of 2019 before the Hon’ble High Court, Allahabad stating that the Tribunal below was vacant. The said writ petition was disposed off vide order dated 24.09.2019 with the direction that till the disposal of interim application, respondent-Bank shall not take possession of the property in question.

8. Pursuant to the order of the Hon’ble High Court, the Tribunal below after hearing the parties had declined the interim relief of the appellants vide order dated 14.11.2019, against which the appellants preferred an Appeal Dy. No. 399 of 2019 before this Tribunal, which was disposed off having become infructuous.

9. The Tribunal below vide impugned order dismissed the S.A. of the appellants holding that a fair opportunity was granted by the learned A.D.M. to the applicants for filing

objection against the application filed by the respondent- bank under section 14 of the SARFAESI Act. However, instead of filing any objection/reply to the application of the respondent-bank, the applicants moved an adjournment application, which was filed only after decision of the application under section 14(i) of the SARFAESI Act on 16.03.2019. Being aggrieved by the said order, the present appeal has been filed by the appellants.

10. Learned counsel for the appellants submitted that before passing the order under section 14 of the SARFAESI Act, the DM/ADM is required to give an opportunity of hearing to the borrower, but in the present case, the ADM has not provided the reasonable opportunity to the borrower to file objection before him. A prayer was made on behalf of the appellants seeking time to file objection, but without providing opportunity, the matter was decided. Thus, it was virtually an ex-parte order. Therefore, one more opportunity be given to the appellants to file their objection before the ADM, so that they may submit their defence in right perspective. The order without giving proper opportunity of hearing caused prejudice to the appellants. Hence, the matter be demanded back to the ADM for hearing afresh. To buttress his arguments, the learned counsel has referred a judgment passed by the Hon’ble Supreme Court in Kajaria Iron Castings Ltd. Vs. Ashwani Kumar More, 2002 (10) SCC 292.

11. On the contrary, the leaned counsel for the Bank, while supporting the Judgment of the Tribunal below, has contended that the appellants have not filed their objection despite providing various opportunities. The ADM was required to decide the application within a stipulated period, therefore, no irregularity was caused by the ADM, hence, the appeal is liable to be dismissed.

12. Having heard the learned counsels for the parties and considering the material available on record, it is apparent that the Bank had filed an application before the DM on 11.07.2018. The ADM ordered to issue the notices to the appellants on 05.12.2018 and the vakalatnama was filed on behalf of the appellants on 19.01.2019 before the ADM. The order of the ADM reflects that the last opportunity to file objection was given on 27.02.2019. Yet no objection was filed by the appellants and instead one more opportunity was sought on 06.03.2019, when one of the appellants was present in person before the ADM. The arguments were heard on that day and simultaneously, the appellants were also directed to file objection/evidence before 16.03.2019, which was the date fixed for orders. Even on that day, no reply/objection was filed, hence the order was passed by the ADM. Just after passing the order, an application was filed seeking further time for filing of objection. It is, thus, clear that even on the date of the judgment, the appellants have not submitted their

objection and again attempted to seek time to file objection.

13. It is needles to mention that the DM/ADM is required to decide the application as expeditiously as possible within the stipulated period. The proceedings under section 14 are executive in nature and to be decided in summery manner. The procedure of strict compliance of CPC cannot be followed. If a liberal attitude is adopted in such type of proceedings, it would prejudice the right of the secured creditor. In the instant case, as stated above, the vakalatnama was filed on behalf of the appellants on 19.01.2019. Therefore, they were expected to file objection on that day, yet, an opportunity was granted and last being on 27.02.2019. The appellants have failed to avail the opportunity and again sought time on 06.03.2019. The ADM was liberal enough to provide the opportunity to file the objection/evidence even after hearing the arguments, still the appellants did not file any objection and an application was moved that too after passing the impugned order. Thus, the facts of the matter indicate that a reasonable and fair opportunity was granted to the appellants by the ADM, yet the appellants have not filed their objection. It goes to show that they were not interested in filing the objection, rather inclined to prolong the matter under one pretext or the other. Thus, they are not entitled for further opportunity.

14. There is no dispute on the proposition laid down by the Hon’ble Supreme Court in Kajaria Iron Castings Ltd. Vs. Ashwani Kumar More (Supra) that the defendant/litigant be provided a reasonable opportunity for filing of objection/written statement, but the said judgment does not render any assistance to the appellants. In that case, the opportunity was closed in Civil Suit, wherein the Hon’ble Supreme Court granted one more opportunity, but in the instant case, the matter relates to the SARFAESI proceedings, wherein the summery trial is expected at every stage of the litigation. Moreover, ample opportunities, as stated above, have been given to the appellants by the ADM. If a further latitude is granted, it would amount to abuse of process of law and would prejudicially affect the rights of the secured creditor.

15. In view of the above, there is no infirmity/illegality in the impugned order and the appeal is liable to be dismissed being devoid of merits.

16. Accordingly, the appeal is dismissed with no order as to costs.

17. A copy of this judgment be sent to the parties as well as the DRT concerned and be also uploaded in the E-DRT portal. CHAIRPERSON Date: 29.12.2020

VN Giri