R.Ravichandran vs V Ayyappan on 29 December 2022

ORDER

1. This Appeal is against Order dated 20.05.2022 of DRT-III, Chennai, in SA 87/2022.

2. Brief facts leading to this Appeal are as follows:-

Respondent Nos. 1 and 2 herein filed above referred SA questioning Sale Notice dated 21.12.2021 and consequential sale held on 01.02.2022. Appellant herein is Auction Purchaser, who is Respondent No. 2 in SA, and Respondent No.3 herein is Bank, which is first Respondent in SA 87/2022. Tribunal below, on a consideration of contentions and rival contentions of both parties, held that Sale Notice dated 21.12.2021 is not in accordance with the provisions of SARFAESI Act, and set aside the same and consequential sale held on 01.02.2022; aggrieved by said Order, Auction Purchaser preferred present Appeal.

3. Both parties filed Written Arguments and reiterated the same at the time of oral arguments.

4. Advocate for Appellant submitted that Appellant participated in the auction held on 01.02.2022, and he was declared as a successful bidder for bid amount of Rs.2.52 Crores, and he immediately deposited 64 Lakhs, being 25% of bid amount, on the same day, and 3rd Respondent Bank intimated sale confirmation to Appellant through Letter dated 01.02.2022. It is submitted that Appellant deposited a sum of Rs.10 Lakhs on 10.02.2022, and sought for extension of time, and 3rd Respondent Bank granted extension till 02.03.2022. It is further submitted that Appellant further requested time and 3rd Respondent Bank considered the same, and extended time till 20.03.2022. It is submitted, Auction Purchaser paid, in total, Rs.1.49 Crores till 03.03.2022, and Respondent Nos. 1 and 2 herein, filed Securitisation Application before DRT-III, Chennai, wherein Tribunal below granted interim Order in favour of Respondent Nos. 1 & 2. He further submitted, Auction Purchaser is ready with balance of Rs.1.03 Crores, but

Deputy General Manager of Bank informed Appellant to wait till 31.03.2022, and therefore, Appellant did not pay said amount. He further submitted that as 3rd Respondent Bank did not receive balance amount, due to pending proceedings before DRT-III, Chennai and interim Order, Appellant gave authorization letter to 3rd Respondent Bank to debit and transfer amount from Appellant’s Savings Bank Account and that authorization was given on 01.04.2022. He further submitted that there are no lapses on the part of Auction Purchaser, and balance amount could not be paid due to interim Order, therefore, setting aside sale by Tribunal below, is not at all correct. He further submitted that DRT-III, Chennai, failed to notice that there are absolutely no valid grounds for allowing SA 87/2022. He further submitted that Tribunal below failed to notice that issuance of Sale Notice dated 21.12.2021 is strictly in accordance with the provisions of SARFAESI Act and Rules made there under, and there are no grounds to set aside the same, and further submitted that as Order of Tribunal below is not legal, same is liable to be set

aside, and 3rd Respondent Bank has to be directed to issue Sale Certificate, in favour of Auction Purchaser.

5. Learned Advocate for Respondent Nos. 1 and 2 submitted that property was sold at a very less price, though it is valued around Rs.4.50 Crores, it was sold for Rs.2.52 Crores. He further submitted that Respondent Nos. 1 & 2, who are mortgagers, are entitled to exercise their right of redemption, and accordingly, they paid entire outstanding to 3rd Respondent Bank, therefore, Tribunal below is right in allowing SA. It is further submitted that Sale Notice dated 21.12.2021 is not as per provisions of SARFAESI Act, 2002, and Authorised Officer of 3rd Respondent Bank failed to comply with Rule 8(5) and 8(6) of Security Interest (Enforcement) Rules, 2002 (hereinafter called Rules). He further submitted that Sale Notice is not issued as per Appendix IV-A, and it does not specify the conditions under which property would be sold. It is further submitted Sale Notice was not published in newspaper as required under Rules. It is further submitted

Auction Purchaser has not deposited amount in compliance of Rule 9(4) and 9(5) of Rules, 2002, and considering all these aspects, Tribunal below rightly allowed SA, and there are no grounds to interfere with Order of Tribunal below.

6. Third Respondent Bank adopted the arguments of Respondent Nos. 1 & 2.

7. It is not in dispute that Auction Purchaser has not paid balance sale amount, till 01.04.2022. According to Auction Purchaser, he gave a letter authorizing Bank to adjust the balance amount from his Savings Bank Account. Rule 9(4) of Rules, 2002, contemplates payment of balance bid amount to be paid on or before 15th day of confirmation of sale of immovable property. Admittedly, sale confirmation was on 01.02.2022, therefore, balance bid amount has to be paid on or before 16.02.2022. According to Appellant, he sought for extension of time and 3rd Respondent Bank granted the same. As per Rule 9(4) of Rules, 2002, Authorised Officer can extend

the period as agreed, in writing in between purchaser and Secured Creditor, which shall not exceed three months. Even according to Auction Purchaser, extension in writing was upto 20.03.2022. Auction Purchaser contended that Deputy General Manager was contacted through phone, who asked Appellant to wait till 31.03.2022, in view of interim Order. When a question is put to Advocate for Appellant, who is Authorised Officer in this case?, for which, he submitted that Deputy General Manager is Authorised Officer. But, as seen from correspondence, answer of Advocate for Appellant is not at all correct, because letters for extension were addressed to the Branch Manager, City Union Bank Ltd., Mannargudi Branch. Letter dated 28.02.2022 and Letter dated 14.03.2022 are addressed to Branch Manager only, and even Appellant received replies for those Letters from Authorised Officer, who issued Sale Notice, 13(2) Notice etc. So, from a consolidated reading of these Letters, it can be safely presumed that Branch Manager is the Authorised Officer, but not Deputy General Manager, but Appellant took a defence that he could not pay the balance amount as Deputy General Manager asked him to

wait till 31.03.2022, in view of interim Order. As already referred to above, Rule 9(4) of Rules, 2002, contemplates extension, only in writing between purchaser and Secured Creditor, but not an oral request. Even in Letter dated 01.04.2022, for adjustment of money is also addressed to Deputy General Manager, but as per Rules, balance amount has to be paid to Authorised Officer, and as per Rule 9(5) of Rules, 2002, if there is any default, 25% has to be forfeited, and it also indicates, a default purchaser shall forfeit all claim to the property. So, if a strict interpretation is given to Rule 9(5) of Rules, 2002, when Auction Purchaser has not paid balance bid amount within stipulated time, he has to forfeit right over property, therefore, his request to direct 3rd Respondent Bank to issue Sale Certificate is absolutely untenable.

8. As rightly pointed out by Learned Advocate for Respondents, Appellant has no vested right, and when Bank permitted borrower to redeem, Appellant, being Auction

Purchaser, cannot object for it. In fact, Tribunal below, directed 3rd Respondent Bank to refund the money received from Auction Purchaser with interest, with a direction to collect interest amount from borrowers. Both Bank and borrowers have not challenged that direction, and on a scrutiny of material, such direction of Tribunal below is most appropriate in protecting interest of all parties.

9. On a scrutiny of entire material, I am of the considered view that, Tribunal below is absolutely right in setting aside Sale Notice and consequential sale, and there are absolutely no grounds to interfere with Order of Tribunal below.

10. For these reasons, it is held that Appeal is devoid of merits and liable to be dismissed.

11. In the result, Appeal RA (SA) 21/2022 is dismissed. Parties shall bear their own costs. All pending IAs, if any, stand closed.

[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 29th of December, 2022]

Sd/- [Justice S. Ravi Kumar] CHAIRPERSON