MD. KAYAM vs KARNATAKA BANK LIMITED on 7 August 2026

**IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

HON'BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

CHAIRPERSON

CAMP COURT AT DRT, CUTTACK**

**Appeal Dy. No. 772 of 2025

(Arising out of SA No.-44/2022(Cuttack))**

Order No.12

07.08.2026

Md. Kayam .....Appellant

-Vs-

Karnataka Bank Limited

... Respondents

Mr. Tuna Sahu, Learned Counsel for the Appellant Mr. Anirban Pramanick for the Respondent Bank **THE APPELLATE TRIBUNAL :**

Heard learned Counsel for the appellant and the Respondent Bank and perused the record.

2. Instant Appeal has been preferred against the judgment and order dated 24/06/2025 passed by the learned DRT, Cuttack in SA No.44/2022 whereby the learned DRT allowed the SA and cancelled the sale notice dated 21/07/2022. The operative order and the impugned judgment reads as under:- ***"In the result, S.A. No.44 of 2022 filed by the applicant is hereby allowed and possession notice under Section 13(4) dated 08.02.2022 and so also sale notice dated 21.07.2022 are hereby quashed. Respondent Bank is directed to refund the amount deposited by the auction purchaser(Respondent No.4) along with interest @7% within 30 days from the date of this order. Applicant is directed to deposit the auction amount of Rs.43,93,000/- deposited by the Respondent No.4 along with interest @7% with the Respondent Bank within 30 days from the date of this order so as to enable the Respondent Bank to refund the said auction amount along with interest. Registry is directed to return the DDs of 44.00 lakhs lying before the Registry to the applicant within 15 days***

**from the date of this order so as to enable the applicant to deposit the auction amount with interest@7% p.a.**

**Since the main SA is disposed of, hence all the IAs, pending, if any, stands disposed of and interim order, if any, stands vacated.**

**Let a copy of this order be supplied to the parties forthwith as per rules.**

**Let the file of SA No.44 of 2022 be consigned to the record room.**

**This order is dictated and corrected by me and pronounced in the open Court under my signature, this the 24^th day of June, 2025."**

**3.** At the very outset learned Counsel for the appellant submits that the appellant is the alleged guarantor/mortgagor who preferred the SA No.44/2022 filed under Section 17 of the SARFAESI Act challenging the possession notice and also to quash the sale notice dated 21/07/2022. The order passed by the learned District Magistrate under Section 14 dated 21/09/2022 on certain grounds. SA was opposed by the Bank on different grounds. Learned DRT framed four issues as under:-

- (i) Whether the security interest has been created by the applicant in favour of the Respondent Bank over Schedule A property?

- (ii) Whether the Respondent Bank has violated the provisions under Rule 8(1) and 8(2) of the SARFAESI Act & Rules?

- (iii) Whether the Respondent Bank has violated Rule 8(6) of the Security Interest(Enforcement), Rules, 2002?

- (iv) Whether the valuation of the property has been made properly before fixing the reserve price?

**4.** Learned DRT recorded the finding that the equitable mortgage was created by the applicant in favour of the bank over the schedule A property for the loan availed by M/s Taj Cotton. In issue No.2 finding was recorded that there was violation of Rule 8(1) of the Rules although Rule 8(2) is complied by the Bank. In issue No.3 it was

recorded that in notice under Rule 8(6) clear 30 days notice have not been given. In issue No.4 it was held that the property was not properly valued. Accordingly learned DRT allowed the Securitization Application.

5. Learned Counsel for the appellant would submit that the appellant is simply challenged the impugned judgment only on the point that while passing the order the learned DRT directed the applicant to deposit the auction amount of Rs.43,93,000/- along with interest @7% so that same may be paid by the Bank to the auction purchaser. Learned Counsel would submit that when the mandatory provisions of the Act and Rules are not complied by the Bank and the sale notice as well as measures taken under Section 13(4) was set aside by the learned DRT due to lapses committed by the Bank than the appellant cannot be put to a condition that he should deposit 7% interest on the auction amount. It would further be submitted that the impugned judgment was not challenged by the Bank.

6. On the contrary learned Counsel for the Respondent Bank submits that the appellant has not complied the order of the learned DRT directing payment of the amount by the appellant to the bank and the learned DRT has rightly imposed 7% interest upon the appellant.

7. Undisputedly the impugned order is not challenged by the Bank or the auction purchaser and accordingly attained finality. Now only it is to be looked into whether the appellant can be saddled with the liability to pay interest @7% on the amount of Rs.43,93,000/- which would be paid to the auction purchaser by the Bank? When the SA was allowed due to the faults for non-compliance of the mandatory provisions and Rules by the Bank than there was no question of imposition of condition on the appellant to pay interest @7% on the amount of Rs.43,93,000/-. Since the action of the Bank was set aside for the lapses committed by the Bank itself the appellant cannot be saddled with the liability of payment any interest. Accordingly that portion of the impugned judgment is liable to be set aside. Further the amount of Rs.44,00,000/- is still not withdrawn by the appellant from

the Registry of the DRT. Accordingly amount of Rs.43,93,000/- should be directed to be remitted to the Bank by the Registry in compliance of the impugned order. Rest of the amount shall be refunded to the appellant by the Registry of the DRT.