Shri Pratul Kumar Ghosh vs Ashish Agarwal on 23 December 2020

O R D E R

This appeal impugns the order of the learned Presiding Officer, DRT, Guwahati made in S.A No. 25 of 2020. There are two applicants in the S.A and the 1st applicant in the S.A is the proprietor of the 2nd applicant, which is an advertisement company. The 1st applicant being the proprietor of the 2nd applicant company approached the 2nd Respondent Bank for a Cash Credit Facility of Rs.30 lakhs in the year 2015 and the Bank sanctioned the amount. The first applicant executed the necessary documents and also created a mortgage of the land belonging to him and availed the Cash Credit Facility.

2. After a while, the account became irregular and the interest alone was being serviced. The appellant failed to regularize the loan account and the said loan account was classified as a “NPA” on 31.03.2019. The 1st Respondent Bank initiated proceedings under the SARFAESI Act by the issuance of necessary notices and in the process physical possession of the property was taken and thereafter the property was sold by an e-auction by Respondent No.4, who is the Authorized Officer of the Respondent No.2 Bank. Respondent No.1 was the successful bidder in the e-auction and the Sale certificate was duly issued to him. The sale of the property through e-auction fetched a sum of Rs.1,01,37,875/- to the bank. Thereafter the appellants filed the S.A setting out their contentions in detail before the Tribunal below and they had made several prayers, which are reproduced below: - “ (i)That the measures purportedly taken under Section 13(4) of the SARFAESI Act, 2002 by taking possession of the mortgaged property of the Applicant No.1 by the defendant Bank in general and the defendant No.4 in particular are illegal, arbitrary and in clear violation of statutory provisions;

(ii) That the e-Auction dated 29.07.2020 conducted by the defendant bank and the Sale Certificate dated 05.08.2020 issued by the defendant bank is illegal, in operative and void ab initio;

(iii) That the possession notice dated 06.12.2019 issued by the defendant bank purportedly under section 13(4) of the SARFAESI Act are liable to be set aside and quashed for not confirming the mandatory provisions as laid down under Section 8(1) and (2) of the SARFAESI Rules, 2002;

(iv) That the defendant bank and more specifically the defendant No. 3 and 4 to accept the demand draft of the Applicant No.1 as a legal tender towards his outstanding balance and close his loan account;(

(v) That the taking of the physical possession of the immovable property purportedly taken by the defendant No.3 and 4 purportedly under Section 13(4) of the SARFAESI Act, 2002 being ex-facie illegal and in violation of the statutory provisions, the defendants in general and the defendant no.3 in particular are liable to re deliver/restore the moveable and immovable property to the Applicants;

(vi) That the second asset, if attached, under Section 13(4) of the SARFAESI Act, 2002 by violating the procedure in the Security Interest (Enforcement) Rules, 2002 and acting behind the back of the Applicant is prima facie illegal and is an abuse of unfettered power and authority conferred by the stringent provisions of the SARFAESI Act, 2002 in total violation of the Security Interest (Enforcement) Rules, 2002;

(vii) That the process followed by the defendant bank of taking over possession of the mortgaged property by the defendant bank is illegal and in total violation of the Security Interest (Enforcement) Rules, 2002

(viii) That a direction to the defendant bank and more specifically the defendant No. 3 and 4 to release the mortgaged property of the Applicant;

(ix) For granting adequate compensation to the Applicants as per Section 19 of the SARFAESI Act, 2002;

(x) That the possession of secured assets by the defendant bank is not in provision of the SARFAESI Act and the Rules framed there under and to direct the defendant bank to return and to hand over the physical possession of such secured mortgaged property as described in Schedule to the concerned Applicant as per provision laid down under Section 19 of the SARFAESI Act;

(xi) That a direction to the defendant No.3 and 4 to refund the defendant No.1 the money paid by him for the purported purchase of the mortgaged property as described in Schedule through the e-Auction dated 29.07.2020”

3. Learned counsel for the appellant took this Tribunal through the facts of this case and also through the provisions of the SARFAESI Act. Learned counsel added that the Authorised Officer has contravened the provisions of SARFAESI Act and further that the sale in this case is required to be set aside. Learned Counsel stated that the SA is well within the limitation and that the appellants’ claim for redemption of the propertyand setting aside the sale is proper and ought to have been allowed by the tribunal below and further that the order of the learned Presiding Officer is erroneous and is liable to be set aside. Learned counsel relied upon the decisions in the following cases in support of the appellants’ case; a..MANGLESH CHAMPAKLAL GANDHI Versus ADITYA BIRLA FINANCE LTD., LAWS (GJH) 2019-10-10 b Bank of Baroda v. Veena Chandyoke and another Miscellaneous Appeal No. 63 of 2006, DRAT,New Delhi Dt.10.9.2009

c Dwarika Prasad v. State of Uttar Pradesh (2018) 5 SCC 491

4. Learned counsel for the Bank stated that the learned Presiding Officer, DRT, Guwahati has rightly considered the facts and circumstances of the case and that he hascorrectly concluded that the SA warrants only a dismissal and has proceeded to dismiss the same and added that the order in the S.A requires not to be interfered with. Learned Counsel relied upon decisions laid down the following cases in support of secured creditor’s case: -

(1) Mathew Varghese vs. M. Amrita Kumar;’

(2) Shakeena & Anr. Vs. Bank of India;

(3) J. Raju Subramaniyan & Anr. Vs. Pandiyas & Ors.

(4) Sagufa Ahmed vs. Upper Assam Plywood Products Private Limited Learned counsel prayed that the appeal may be dismissed as the findings of the leaned Presiding Officer of DRT, Guwahati are in conformity with law.

5. An analysis of each of the prayers made by the appellant in the SA reveal the following Prayer No.(i). It is revealed that the appellants have statedthat the measures taken under Section 13(4) of the SARFAESI Act with respect to possession of the mortgaged property is illegal. A reading of the order in appeal would reveal that the learned Presiding Officer has found nothing amiss in the proceedings conducted by the Authorized Officer under Section 13(4) of the SARFAESI Act. prayer No.(ii). The appellants have stated that the e-auction dated 29.07.2020 conducted by the Respondent / Bank and the Sale Certificate issued by the Bank are illegal. A reading of page 11 of the order of the tribunal below would reveal that the e-auction was conducted in a proper manner and that the Sale Certificate was also issued properly. Prayer No.(iii). The appellant has stated that the issuance of the possession notice dated 06.12.2019 is not conformity with the Rules. A reading of page 5 of the order reveals that the Authorized Officer has correctly followed the Rules.

Prayer No.(iv).

The appellants have stated that the Bank had refused to receive the Demand Draft given by the appellant for closing his loan account. The Bank has rightly refused to accept the draft as the same cannot be received as per the provisions of the SARFEASI Act. Prayer No.(v). It is revealed that the appellants have that stated the measures taken under Section 13(4) of the SARFAESI Act with respect to possession of the mortgaged property is illegal. A reading of the order under appeal would reveal that the learned Presiding Officer has found nothing amiss in the proceedings conducted by the Authorized Officer under Section 13(4) of the SARFAESI Act. Prayer No.(vi). The appellants have stated that the Bank had abused its powers. A reading of the judgment of the learned Presiding Officer would reveal neither the Bank nor the Authorized Officer have exceeded the powers conferred upon them under the provisionsof the SARFAESI Act.

Prayer No.(vii). The appellants have stated that the process followed by the Bank for taking over possession of the property is not proper. It is seen that the Authorized Officer has taken possession of the property by following the Rules correctly. Prayer No.(viii). The appellant has prayed for direction to the Bank for releasing his property. It is seen from the order of the learned Presiding Officer that the appellant is not entitled to the release of the property, which had already been sold by an auction under the provisions of SARFAESI Act. Prayer No.(ix) The appellant has asked for compensation and the learned Presiding Officer has rightly not granted any compensation as the facts of the case do not warrant the same. Prayer No.(x) The appellant has once again stated that the possession of the property has been taken by the Bank in violation of the provisions of the SARFAESI Act and has stated that the property should be returned to him. The property cannot be handed over to appellant as the Bank has sold the property as per the provision of SARFAESI Act.

Prayer No.(xi). The appellant has stated that the money paid by the Auction Purchaser for the purchase of the mortgaged property should be refunded to the Auction Purchaser. It can be seen that the Auction has been properly conducted and therefore, the question of a refund of the auction amount does not at all arise. .6. An analysis of the contentions of the appellantsand the several prayers made by them indicate that the appellants want a redelivery of the property which had already been sold under the provisions of the SARFAESI Act.

7. The points that for consideration that arise in this case may be stated as follows:

(1) Whether theRespondent No.4 i.e., the Authorized Officer has conducted the proceedings under the SARFAESI Act in a proper and correct manner?

(2) If not, to what relief are the appellants entitled to? Point No.1.

Learned Presiding Officer, DRT, Guwahati has in his order culled out the pleas of the appellants and it may be set out as seen below: - (a) The appellants have pleaded that they have a right over their property and that they are entitled to redeem the property after the auction sale is over as the registration of the sale Certificate has not been completed.

(b) The appellants have submitted that 30 days clear notice has not been given for the auction sale by the Authorised Officer.

(c) The appellants have stated that the secured asset has been undervalued and sold at a throwaway price and therefore, the e- auction conducted by the Authorized Officer should be nullified.

8. A redemption of the property, which has been mortgaged to the Bank, is permitted under Section 13(8) of the SARFAESI Act and no redemption is possible over and above the mandate of the said section of law. The appellants have chosen not to seek a redemption of the property within the time frame afforded to them under Section 13(8) of the SARFAESI Act and therefore, a redemption of the property cannot now be envisaged. The appellants’ contention that a clear notice of 30 days is required to be given for the sale has been met out by the Authorized Officer and the order of learned Presiding Officer establishes the same. The appellants have stated that the e action should be nullified. The learned Presiding Officer, DRT, Guwahati has found nothing amiss in the proceedings of the Authorized Officer under the provision of SARFAESI Act and the Rules made there under and a reading of the order would reveal the same and when the proceedings of the Authorized Officer are flawless the Tribunal below could not have ventured to nullify the sale. It is seen from the above that the learned Presiding Officer has correctly considered the case of the appellants and has rightly applied the provisions of the SARFAESI Act and has come to inescapable conclusion that the S.A filed by the appellant is unworthy of consideration warranting only a dismissal. Further a combined reading of the prayers made in paragraphs (i) to (xi) of the S.A and the order of the Tribunal below would reveal that no case has been made out by the appellant for grant of prayers (i) to (xi).

9. Therefore, from the above as it is seen that the Authorised Officer has conducted the proceedings in a correct and in a proper manner this Tribunal is driven to answer this point in favour of the bank and against the appellants. Point No. 2 Point No. 1 has been against the appellants and therefore it is answered that the appellants are not entitled to any relief.

10. Point Nos.1 and 2 have been against the appellants and therefore this Tribunal is driven to pass the following order: “The appeal is dismissed. No order as to costs.” File be consigned to record room. (Dictated to the Stenographer, transcribed by him, corrected, signed and pronounced by me on this the 23rd day of December, 2020).

Sd/= (Dr. T. Ravi Shankar) Chairperson