BANK OF MAHARASTRA vs L MUTHUKUMAR on 29 January 2025

O R D E R

1. MA No.228 of 2024 in SA No. 567 of 2024:- This Petition has been filed u/s. 19(25) of the RDB Act, 1993 by the Petitioners/Defendants Bank No.1 & 2 praying to re-open the SA No. 567 of 2024, which was dismissed on 08.10.24.

2. The Counsel for the Petitioners/Defendants Bank No.1 & 2 have submitted that Respondent/Applicant herein is the Proprietor of M/s. Friendly Agency involves in the poultry farming activity at Kanyakumari. He had availed the Cash Credit Facility for a sum of Rs. 27,50,000/- (Rupees Twenty Seven Lakhs Fifty Thousand only). The one L. Bama stood as the guarantor and offered his securities and deposited his title deeds with the Respondent Bank. The Respondent/Applicant had executed Hypothecation Agreement in favour of the Petitioners/Defendants Bank and thereby he had hypothecated all the Live Stock and Office Machineries. Further, GECL credit facility for a sum of Rs. 4,54,000/- (Rupees Four Lakhs Fifty Four Thousand only) was sanctioned to the Respondent/Applicant during COVID 19 and Cash Credit Facility of the Applicant is restructured into working Capital Term Loan for a sum of Rs. 28,20,115/- and a Funded Interest Term Loan for a sum of Rs. 3,36,000/- was also sanctioned.

Despite, sufficient opportunities, borrower failed to regularize the loan account and hence, the loan account was classified as Non Performing Asset on 25.10.22. Demand Notice was issued on 24.11.22 to the borrower and guarantor and then Possession Notice was also issued on 16.11.23. Thereafter, the impugned Auction Sale Notice was issued on 24.07.2024, challenging the same, Respondent/Applicant filed this present Application. During adjudication, the Tribunal granted an Ad- Interim Stay Order to the Petitioner Bank to proceed with the sale but not to confirm the sale till 05.12.24 pursuant to the Sale Notice dated 24.07.24 subject to the payment of 40% of the entire suit amount of Rs. 42,25,741.56p in 3 equal installments directly to the 2nd Petitioner Bank.

It is further submitted that sale was held and Mr. Vijay, S/o. Thanga Nadar, Kanyakumari District was the successful bidder. But due to the conditional stay granted by the Tribunal, the sale confirmation letter was not issued in favour of the successful bidder. The Respondent had failed to comply with the condition and filed extension Petition which was listed for hearing on 08.10.24, which was allowed. The Counsel for the Petitioner Bank informed the Court that the conditional order was not complied with and sale was also not held for want of bidders and hence, the SA becomes infructuous and requested that SA may be dismissed. Accordingly, SA was dismissed as infructuous on 08.10.2024 itself.

It is further submitted that due to mis-communication from the branch, the Counsel appearing for the Bank had reported that the Sale was not successful and hence, the case was closed as infructuous. Further, it is submitted that the Sale had happened and it is not yet confirmed in favour of the Auction Purchaser as per the Orders of this Hon'ble Tribunal. Further, it is submitted that failure on the part of our advocate is neither willful nor wanton and the same should be condoned. Therefore, it is prayed that this Hon'ble Tribunal may please reopen the SA No. 567 of 2024.

3. On the other hand, Counsel for the Respondent/Applicant has filed Counter Affidavit and vehemently denied the averment of the Petitioners/Defendants Bank as false and the Petitioners are put to strict proof of the same.

The Respondent further submitted that he has availed some credit facilities from the Petitioner Bank and regularly and periodically repaid the borrowed amount. Due to Covid-19 lockdown, his business sustained with huge loss and he could not even run his business in a successful manner. But the Petitioners' Bank hastily initiated action under SARFAESI Act against the security furnished and classified his loan account as NPA on 25.10.2022. And then the Petitioner's Bank issued Sale Notice dated 24.07.24 to the Applicant without following any procedure and auction sale was scheduled on 06.09.24, aggrieved over the same, he has filed this SA No. 567 of 24 and obtained an Ad-Interim Stay order dated 03.09.2024. Due to his financial condition he was unable to comply with the 1st installment and he filed an extension Petition to extend the time for one month to pay the 1st installment. During the course of argument, the Petitioner Counsel stated that Sale was not held for want of bidders, recording the same, the Hon'ble Tribunal closed this Application.

It is further submitted that in these circumstances, the Petitioner Bank filed this present Petition after lapse of 50 days with a mala-fide intention. In fact the Petitioner Bank colluded with the third party and stage managed the auction sale process and created the records and now filed the present petition. Therefore, it is prayed to dismiss the petition.

4. Having heard both the Parties and after perusal of records, it is observed that the Respondent has availed some credit facilities from the Petitioner Bank and failed to repay the loan amount and hence, the loan account has been classified as NPA and the Petitioner Bank initiated SARFAESI Proceedings against the loan account and finally issued the impugned Sale Notice dated 24.07.24 scheduled to be held on 06.09.24. Being aggrieved over the same, the Respondent filed this present SA. The case was coming for hearing before this Tribunal on 03.09.2024, and on the request of the Respondent this Tribunal has granted an Ad-Interim stay Order on the same day itself. The case was adjourned on 05.12.24. In the meantime, the Respondent filed an Advance Hearing Petition on 30.09.24 seeking extension of time to pay the 1st Installment for a period of one month and the case was taken up on 08.10.24 for hearing. During the course of hearing, the Counsel for the Petitioner Bank informed the Court that Sale was not held for want of bidders and requested to dismiss the SA as infructuous. Accordingly, in front of both side counsels SA was dismissed as infructuous on 08.10.24.

Under these circumstances, the Petitioner Bank has filed this Re- open Petition on 27.11.24 U/s. 19(25) of RDB Act, 1993, stating that the Sale had already been taken place and Mr. Vijay, S/o. Thanga Nadar, Kanyakumari District was the successful bidder. But due to the conditional stay granted by the Tribunal, the sale confirmation letter was not issued in favour of the successful bidder. Further, he informed that due to mis-communication from the branch, the counsel appearing for the Bank had reported that the Sale was not successful.

Section 19(25) of RDB Act, 1993 clearly says that "The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice"

On the other hand, the Respondent is vehemently opposed to re- open the SA in his Counter Affidavit.

I also perused the entire documents available on the records and I find that during adjudication of the case, the Counsel for the Petitioner Bank has given the wrong information before the Court that the sale was not held and believing his words the Court had dismissed the SA as infructuous. And, then after the lapse of 50 days, again the Bank has filed the re-open Petition and stated that sale had already been held but not confirmed as per the stay order granted by this Tribunal. However, the Bank did not provide documentary evidences to prove his case. The Bank has failed to file the typeset of papers to prove his averment. However, the

Petitioners have filed this Re-open Petition after lapse of 50 days, which is barred by limitation. So, I am not inclined to allow this Petition.

In view of the above facts and circumstances of the case, I am of the view that there is no valid reason to re-open the SA No. 567 of 2024.

In the result, this petition in MA No.228/2024 stands Dismissed. Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 29th January, 2025. sd/- (SEEMA SINHA)

Dictated & Corrected by me

sd/- (SEEMA SINHA) PRESIDING OFFICER

Typed by me (D. Krishnaveni, PA)

Order uploaded on 30.01.2025