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IN THE DEBTS RECOVERY TRIBLTNAL LUCKNOW
Present: A. H. Khan, Presiding Officer Date of order 16-06-2022
S.A. No.33 of 2021
Present:-
Counsel for the applicant
\!r.\ajiv Saran Counsel for the bank
Mr,Vinay Shanker Counsel for Auction Purchaser
Mr.Shashank Shukla
1. Final arguments were heard on 07-06-2022 and case was reservecl for pronouncement of orders.
2. The applicant has filed the present SA on 15-01 -2021praying to quash the entire auction/sale proceeding in pursuance of notice dtd.11-11-20 and ll-12-20 and to direct the opposite parties not to confirm the auction and issue sale certificate in favour of any person.
3. The case of the applicant, in brief, is thathe had availed credit facility from respondent bank and had mortgaged the subject properties to secure the same. That due to illness and improper functioning of business, he could not rnaintain account satisfactorily and account was declared as NPA. That bank issued demand notice dtd.22-04-19 u/s 13 (2) of sAMAESI Act to which applicant submitted its representation before competent authority and also deposited an amount of Rs.41.80 Lacs till 14-02-20. That bank never served possession notice on applicant and had also filed a case u/s 14 SARFAESI Act before DM, Shravasti for taking physical possession of the secured asset and the said case has been decided in favour of bank vide order dtd.16-01-20 passed by DM. That bank had filed application u/s 14 SAMAESI Act befbre DM, Bahraich for taking physical possession of remaining mortgaged property. That bank has taken possession of the property without serving any notice and had also not published the said possession notice in newspaper and had also not affixed the same. That bank had issued sale notice dtd.l l-ll-20 despite the fact that proceeding before DM are still pending. That applicant had also submitted OTS proposal on 04-12-20 but without considering the same, bank had issued sale notice dtd.ll-12-20 fixing the auction on 28-12-20. That bank had not issued any clear 30 days sale notice in r/o movable assets and had sold the properties. That applicant had filed rvrit petition NO.4(IWB) of 2021before Hon'ble High Court which was dismissed vide order dtd.05-01-21 for want of statutory alternate remedy. That applicant has no knowledge regarding auction proceedings scheduled on 09-12-20 and 28-12-20 and when some amount was credited in the loan account, a message came in applicant's mobile. That bank had sold the
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property at a throw away price without obtaining any valuation report as required under the SARFAESI Act.
4. Bank had filed its counter affidavit on29-10-21wherein it is stated that the SA is not maintainable as no Board Resolution of the company has been filed by the applicant and the SA filed by an unauthorised person is liable to be dismissed. That account of the applicant was classified as NpA on 19-04-19 and thereafter demand notice dtd,.22-04-19 was served upon applicants however no further measures were taken by bank during lockdorvn period and applicant failed to deposit the dues ofthe bank. That possession notice dtd.26-06-19 was issued for all the mortgaged properties to all borrowers including the applicant and was also affixed on secured assets as well as published in newspapers. That bank has taken physical possession of the properties in accordance with law in compliance of order dtd.16-01-20 passed by DM u/s 4 SARFAESI Act and has also obtained valuation report before putting the properties to sale. That earlier sale notice dtd.24-09-19 and 16-12-19 could not materialize for want of bids and therefore 3'd sale notice dtd.l 1-11-20 was issued fixing date of auction as 09-12-20 and the said sale notice was personally received by Shri.Rohit Kumar under his signature. The said sale notice was also affixed on secured asset and also published in newspaper. In the auction held on 09-12-20, two properties were auctioned in favour of highest bidder and after receiving full sale amount, sale certificate was issued on 24-12-20 and possession was also handed over. That no OTS proposal was ever submitted by applicant and therefore there is no question of considering the same. That for the remaining three properties, bank again issued sale notice on ll-12-20 fixing the auction on 28-12-20 and the said sale notice was again personally received by Mr.Rohit Kumar. The sale notice dtd.ll-12-20 was also affixed on secured asset and published in trvo newspapers also. That all the three properties were sold out in the auction held on 28-12-20 and since highest bidders have deposited the entire sale amount, sale certificates were issued by the bank and physical possession of the said properties has also been delivered to them. That the right of redemption is available to the before issuance of sale notice but in the present case, the entire sale proceedings have been concluded. That there is no illegality in the action of the bank and all mandatory provisions of SARFAESI Act and rules made thereunder have been duly followed by the bank.
5. Duly considered submissions and perused the records. Counsel tbr the applicant and auction purchasers have filed written arguments which are on record.
6. Perusal of Para 7 Relief Clause reveals that applicant has not challenged demand notice and possession notice and had only praved to quash the entire auctiorVsale proceeding in pursuance of notice dtd. l1-11-10 and 11-12-20. It is seen that before putting the properties to sale, bank had 0 --(-
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obtained valuation report dtd.17-06-20 (Annex.cA-3) from approved valuer. Perusal of Annex.cA-4 reveals that notice for sale dtd.rl-il-20 (page 66 to
68) was received by Mr.Rohit Kumar personally by putting his signature. The said Mr.Rohit Kumar is the authorised signatory of the Applicant company by virt,e of Board Resolution dtd,.r2-or-2r filed at page 4gA of the SA. The said sale notice was affixed on the secured asset (page 69 to 77 ) and was also published in newspaper (page 7g to g0) of Annex.cA-4 filed by the bank alongwith counter affidavit. Thereafter bank had issued notice fbr sale on ll-12-20 (Annex.CA-6 page g2 & g3) which was sent to applicant vide postal receipt dtd.rr-r2-2} (page g4) and the same was affixed on secured asset (Page 85 to 93) and was also pubrished in two newspapers (Page 94 to 96) of Annex.CA-4.
7. with regard to sale notice dtd.ll-lr-2O the only contention of the applicant in the SA is that despite proceeding pending before DM, bank had issued the sale notice dtd.lr-11-20. The said sale notice dtd.1l-11-20 was personally received by the authorised person of the Applicant company who has filed the present SA also by virtue of Board Resolution passed in his favour. Further, sale notice dtd.l l-11-20 was affixed on secured asset and was also published on l3-l l-20. Thus, there is no dispute with regard to sale notice dtd.ll-ll-20 and it has to be held that bank had followed all the mandatory provisions of SARFAESI Act and there is no illegality in the action of the bank in conducting the auction on 09-12-20 pursuant to sale notice dtd.l l-11-20 and accordingly challange to the same is dismissed beino devoid of merits and substance.
8. with regard to Sale notice dtd.ll-r2-zo, the main contention of the counsel for applicant is that in the publication of sale notice dtd.l5-12-20 made by the bank, no clear 15 day's time has been given to the applicant and therefore the sale is bad in law. He has relied on the judgment passed by Hon'ble High court of Kerala in the case of E.K.Rajan vs. Ao, canara bank and stated that clear 15 days notice was required to be given by the bank before putting the property to sale. perusal of the said judgment and other judgments relied by the applicant reveals that the facts ofthe present case are different from the said cases. In the present case, Sale notice dtd.lr-12-20 has been personally received by the authorised person of the Applicant company who has filed the present sA also by virtue of Board Resolution passed in his favour. The said sale notice dtd.ll-12-20 was duly affixed on secured asset and was also published in the newspapers.
9. Hon'ble Supreme Coun in the case of tWs L&T Housing Finance Ltd. vs. Irzlls Trishul Developers - Civil Appeal No.34l3 of 2020 vide judgment dtd.27-10-20 has held as under :-
Para 18 - It may be relevant to note that the respondents (borrower) did not deny advancement of loan, execution of facility agreement, their
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liability and compliance of the procedure being followed by the secured creditor (appellant) prescribed under the SARFAESI Act. Para 19 - In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of SAMAESI Act by secured creditor, in our considered opinion, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudice if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions. Para 20 - Adverting to facts of the instant case, we are of the view that the objection raised by the respondents was trivial and technical in nature and the appellant (secured creditor) has complied with the procedure prescribed under the SAMAESI Act.
10. In the case of ARCE polymers pvt. Ltd. vs. iws Alphine Pharmaceuticals Pvt. Ltd. the Hon'ble Supreme Court vide its judgment dtd.03-12-21 in Para 18 has held that "...........The bank proceeded with the auctions under SARAESI Act on 28-03-18 and 14-06-18. The borrowers then kept silent. As the earlier auctions failed the bank issued notice dtd. 20-08- 19 informing the borrower about the 4th auction to be held on I I -09- I g at a reduced reserve price. The borrower challenged the action taken by the bank after the subject property had changed hands and 3d par1.. interest had been created. Taking into consideration the entire facts of the case, rvhich perspicuously reflect disingenuous conduct on the part of the borroyer ro gain indulgence, un fulfilled assurances and promises, their unwillingness ro pay, and in the light of the law laid down by this Court, we are of the view that the borrower has waived and is estopped from challenging violation of Sec.13(3A) of the SARFAESI Act and hence the first issue is decided in favour of the bank....."
1 1. In the case of AO, Bank of Baroda Vs. IWs ARIT Solutions pvt. Ltd., Hon'ble DRAT, Allahabad vide its judgment dtd. 14-09-20 in para 19 has held as under :-
"Para19- It is also to be seen that the auction purchaser has deposited the entire sale price and the sale Certificate has been issued, thus a
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principle laid down by the Hon'ble Allahabad High Court in Rafeeq Ahemd Vs. State of U.P. & Ors. AIR 1999 Allahabad272. lnthe said judgment, the Hon'ble High Court has held that if the borrowers/guarantors are not interested in repayment of the loan, they should not be permitted to play with the procedure of law. Further, the Hon'ble Punjab & Haryana High Court in the case of M/s National rice and General Mills & Ors. Vs. Bank of India & Ors., AIR 2009 P&H 129 has held that if any minor irregularities or error occurred in the process and those do not go to the root cause of the case and had not resulted in any loss to the borrowers, are to be ignored, particularly when they have never shown their inclination to pay the dues with interest."
12. In view of above settled position of law, I do not find any illegalityin the action of the bank in proceeding with the auction ot28-12-20 pursuant to sale notice dtd.11-12-20 and therefore challange to the same is dismissed being devoid of merits and substance.
13. There being no other issue for adjudication, the presentSA stands finally disposed of.
File be consigned to record roorn.
(A.,H. Khan)
Presiding OfficeL