Allowed

Union Bank of India v. Prashant Keshavrao Bansod

DRAT25 Oct 2022IA/67/2022

Case brief

AI extract

What is this about?

The Appellant argued that no separate forfeiture notice was needed as prior communications clarified the forfeiture of the 25% deposit upon default. The Chairperson held that separate notice is not mandated under the Security Interest Rules. The stay application was allowed, and the appeal was posted for hearing.

What did the court decide?

Stay of the impugned order and recovery proceeding initiated by the respondent auction purchaser for refund of the amount with interest is allowed.

Union Bank of India versus Prashant Keshavrao Bansod — Banking and Recovery | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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I. A. No. 67/2022

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Appeal No. 19/2022

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Between

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Union Bank of India. … Appellant/s V/s.

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Mr Prashant Keshavrao Bansod … Respondent/s Mr Nainesh N. Amin, i/b N.N. Amin & Co., Advocate for Appellant.

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-: Order dated: 25/10/2022:-

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I.A. No. 67/2022 the application for a stay of the operation of the impugned order and also to stay the recovery proceeding initiated on the basis of the impugned order.

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The Respondent has remained set ex-parte. Heard the learned counsel appearing for the Appellant. The Appellant impugns the order of the Ld. Presiding Officer, D.R.T, Aurangabad in S.A. No.05/2017 dated 20.08.2019.

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The impugned order has found fault with the Appellant for not having issued a separate notice informing the Respondent auction purchaser about the forfeiture of 25% of the auction price including the EMD on failure to deposit the balance sale price within time. The learned counsel appearing for the Appellant points out that the extension of time to deposit 75% of the balance sale consideration was granted to the auction purchaser twice, and the final date of extension expired on 30.06.2016. It is submitted that in reply to the notice seeking extension submitted by the Respondent, it was adequately made clear by the Appellant that no further extension would be granted and that the 25% of the sale price deposit will stand forfeited in case the balance amount is not paid within the said extended time.

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The Ld. Presiding Officer had allowed the application on the premise that separate notice of forfeiture was not served before appropriating the amount. A reading of Rule 9 (4) and Rule 9 (5) of the Security Interest Rules (Enforcement 2002) makes it clear that an extension of time to pay the balance 75% sale consideration could be granted upon agreement in writing between the secured creditor and auction purchaser for a period not exceeding three months. Beyond which further extension cannot be granted. Sub Rule (5) makes it clear that in default of payment within the period mentioned in Sub Rule (4) the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit to the secured creditor all claims to the property or to any part of the sum for which it may be subsequently sold.

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Reading of these Sub Rules to Rule 9 makes it adequately clear there is a separate notice informing the auction purchaser of forfeiting the amount paid as advance need not be served.

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In reply to the extension Application served on the auction purchaser, it is made clear that no further extension would be granted and that the amount paid as advance will have to be forfeited by the auction purchaser in case of default.

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Without considering these aspects the learned Presiding Officer seems to be labouring under the impression that a separate notice of forfeiture is required to be served. The finding prima-facie appears to be erroneous.

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Under the circumstance, the Appellant is entitled to a stay of the impugned order as well as the recovery proceeding initiated by the Respondent auction purchaser for a refund of the amount together with the interest.

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Post on 13.01.2023 for hearing the appeal.

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Sd/Chairperson

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psa-16

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Union Bank of India v. Prashant Keshavrao Bansod

Case brief

What is this about?

What did the court decide?

Union Bank of India v. Prashant Keshavrao Bansod

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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