Dismissed

Sabu Varghese George v. Authorized Officer Housing Development Finance Corporation Ltd.

DRAT2 Aug 2022REGULAR APPEAL/13/2021

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed an appeal challenging the Debt Recovery Tribunal's order enforcing a secured asset sale. The Tribunal held that the notice requirements were satisfied as the appellant had information of the sale, and the appellant was estopped from complaining due to his failure to utilize redemption opportunities despite prior chances to pay.

What did the court decide?

The appeal RA (SA) 13/2021 was dismissed with no order as to costs, and all pending IAs stood closed.

Sabu Varghese George versus Authorized Officer Housing… — Banking and Recovery | DRAT (2022)

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RA (SA) 13/2021

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 4^th of August, 2022

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar

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CHAIRPERSON

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RA (SA) 13/2021

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[TSA No.909/2016 (SA 378/2015) on the file of DRT-II, Ernakulam]

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Between

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Sabu Varghese George, S/o George, Thundiyil, House No.75, Maithri Nagar, Kaottarakkara,

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Now residing at Shouran General Contracting, Post Box No.243, Dammam, 31411, Soudi Arabia,

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Rep. by Power of Attorney Holder, Bindu Thomas, W/o. Sabu Varghese George,

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Residing at Mini Villa, Channappetta P.O., Kollam – 691 311.

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……Appellant

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And

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Authorised Officer, Housing Development Finance Corporation Ltd., HDFC House, Vazhuthacaud, P.B. No. 2288, Thiruvananthapuram – 695 010.

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RA (SA) 13/2021

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Housing Development Finance Corporation Ltd., HDFC House, Vazhuthacaud, P.B. No. 2288, Thiruvananthapuram – 695 010. Rep. by its Deputy Manager.

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A.S. Govind, S/o Dr. M. Ayyappan, Sreeprasadam, Thamarakulam Lane, Sasthamangalam, Thiruvananthapuram – 695 010

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Now residing at Flat No.104, Building No.484, Behind Zulekha Hospital, Al Nahada 3, Dubai, Dubai, UAE.

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….. Respondents

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Counsel for Appellant : Mr. M. Balaji & Mr. Liza P. Cherian Counsel for R 1 & 2 : Mr. K. J. Parthasarathy & Mr. B. Rajesh Counsel for R 3 : Mr. Sunder Mohan

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ORDER

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This Appeal is against Order dated 07.09.2018 in

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TSA 909/2016 ( SA 378/2015) filed before DRT-II, Ernakulam.

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Brief facts leading to this Appeal are as follows:-

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Appellant herein filed above referred Securitisation Application challenging action of Respondent Nos. 1 & 2 Bank [hereinafter referred to as ‘Respondents’] initiated under

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RA (SA) 13/2021

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SARFAESI Act, 2002. Appellant herein mainly questioned the action of Respondents on two grounds; first ground is that Appellant did not receive Sale Notice under Rule 8 (6) of Security Interest (Enforcement) Rules, 2002 [hereinafter referred to as Rules, 2002] and second ground is that property was sold at a meager price and valuation taken for reserve price is deliberately undervalued. On the other hand, Respondents contended that they followed the provisions of SARFAESI Act and Rules made thereunder strictly, and Notices as required under Rules were duly sent, and Appellant has full knowledge about the sale. Respondents further contended that valuation of property was obtained on 11.04.2015 from an approved Valuer and fixed reserve price on the basis of minimum value fixed by Valuer. On a consideration of contention and rival contention, Tribunal below dismissed the Application, aggrieved by which, present Appeal is preferred.

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Both Appellant and Respondent Nos.1 & 2 Bank filed Written Arguments and reiterated the same at the time of oral

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submissions.

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RA (SA) 13/2021

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Advocate for Appellant submitted that Tribunal below erred

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in not considering the fact that Appellant paid entire outstanding amount to Respondents. It is further submitted that Appellant, who was residing abroad at relevant point of time, was not served with Sale Notice as required under Rule 8(6) of Rules, 2002. It is submitted that 1^st Respondent deliberately sent Sale Notice to local address knowing fully well that Appellant is residing abroad. It is further submitted that valuation at the time of availing loan is higher than the valuation obtained in the year 2015, and Authorised Officer of Respondent Bank deliberately obtained valuation certificate for a lesser value. It is submitted that property worth Rs.1.50 Crores was sold for a sum of Rs.44,10,012/- and as Appellant has paid back entire outstanding of Rs.37,44,353/- to Respondents, Order of Tribunal below is to be set aside.

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On the other hand, Advocate for Respondents submitted that Secured Creditor caused Notices in compliance of Rules 8 & 9 of Rules, 2002, and proof of service is produced before Tribunal

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RA (SA) 13/2021

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below, considering the same, objection of Appellant is overruled. It is submitted, Appellant contended that he was residing in abroad and no Notice was served on him, but Secured Creditor sent Notices to the Address available with Secured Creditor, which are shown in Section 13(2) Notice dated 18.08.2014, and Appellant challenged that Notice before Hon’ble High Court of Kerala, wherein the same address as indicated in Section 13(2) Notice is shown in Writ Petition. It is submitted that Appellant never intimated Secured Creditor about shift of his residence to abroad, therefore, the contention of Appellant is not tenable. It is further submitted that Appellant was given ample opportunity to retrieve the mortgage property even after conclusion of sale, but Appellant

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failed to utilize the same, and now it is not open to Appellant to contend that he paid the entire amount. It is further submitted that there is absolutely no illegality or infirmity in Valuation Report, on the basis of which reserve price was fixed, and Appellant managed to obtain Valuation Report long after the sale, only to suit his contention. It is submitted Tribunal below rightly

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dismissed Application and that there are no grounds to interfere with Order of Tribunal below. It is further submitted that under

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RA (SA) 13/2021

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the principle of equitable estoppel , Appellant has no right to complain of any violation, and to support his arguments, he placed reliance on judgement of Hon’ble Supreme Court in Arce

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Polymers Private Limited vs. Alphine Pharmaceuticals Private

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Limited and Others, reported in (2022) 2 SCC 221 .

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As already referred to above, Appellant mainly challenged the action of Respondents on two grounds. First ground contended is that Appellant did not receive Sale Notice under Rule 8 (6) of Rules, 2002. According to this Rule, a 30 days’ notice is contemplated. According to Respondents, Sale Notice was sent to Appellant to both his address and also under e-mail, and published in two dailies, one in English ‘Hindu’ and another in vernacular ‘Mangalam’. Respondents produced proof in support of this contention, and taking that evidence into consideration, Tribunal below overruled the objection of Appellant. From pleadings in Securitisation Application, it is clear that wife of Appellant approached Bank on 12.08.2015 and that she came to know about sale that was proposed to take place on 17.08.2015.

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If really, Appellant has not received Sale Notice, then, in what

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RA (SA) 13/2021

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connection wife of Appellant visited Bank on 12.08.2015, is nowhere explained. Normally, Notice to party is for the purpose of knowledge or information. When Appellant has got information, even five days prior to sale, he cannot complain that he has no notice of it. Tribunal below considered this aspect and overruled the contention of Appellant. I do not find any wrong in the approach of Tribunal below, and in fact, Learned Presiding Officer rightly overruled the objection by taking into consideration the facts and circumstances. So, first ground of Appellant cannot be sustained.

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Second ground of Appellant is that property is undervalued. From the record, it is clear that Respondents obtained Valuation Report and Authorised Officer of Respondent Bank fixed upset price on the basis of Valuation Report dated 11.04.2015, wherein three kinds of value are given. Out of three values, Authorised Officer took the minimum value, and fixed the reserve price. As already referred to above, sale was on 17.08.2015 and Valuation Report is about 4 months prior to sale, Authorised Officer has rightly taken that report into consideration. After the sale,

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RA (SA) 13/2021

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Appellant made a request to Tribunal below to give an opportunity to redeem the property, for which, Tribunal below sympathetically considered and directed Appellant to deposit Rs.15 Lakhs by 01.10.2015 in a no lien account with Respondent Bank and balance amount within one month thereafter. Tribunal below directed Respondents 1 & 2 to defer from registering Sale Certificate to enable Appellant to comply with the direction issued on 30.09.2015. Appellant, only deposited Rs.15 Lakhs, thereafter,

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did not remit the balance amount, but filed Application seeking extension of time, which Tribunal below rightly refused.

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As seen from record, Appellant challenged 13(2) Notice before Hon’ble High Court of Kerala in WP (C ) No. 27478/2014, wherein Hon’ble High Court by Order dated 28.10.2014 directed Appellant to remit the overdue defaulted amount in five equal monthly instalments commencing from 15.11.2014, to be effected on or before 15^th of every succeeding months, and in default, Secured Creditor can proceed further. But, Appellant failed to comply with said directions of Hon’ble High Court of Kerala, which ultimately resulted in proceeding further. So, in the initial stage, Hon’ble

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RA (SA) 13/2021

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High Court of Kerala gave an opportunity to Appellant to pay money in instalments, which was not utilized, and at final stage, Tribunal below gave opportunity to pay the amount in two instalments for retrieving property and that opportunity was also not availed fully.

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In the decision relied on by Respondents, Hon’ble Supreme Court observed as follows:-

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16………………………….

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17. It is correct that waiver being an intentional relinquishment is not to be inferred by mere failure to take action, but the present case is of repeated positive acts post the notices under Sections 13(2) and (4) of the SARFAESI Act. Not only did the Borrower not question or object to the action of the Bank, but it by express and deliberate conduct had asked the Bank to compromise its position and alter the contractual terms. The Borrower wrote repeated request letters for restructuring of loans, which prayers were considered by the Bank by giving indulgence, time and opportunities. The Borrower, aware and conscious of its rights, chose to abandon the statutory claim and took its chance and even procured

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RA (SA) 13/2021

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favourable decisions. Even if we are to assume that the Borrower did not waive the remedy, its conduct had put the Bank in a position where they have lost time, and suffered on account of delay and laches, which aspects are material. Action on the Subject Property was delayed by more than a year as at the behest of the Borrower, the Bank gave them a long rope to regularise the account. To ignore the conduct of the Borrower would not be reasonable to the Bank once third party rights have been created. In this background, the principle of equitable estoppel as a rule of evidence bars the Borrower from complaining of violation.

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18. ……….”

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From a reading of above para, it is clear that conduct of borrower is also an important factor and that would bar borrower for complaining any violation.

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Here in this case, though Appellant vehemently contended that he is interested in discharging loan, but his conduct shows in spite of opportunity, he has not availed, which ultimately resulted

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RA (SA) 13/2021

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in sale of the property and creation of third party right, which now

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cannot be ignored.

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On a scrutiny of entire material, I am of the considered view that Tribunal below was right in dismissing Securitisation Application and there are absolutely no grounds to interfere with the well reasoned Order of DRT-II, Ernakulam.

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For the above reasons, Appeal is liable to be dismissed, and accordingly, Appeal RA (SA) 13/2021 is dismissed with no order as to costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 4^th of August, 2022]

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CHAIRPERSON

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Sabu Varghese George v. Authorized Officer Housing Development Finance Corporation Ltd.

Case brief

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Sabu Varghese George v. Authorized Officer Housing Development Finance Corporation Ltd.

Case brief

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