Allowed

State Bank of India v. Ms Anirban Distibutors

DRAT4 Jul 2022REGULAR APPEAL/18/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal allowed the bank's appeal against a lower court order directing a proposed settlement. The Tribunal held that it could not impose a settlement on banks without their consent and set aside the impugned order as it exceeded the Tribunal's jurisdiction under the SARFAESI Act.

What did the court decide?

The judgment and order dated 4th May, 2022, passed by the Debts Recovery Tribunal-2, Kolkata, allowing the respondents to settle the matter is set aside.

State Bank of India versus Ms Anirban Distibutors — Contract and Commercial Disputes | DRAT (2022)

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Appeal No. 18 of 2022-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 18 of 2022)

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(Arising out of S.A. 282 of 2022 in DRT-2, Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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State Bank of India, Stressed Assets Recovery Branch, Ulhas Gate No. 1, Burdwan, District : Burdwan, P.I.N. – 713 104;

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The Authorised Officer, State Bank of India, Stressed Assets Recovery Branch, Ulhas Gate No. 1, Burdwan, District : Burdwan, P.I.N. – 713 104.

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… Appellants

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-Versus-

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M/s. Anirban Distributors, Registered Office at 31, Radhanagar Dhaldighi Para, Purba Bardhaman, PIN 713 101;

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Aniruddha Abedin, Ulhas 3^rd Avenue, Post Office - Joteram, Burdwan – 713 104;

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Roushanara Begum, 31, Radhanagar Dhaldighi Para, Purba Bardhaman, PIN 713101.

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… Respondents

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Counsel for the Appellant … Mr. Debasish Saha Counsel for Respondents No. 1, 2, 3 … Mr. Soumo Mukherjee with Ms. Sweta Mishra, led by Mr. A.K. Dhandhania, Learned Senior Advocate

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JUDGMENT : 4^th July, 2022

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THE APPELLATE TRIBUNAL :

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The instant appeal is arising against order passed in Case No. DN 362 of 2022 by DRT-2, Kolkata dated 4^th May, 2022. 2. It appears that the SARFAESI Application was preferred by Respondents No. 1 and 2 which is a Proprietorship concern. In the year 2010, SARFAESI Appellant approached the Appellant Bank for sanction of credit facility and thereby credit facility was allowed to the tune of Rs.100.00 lac.

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Appeal No. 18 of 2022-DRAT-Kolkata Agreement letter was issued on 12^th March, 2010; all the necessary formalities were completed; property, as mentioned in para 5.5 of the Memo of Appeal was mortgaged; the loan account became irregular and classified as N.P.A. on 28^th August, 2015; Notice under Sections 13 (2) was issued on 18^th November, 2012 and Notice under Section 13 (4) of the SARFAESI Act, 2002 was issued on 4^th February, 2016; order of the District Magistrate under Section 14 of the Act was obtained on 18^th November, 2016.

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3. Application under Section 17 of the SARFAESI Act, 2002, being S.A. 162 of 2016 filed by the Respondents herein was dismissed by the Learned DRT on 20^th November, 2017. No appeal was preferred against that judgment. Sale notice was issued on 16^th March, 2022 in respect of two mortgaged properties/public auction was published on 28^th April, 2022 with reserve price of Rs.1.10 crore in respect of property No. 1 belonging to SARFAESI Applicant No. 3; reserve price was fixed for Rs.28.00 lac and the other property in the name of the Applicant No. 2 was fixed for Rs. 82.00 lac. On the bid of Rs.28.20 lac, 25% of the amount was deposited; remaining amount was also subsequently deposited.

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4. Another S.A. was filed being S.A. 363 of 2022 (renumbered as S.A. 282 of 2022) wherein notices under Section 13 (2) and 13 (4) were also under challenge. There was a concealment of material fact about the description of S.A. 162 of 2016. Application for interim relief was filed

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Appeal No. 18 of 2022-DRAT-Kolkata which came up for hearing before the Learned DRT on 29^th April, 2022 and subsequently on 4^th May, 2022 when the impugned order was passed to the effect that :

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“Upon referring the proposal to the Defendant Bank and on due deliberations, this Tribunal is of the opinion that applying principles of natural justice and in view of the Applicant's concern to protect his property the Applicant shall settle the matter. The Applicants shall take a Demand Draft flavouring, collection account SBI SARB Branch Burdwan and hand over the same to the officer of the Bank Mr. Indranil Sengupta or by RTGS transfer (on instructions from the officer of the Bank present about details of Bank DD) The Bank is directed to furnish the details of the charges expenses incurred in respect of the said sale notice which have to be paid by the Applicants to the Bank and who interest to be paid to the auction purchaser. The said amounts shall be paid within 15 days or as decided between the parties. It is further made clear that settlement has been made at Rs.29. lacs apart from the expenses to the Bank and interest to be paid to auction purchaser. Accordingly, the Applicant shall approach the defendant Bank in respect of payment of the balance amount within another four weeks. Upon compliance, a joint affidavit may be filed before this Tribunal in respect of the settlement. The Applicant is at liberty to approach the defendant Bank with a settlement proposal within 15 days from the date of this order in respect of the other property i.e. No. 1.”

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Appeal No. 18 of 2022-DRAT-Kolkata Feeling aggrieved, the Applicant Bank has preferred the instant appeal.

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5. Learned Counsel for Appellant submits that the impugned order is bad in law which is against the statutory provision of Section 13 (8) of the SARFAESI Act, 2002. It is further submitted that there was no consent given by the Appellant regarding settlement. It is further submitted that no estoppel can be made against the statute. Even the facts were suppressed by the SARFAESI Applicants.

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6. Learned Senior Advocate for the Respondents submits that it was a consent order which is apparent from the order itself wherein the word “settlement” was used by the Learned Presiding Officer. It is further submitted that the Bank Officer was present at the time of passing of the order. It had given the details of approximate amount of expenses incurred in the sale, publication, etc., along with the damages to the auction purchaser. It is further submitted that an amount of Rs. 29,65,000.00 has been deposited with the Bank by the SARFAESI Applicant. It is further submitted that even Provisions of Section 13 (8) are not applicable in the present case. 7. I have gone through the impugned order. It appears that the impugned order was passed by Learned DRT after hearing the parties wherein the Learned Tribunal was of the opinion to settle the matter applying the principles of natural justice and in view of the Appellants’ i.e. the SARFAESI Applicants, concern to protect their property that SARFAESI Applicants shall settle the matter.

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Appeal No. 18 of 2022-DRAT-Kolkata 8. Consent order means that both the parties should arrive at a common platform to settle the matter. In the present case, as apparent from the impugned order, Learned Presiding Officer himself came to the conclusion that the matter should be settled between the parties. There is no offer or acceptance to show that the Bank was also inclined to settle the matter; rather, tone and tenor of the order shows that the Learned Presiding Officer passed the impugned order with an intent to apply the principles of natural justice keeping in view the fact that SARFAESI Applicants want to protect their property.

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9. It is settled legal proposition that no estoppel can be made against the statute. Section 13 (8) of the SARFAESI Act, 2002 reads as under: “[ (8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets -

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(i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this subsection, no further step shall be taken by such secured

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Appeal No. 18 of 2022-DRAT-Kolkata creditor for transfer by way of lease or assignment or sale of such secured assets]”

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10. If the SARFAESI Applicants wanted to settle the matter, they should have made the payment before the publication of the sale/auction notice or Government tender for publication. In the present case, no such step was taken by the Applicants; rather, all this exercise was done after filing of the S.A. wherein all the steps, i.e. issuance of notices under Section 13 (2) and 13 (4) of the SARFAESI Act and letter of District Magistrate under Section 14 were obtained much prior to filing of the S.A. It is also relevant to mention that prior an S.A. 162 of 1016 was dismissed wherein all the pleas were taken and that order was not challenged in appeal. Hence, that order had attained its finality.

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11. The impugned order shows that Learned Presiding Officer has settled the matter without even obtaining consent of the Bank to settle the matter. It is an ex parte exercise of powers. Learned DRT had exceeded its jurisdiction in exercising such ex parte powers which is not permissible under the law. Had the Bank would have been interested to settle the matter; the same proposal should have been reflected in the finding on record.

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12. In absence of such material on record, I find no justification to come to a finding that it was a consent order with the consent of the parties, passed by the Learned Presiding Officer. Accordingly, the order could not sustain and is liable to be set aside and the appeal deserves to be allowed.

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Appeal No. 18 of 2022-DRAT-Kolkata

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O R D E R

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The appeal, being Appeal No. 18 of 2022, preferred by the Appellant Bank against the judgment and order dated 4^th May, 2022, passed by Learned Debts Recovery Tribunal-2, Kolkata in Case No. DN 362 of 2022, is allowed.

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The judgment and order dated 4^th May, 2022, passed by Learned DRT-2, Kolkata in Case No. NDN 362 of 2022, is hereby set aside.

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No order as to costs.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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File be consigned to Record room.

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Order dictated, signed, dated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson

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Later:

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Learned Senior Advocate for Respondents pray for stay of the order, which is refused.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 04^th July, 2022 14/ac

State Bank of India v. Ms Anirban Distibutors

Case brief

What is this about?

What did the court decide?

State Bank of India v. Ms Anirban Distibutors

Case brief

What is this about?

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