Allowed

State Bank of India v. Ladu Kishore Rauta

DRAT14 Jul 2022REGULAR APPEAL/24/2020

Case brief

AI extract

What is this about?

The DRAT allowed two appeals challenging a DRT order that quashed an SARFAESI sale. The Tribunal found the lower court failed to record specific findings on valuation disputes and notice service without affording a hearing to the Bank. The matter was remanded for a fresh decision.

What did the court decide?

Both appeals allowed. The DRT order quashing the SARFAESI sale is set aside. The matter is remanded to the DRT to decide afresh after a proper hearing.

State Bank of India versus Ladu Kishore Rauta — Specific Performance | DRAT (2022)

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Appeal No. 24 of 2020 & Appeal No. 21 of 2021-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No.24 of 2020)

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(Arising out of S.A.116 of 2019 in DRT, Cuttack)

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With

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(Appeal No. 21 of 2021)

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(Arising out of S.A.116 of 2019 in DRT, Cuttack)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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(Appeal No.24 of 2020)

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(Arising out of S.A.116 of 2019 in DRT, Cuttack)

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The Authorised Officer/Chief Manager, State Bank of India, Purusottampur Branch, Puusottampur, District : Ganjam, P.I.N. – 761 018;

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State Bank of India, Purusottampur Branch, Puusottampur, District : Ganjam, P.I.N. – 761 018;

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… Appellants

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-Versus-

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Sri Ladu Kishore Rauta, Son of Nalu Rauta, residing at Gaudanuagaon, P.O. B.N. Pur, Via – Kodala, District : Ganjan, P.I.N. – 761 032;

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Sri Ajeet Sahu, residing at Gaudanuagaon, P.O. B.N. Pur, Via – Kodala, District : Ganjan, P.I.N. – 761 032.

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… Respondents

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Counsel for the Appellant … Ms. Sharmistha Pal, led by Mr. Debasish Chakrabarti Counsel for Respondent … Mr. P.K. Satpathy Counsel for Prororma Respondent … Mr. Dipanjan Datta

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With

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(Appeal No. 21 of 2021)

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(Arising out of S.A.116 of 2019 in DRT, Cuttack)

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Sri Ajeet Sahu, residing at Gaudanuagaon, P.O. B.N. Pur, Via – Kodala, District : Ganjan, P.I.N. – 761 032.

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… Appellant

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-Versus-

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State Bank of India, Purusottampur Branch, Puusottampur, District : Ganjam, P.I.N. – 761 018;

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The Authorised Officer/Chief Manager, State Bank of India, Purusottampur Branch, Puusottampur, District : Ganjam, P.I.N. – 761 018;

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3 Sri Ladu Kishore Rauta	Appeal No. 24 of 2020 , Son of Nalu	& Appeal No. 21 of 2021-DRAT-Kolkata Rauta, residing at
Gaudanuagaon, P.O. B.N. P.I.N. – 761 032.	Pur, Via – Kodal	a, District : Ganjan,

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		… Respondents
Counsel for the Appellant	…	Mr. Dipanjan Datta
Counsel for Respondent	…	Ms. Sharmistha Pal, led by Mr. Debasish Chakrabarti
Counsel for Respondent No. 3	…	Mr. P.K. Satpathy
JUDGMENT	:	14^thJuly, 2022

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THE APPELLATE TRIBUNAL :

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Appeal No. 24 of 2020 and Appeal No. 21 of 2021 are arising out of a common judgment and order passed by Learned DRT, Cuttack dated 6^th February, 2020 in S.A. 116 of 2019 (Ladu Kishore Rauta -vsAuthorised Officer, State Bank of India & Others) whereby the SARFAESI Application was allowed. Since both the appeals have arisen against the same order they are being decided by one judgment.

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2. Appeal No. 24 of 2020 is preferred by the Secured Creditor, i.e. the Authorised Officer, State Bank of India, while Appeal No. 21 of 2021 is preferred by the Auction Purchaser, Ajeet Sahu, who is Respondent No. 2 in Appeal No. 24 0f 2020. 3. Facts in brief are that Respondent No. 1, i.e. Ladu Kishore Rauta, availed a Term Loan of Rs.9,88,000.00 in the year 2015 to build a house over Plot No. 112/1191 Khata No. 308/12, Mouza - Guranda, Tahsil – Khalikote, District : Ganjam. The aforesaid property was secured as colateral security; there was default in payment; loan was classified as N.P.A. on 31^st January, 2017; proceedings uunder SARFAESI Act 2002 was initiated by the Secured Creditor; notice under Section 13 (2) was issued on 21^st March, 2017 demanding Rs.10,85,856.00; symbolic possession was taken under Section 13 (4) of the SARFAESI Act 2002 on 18^th My, 2018. OTS proposal was made by the Respondent without depositing upfront money which was declined by the Bank on 25^th November, 2019. Sale notice was issued and the property was put to auction. Respondent No. 3 was the highest bidder of Rs.18.15 lac; while

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Appeal No. 24 of 2020 & Appeal No. 21 of 2021-DRAT-Kolkata reserve price was Rs.18.00 lac. Sale Certificate was issued and physical possession was handed over to the auction purchaser.

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4. Respondent Borrower filed a SARFAESI Application under Section 17 of the Act before the Learned DRT challenging that the secured asset was a residential property; due procedure was not followed for sale; provisions of SARFAESI Act were not followed. Objections of the Borrower were not considered; the property was not bifurcated or severed. Borrower has shown his intention to settle the matter but was not done by the Bank. Reserve price was fixed at Rs.18.00 lac without severing the secured asset.

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5. Respondent Bank filed an objection stating that due procedure has been followed at the time of auction. It is further submitted that notices under Section 13 (2) and 13 (4) of the Act were duly issued and served. Property was sold for a value which it could have fetched in the open market. Sale Certificate has been issued in favour of the auction purchaser and possession has been handed over. It is further mentioned that the report of valuer was not filed during the proceedings before DRT rather it was handed over which is considered by DRT. Auction purchaser, Respondent No. 3, preferred his separate objections wherein he has taken all the pleas which were taken by the Bank with an additional ground that after purchasing the property huge amount has been spent by him on the property in question. Learned DRT has recorded the findings as under :

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“ 1. Secured assets intended to be enforced by the secured creditor in the event of non payment of secured debts by the borrower, is not mentioned in the notice.

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2. There is no iota of evidence to show that the respondent bank has sent reply to the section 13 (3A)- Annexure-2 which is given by the applicant.

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3. That the high valued worth property of Rs. 80 lakhs is sold for Rs.18,15,000/-.

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4. Valuation of the property not done properly.

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Appeal No. 24 of 2020 & Appeal No. 21 of 2021-DRAT-Kolkata

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5. If part of the property is sold, the entire loan will be cleared but total building is sold for recovery of the entire loan amount by the respondent bank.

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6. Without giving notice to the applicant the auction was conducted for which there is no any documentary evidence has been filed by the respondent bank to show that the e-auction sale notice is personally served to the applicant and applicant received the same. ”

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6. On the basis of those findings, Learned DRT passed the order allowing the SARFAESI Application with a direction to Sub-Registrar, Khallikote to cancel the sale deed. Further, Bank was directed to take the possession from the auction purchaser and to deliver it back to the Borrower.

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I have heard the Learned Counsel for the Appellant as well as Respondent No. 1 and the auction purchaser in both the appeals.

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7. At the very outset, as would appear from perusal of the judgment that Learned DRT has arrived at a conclusion that the high value property of Rs.80.00 lac is sold at RS.18.15 lac. On this point Learned Counsel for the Appellant submits that there are two reports of Valuer wherein a report is allegedly filed by the Respondent No. 1 wherein value of the property is shown as Rs.80.00 lac. Learned Counsel has placed reliance on the letter of the Valuer, Engineer R.N. Mohanty dated 29^th February, 2020, wherein he has denied his signature on the report filed by the Respondent No. 1/Borrower (SARFAESI Applicant). At this stage, Learned Counsel for SARFAESI Applicant submits that the report was submitted before the Learned DRT without making it Annexure of any affidavit. How the Valuer’s report was taken on record by the Learned DRT could not be established; rather, it is taken on record and considered by DRT against the specific provisions of law. If the report is to be considered, then an opportunity should have been given to the secured creditor/Bank to controvert the same. But the same opportunity was not given. However, now the report has been challenged by the Appellant on the basis of the letter of Engineer Mohanty which is to be looked into as to whether it bears the signature of Mr. Mohanty or not. All these facts ought to have been looked into by the Learned DRT.

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Appeal No. 24 of 2020 & Appeal No. 21 of 2021-DRAT-Kolkata

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8. Further there is a dispute regarding service of complete notice under Section 13 (2) of the SARFAESI Act 2002. There is a controversy as to whether third page of the notice was served upon the Borrower or not. Learned DRT has not recorded any reasoning for arriving at the findings in the judgment.

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9. Under such circumstances, it would be in the interest of justice that the Learned DRT should record the specific findings and decide the case afresh in the light of the observations made above after affording an opportunity of hearing to the parties. Accordingly, both the appeals are liable to be allowed.

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O R D E R

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The appeals, being Appeal No. 24 of 2020 and Appeal No. 21 of 2021, are allowed. Judgment and order passed by Learned DRT, Cuttack dated 6^th February, 2020 in S.A. 116 of 2019 (Ladu Kishore Rauta -vs- Authorised Officer, State Bank of India & Others) is hereby set aside.

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The matter be remanded to Learned DRT, Cuttack for deciding afresh in the light of the observation made in the body of the judgment after giving opportunity of hearing to the parties.

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Copy of this judgment be placed in the records of Appeal No. 21 of 2021.

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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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Dated: 14^th July, 2022 12/13/ac

State Bank of India v. Ladu Kishore Rauta

Case brief

What is this about?

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State Bank of India v. Ladu Kishore Rauta

Case brief

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