Dismissed

M/s. Jay Jay Blocks v. Punjab National Bank

DRAT19 Sept 2022REGULAR APPEAL/31/2010

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed appeals filed by borrowers against the dismissal of their Securitisation Application and Interlocutory Application. The Tribunal held that the bank properly followed SARFAESI Act procedures, the notice period requirements were met alternatively under Rule 9(1), and the Appellants could not challenge subsequent sale steps without amending their pleadin

What did the court decide?

Both appeals RA (SA) 31/2010 and MA (SA) 18/2012 were allowed dismissed; all pending IAs closed with costs to the respondents.

M/s. Jay Jay Blocks versus Punjab National Bank — Banking and Recovery | DRAT (2022)

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RA (SA) 31/2010 & MA (SA) 18/2012

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 19^th of September, 2022

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

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CHAIRPERSON

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RA (SA) 31/2010

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[SA No.192/2007 on the file of DRT-III, Chennai]

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MA (SA) 18/2012

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[IA 61/2008 in SA No.192/2007 on the file of DRT-III, Chennai]

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RA (SA) 31/2010

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Between

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M/s. Jay Jay Blocks,

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Rep by its Prop Mr. K. Jeyabal,

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No.7/2, Gangai Street,

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East Shanmuga Puram, Villupuram 605 602.

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K. Jeyabal, Prop. M/s. Jay Jay Blocks,

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No.7/2, Gangai Street East, Shanmuga Puram, Villupuram 605 602.

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……Appellants

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And

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Chief Manager,

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Punjab National Bank, Babu Complex, First Floor, No.23, Mahatma Gandhi Road, Villupuram.

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The Authorised Officer, Punjab National Bank, Babu Complex, First Floor, No.23, Mahatma Gandhi Road, Villupuram.

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RA (SA) 31/2010 & MA (SA) 18/2012

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The Assistant General Manager, Punjab National Bank, ARM Branch, Khivraj Buildings, First Floor No.624, Anna Salai Chennai – 600 006.

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Abdul Ameed, S/o Abdul Wahab, No.400, Govindaraj Perumal Street, Villupuram – 605 602.

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5, Tmt. Vatchala, W/o Chinnasamy, No.25, Sivasankari Street, Thirukamu Nagar, Poonthottam, Villupuram – 605 602.

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T. Rajamani, S/o Thangavel Pillai, No.32, Amachar Koil Street, Villupuram – 605 602.

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A. Kamarudeen, S/o K. Asan Mohammed, No.28, B Rajagopal Street, Villupuram - 605 602.

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A. Thilsath, W/o Akbar, No.16, Lakshmikanthapuram, Thuraiyur, Trichy District – 621 010.

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….. Respondents

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RA (SA) 31/2010 & MA (SA) 18/2012

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MA(SA) 18/2012

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Between

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M/s. Jay Jay Blocks, Rep by its Prop. Mr. K. Jeyabal, No.7/2, Gangai Street, East Shanmuga Puram, Villupuram 605 602.

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K. Jeyabal, Prop. M/s. Jay Jay Blocks, No.7/2, Gangai Street East Shanmuga Puram, Villupuram 605 602.

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……Appellants

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And

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Chief Manager, Punjab National Bank, Babu Complex, First Floor, No.23, Mahatma Gandhi Road, Villupuram.

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The Authorised Officer, Punjab National Bank, Babu Complex, First Floor, No.23, Mahatma Gandhi Road, Villupuram.

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The Assistant General Manager, Punjab National Bank, ARM Branch, Khivraj Buildings, First Floor No.624,

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Anna Salai Chennai – 600 006.

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Thiru. Ameer Khan, Villupuram.

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RA (SA) 31/2010 & MA (SA) 18/2012

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5.	Thiru.Kamarudeen, Villupuram.
6.	Abdul Ameed, S/o Abdul Wahab, No.400, Govindaraj Perumal Street, Villupuram – 605 602.
7.	Tmt. Vatchala, W/o Chinnasamy, No.25, Sivasankari Street, Thirukamu Nagar, Poonthottam, Villupuram – 605 602.
8.	T. Rajamani, S/o Thangavel Pillai, No.32, Amachar Koil Street, Villupuram – 605 602.
9.	A. Thilsath, W/o K. Akbar,
	No.16, Lakshmikanthapuram, Thuraiyur, Trichy District – 621 010.
	…..Respondents
Coun	sel for Appellants : Mr. K. A. Ramakrishnan for Mr. J. Bharathi Raja
Coun	sel for R1 to R3 : Mr. P. Adhavan for Mr. Rajamanickam
Coun	_sel for R4, R5, R6 & R8_RA (SA) 31/2010 &
R6 to	R9 in MA(SA) 18/2012 : Mr. Navaneetha Krishnan for Mr. A. Vairamoorthy

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RA (SA) 31/2010 & MA (SA) 18/2012

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COMMON ORDER

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These two Appeals are against Orders of DRT-III, Chennai dated 07.03.2018 through which SA 192/2007 and IA SR No. 1996/2007 (renumbered as IA 61/2008) are dismissed.

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RA (SA) 31/2010 is against dismissal of Securitisation Application SA 192/2007, whereas MA (SA) 18/2012 is against dismissal of IA 61/2008.

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Parties to proceedings submitted common arguments including common Written Arguments, therefore, these two Appeals are disposed of through a Common Order.

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Brief facts leading to these Appeals are as follows:-

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Appellants availed various credit facilities from 1^st

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Respondent Bank from 1998 onwards, and as they committed

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RA (SA) 31/2010 & MA (SA) 18/2012

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default in discharging loan amount due to 1^st Respondent Bank, Authorized Officer of Respondent Bank (2^nd Respondent) issued Notice under Section 13(2) of SARFAESI Act, 2002, on 09.02.2004, demanding a sum of Rs.21,37,583/-, which was due as on 31.12.2003, and thereafter, 2^nd Respondent issued Sale Notice dated 24.07.2007 fixing sale on 20.08.2007, challenging Sale Notice dated 24.07.2007, Appellants filed Securitisation Application.

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Respondent Nos.1 to 3 Bank (hereinafter called Respondent Bank) filed Counter opposing Securitisation Application, and as sale was fixed on 20.08.2007, Appellants moved Tribunal below for interim Order, and Tribunal below granted conditional order directing Appellants to pay a sum of Rs.1.80 Lakhs by 20.08.2007. Appellants have not complied with said condition, and requested Tribunal below to extend time, and Tribunal below extended time from 20.08.2007 to 03.09.2007 and again from 03.09.2007 to 11.09.2007, and as Appellants failed to comply with the same, SA was dismissed

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RA (SA) 31/2010 & MA (SA) 18/2012

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on 11.09.2007. Thereafter, 2^nd Respondent herein took

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further steps and issued Sale Notice dated 11.10.2007 fixing auction sale on 15.11.2007 and Appellants filed four Applications on 26.11.2007; one to condone delay of 47 days in filing Petition to set aside dismissal Order dated 11.09.2007; Petition to stay all further proceedings pursuant to auction held on 15.11.2007; Petition to set aside sale held on 15.11.2007 and Petition to restore Securitisation Application. Tribunal below, condoned delay in filing Restoration Application and ordered for allowing Restoration Application on condition of deposit of Rs.2 Lakhs with Respondent Bank, and as Appellants deposited said amount on 26.11.2007 itself, therefore, Securitisation Application is restored to file.

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On a consideration of contentions and rival contentions of both parties, Tribunal below dismissed Securitisation Application holding that 2^nd Respondent followed provisions of Securitisation Act and Rules made there under, and there are

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RA (SA) 31/2010 & MA (SA) 18/2012

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no violations of mandatory provisions. While dismissing Securitisation Application, Interlocutory Application IA

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61/2008 is also dismissed; aggrieved by which, these two Appeals are preferred.

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In the auction held on 15.11.2007, Respondent Nos. 6 to 9 in MA (SA) 18/2012 purchased Schedules ‘A’ and ‘E’ properties and Respondent Nos. 4, 5, 6 and 8 in RA (SA) 31/2010 purchased remaining properties.

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As already referred to above, all the parties filed Written Submissions and reiterated the same at the time of oral submissions.

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Main grievance of Appellants is that Tribunal below failed to note that 2^nd Respondent has not followed Rule 8(5) and 8(6) of Security Interest (Enforcement) Rules, 2002 (for short Rules, 2002). It is submitted, as per Rule 8(6) of Rules, 2002,

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30 days clear notice is to be given before conducting auction,

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RA (SA) 31/2010 & MA (SA) 18/2012

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but there is no clear 30 days. It is submitted Sale Notice dated 11.10.2007 has been served on Appellants only on 17.10.2007, but sale is conducted on 15.11.2007, therefore,

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there is no 30 days clear notice. The other submission of Advocate for Appellants is that properties mortgaged will fetch more than Rs.1.5 Crores, but they were sold for a paltry sum of Rs.20.82 Lakhs, and this is because of collusion between Respondent Bank and Auction Purchasers. It is submitted as per Valuation Report, properties are worth of Rs.1.5 Crores, but upset price fixed was very low thereby there is violation of Rules, 2002. It is further submitted that Auction Purchasers have failed to deposit 25% of bid amount in time, so also, remaining 75%, but Tribunal below, failed to consider these aspects and erroneously dismissed Securitisation Application

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and Interlocutory Application, therefore, impugned Order is liable to be set aside.

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On the other hand, Advocate for Respondent Bank

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submitted that Authorized Officer of Bank strictly followed

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RA (SA) 31/2010 & MA (SA) 18/2012

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provisions of SARFAESI Act and Rules made there under, and Tribunal below rightly recorded a finding that rules are followed. It is submitted that Section 17 of SARFAESI Act, 2002 provides right to aggrieved party to challenge measures initiated by Secured Creditor or Authorised Officer, but that Application has to be filed within 45 days from the date of measures. It is submitted that Securitisation Application SA 192/2007 is filed challenging Sale Notice dated 24.07.2007, in which sale is fixed for 20.08.2007, but that sale is not taken place, and therefore, Authorized Officer of Bank issued another Sale Notice on 11.10.2007 fixing sale on 15.11.2007, but that was not challenged by Appellants. It is submitted when Section 17 of SARFAESI Act, 2002, provides a remedy for filing Applications for each measure, questioning subsequent steps through interim Application is not permissible, and Tribunal below rightly dismissed Interlocutory Application. It is further submitted that every measure can be challenged under Section 17 of SARFAESI Act, 2002, and Appellants ought to have filed a separate

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RA (SA) 31/2010 & MA (SA) 18/2012

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Securitisation Application questioning Sale Notice dated 11.10.2007, and having not done so, it is not open for them to question that Notice in a Securitisation Application filed earlier without amending the pleadings. It is submitted when Appellants have not sought for any amendment to Securitisation Application, and reliefs claimed in

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Securitisation Application are to set aside Auction Notice dated 24.07.2007 for proposed auction on 20.08.2007 and declare it null and void , and when that Sale Notice is not enforced, the reliefs in the Securitisation Application have become infructuous . It is submitted that Tribunal below rightly dismissed Securitisation Application and Interlocutory Application and there are no grounds to interfere with said orders.

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6. Advocate appearing on behalf of Auction Purchasers,

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while adopting arguments of Bank Advocate, submitted that sale took place on 15.11.2007 on the basis of fresh Sale

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Notice, and Appellants, without filing any Securitisation

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RA (SA) 31/2010 & MA (SA) 18/2012

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Application challenging fresh Sale Notice dated 11.10.2007, which culminated into sale dated 15.11.2007, only prosecuted earlier SA, which is filed challenging Sale Notice dated 24.07.2007, which is not culminated into sale. It is submitted Interlocutory Applications are only filed to get temporary reliefs during pendency of main Application, and in Interlocutory Applications, main relief cannot be granted. It is submitted that in IA 61/2008, Appellants prayed for relief of setting aside Auction Sale dated 15.11.2007, which is in pursuance of Sale Notice dated 24.07.2007, therefore, not maintainable, and Tribunal below rightly dismissed it. It is submitted when Authorized Officer of Bank issued a fresh Sale Notice on 11.10.2007, it is a separate cause of action, and Appellants, without filing a separate Securitisation Application challenging said Sale Notice, cannot be allowed to raise these aspects, in a Securitisation Application in which those facts are not pleaded. It is submitted both Appeals, viewed in any angle, are not maintainable and liable to be dismissed.

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RA (SA) 31/2010 & MA (SA) 18/2012

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Before considering contentions and rival contentions of

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all parties, it may be necessary to examine reliefs claimed in main Securitisation Application in SA 192/2007, which are four in number, they are as follows:-

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“1. declare that the impugned auction notice

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dt.24/07/2007 issued by the 3^rd respondent to bring

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the properties for auction on 20/08/2007 as null & void and unenforceable;

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2. direct the respondents to furnish a detailed true statement of account from the beginning of the last transaction up-to-date in order to find out the correctness of the claim made by the respondent-bank’

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3. direct the respondents to pay the costs of this proceedings to appellants; and

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4. grant such further or other relief as this Hon’ble Tribunal might deem fit and proper in the

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circumstances of the case.”

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RA (SA) 31/2010 & MA (SA) 18/2012

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From the above reliefs, it is clear that request of Appellants is to declare Auction Notice dated 24.07.2007 of Assistant General Manager, Punjab National Bank, ARM Branch, as null and void and unenforceable. Even for arguments sake, the request of Appellants is accepted and Securitisation Application has to be allowed, the relief that has to be granted is declaring Auction Notice dated 24.07.2007 as null and void and unenforceable. But, as rightly pointed out by Advocate appearing on behalf of Respondent Bank, Auction Notice dated 24.07.2007 is not enforced, and no further steps are taken in pursuance of that Notice. In other words, by issuing Sale Notice dated 11.10.2007, it has to be inferred that Authorized Officer of Bank has withdrawn its earlier Sale Notice dated 24.07.2007. Here, as rightly pointed out by Advocate appearing on behalf of Respondent Bank, Section 17 of SARFAESI Act, 2002, provides remedy to challenge each step. Sale Notice dated 11.10.2007 gives a fresh cause of action to

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Appellants to challenge that Notice, but for the reasons best

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RA (SA) 31/2010 & MA (SA) 18/2012

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known to Appellants, they have not taken any such step. On

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the other hand, they have sought for restoration of earlier SA, which was dismissed for non-compliance of conditional Order.

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Even after restoration of said SA, without praying for any amendment, Appellants proceeded with same relief and same pleadings. As rightly pointed out by Advocate for

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Respondents, through Interlocutory Applications, one cannot get main relief and very purpose of Interlocutory Application is to grant interim reliefs during pendency of main case. But here, Appellants surprisingly, without amending even prayer of Securitisation Application, challenged subsequent Sale Notice and auction held in pursuance of it, through Interlocutory Application. Though such remedy is not available and not maintainable, Tribunal bellow, even considered those objections while deciding SA 192/2007.

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8. Though Appellants contended that there is no clear 30

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days notice as required under Rule 8 (6) of Rules, 2002, it is apparent from Notices itself, auction held on 15.11.2007 is

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RA (SA) 31/2010 & MA (SA) 18/2012

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only after completion of 30 days from the date of issuance of Sale Notice dated 11.10.2007. According to Appellants, they received Notice on 17.10.2007 and as auction was held on 15.11.2007, there is no clear 30 days notice. Rule 9 (1) of Rules, 2002, contemplates no sale shall take place before expiry of 30 days from the date on which public notice of sale is published in newspapers or notice of sale has been served to borrower. Language used in this Rule for these two conditions is ‘or’ , but not ‘and’ , which means compliance of either of it is sufficient. From the records, it is clear that Sale Notice dated 11.10.2007 is published in newspapers as required under Rule 9(1) of Rules, 2002 on 13.10.2007, as sale is held on 15.11.2007, there is clear 30 days in between 13.10.2007 and 15.11.2007. By referring to this aspect, Tribunal below recorded a finding that Authorised Officer of Bank followed mandatory provisions, and there is no violation at all. I do not find any wrong in the findings of Tribunal below, particularly when Rule 9 (1) of Rules, 2002 says 30 days gap between either of the requirements, and first

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RA (SA) 31/2010 & MA (SA) 18/2012

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requirement as per Rule 9 (1) of Rules, 2002, is publication of Notice in newspapers, which is duly complied with. Though Appellants raised many issues contending that properties worth of Rs.1.5 Crores is sold for a paltry sum of Rs.20.82 Lakhs, they failed to substantiate the same, and same is recorded by Tribunal below. Even otherwise, Appellants have no right to raise those aspects, when they have not raised the same in their main Securitisation Application, and when they have not amended the prayers suitably.

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9. On a scrutiny of entire material with reference to impugned Order dated orders dated 07.03.2008, I am of the considered view that there is no illegality in the Orders passed in SA 192/2007 and IA SR No. 1996/2007 (renumbered as IA 61/2008) and no grounds to interfere with it.

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RA (SA) 31/2010 & MA (SA) 18/2012

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10. For the reasons stated above, viewed in any angle, both

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Appeals are devoid of merits and liable to be dismissed. In the

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result, Appeals RA (SA) 31/2010 and MA (SA) 18/2012 are dismissed with 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 19th of September, 2022]

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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M/s. Jay Jay Blocks v. Punjab National Bank

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M/s. Jay Jay Blocks v. Punjab National Bank

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