Authorized Officer of Akola Janata Commercial Co-Operative Bank Ltd. v. M/S Chintamani Cotex & Ors.

DRAT25 Apr 2022REGULAR APPEAL/359/2015

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal held the lower court's order setting aside an asset sale as perverse and unsustainable due to lack of proper notice to the auction purchaser and incorrect handling of limitation issues. It remanded the matter for fresh disposal after impleading the purchaser.

What did the court decide?

Set aside the impugned judgment; direct the DRT to take the SA on file and implead the auction purchaser; dispose afresh within six months.

Authorized Officer of Akola Janata Commercial Co-Operative… — 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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Appeal No. 359/2015

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Between

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Authorized Officer, Akola Janata Commercial … Appellant/s Co-operative Bank Ltd.

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V/s.

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M/s. Chintamani Cotex & Ors.

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…Respondent/s

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Mr. D. R. Goenka, Advocate for Appellant.

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AND

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Appeal No. 361/2015 Chetan Chimanlal Parekh … Appellant/s V/s. M/s. Chintamani Cotex & Ors. …Respondent/s

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Mr. Meghnath Navlani, Advocate for Appellant.

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Mr. D.R. Goenka, Advocate for Respondent No.4.

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-: Common Order dated : 25/04/2022 :-

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Heard the Ld. Counsel for the Appellants.

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Both these Appeals arise from the same impugned judgment of the DRT, Nagpur in S.A. No.40 of 2014 dated 26.10.2015. The creditor is an Appellant in regular Appeal No.359 of 2015 while Auction Purchaser is an Appellant in regards Appeal No. 361/2015. Since the matter to be decided is the same, both these Appeals are disposed of by this common order.

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On reading of the entire impugned judgment of Ld. D.R.T. which indicates that it is per se perverse because the borrower had approached the D.R.T. by filing the S.A. to set aside the sale of

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the secured asset and it was found vide paragraph no. 10 that there is delay 45 days in challenging the same and there is no reason for condoning the delay. The challenge has not come within 45 days stipulated by statute and there is no reason for condoning the delay, but at the same time, in paragraph no.11, Ld. D.R.T. states that the borrower did not have knowledge and that the procedure required for the sale has not been followed, therefore, it is required to be set aside.

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It is pertinent to note that the symbolic possession of secured asset was taken by Bank as earlier as on 10.05.2013 and thereafter first notice for sale was issued on 08.07.2013 which did not take place and second notice was issued on 05.09.2013 and bids took place on 11.10.2013 and Appellant in Appeal No.361 of 2015 being the highest bidder for Rs. Rs.14,61,000/- become the auction purchaser. Thereafter, he deposited amount within the stipulated time and sale was confirmed and Sale Certificate was issued by order dated 07.11.2013. While symbolic possession was taken over by Bank, the borrower had also approached the Hon’ble High Court with Writ Petition but the same was dismissed on 10.04.2013. The Hon’ble High Court, found that the Appellant had an option to approach DRT for the same but by that time the sale has already taken place and also confirmed and the Appellant did not approach the DRT within stipulated time. The Ld. DRT has found that there is no reason for condoning the delay but at the same time it is also observed that the rules pertaining to the sale were not property abided. The rules pertaining to the sale and compliance of the rules can only be gone into if application for setting aside the sale is filed within stipulated

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45 days. Therefore, the Ld. DRT was not justified in holding that the rules have not been abided too and, therefore, the sale needs to be set aside. If it is found that the Auction Purchaser was not the party to the entire proceeding seeking to set aside the sale which has been confirmed and consequent to that the borrower had approached to the DRT to set aside the sale. It is incumbent to implead the auction purchaser by the rules of Audi Alteram Partem, and hear the auction purchaser who has become owner in the possession of the property. Hence, I find that impugned judgment of the Ld. DRT is perverse and not sustainable. Regarding the question of limitation also, the Ld. DRT has not concluded correctly. The impugned judgment is, therefore, set aside and Ld. DRT is directed to take S.A. on file and an opportunity shall be given to the auction purchaser to get himself impleaded in the S.A. After hearing the auction purchaser, S.A. shall be disposed afresh, as expeditiously as possible, preferably within a period of six months from the date of receipt of a copy of this order.

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Accordingly, Appeals stand disposed of.

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All Miscellaneous Applications, if any, are dismissed as infructuous.

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Sd/Chairperson

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dpj/mks-24 & 25

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Authorized Officer of Akola Janata Commercial Co-Operative Bank Ltd. v. M/S Chintamani Cotex & Ors.

Case brief

What is this about?

What did the court decide?

Authorized Officer of Akola Janata Commercial Co-Operative Bank Ltd. v. M/S Chintamani Cotex & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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