Allowed

Central Bank of India v. Smt Mona Yadav and Ors.

DRAT4 Jul 2023

Case brief

AI extract

What is this about?

The Tribunal allowed bank and auction purchaser appeals, setting aside and quashing orders that had condoned significant delay in filing a Special Appeal under SARFAESI. The court held delay was deliberate as borrowers pursued remedies in the wrong forum (High Court) despite knowledge of the correct remedy (Special Appeal) and prior litigation.

What did the court decide?

The Special Appeal was dismissed and the orders of the Tribunal allowing condonation of delay were set aside and quashed.

Central Bank of India versus Smt Mona Yadav and Ors. — Banking and Recovery | DRAT (2023)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Appeal Dy. No. 186/2020

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Smt. Kiran Jha, W/o Shri H. S. Jha, R/o H.No. 7 (D) Paramount Villa, Shyamla Hills, District Bhopal (M.P.)-462010.

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……….....……………………...………………………………………………..Appellant

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Versus

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Smt. Mona Yadav, W/o Shri Mohan Yadav, Prop.- Ganesh Warehouse,

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Shri Mohan Yadav, S/o Shri Kanhaiya Lal Yadav, Both R/o-M-116, Veena Nagar, Indore (M.P.), Pin-452003.

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Authorized Officer, Central Bank Of India, Pipariya Branch, District-Hoshangabad (M.P.), Pin Code:-461775

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The Regional Manager, Regional Office, Central Bank of India, 9 Arera Hills, Jail Road, Bhopal (M.P.), Pin Code462011

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Tehsildar, Sohagpur Sub-Division, District-Hoshangabad (M.P.) Pin Code-461001

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The Registrar, Documents and Assurances, Sub Division, Sohagpur (M.P.) Pin Code-461771

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The Competent Authority-cum-Branch Manager, M.P. Warehousing and Logistics Corporation, Pipariya Branch, District Hoshangabad (M.P.) Pin Code-461775

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……….….………….…….………………………………………………….Respondents

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Appeal Dy. No. 238/2020

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Authorized Officer, Central Bank of India, Pipariya Branch, District Hoshangabad [M.P]-461775

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Regional Manager, Regional Office, Central Bank of India, 9 Arera Hills, Jail Road, District Bhopal [M.P]-462010 ………...……………...………………………………………………..Appellants

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Versus

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Mona Yadav, W/o Shri Mohan Yadav, Proprietor- Ganesh Ware House, R/o M-116, Veena Nagar, Indore [M.P]452003.

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Shri Mohan Yadav, S/o Shri Kanhaiyalal Yadav, R/o M-116, Veena Nagar, Indore [M.P]-452003

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Smt. Kiran Jha, W/o Shri H. S. Jha, R/o 7-(D), Paramount Villa, Shyamala Hills, Distt. Bhopal [M.P.]-462010

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…..………….…….………………………………………………….Respondents

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Appeal Dy. No. 392/2021

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Smt. Kiran Jha, W/o Shri H.S. Jha, R/o H.No. 7 (D) Paramount Villa, Shyamla Hills, District Bhopal (M.P.), Pin Code:-462010. ……….....……………………...………………………………………………..Appellant

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Versus

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Smt. Mona Yadav, W/o Shri Mohan Yadav, Proprietor Ganesh Warehouse, R/o-M-116, Veena Nagar, Indore (M.P.), Pin Code:-452003

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Shri Mohan Yadav, S/o Shri Kanhaiya Lal Yadav, R/o-M116, Veena Nagar, Indore (M.P.), Pin Code:-452003.

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Authorized Officer, Central Bank Of India, Piparya Branch, District Hoshangabad (M.P.), Pin Code:-461775

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Regional Manager, Regional Office, Central Bank Of India, 9 Arera Hills, Jail Road, Bhopal (M.P.), Pin Code-462011.

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Tehsildar, Sohagpur Subdivision, District Hoshangabad, (M.P.) Pin Code-461001.

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The Registrar, Documents and Assurances, Sub Division, Sohagpur (M.P.)Pin Code-461771.

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The Competent Authority-Cum-Branch Manager, M.P. Warehousing and Logistic Corporation, Piparya Branch, District Hoshangabad (M.P.) Pin Code-461775.

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…….….………….…….………………………………………………….Respondents

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Advocates who appeared in this case

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For the Auction Purchaser

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For the Bank For the borrower

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Shri Kushal Kant alongwith Shri R.K. Singh Chauhan, Advocate Shri Himanshu Tiwari, Advocate Shri V. K. Shukla, Advocate

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JUDGMENT

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Date of Decision: 04.07.2023

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JUSTICE R. D. KHARE, CHAIRPERSON

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The above mentioned appeals are being decided by this common order, which have been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) against the orders dated 07.03.2020 and 06.08.2021.

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The factual matrix of the case as gathered from the Appeal Dy. No. 238/2020 filed by the Bank is that the respondent No. 1-Mona Yadava, proprietor of the firmGanesh Ware House, was sanctioned a term loan of Rs. 1.49 crores and odd in the year 2009. In order to secure the said loan, the respondents No. 1 and 2 stood as guarantors and created mortgage over their property in question with the Bank. The borrowers did not maintain

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the financial discipline, therefore, the loan account was classified as NPA and the demand notice dated 30.04.2012 was issued by the Bank under section 13(2) of the SARFAESI Act for a sum of Rs. 1,66,97,778/- as on 30.04.2012. Since the borrowers did not pay any heed to the said demand, therefore, the Bank took the symbolic possession of the property in question by issuing Possession Notice dated 17.08.2012 under section 13(4) of the SARFAESI Act. Thereafter. the Bank issued auction-sale notice dated 15.11.2012 scheduling the auction of the property on 18.12.2012, which could not be materialized. Subsequently, the Bank issued second auction notice dated 03.03.2013 scheduling the auction of the property on 18.03.2013 and the property was sold for a sum of Rs. 1,15,01,000/-. On depositing the sale consideration, the sale certificate was issued on 17.12.2013 and sale deed was executed by the Bank in favour of the auction purchaser Smt. Kiran Jha on 01.01.2014, which was registered on 11.04.2014.

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It is averred that one Gajanan Agro India Pvt. Ltd. through its Director B.P. Yadav moved before the Hon’ble High Court by filing a Writ Petition No. 6223/2013 challenging the auction sale notice dated 03.03.2013, in which Smt. Mona Yadav and her firm Ganesh Ware House were arrayed as respondents and her husband Mohan Yadav was also one of the Directors in the said firm. The said petition was disposed off by the Hon’ble High Court vide its order dated 03.04.2013 with liberty to file securitization application under section 17 of the SARFAESI Act. Accordingly, the S.A. No. 89/2013 was filed by Gajanan Agro India Pvt. Ltd. through its Director B.P. Yadav on 17.04.2013 challenging the auction sale notice dated 03.03.2013 and auction dated 18.03.2013.

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In the said proceedings, the respondent No. 1 Smt. Mona Yadav appeared through her counsel. The said S.A. was dismissed by the Tribunal below vide order dated 01.02.2019 observing that the mortgage created in favour of the Bank is valid and applicant company Gajanan Agro India Pvt. Ltd. being a subsequent purchaser has no locus to file the S.A.

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It transpires that the respondent No. 1 Mona Yadav had also filed a Writ Petition No. 7392/2014 before the Hon’ble High Court on 08.05.2014, which was dismissed vide order 19.03.2019 with liberty to file a securitization application before the Tribunal below in accordance with law. Accordingly, S.A. No. 221/2019 was filed before the Tribunal below along with application for condonation of delay on 23.04.2019 challenging the demand notice dated 30.04.2012, possession notice dated 17.08.2012, auction notice dated 03.03.2013 and auction conducted thereafter and sale certificate dated 17.12.2013 as well as the order dated 27.07.2017 passed by the D.M., Hoshangabad. The Tribunal below vide impugned order dated 07.03.2020 condoned the delay occurred in filing the present S.A. subject to deposit of cost of Rs. 5.00 lakh with the Bharat Ke Veer Fund within a period of three weeks and the challenge of the order dated 27.07.2017 passed by the ADM, Hoshangabad has been held to be barred by limitation and the same has been dismissed. Being aggrieved by the said order, the present Appeal Dy. No. 238/2020 has been preferred by the Bank and the Appeal No. 186/2020 by the auction purchaser.

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It also transpires that during the pendency of these two appeals, the respondent No. 1 filed three applications before the Tribunal below, one for modification of the

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order impugned, second for extension of time to deposit the cost as directed by the Tribunal below along with application for condonation of delay. The Tribunal below vide impugned order dated 06.08.2021 has allowed the same and modified the order dated 07.03.2020 by allowing the delay condonation application in filing the application for extension of time to deposit the cost. Being aggrieved by the said order, the auction purchaser has filed the Appeal Dy. No. 392/2021 before this Tribunal.

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Learned counsel for the appellant submitted that the Tribunal below passed the order impugned in S.A. No. 221/2019 allowing the application for condonation of delay subject to deposit of cost of Rs. 5.00 lacs in Bharat Ke Veer Fund. It is contended that the S.A. filed by the S.A. applicants was time barred by more than five years. Further, the cost was not deposited as per order of the Tribunal below and subsequently, an application was moved by the borrower for extension of time, which was allowed by the Tribunal below vide order dated 06.08.2021. The condonation of delay was allowed subject to certain condition, but the same was not complied with by the borrowers in time, therefore, the application for extension of time was not maintainable, but the same was allowed illegally.

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Learned counsel for the appellant further submitted that the respondent-No. 1-Mona Yadav was arrayed as respondent No. 3 in the Writ Petition filed by the Gajanan Agro India Pvt. Ltd. and she participated in the entire proceedings before the Hon’ble High Court. As such the respondents-borrowers were having complete knowledge about each and every proceedings of the case. Thereafter, the said firm filed the S.A. No. 89/2013

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before the Tribunal below, in which the respondent-Mona Yadav was again arrayed as respondent No. 3 and she contested the entire proceedings of the said case from 2013 to 2019. Respondents No. 1 and 2 are the wife and husband and are related to the entire controversy of the matter in dispute as well as were having knowledge of the proceedings initiated by the Bank. It is further submitted that inspite of having knowledge of the order of the Hon’ble High Court passed in Writ Petition No. 6223/2013 for filing the application before the Tribunal below under section 17(1) of the SARFAESI Act, the respondents No. 1 and 2 opted not to challenge any action of the Bank before the Tribunal below, instead filed a Writ Petition before the Hon’ble High Court challenging the action of the Bank, whereas the said respondents were participating in the S.A. filed by the Gajanan Agro India Pvt. Ltd. It is further contended that when the S.A. of M/s Gajanan Agro India Pvt. Ltd. was dismissed, the respondent-borrower filed an application before the Hon’ble High Court for withdrawal of their Writ Petition, which was allowed vide order dated 19.03.2019 with liberty to file S.A. before the Tribunal below. The said order is not applicable to the respondent No. 2 Shri Mohan Yadav since the said Writ Petition was not filed by him, therefore, he is not entitled to take shelter of the order dated 19.03.2019 passed by the Hon’ble High Court. It is also submitted that the present S.A. was filed by the respondents No. 1 and 2 after about one month from the date of the order of the Hon’ble High Court passed in Writ Petition No. 7394/2014 i.e. 19.03.2019. The said Writ Petition was filed before the Hon’ble High on 08.05.2014 i.e. after about one year and two months from the date of auction notice i.e. 03.03.2013 and after

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about 5 months from the date of issuance of sale certificate i.e. 17.12.2013.

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Learned counsel for the appellant further contended that there was no pleading on behalf of the respondentborrower for condonation of delay of more than 5 years therefore, in absence of any pleading and prayer, no such relief could have been granted. It is also contended that the extension, which has been granted by the Tribunal below, is against the principle of natural justice, as laid down by the Hon’ble Apex Court in the judgment passed in Petition for Special Leave to Appeal (C) No. 24164/2019- M/s Esjaypee Impex Pvt. Ltd. Vs. The Assistant General Manager and Authorized Officer, Canara Bank, decided on 05.01.2021, copy of which has been placed before this Tribunal, which is taken on record.

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Learned counsel for the respondent-Bank submitted that the condition of the respondent-Borrower had been considered by the Tribunal below and it has been noticed that the cost of Rs. 5.00 lacs was deposited in Bharat Ke Veer Fund.

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Learned counsel for the respondents-borrowers contended that the delay occurred in filing the present S.A. was not deliberate and intentional, as they were pursuing their cause bonafide although before the wrong forum. The learned counsel further submitted that the property was auctioned on 18.03.2013 pursuant to the auction sale notice dated 03.03.2013. Since the auction proceeds was not deposited by the auction purchaser even after three months, they took it for grant that the auction sale dated 18.03.2013 stood failed, but after coming to know that the auction purchaser was being

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granted the loan from other branch of the Bank to deposit the balance auction proceeds, the borrowers made a representation before the Chairman-cum-Managing Director dated 27.01.2014, which was rejected vide letter dated 26.02.2014. It is also submitted that the appellants had filed an objection before the Sub-Registrar praying that the registration of the sale certificate be kept in abeyance, which remained pending till 11.04.2014.

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The learned counsel for the borrowers also submitted that they had challenged the auction notice, auction sale, sale certificate and its registration by filing a writ petition before the Hon’ble High Court on 08.05.2014, whereas the cause of action was arisen out of execution of sale certificate dated 01.01.2014. As such the writ petition was filed within the limitation of 45 days from the date of deriving the copy of sale certificate dated 11.04.2014. As such there was no delay till that time. It is further contended that the said writ petition was disposed off on 19.03.2019 by the Hon’ble High Court with liberty to the SA-applicants to approach before the DRT concerned. Accordingly, the present S.A. was filed on 23.04.2019 along with application for condonation of delay of 587 days.

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Apart from above, the learned counsel for the borrowers submitted that the auction purchaser did not deposit the sale consideration in terms of the auction notice and the auction amount has been deposited in contravention of Rules 9(3) & (4) of the Rules, 2002. It is further contended that the subsequent auction sale notice was issued and published for 14 days, whereas the same ought to have issued for 15 days, therefore, the auction sale notice issued by the Bank is defective, hence the sale is not sustainable. Learned counsel also submitted that if

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the application for condonation of delay is dismissed, the borrower shall suffer irreparable loss and would be deprived of justice. The learned counsel further submitted that in meritorious case, if the condonation of delay is refused, the same can result in a meritorious case being thrown out at the very threshold and cause of justice being defeated. In the last, the learned counsel submitted that in case the delay stands condoned, then the borrower has bright chances to succeed in the present S.A. It is, therefore, prayed that the appeals filed by the Bank and Auction Purchaser may be dismissed and the order passed by the Tribunal below may be affirmed.

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Having heard the learned counsels for the parties and considering the material available on record, it is undisputed that the demand notice, possession notice, the sale notice was issued by the respondent-bank and the property was sold and the sale certificate dated 17.12.2013 was issued and sale deed has also been executed in favour of the auction purchaser-Appellant in Appeal Dy. No. 186/2020 and Appeal Dy. No. 392/2021 on 01.01.2014, which was registered on 11.04.2014. The main question in the present case is, as to whether the Tribunal below has rightly excluded the period consumed before the Hon’ble High Court and condoned the delay of one year prior to filing of writ petition or not?

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It is to be seen that after issuance of demand notice dated 30.04.2012, the possession notice was issued on 17.08.2012 and thereafter, the sale notice was issued on 15.11.2012 for auction of the property in question on 18.12.2018, which could not be materialized, therefore, the Bank issued another sale notice dated 03.03.2013 fixing the date of auction for 18.03.2013. The property was sold for Rs. 1.15 crores. Consequently, the sale

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certificate was issued on 17.12.2013 and the sale deed was executed on 01.01.2014, which was registered on 11.04.2014 in favour of the respondent no. 3-Auction Purchaser. It appears that instead of filing the S.A. before the Tribunal below, the S.A. applicants filed a writ petition no. 7394 of 2014 before the Hon’ble High Court on 08.05.2014. In the meantime, the S.A. applicants also filed complaint/representation before the Bank on 27.01.2014 alleging that the auction conducted by the Bank is illegal. The S.A.-applicants also raised objection before the court of Collector of Stamp, Hosangabad in the proceeding under section 47-Ka(1) of the Stamps Act with regard to the determination of the stamp duty payable on registration of sale certificate dated 17.12.2013, which was decided vide order dated 20.06.2014. It is to be noted that in the writ petition no. 6223 of 2013 filed by B. P. Yadav, Director of M/s Gajanan Agro India Pvt. Ltd., Smt. Mona Yadav and her firm Ganesh Warehouse were already arrayed as respondents and she had actively contested the same before the Hon’ble High Court till the date of its dismissal i.e. 03.04.2013, whereas the said writ petition was dismissed on alternative remedy. Pursuant to it, the S.A. No. 89/2013 was filed by B. P. Yadav before the Tribunal below on 17.04.2013 challenging the auction sale proceedings conducted on 18.03.2013, in which Smt. Mona Yadav and her firm Ganesh Warehouse were arrayed as respondents and she appeared through a counsel and participated in its proceedings till the dismissal of the S.A. of B.P. Yadav on 01.02.2019. It is thus clear that the S.A. applicant was having knowledge of each and every steps taken by the Bank. It is also to be noted that when the writ petition of B.P. Yadav was dismissed on the ground of alternative remedy and S.A.

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was filed by him, in which the S.A. applicant was also a party, then she ought to have preferred the S.A. challenging the actions of the Bank, but she did not do so and she filed the aforesaid writ petition before the Hon’ble High Court on 08.05.2013, which was pending till 19.03.20219 and in the meantime, she was deliberately watching the fate of the S.A. of B. P. Yadav. It is also observed that as and when the S.A. of B. P. Yadava was dismissed, she immediately moved an application before the Hon’ble High Court for withdrawing the said writ petition seeking liberty to move S.A. before the Tribunal below, meaning thereby she was well aware of the appropriate remedy available to her and she was deliberately pursing her cause before the wrong forum, hence the Tribunal below has wrongly excluded the period consumed before the Hon’ble High Court, whereas section 14 of the Limitation Act requires that prior proceedings should have been prosecuted in good faith and with due diligence.

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In view of the above discussions, it is clear that the exorbitant delay occurred in filing the present S.A. by Smt. Mona Yadav is deliberate and intentional, as the fact that every action and step of the Bank was in her knowledge from the date of sale notice till the date of execution of sale deed in favour of the auction purchaser, but she opted first to remain silent for one year and lateron, she moved before the wrong forum in-spite of knowing well that one writ petition of B.P. Yadav had already been dismissed by the Hon’ble High Court on the ground of alternative remedy.

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After dealing with the above mentioned facts, it cannot be disputed that the respondents No. 1 and 2- S.A.

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Applicants were contesting the matter from the beginning either before the Hon’ble High Court or before the Tribunal below. Furthermore, after dismissal of the first Writ Petition filed by B. P. Yadav being Writ Petition No. 6223/2013 with liberty to file the S.A. under section 17 of the SARFAESI Act, the filing of second Writ Petition by the respondents No. 1 and 2-borrowers cannot be said to be justified when it was known that the writ petition was not maintainable and the S.A. under section 17 has already been filed.

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In view of the aforesaid, the impugned order dated 07.03.2020 is set aside and the Appeal Dy. No. 186/2020 filed by the auction purchaser and the Appeal Dy. No. 238/2020 filed by the Bank are allowed. Consequently, the application for condonation of delay is dismissed so is the securitization application also. Since the order impugned, by which the delay was condoned subject to cost, has been set aside, therefore, another impugned order dated 06.08.2021, whereby the compliance of the order dated 07.03.2020 was considered to be made by the Tribunal below, is also quashed and the Appeal Dy. No. 392/2021 filed by the auction purchaser is allowed..

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned and be also uploaded on e- DRT portal.

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CHAIRPERSON

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VN Giri

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Central Bank of India v. Smt Mona Yadav and Ors.

Case brief

What is this about?

What did the court decide?

Central Bank of India v. Smt Mona Yadav and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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