Dismissed

Rare Asset Reconstruction Ltd. v. Mrs a Sailaja Reddy and Anr.

DRAT13 Jun 2023REGULAR APPEAL/119/2018

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application quashing SARFAESI proceedings due to lack of proof regarding affixation of an e-auction sale notice on the secured asset. The Appellate Tribunal held that affixation is mandatory under Rule 8(7) and dismissed the bank's appeal for failing to prove compliance.

What did the court decide?

Appeal dismissed; impugned order of the DRT setting aside the sale notice and quashing subsequent proceedings is confirmed.

Rare Asset Reconstruction Ltd. versus Mrs a Sailaja Reddy and… — Banking and Recovery | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA Appl. No. 119 of 2018

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(Arising out of S.A. No. 259 of 2017 – DRT- I Hyderabad)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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13.06.2023

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Rare Asset Reconstruction Ltd., having its office at 41/2, M.G. Road, Bangalore-560001 and Branch office at 1^st floor, Babukhan Estate, Bashbeer Bagh, Hyderabad – 500001.

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The Authorized Officer, Rare Asset Reconstruction Ltd., office at 1^st floor, Babukhan Estate, Bashbeer Bagh, Hyderabad – 500001.

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… Appellants

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Vs.

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Mrs. A.Sailaja Reddy, wife of Venku Reddy, residing at H No. 6-3-866, G-5, Imperial Apartment, Greenlands, Hyderabad -16.

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Mr. Ponukumati Ravi Kiran, son of Sri Yesupadam, residing at H.No.8-3-674/G2, Shikhara Apartment, P.P. Nagar, Yellareddyguda, Hyderabad.

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….. Respondents

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For Appellant : Mr. Debasish Chakraborty, Learned Counsel Ms. Sharmistha Pal, ld. Counsel. For Respondent : None

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JUDGEMENT

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This appeal has arisen against the judgement and order

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dated 17.04.2018 passed in S.A. No. 259 of 2017 by the learned DRT-I Hyderabad whereby the S.A. was allowed setting aside the sale notice and quashing all subsequent proceeding on the ground that there was no proof of affixation of Rule 8(6) notice and e- auction sale notice on the conspicuous part of the secured asset.

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Being aggrieved thereby present appeal is filed by the appellant bank.

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Respondent no.1 is a guarantor of the loan disbursed in favour of M/s. Neerajaksha Iron & Steel Pvt. Ltd. Due to irregular repayment by the borrower the loan was classified NPA and SARFAESI proceeding was initiated by the appellant bank. Respondent no.1 had field the S.A. before learned DRT challenging the SARFAESI proceedings on different grounds alleging that possession notice and e-auction sale notice are bad in law. Learned DRT has held that S.A. applicant has no right to challenge the possession notice as it is time barred. However, learned DRT has accepted the contention of the S.A. applicant that e-auction sale notice was not affixed on the conspicuous part of the secured asset.

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Learned counsel for the appellant bank submits that there is no mandatory provision of affixing Rule 8(6) notice. However, learned counsel submits that e-auction sale notice was published and affixed.

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Heard learned counsel for the appellant. Learned counsel for the respondent is not present in spite of effective service. 5. SARFAESI application was allowed basically on the ground that there is no proof of affixation of e-auction sale notice on the conspicuous part of the secured asset. Before going to resolve the issue, Rule 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002 are need to be referred :

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“8(6). - The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):

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Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the form given in Appendix IV-A to be published in two leading newspapers one in vernacular language having sufficient circulation in the locality

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8(7) - Every notice of sale shall be affixed on a conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale on the website of the secured creditor which shall include -

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(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

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(b) the secured debt for recovery of which the property is to be sold;

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(d) time and place of public auction or the time after which sale by any other mode shall be completed;

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(e) depositing earnest money as may be stipulated by the secured creditor;

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(f) any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property.”

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[emphasis supplied]

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A conjoint reading of both the sub-rules (6) and (7) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 will show that mandate of Rule 8(7) is that e-auction sale notice shall be affixed on the conspicuous part of the secured asset. Provisions of SARFAESI Act, 2002 and Rules made thereunder are procedural law. Hence, each and every procedure provided in the Rules has to be followed scrupulously by the secured creditor during the course of SARFAESI proceeding.

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Specific ground was taken by the respondent no.1 in SARFAESI Application for non-affixation of notice, but no denial was made by the Bank in its reply. Hence, it would amount as admission of the Bank. Appellant bank has failed to proof on

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evidence either before DRT or before this Appellate Tribunal that e-auction sale notice was affixed on the conspicuous part of the secured asset. Accordingly, I do not find any reason to interfere into the impugned judgement and order dated 17.04.2018 passed by learned DRT-I Hyderabad. Instant appeal is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Impugned order dated 17.04.2018

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passed by learned DRT is confirmed. No order as to costs.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me on this the 13th day of June, 2023.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 13.06.2023 23 /pkb

Rare Asset Reconstruction Ltd. v. Mrs a Sailaja Reddy and Anr.

Case brief

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Rare Asset Reconstruction Ltd. v. Mrs a Sailaja Reddy and Anr.

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