Dismissed

Mr S Chrispin Raj v. Repco Bank

DRAT27 Sept 2023REGULAR APPEAL/2/2021

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed an appeal challenging a bank property sale. The Bench held the initial High Court decision regarding bank status was not retrospective, found no evidence of collusion, and affirmed the sale adhered to Rules. The appeal was rejected on merits and maintainability.

What did the court decide?

The Appeal RA (SA) 2/2021 was dismissed with both parties to bear their own costs.

Mr S Chrispin Raj versus Repco Bank — Banking and Recovery | DRAT (2023)

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RA (SA) 2/2021

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 27^th of September, 2023

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

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RA (SA) 2/2021

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[SA SR No. 10296/2017 on the file of DRT-III, Chennai]

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Between

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S. Chrispin Raj, S/o T. S. Selvaraj, Redhills Medical, No.253, G.N.T. Road, Redhills, Chennai – 600 052.

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..Appellant

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AND

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The Authorised Officer, REPCO Bank, REPCO Towers, No.33, North Usman Road, T. Nagar, Chennai – 600 017.

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C. Selvaraj, S/o Chithambaram, 2/229, Thiruvallur Street, Padianallur, Redhills, Chennai – 600 052.

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Respondents

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Counsel for Appellant : Mr. N. R. Anantha Rama Krishnan Counsel for R1 : Mr. A. Ilangovan Counsel for R2 : Mr. A. Joseph Dorairaj

RA (SA) 2/2021

O R D E R

This Appeal is against the Order dated 07.05.2019 of DRT-III, Chennai, in SA SR No.10296/2017

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Brief facts leading to this Appeal are as follows:-

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Appellant herein filed above referred SA SR challenging Sale held on 15.11.2017 and consequential Sale Certificate registered on 01.12.2017, contending that the Sale process is vitiated under law.

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Tribunal below, initially, dismissed said Application on 02.08.2018 and said Order is challenged before Hon’ble High Court of Madras in Writ Petition No. 23073/2018 and Hon’ble High Court, by an Order dated 05.09.2018 was pleased to set aside the Order of Tribunal below dated 02.08.2018, and remitted back the matter to DRT with a direction to dispose of the same, on merits and in

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RA (SA) 2/2021

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accordance with law. Thereafter, Tribunal below decided said Application after hearing all the parties, and dismissed the same, through impugned Order dated 07.05.2019; aggrieved by which, the present Appeal is preferred.

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Heard the arguments of all the Advocates for parties. Appellant and second Respondent also filed their respective Written Submissions.

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Advocate for Appellant mainly raised three points, and submitted that, impugned Order is liable to be set aside. First point urged on behalf of Appellant is that first Respondent herein is not a Bank, therefore, not entitled to initiate SARFAESI proceedings. Second point urged on behalf of Appellant is that Tribunal below erred in holding that SARFAESI Application is not maintainable and barred by limitation, and the third ground urged is that first Respondent did not obtain proper Valuation Report as required under Rule 8 (5) of Security Interest (Enforcement)

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RA (SA) 2/2021

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Rules, 2002, (hereinafter referred to as Rules) and Respondents 1 and 2 colluded together and stage managed in manipulating auction Sale. It is further contended, though Auction Sale is published, general public are not put on Notice. It is further contended that property worth of Rs.7 Crores was sold for a meager amount of Rs.3,03,75,000/- and these aspects are not considered by the Tribunal below, therefore, Order of Tribunal below is liable to be set aside.

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Advocate for Bank refuted the arguments of Appellant, and submitted that, the decision relied on by Appellant for the proposition that first Respondent is not a Bank, is not applicable to the case on hand. He further submitted that, Tribunal below while considering the point of limitation, also considered the merits of the case, and found that, the allegations made in Securitisation Application are not tenable, therefore, Order of Tribunal below, is in accordance with law. He further submitted that the allegation of

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RA (SA) 2/2021

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collusion between Respondent No.1 and Respondent No.2, is not supported by any material, on the other hand, the documents produced on behalf of Bank including the bid sheets, do show that the auction is conducted in a transparent way. He further submitted that the Sale process is conducted in accordance with Rules made under SARFAESI Act, 2002, by serving Sale Notice, by affixing the same on the property and by publishing Sale Notice in two leading newspapers, therefore, the allegation that general public are not put on Notice, is not tenable. He further submitted, the objection raised by Appellant with regard to payment of bid amount, is not tenable, and documents produced before DRT, would clinchingly show that, first Respondent strictly followed all the Rules in conducting the Sale and issuing Sale Certificate. It is submitted, there are no merits in the Appeal and liable to be dismissed.

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Advocate for Respondent No.2 i.e. Auction Purchaser submitted that the Application to set aside the Sale is not maintainable without depositing the entire Sale price, and to

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RA (SA) 2/2021

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support his arguments, he has relied on Rule 60 of II Schedule to the Income Tax Act. He further submitted

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that the Appellant allowed the Sale to take place on 15.11.2017 without questioning reserve price mentioned in the Sale Notice. He submitted, if really, Appellant has to say that reserve price is far low than the market value, he should have filed Securitisation Application before the auction date, but, Appellant conveniently filed Securitisation Application after completion of Sale and registration of Sale Certificate. He submitted that Respondent No.2 is a bona fide purchaser and parted with Rs.3,03,75,000/- about six years back, and till now, he is not put in possession of the property. It is submitted, Tribunal below rightly dismissed the Application, both on merits and maintainability, and there are no grounds to interfere with the same.

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First contention of Appellant is that, first Respondent is not a Bank, and therefore, not entitled to initiate SARFAESI action. To support his arguments, he relied on the judgement of Hon’ble High Court of Madras dated 6

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RA (SA) 2/2021

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03.03.2021 in Writ Petition No.33133/2019, in the case of SP Ganesan Vs. Authorised Officer, REPCO Bank . In that decision, one SP Ganesan filed the Writ challenging Demand Notice issued under Section 13(2) and Possession Notice issued under Section 13(4) of SARFAESI Act, 2002. By considering the material of that case, Hon’ble High Court held that the first Respondent therein cannot regarded as a Bank or Secured Creditor, therefore, Notices issued are not maintainable. Referring to that, Advocate for Appellant submitted that, first Respondent herein is the Respondent in the said Writ Petition, by applying that judgement, it has to be held that first Respondent is not a Secured Creditor.

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It is not in dispute that Sale in this case took place on 15.11.2017 i.e. long prior to filing of the Writ in the above referred case. Said Writ is filed in the year 2019, by which date, the impugned Order in this case, is already passed. By that date of judgement of above referred case of Hon’ble High Court of Madras, the Sale in this case is already concluded, Sale Certificate is also registered, therefore, that decision, as

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RA (SA) 2/2021

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rightly pointed out by Advocate for first Respondent, has no application here, because it cannot have retrospective effect.

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Next contention of Appellant is that Tribunal below erred in holding that Securitisation Application is filed beyond the period of limitation. Though, Tribunal also considered the period of limitation, but it decided the matter on merits, by considering the allegations and counter allegations, therefore, the point of limitation, need not be looked into separately, and it has to be dealt with other contentions touching the merits.

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As already referred to above, Securitisation Application is filed challenging the Sale held on 15.11.2017. Though, the Application runs into several paragraphs, the relevant objection regarding Sale is at para 16. According to Appellant, the entire Sale process is on account of collusion between Bank and 2^nd Respondent, to enable 2^nd Respondent to grab the property. One for the contentions of Appellant is

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RA (SA) 2/2021

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that the proposed Sale was not put on Notice to public as required under law. Though, it is contended that there is no public Notice, Appellant failed to produce any material in support of it; on the contrary, the document filed along with Memorandum of Appeal namely Tender/Public Re-auction Sale Notice dated 05.10.2017, Tender/Public Re-auction Sale Notice showing affixture of photographs, Tender/Public Re-auction Sale Notice published in ‘ Dinamani’, Tamil Daily and Tender/Public Re auction Sale Notice published in ‘ The New Indian Express ’, English Daily, would clearly establish that Sale dated 15.11.2017 is conducted in accordance with Rules (8) and (9) of Rules, 2002. Tribunal below dealt with this aspect, in detail, therefore, there is no need to reiterate the same.

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Other contention of Appellant is that the property worth of Rs.7 Crores is sold for a meager amount of Rs.3.03 Crores and odd. To support this contention, Advocate for Appellant relied on Valuation Report dated 10.03.2017 issued by

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RA (SA) 2/2021

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M. Manivannan, a licensed authorized Surveyor. According to Appellant, they have obtained this Valuation Certificate. As seen from this, the Schedule property is valued as per guideline rate as obtained from website at Rs.1.25 Crores, but, he quoted prevailing market price at Rs.68 Lakhs to Rs.72 Lakhs per cent, which comes to Rs.6.72 Crores. There is no reference in the Valuation Certificate as to the basis for the prevailing market price. When the guideline rate which is obtained from website i.e. Government rate, that is Rs.1.25 Crores for entire property, it is for the Appellant to show the prevailing market value. Respondent Bank, before issuing Sale Notice, obtained Valuation Report dated 04.07.2017, based on which, reserve price is fixed. When the guideline value is Rs.1.25 Crores and the reserve price is fixed at Rs.3.02 Crores, the same cannot be held as low, without acceptable evidence. As seen from the bid sheet, the bidders went on increasing the reserve price, and finally, 2^nd Respondent is declared as highest bidder for a sum of Rs.3,03,75,000/-. Tribunal below, considered these aspects and negatived the contention of collusion between

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RA (SA) 2/2021

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Respondent No.1 and Respondent No.2, I do not find any wrong in the approach of Tribunal below in discarding the objection of Appellant. As rightly pointed out by Advocate for first Respondent, the allegation of collusion remained as allegation, and not at all substantiated with material evidence.

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Appellant also contended that Sale Certificate issued is not in conformity with Act and Rules. But, said objection cannot be countenanced when the issue of Sale Certificate, is not a measure, and it is only consequential to Sale. Further, if any wrong details are there in the Sale Certificate, for that, only Auction Purchaser could have grievance about it, and when Appellant’s contention with regard to Sale, is not accepted, the Sale Certificate issued as a consequential of Sale, cannot allowed to be questioned.

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RA (SA) 2/2021

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On a scrutiny of entire material, I am of the considered

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view that the Tribunal below rightly dismissed the Securitisation Application both on merits and maintainability, and I do not find any grounds to interfere with the same.

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For the reasons stated above, it is held that the Appeal

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is devoid of merits and liable to be dismissed.

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15. In the result; the Appeal RA (SA) 2/2021 is dismissed.

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Both parties shall bear their own 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 27^th of September, 2023]

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[ Justice S. Ravi Kumar] CHAIRPERSON

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Mr S Chrispin Raj v. Repco Bank

Case brief

What is this about?

What did the court decide?

Mr S Chrispin Raj v. Repco Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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