Allowed

Karur Vysya Bank v. C Arjunaraja & Anr.

DRAT4 Oct 2023REGULAR APPEAL/21/2014

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the bank's appeal against a DRT order that had set aside a concluded sale and restated possession. The Tribunal held that the DRT erred in relying on pleadings alone without proper evidence to find illegality in the possession and sale process, which complied with the SARFAESI Act.

What did the court decide?

The impugned order dated 29.11.2013 is set aside; the Special Application stands dismissed; both parties bear their own costs.

Karur Vysya Bank versus C Arjunaraja & Anr. — Banking and Recovery | DRAT (2023)

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RA (SA) 21/ 2014

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 4^th day of October, 2023

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PRESENT: HON'BLE MR. JUSTICE S.RAVI KUMAR CHAIRPERSON

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RA (SA) 21/ 2014

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(SA 62/2011 on the file of DRT, Madurai)

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Between

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The Authorised Officer, The Karur Vysya Bank Limited, No.16, A.A Road, Gayathri Illam, Gnanaolivupuram, Madurai.

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…..Appellant

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AND

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Mr. C. Arjunaraja, S/o Chellaperumal, Prop. M/s. Janaki Perumal Agencies, No.41, Sivakoil South Street, Erulappapuram, Nagercoil, Kanyakumari District.

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Mr. S. Sathyamohan, No. 20, Velladachivillai, Edalakudy (PO), Nagercoil, Kanyakumari District.

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…..Respondents

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Counsel for Appellant : Mr. T. S. Gopalam & Co., Counsel for R1 : M/s.Ramalingam & Associates Counsel for R2 : Mr. E. Sathiya Raj

RA (SA) 21/ 2014

ORDER

This Appeal is against the Order dated 29.11.2013 of DRT, Madurai, in SA 62/2011.

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Brief facts leading to this Appeal are as follows:-

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First Respondent herein filed above referred SA to set aside Possession Notice dated 18.03.2007 issued in respect of item No.1 of ‘B’ Schedule property and to declare proceedings initiated by Bank ending up with Sale dated 06.03.2009 as invalid and direct Appellant herein to restore possession.

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Bank resisted the Application contending that it duly followed all the mandatory provisions of the Act and Rules in issuing Possession Notice and conducting Sale and that the Application is devoid of merits.

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RA (SA) 21/ 2014

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On a consideration of contentions and rival

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contentions of both parties, Tribunal below allowed Securitisation Application and held that taking possession and bringing the property for Sale are not in accordance with Rules. Aggrieved by the same, Bank preferred present Appeal.

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Heard both sides.

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Advocate for Appellant submitted that Tribunal below completely ignored the law and the direction of this Tribunal, while deciding SA 62/2011. He submitted, when Bank preferred an Appeal in MA (SA) 376/2010 against Orders of DRT, Madurai, in IA 520/2008 in SA SR No. 2493/2008, this Tribunal observed that certain typographical errors have crept in the Order, therefore, it requires to be corrected, and on that ground, Order in IA 520/2008 was set aside, and matter was remitted back to Tribunal below for a fresh

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RA (SA) 21/ 2014

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disposal in accordance with law. He submitted, Tribunal below was under the impression that the District Collector cannot delegate his power, which is not stated anywhere in SARFAESI Act, on that ground alone, the process of taking possession is found illegal and incorrect. He further submitted, Tribunal below wrongly held that there is no 30 days clear Notice, without looking details furnished in the Counter. He submitted, Bank clearly followed the provisions envisaged under SARFAESI Act, 2002, and there is clear 30 days in between Sale Notice and date of auction, and Order of Tribunal below is liable to be set aside. He further submitted that Tribunal below dismissed SA on 23.12.2008 for not complying with conditional Order, and thereafter, Bank conducted Sale and Sale Certificate is issued on 13.04.2009, ignoring these aspects, Tribunal below simply carried away with the contentions of first Respondent herein, and Order of Tribunal below is liable to be set aside.

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RA (SA) 21/ 2014

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On the other hand, Advocate for first Respondent submitted, the original SARFAESI Application is amended as per orders in IA. When amendment is permitted, that Order is not challenged by Bank, therefore, it is not open for Bank to now contend that first Respondent challenged only Possession Notice. He further submitted, there is no clear 30 days in between Sale Notice and date of auction. Tribunal below rightly allowed Securitisation Application and there are no grounds to interfere with.

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I have perused material papers and impugned Order dated 29.11.2013.

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Amended copy of Securitisation Application is filed

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along with Memorandum of Appeal. As seen from the same, the main challenge is about Possession Notice. As seen from said copy, Sale conducted on 06.03.2009 also included in the grounds of challenge, contending that property was sold for lesser value and that there is no 30 days clear

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RA (SA) 21/ 2014

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notice. Tribunal below mainly examined legality of District Collector’s Order in RC No. C4/62007/07 dated 07.01.2008 and referred to certain judgements of Hon’ble High Court of Madras and Hon’ble Supreme Court. As rightly pointed out by Advocate for Appellant, those decisions are not properly understood, and wrongly applied. Hon’ble Supreme Court recently clarified that Order passed under Section 14 of SARFAESI Act, 2002, is only administrative in nature and not a judicial Order. What is to be examined by DRT under Section 17 of SARFAESI Act, 2002, is to see whether measures are followed in accordance with provisions of the Act and Rules for taking possession, either directly or with the help of District Collector or Chief Metropolitan Magistrate, as the case may be. Secured Creditor has to see that the fact of taking possession is to be published in two newspapers. As seen from record, the same is followed by Appellant by publishing in English newspaper and also in vernacular newspaper on 20.03.2008. As seen from record,

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RA (SA) 21/ 2014

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it appears that even District Collector, though not bound, issued Notice to first Respondent herein before passing orders. So, the entire objection of first Respondent with regard to Possession Notice is not supported by any material evidence; but the Tribunal below, only on the basis of pleadings, accepted the version of first Respondent.

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Other contention of first Respondent is that there is no 30 days clear Notice and property was sold for lesser price. In the Counter, Appellant specifically pleaded that Sale Notice dated 30.01.2009 was duly served on first Respondent herein, 30 days prior to the auction Sale, in compliance of provisions of SARFAESI Act and Rules. That plea is not questioned by first Respondent herein. Further, Sale Notice is published in English Daily ‘ BusinessLine’ and vernacular Daily in ‘ Dinamalar’ on 01.02.2009 and 31.01.2009 respectively, intimating the public that auction will be held on 06.03.2009 at 1.00 p.m. at the Karur Vysya

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RA (SA) 21/ 2014

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Bank Ltd., premises, Nagercoil Branch. So, there is clear 30 days gap in between Sale Notice and the date of auction from the material documents. Even tenders were opened in the presence of witnesses, and second Respondent herein became the highest bidder and he paid Rs.3.76 Lakhs on 06.03.2009 itself, and remaining balance within stipulated time, therefore, the objection of first Respondent on this aspect is also untenable.

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Other contention of first Respondent is that the property was sold for a lesser price. First Respondent contended that property is worth of Rs.36 Laksh, but it was sold for a sum of Rs.15.04 Lakhs. Except that allegation in Securitisation Application, by way of amendment, no supporting material is produced showing the market value of the property sold in auction. As per Section 17 of SARFAESI Act, 2002, DRT has to examine the facts pleaded with reference to evidence. When first Respondent did not

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RA (SA) 21/ 2014

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produce any evidence, the contention with regard to value, cannot be accepted.

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On a scrutiny of entire material, I am of the considered view that, the Tribunal below committed error in allowing Securitisation Application and setting aside a concluded Sale, without any proper evidence, therefore, I am of the view that said Order is liable to be set aside.

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In the result : Appeal RA (SA) 21/ 2014 is allowed. Impugned Order dated 29.11.2013 is set aside. Consequently, SA 62/2011 of DRT, Madurai stands dismissed. 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 4^th of October, 2023]

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[Justice S. Ravi Kumar] CHAIRPERSON

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Karur Vysya Bank v. C Arjunaraja & Anr.

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. C Arjunaraja & Anr.

Case brief

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What did the court decide?

What the court decided

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