Allowed

K Vetrivel v. City Union Bank Limited

DRAT4 Aug 2023REGULAR APPEAL/59/2022

Case brief

AI extract

What is this about?

The Deputy Chairman allowed an appeal filed by an auction purchaser against a direction allowing the borrower to redeem mortgaged property. The Tribunal set aside this direction as it infringed the purchaser's legal rights due to non-disclosure of the fact that the property had already been sold.

What did the court decide?

The impugned direction allowing redemption was set aside and the Securitisation Application dismissal was confirmed.

K Vetrivel versus City Union Bank Limited — Company and Corporate | DRAT (2023)

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RA (SA) 59/202

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 4^th of August, 2023

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

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RA (SA) 59/2022

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(TSA 7/2022 on the file of DRT-III, Chennai)

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Between

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Mr. K. Vetrivel, S/o Mr. Kandhasamy, No.55/365, Sai Sandhiya Illam, Gandhi Road, West Tambaram, Chennai -600 045.

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…..Appellant

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AND

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Authoirsed Officer, City Union Bank, Administrative Officer, No.24-B, Gandhi Nagar, Kumbakonam - 612 001.

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RA (SA) 59/202

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K. Suresh, S/o Krishnan, No.163, Sambanthanar Street, Pammal Main Road, Pammal, Chennai – 600 075. 3. City Union Bank Tambaram (West), No.24/38, Rajaji Salai, Tambaram West, Chennai – 600 045. 4. M/s. Asia Trading Centre, No. 1/27, Saidapet Road, Vadapalani, Chennai – 600 026. 5. Mr. Mohamed Othumansha Maricar, No. 201, 61/71, Aspririn Garden II Street, Kilpauk, Chennai – 600 010. 6. Mrs. Rabiyathul Falila Banu, No. 201, 61/71, Aspriin Garden II Street, Kilpauk, Chennai – 600 010. …… Respondents (Respondents 4 to 6 are given up) Counsel for Appellant. : Mr. S. A. Murali Counsel for R1 & R3 : Mr. P. Srinivasan Counsel for R2 : Mr. R. Krishnamoorthy

RA (SA) 59/202

ORDER

This Appeal is against Order dated 17.10.2022 of DRT-III, Chennai, in TSA 7/2022.

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Brief facts leading to this Appeal are as follows:-

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Second Respondent herein filed TSA 7/2022

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questioning the measures initiated by 1^st Respondent under Section 14 of SARFAESI Act, 2002.

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After considering submissions of Respondents 1 & 3 and Respondent 2 herein, Tribunal below, held that Application is liable to be dismissed, but granted liberty to 2^nd Respondent herein to pay outstanding on or before 30.12.2022 and redeem his property. Aggrieved by said direction, Appellant, who is a third party, Auction Purchaser, preferred the present Appeal.

RA (SA) 59/202

3. Heard both sides.

Advocate for Appellant submitted that Tribunal below ought not have granted liberty to 2^nd Respondent herein, as by that date, the right of redemption of property is not available. He submitted, said direction infringed the legal right of Auction Purchaser, which forced Appellant to file this Appeal.

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Advocate for 2^nd Respondent contended that

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outstanding is paid on 03.12.2022 itself, though outer limit is upto 30.12.2022. It is submitted, in view of same, the Appeal is liable to be dismissed.

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Advocate for Bank, except confirming the payment by

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2^nd Respondent and stating that Bank received money as per direction of DRT, no other arguments are advanced.

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RA (SA) 59/202

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I have perused material papers including impugned Order dated 17.10.2022.

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As all the material papers are not filed along with Appeal Memorandum, original record is secured from Tribunal below and the same is verified.

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The only grievance of Appellant is that he has paid entire sale consideration of Rs.70.10 Lakhs to Respondent Bank, and granting liberty to 2^nd Respondent herein to redeem the property by extending time upto 30.12.2022 has caused infringement to his legal right.

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Now, it may be relevant and appropriate to extract the impugned direction for better appreciation:

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“ ……..

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However, liberty be with applicant to approach respondent bank by or before 30.12.2022 and redeem his property, failing which respondent bank will be entitled to execute the warrant pursuant to the order

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RA (SA) 59/202

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of Ld. CJM as well as to proceed further in accordance to law for recovery of their dues. This order be restricted only to the property mortgaged by applicant herein and not to any other security, if available to the respondent bank. Interim order, if any granted and subsisting till this day stands vacated and all other IAs, if any pending stand closed.

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With the above directions, this SA stands disposed.”

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As seen from record, Securitisation Application is filed before DRT-I, Chennai, but because of change of jurisdiction, said SA was transferred to DRT-III, Chennai, which is registered as TSA 7/2022. As seen from lower court record, this matter came up before Learned Presiding Officer for first time on 20.08.2022, and on considering the submissions made on behalf of 2^nd Respondent herein, permission is accorded to 2^nd Respondent to pay 10% of Rs.70/- Lakhs, to the credit of Borrower’s loan account with Respondent Bank, and on such deposit, Bank was directed to maintain status quo and posted the matter to 20.09.2022 for reporting

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RA (SA) 59/202

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compliance; on which date, compliance is reported and both sides were present. As Advocate for Bank sought time for filing Counter, matter is posted to 17.10.2022. On 17.10.2022, matter is disposed of by considering the submissions of both sides.

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As seen from impugned Order, it appears that, Advocate for Bank represented that Bank is filing a Memo into Court along with statement of accounts evidencing the balance outstanding. It is represented before Tribunal below on behalf of Bank that several opportunities were extended to 2^nd Respondent herein, but except seeking extensions, he has not complied with his own undertaking to redeem the property. Considering these submissions, the above direction is given.

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From a reading of impugned Order, it appears that, this

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Order is passed in open court without looking at Memo filed

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RA (SA) 59/202

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on behalf of Bank, believing the representation of Bank’s Advocate. But, as seen from the Memo, it appears that the property was already sold on 20.06.2022 much before Order of CJM. It is also clear from the Memo that Auction Purchaser paid entire sale consideration of Rs.70.10 Lakhs and Sale Certificate is issued on 17.08.2022. As seen from record, Securitisation Application is filed before DRT-I, Chennai, on 18.08.2022, i.e., one day after issue of Sale Certificate. When property was already sold and Sale Certificate was issued, minimum expected from Bank’s Advocate is to place those facts before Tribunal through its oral submissions, when it made its first appearance on 20.09.2022. Even if it is not made on that date, at least, on 17.10.2022, when it is represented that they are going to file Memo, it is expected to inform the Tribunal about sale that was concluded on 20.06.2022. But, both Bank and 2^nd Respondent herein, kept the Tribunal below in dark and allowed it to give such a direction as though Orders of CJM were at the stage of Section 13(4) of SARFAESI Act, 2002.

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RA (SA) 59/202

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But, in fact, CJM Orders are subsequent to Sale, which fact is not brought to the notice of Tribunal below.

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As rightly pointed out by Advocate for Appellant, the above direction certainly infringes legal right of Auction Purchaser, because it is indirectly amounts to setting aside the Sale without there being challenge. Had the Bank placed

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the true facts before Tribunal below, before passing impugned Order, I am sure that such a direction ought not have been given by Tribunal below. Impugned direction is only because suppression of fact by Bank.

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On a scrutiny of entire material, I am of the considered view that the Tribunal below ought to have been careful before giving such direction. When Bank’s Advocate represented that Memo is being filed showing outstanding of balance, Tribunal below ought to have postponed the case till Memo is filed and should have disposed of the matter only after verifying the Memo. If that is done, this situation ought not have been occurred. Anyway, without going into that

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RA (SA) 59/202

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controversy, suffice to say that impugned direction is unwarranted, and it infringes legal right of Auction

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Purchaser.

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In view of same, direction given by DRT-III, Chennai, is liable to be set aside.

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In view of my foregoing observations and findings,

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Appeal RA (SA) 59/2022 is allowed with costs and impugned direction referred to above, is set aside, confirming the dismissal of Securitisaion Application TSA 7/2022. 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 August, 2023]

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[ Justice S. Ravi Kumar] CHAIRPERSON

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K Vetrivel v. City Union Bank Limited

Case brief

What is this about?

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K Vetrivel v. City Union Bank Limited

Case brief

What is this about?

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