Dismissed

M/s Thilak International v. Uco Bank & Anr.

DRAT3 Apr 2023REGULAR APPEAL/62/2018

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed the Appeal filed by a borrower challenging the dismissal of his Securitisation Application. The Tribunal held the Appellant was time-barred under Section 13(8) of SARFAESI Act and noted he did not challenge the valid Sale Notice or Auction that had concluded years prior.

What did the court decide?

Appeal RA (SA) 62/2018 is dismissed with costs.

M/s Thilak International versus Uco Bank & Anr. — Banking and Recovery | DRAT (2023)

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RA (SA) 62/2018

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 3^rd of April, 2023

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

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RA (SA) 62/2018

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[TSA No.60/2007 on the file of DRT, Madurai]

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Between

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M/s. Thilak International, Rep. by its Partner, D. Thilagaraj, 4C/5, 4C/7, Mani Nagar, Tuticorin – 628 003. Now represented by its Partner, D. Joseph Raja.

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……Appellant

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And

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UCO Bank, Regional Office, Chennai – 600 024. Rep. by the Authorised Officer.

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RA (SA) 62/2018

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UCO Bank, Tuticorin Branch, 208, C.D., V.E. Road, Tuticorin – 628 003. Rep. by its Branch Manager.

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Mr. G. Saravanan, S/o Mr. Ganesan 41, Velachery Main Road, Vijaya Nagar, Chennai – 600 042.

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Mr. J. Saravanan, S/o D. Jeyapaul, 1C/6, Perumalpuram, Tuticorin – 628 002.

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….. Respondents Counsel for Appellant : M/s. J. Antony Jesus Counsel for Respondent Nos.1 & 2 : Mr. V. Suthakar and Mr. K. S. Viswanathan Counsel for Respondent Nos. 3 &4 : M/s. RRN Legal :

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RA (SA) 62/2018

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ORDER

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This Appeal is against Order dated 17.11.2017 in TSA 60/2007 of DRT, Madurai.

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Brief facts leading to this Appeal are as follows:-

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Appellant herein filed SA 50/2006 before DRT-II, Chennai, mainly challenging Notice dated 10.03.2006, subsequently, SA is transferred to DRT, Madurai, which is renumbered as TSA 60/2007. DRT, Madurai, allowed TSA 60/2007 on 31.01.2008, aggrieved by which, Bank filed RA (SA) 111/2008 before this Tribunal, and my predecessor in office, allowed Appeal on 10.03.2011 by setting aside Order of Tribunal below in TSA 60/2007 dated 31.01.2008. Challenging Orders of this Tribunal, Appellant filed Writ Petition WP No.18753/2011 before Hon’ble High Court of Madras, and Hon’ble High Court by Order dated 28.08.2012, while upholding Order of this Tribunal, remanded RA (SA)

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RA (SA) 62/2018

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111/2008 to DRT, Madurai, for a fresh consideration, and to that extent, modified Order of this Tribunal.

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After remand, DRT, Madurai, by considering

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contentions and rival contentions of both parties, dismissed TSA 60/2007 on 17.11.2017, aggrieved by which, present Appeal is preferred.

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Before going into contentions and rival contentions, it may also necessary to record certain facts that happened in interregnum period. During pedency of SA, Bank issued Sale Notice dated 20.01.2007 fixing sale on 01.02.2007. Appellant herein challenged said Notice before Hon’ble High Court in WP No. 3318/2007, and Hon’ble High Court of Madras at Madurai Bench, dismissed said Writ Petition on 12.12.2007. In the meantime, sale took place and Auction Purchasers deposited bid amount and Sale Certificate was issued and registered later.

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RA (SA) 62/2018

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This Appeal was finally heard on 28.10.2022. When this Appeal was coming up for orders, Advocate for Appellant herein filed a Memo on 08.12.2022 stating that Appellant filed Writ Petition No. 32325/2022 before Hon’ble High Court of Madras, and Hon’ble High Court, disposed of it on 02.12.2022, and Orders of Hon’ble High Court have to be complied with, to render justice. As Appellant filed Memo, matter was posted for further hearing without pronouncing Order, and as Hon’ble High Court Order is not produced, matter was adjourned from time to time, and finally Order copy of Hon’ble High Court dated 02.12.2022 was received by this Office on 07.03.2023, and thereafter, arguments are concluded on 13.03.2023.

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During pendency of this Appeal, Auction Purchasers,

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who are arrayed as Respondent Nos. 3 and 4, impleaded as parties, as per orders in IA 415/2018 and IA 553/2018, respectively.

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RA (SA) 62/2018

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Heard arguments of parties.

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7. Advocate for Appellant submitted that Order of Tribunal

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below is contrary to law, and it failed to appreciate the material in perspective manner. It is contended that Tribunal below erred in not passing a speaking Order, and it failed to consider points raised by Appellant. He submitted Possession Notice issued by Bank is contrary to provisions of Section 13(4) (a), (b), (c) and (d), of SARFAESI Act, 2002, and same is not examined by Tribunal below. He submitted that Tribunal below not examined the fact that no Sale Notice has been issued inconformity with Appendix IV, and failed to notice such procedural irregularities. He further submitted, Tribunal below failed to notice the fact that Respondent Bank caused publication in newspapers on 24.05.2006, cautioning public and borrowers that Bank has taken possession on 10.03.2006, and Notice dated 10.03.2006 is only Possession Notice, and not Sale Notice. He submitted that Tribunal below failed to consider that Notice dated 10.03.2006, is not

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in accordance with the provisions of the Act and Rules made

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RA (SA) 62/2018

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thereunder. He submitted that there is no clear 30 days Sale Notice as required under Rules, and this aspect was not examined by Tribunal below. He submitted that Order of Tribunal below is contrary to law and liable to be set aside.

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Advocate for Bank submitted that Appellant availed different credit facilities from the year 2001, and as it committed default in payment of outstanding, Demand Notice under Section 13(2) of SARFAESI Act, 2002, was issued, and in spite of receiving said Notice, Appellant failed to make any payment, therefore, Bank issued Possession Notice dated 10.03.2006 as per Section 13(4) of SARFAESI Act, 2002. He submitted that Appellant filed Writ Petition WP (MD) No. 3550/2006 challenging Section 13(4) Notice, but, said Writ Petition was dismissed as alternate remedy is available, and thereafter, Appellant filed SA 50/2006 before DRT-II, Chennai, challenging Section 13(2) Notice dated 14.06.2005 and Notice dated 10.03.2006. It is submitted that during pendency of proceedings, Respondent Bank issued Sale Notice dated 20.01.2007 and conducted Sale. He submitted,

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RA (SA) 62/2018

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initially, DRT, Madurai, allowed Securitisation Application, challenging which, Bank preferred an Appeal, and this Tribunal was pleased to set aside Order of DRT, and gave liberty to Respondent Bank to proceed against secured asset, and recover money. He submitted that Appellant filed Writ Petition challenging Order of this Tribunal, and Hon’ble High Court upheld Order of this Tribunal, but remitted back to DRT for fresh consideration. After remit, DRT held that Notice dated 10.03.2006, cannot be construed as Sale Notice. It is only Possession Notice. It is submitted that when Bank issued Sale Notice, same is not challenged by Appellant, and in pursuance of Sale Notice, Sale is already concluded, and Auction Purchasers have deposited bid amount, and Sale Certificate was also registered in the names of Auction Purchasers on 11.02.2008, in view of same, this Appeal is no longer maintainable, and present Appeal is nothing but, dragging issue, therefore, liable to be dismissed.

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RA (SA) 62/2018

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Advocate for Respondent Nos.3 and 4 submitted that Respondents 3 and 4 were declared as successful bidders in auction conducted on 01.02.2007, and as per directions of Bank, by taking into consideration stay granted by Hon’ble High Court, balance money was paid within stipulated time, and Sale Certificate was issued, and thereafter, it was registered. . It is submitted that Appellant even challenged Sale Notice, which was subject matter of Sale conducted by Bank, in which these Respondents purchased properties, before Hon’ble High Court, and Hon’ble High Court dismissed Writ Petition holding that there is no illegality in Sale Notice. It is submitted that there are no merits in the Appeal, and the same is liable to be dismissed.

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I have perused material papers including earlier Orders, and Orders of Hon’ble High Court. The latest Order of Hon’ble High Court is dated 02.12.2022 in WP No. 32325/2022, which is filed with a request to direct Bank to receive entire dues from Appellant within time to be fixed by Court, contending that an Application is filed seeking such

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RA (SA) 62/2018

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relief before DRAT, but it was returned on maintainability. Hon’ble High Court, by considering earlier Orders and earlier litigation, disposed of Writ Petition, directing this Tribunal to dispose of the Appeal, within a period of four weeks from the date of receipt of copy of Order.

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As already referred to above, Order copy is received on 07.03.2023, and thereafter, arguments are heard on 13.03.2023, and posted for Orders to this date.

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Though it is contended by Advocate for Appellant that Hon’ble High Court, in its Order dated 02.12.2022, directed this Tribunal to number IA in Diary No.647/2022, there is no such direction in the Order dated 02.12.2022. Said IA in Diary No.647/2022 is filed to direct Bank to receive entire dues from Petitioner. As per Section 13(8) of SARFAESI Act, 2002, remedy is provided to borrower to offer the dues within stipulated period. Section 13(8) of SARFAESI Act, 2002, is amended in the year 2016, and prior to amendment, borrower has to tender entire amount with all costs, charges

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RA (SA) 62/2018

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and expenses, at any time before the date fixed for Sale. As already referred to above, during pendency of SA proceedings, Sale Notice was issued and sale was fixed to 01.02.2007. So, as per the provisions under Section 13(8) of SARFAESI Act, 2002, Appellant has to tender the dues with all costs, charges and expenses, before the date fixed for sale, which means, it has to be tendered before 01.02.2007. Admittedly, Application in Diary No.647/2022 is filed in the year 2022, which is nearly after 15 years of Sale. Office is, therefore, rightly raised an objection with regard to maintainability, particularly, when Section 13(8) SARFAESI Act, 2002, prescribes period, to offer the dues. After amendment, this period is further reduced by saying that offer should be made before publication of Notice for public auction. So, either way, the offer of Appellant, is far beyond the period prescribed under Section 13 (8) of SARFAESI Act, 2002, that too, nearly after 15 years.

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RA (SA) 62/2018

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Now, coming to the challenge under Securitisation Application, Appellant filed Securitisation Application with a relief to quash Notice dated 10.03.2006; treating it as Sale Notice, which is not according to the provisions of SARFAESI Act, 2002, and consequently set aside the subsequent proceedings. As seen from contents of Securitisation Application, Notice dated 10.03.2006, is challenged contending that it is a Sale Notice, and Bank has not followed mandatory provisions that are stipulated for issuing Sale Notice. Tribunal below, considered this aspect, held that, Notice dated 10.03.2006, is not a Sale Notice, though it is styled as Sale Notice, it is only Possession Notice issued under Section 13(4) of SARFAESI Act, 2002. In fact, this Tribunal, in its Order dated 10.03.2011, clearly held that a perusal of Notice dated 10.03.2006 reveals that Bank issued two different Notices; one is Possession Notice under Section 13(4) of SARFAESI Act, 2002, and other is Sale Notice. Hon’ble High Court of Madras at Madurai Bench, in Writ Petition filed by Appellant, in its Order dated 21.04.2006, held that Possession Notice had been issued under Rule 8(1)

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RA (SA) 62/2018

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of Rules and Sale Notice had been issued informing the public about proposal to sell, thereby, it is only information to public and actual date of Sale is not stated in Notice, thereby, it cannot be said that there is violation of Rules, therefore, it is clear that Notice dated 10.03.2006, is not a Sale Notice, particularly, when Bank issued further Notice on 20.01.2007, in pursuance of which, Sale is conducted.

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Admittedly, Appellant, neither challenged Sale Notice dated 20.01.2007 nor Sale, that was held on 01.02.2007, therefore, any length of argument on behalf of Appellant, touching these two Notices, cannot be accepted, as they are not subject matter in SA. Tribunal below rightly dismissed Securitisation Application by considering Order of this Tribunal dated 10.03.2011 and Orders of Hon’ble High Court in Writ Petition No.18753/2011 dated 28.08.2012, wherein Hon’ble High Court upheld findings of this Tribunal with regard to Notice dated 10.03.2006.

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RA (SA) 62/2018

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On a overall scrutiny of material, I am of the considered view that Tribunal below was right in dismissing Securitisation Application, and there are absolutely no grounds to interfere with Order of Tribunal below.

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For the reasons stated above, it is held that Appeal is devoid of merits, and there are absolutely no grounds to interfere with reasoned Order of Tribunal below dated

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17.11.2017.

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In the result: Appeal RA (SA) 62/2018 is dismissed

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with 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 3^rd of April, 2023]

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[ Justice S. Ravi Kumar] CHAIRPERSON

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M/s Thilak International v. Uco Bank & Anr.

Case brief

What is this about?

What did the court decide?

M/s Thilak International v. Uco Bank & Anr.

Case brief

What is this about?

What did the court decide?

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