Dismissed

Punjab National Bank v. Kanhaiyalal Sher

DRAT1 Mar 2023REGULAR APPEAL/75/2018

Case brief

AI extract

What is this about?

Regular Appeal filed by Punjab National Bank challenging DRT order setting aside an auction sale for lack of service of sale notice. Tribunal upheld DRT order dismissing appeal, finding no proof of personal service of notice under Rule 8(6) of 2002 Rules.

What did the court decide?

Appeal dismissed, auction sale set aside, Bank directed to refund auction amount with interest, to pay costs, electricity, water and house tax.

Punjab National Bank versus Kanhaiyalal Sher — Banking and Recovery | DRAT (2023)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Regular Appeal No. 75/2018

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Punjab National Bank through its Branch Manager and authorized officer, Kanthal Branch, Ujjain (M.P) Pin 456006

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……….....……………………...………………………………………………..Appellant

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Versus

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Kanhaiyalal Sher, S/o Shri Genda Lal Sher, 61, Gali No. 2, Shanti Nagar, Near Kavelu Karkhana, Neel Ganga, (Ward No. 37), Ujjain, M.P

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Shri Rajesh Solanki, S/o Jamnalal Ji, R/o D-3/34, Triveni Vihar, Ujjain, M.P

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……….….………….…….………………………………………………….Respondents

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Advocates who appeared in this case

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For the appellant Shri O.P. Mishra, Advocate For the respondent No. 1 Shri Abhay Kumar Singh, Advocate For respondent No. 2 Shri Rajesh Solanki in person

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JUDGMENT

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Date of Decision: 01.03.2023

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R. D. KHARE, CHAIRPERSON

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ORAL

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Learned counsel for the appellant orally submits that the auction purchaser-Shri Rajesh Solanki may be impleaded as respondent No. 2 in the array of parties of this memo of appeal.

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The prayer of the appellant is allowed. Let the auction purchaser be impleaded as respondent No. 2 during course of the day.

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The present appeal has been filed under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) against the order dated 02/11/2017 passed by the DRT, Jabalpur, whereby the securitization application filed by the respondent No. 1-borrower was allowed.

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The brief facts of the matter are that the respondent no. 1- borrower was granted a housing loan of Rs. 2.70 lacs by the appellant-Bank. In order to secure the said loan, the respondent No. 1 borrower created equitable mortgage over his house situated at Plot No. 61, Shantinagar, Kavelu Karkhana ke paas, Ward No. 37, Ujjain. Since the borrower did not maintain the financial discipline, therefore, the account was classified as NPA on 30/08/2011. For recovery of the dues, the appellant-Bank initiated the recovery proceedings against the respondent nos. 1 and issued a demand notice dated 23/11/2011 under section 13(2) of the SARFAESI Act demanding a sum of Rs. 2,77,316. Since the borrower did not pay any heed to the demand raised by the Bank, therefore, the Bank took the symbolic possession of the secured property by issuing possession notice dated 21/06/2012 under section 13(4) of the said Act. Thereafter, the appellant-Bank issued auction sale notice dated 25/09/2012 scheduling the auction on 26/10/2012. The said sale notice was also published in two newspapers on 25/09/2012 itself. Accordingly, the property was sold and sales certificate has been issued in favour of the respondent No. 2.

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The respondent-borrower challenged entire proceedings of the Bank by filing S.A No. 233/2012 before the Tribunal below. The tribunal below vide impugned order dated 02/11/2017 has allowed the securitization application of the respondent no. 1-borrower and has set aside the auction sale notice dated 25/09/2012 holding that the possession notice dated 21/06/2012 is barred by limitation and the bank has failed to produce any document with regard to service of sale notice. Being aggrieved by the said order, the present appeal has been filed by the bank.

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Learned counsel for the appellant submits that the Tribunal below while passing the order impugned has recorded the

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finding that the Bank has failed to produce any documents with regard to service of sale notice upon the respondentborrower, which is mandatory as per Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (in short “Rules, 2002), therefore, the auction proceedings were held to be defective and the auction sale notice dated 25/09/2012 was set aside. The learned counsel further contents that due to the fact that the notice could not be traced out, therefore, the same could not be produced before the Tribunal below, but the same was in the record of the Bank, which is now being produced before this Appellate Tribunal. As per provision of the CPC, the said document can be produced at the Appellate stage also, as if there is no provision in the SARFAESI Act and the Rules, then the provisions of CPC will apply.

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Learned counsel for the respondent-borrower submits that the appellant-Bank did not produce any documents before the Tribunal below to show the service of sale notice upon the respondent-borrower, which is clear violation of the Rule 8(6) of the Rules, 2002, therefore, the order impugned has rightly been passed, as it has been stated in the impugned order that the said provision is not complied with. The next contention of the respondent borrower is that the document, which is sought to be produced by the Bank, is a detail of registered post for 27/09/2012 (at pg. No. 11 of the paper book), which shows that the sale notice was sent on 27.09.2012 and the sale was scheduled to be held on 26/10/2012. Even then there is no clear 30 days auction sale notice to the borrower, which is contrary to the Rule 8 (6) of the Rules, 2002. It is, therefore, prayed that the appeal filed by the appellant may be dismissed.

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The auction purchaser in person submits that since 2012 he is being harassed, as neither the possession of the property in question has been handed over to him nor the auction

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money is being refunded by the bank. It is further contented that he is continuously paying the amount towards electricity, water bill and house tax with the authority concerned for the last 12 years, whereas the possession of the property in question is being enjoyed by the borrower. It is, therefore, prayed that the Bank may be directed to refund the auction amount along with interest and the expenses incurred over the auction proceedings as well as the amount deposited towards electricity, water bill and house taxe with the authority concerned.

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Having heard the learned counsels for the parties and considering the material available on record, undisputedly, after issuance of demand notice u/s 13(2) of the SARFAESI Act, the possession notice dated 21/06/2012 was issued u/s 13(4) of the SARFAESI Act and the S.A was filed by the borrower on 09/11/2012, thus the challenge of the said notice has rightly been held to be barred by limitation by the Tribunal below.

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The main question in the present appeal is, as to whether the appellant-Bank has served the sale notice upon the borrower or not. The sale notice was issued on 25/09/2012 and the auction was conducted on 26/10/2012. The said sale notice was published in two newspapers on 25/09/2012 viz. Dainik Avantika and Dainik Bhasker. With regard to service of sale notice, the appellant bank has not produced any document before the Tribunal below, but he has filed a daily report of the India Post for 27/09/2012 before this Tribunal without any postal receipt. Without postal receipt, the report submitted by the appellant cannot be authenticated because there is no receipt number available on record. The said report does not show that when the sale notice was served upon the borrower. The sale notice was issued on 25.09.2012 and the same was published in the newspapers on the very same day i.e. 25.09.2012, which

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appears to be issued after publication of the sale notice. The same also violates the Rule 8(6) of the Rules, 2002. The appellant Bank has failed to produce any relevant document, which may prove that the notice under rule 8(6) has ever been served upon the respondent borrower. As such the appellant bank has failed to serve a clear 30 days auction sale notice upon the respondent borrower. Therefore the Tribunal below has rightly set aside the auction sale dated 25.09.2012 and subsequent proceedings thereof conducted by the appellant-bank

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In view of the above, no interference is called for in the impugned order by this Tribunal and the appeal is liable to be dismissed. Accordingly the appeal is dismissed directing the Bank to refund the auction amount to the auction purchaser together with interest @ 10% per annum simple from the date of deposit till the date of payment. The appellant bank is further directed to pay the costs incurred by the auction purchaser on registration of the Sale Certificate and the amount paid towards electricity and water bills as well as house tax to the authority concerned within one month from today. Since the auction has been set aside on the fault of the bank, therefore, the expenses incurred on registration of the Sale Certificate only shall be borne by the appellant- Bank.

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned and also be uploaded on the e-DRT portal.

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CHAIRPERSON

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Date: 01.03.2023 VN Giri

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Punjab National Bank v. Kanhaiyalal Sher

Case brief

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Punjab National Bank v. Kanhaiyalal Sher

Case brief

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