Remanded

Cfm Asset Reconstruction Private Limited v. M/s. Shekhar Champalal Pagaria Through its proprietor Mr. Shekhar Champalal Pagaria

DRAT19 Sept 2024MISC APPEAL/161/2024

Case brief

AI extract

What is this about?

DRT Appellate Tribunal set aside a non-speaking order that cancelled a sale and directed a de novo sale without considering merits, remanding it to the DRT Pune to decide the matter on merits within two months.

What the court decided

AI extract

Cfm Asset Reconstruction Private Limited versus M/s. Shekhar… — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson

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Misc. Appeal No. 81/2023

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Between

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CFM Asset Reconstruction Pvt Ltd. … Appellant/s

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V/s.

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Shekhar Champalal Pagaria through its Proprietor …Respondent/s Mr. Shekhar Champalal Pagaria & Ors. An Advocate for the Appellant is present.

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Mr. Anurag Kalavatiya, along with Mr. Bhavesh Joshi, i/b M/s. Amicus legal, Advocate for Respondent No. 1.

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AND

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Misc. Appeal No. 160/2024

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Between

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CFM Asset Reconstruction Pvt Ltd. … Appellant/s

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V/s.

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Shekhar Champalal Pagaria through its Proprietor …Respondent/s Mr. Shekhar Champalal Pagaria & Ors. An Advocate for the Appellant is present.

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Mr. Anurag Kalavatiya, along with Mr. Bhavesh Joshi, i/b M/s. Amicus legal, Advocate for Respondent No. 5.

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AND

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Misc. Appeal No. 161/2024 Between CFM Asset Reconstruction Pvt Ltd. … Appellant/s V/s.

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Shekhar Champalal Pagaria through its Proprietor …Respondent/s Mr. Shekhar Champalal Pagaria & Ors.

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An Advocate for the Appellant is present.

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Mr. Anurag Kalavatiya, along with Mr. Bhavesh Joshi, i/b M/s. Amicus legal, Advocate for Respondent No. 5.

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-: Common Order dated: 19/09/2024:-

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The appellant in these three appeals, an Asset Reconstruction Company (ARC), impugns the interlocutory orders passed in three IA’s Nos. 753/2021, 1163/2022, 1966/2022 in Securitization Application (S.A.) No. 217/2021 by the Debts Recovery Tribunal, Pune. The appellant is aggrieved and hence in appeal.

¶23

They sold the property to the auction purchaser M/s. Siddhi Impex and the said auction purchaser had filed I.A. No. 1163/2022 to get the sale set aside because there was an inordinate delay in not handing over possession of the movable property which was sold to them for a sale consideration of ₹ 1,81,00,000/- and despite the entire money being paid, there was no handing over possession and therefore, the auction purchaser was deprived of enjoying the property for a long and unreasonable time. Therefore, they filed these I.As. for getting the sale set aside.

¶24

The borrower also had filed the S.A. challenging the Sarfaesi measures including the sale in favour of the auction purchaser on various grounds. However, the Ld. Presiding Officer in the impugned order observed that since the auction purchaser has applied for setting aside the sale, and the borrower also wants the sale to be set aside, it would be in the interest of all the parties to go for a de novo sale of the property and the sale would therefore, stand cancelled. However, it is pertinent to note that a sale can only be set aside on valid grounds which are to be established by the borrower or the auction purchaser. The creditor had not agreed to the setting aside of the sale.

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The grounds which were raised by the auction purchaser to get the sale set aside should have been considered on its merits. whether Is an inordinate delay in handing over possession of the auctioned property to the auction purchaser a good ground for getting the sale set aside by the auction purchaser is the question that arose for determination. But the Ld. Presiding Officer has not gone into the merits of those contentions to get the sale set aside and has in a perfunctory manner allowed these applications and set aside the sale and directed the ARC to go for a de novo sale which definitely would be challenged by the borrower also because the borrower is challenging not only the sale but also all the procedures taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“ the SARFAESI Act” for short) which ended in the sale of the property.

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Under the circumstances, I find that the order is a non-speaking order, and therefore needs to be set aside and remanded for fresh consideration by the D.R.T. on merits. The S.A. is of the year 2021 therefore, the D.R.T. is directed to make an earnest attempt to dispose of the S.A. itself on its merits as expeditiously as possible at any rate within two months from the date of receipt of this order.

¶28

S.A. along with the I.A. No. 1163/2022 filed by the Auction Purchaser can also be disposed of on merits.

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The notice has not been served on Misc. Appeal No. 160/2024, and 161/2024 for want of service on some of the respondents. Since it is a common order which has been challenged, and all the respondents

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have been served in Misc. Appeal No. 81/2023, the notice to the rest of the respondents in those appeals are dispensed with.

Sd/-

Chairperson

rm-20-21-22