Allowed

Surender Pandey v. Bank of Baroda and Anr.

DRAT4 Sept 2024REGULAR APPEAL/115/2018

Case brief

AI extract

What is this about?

This judgment sets aside the impugned order dismissing the Securitization Application by allowing the appeal. The Appellate Tribunal held that the Bank violated mandatory provisions of the Rules, 2002. Consequently, the sale certificate and auction were quashed, and possession was restored to the borrower.

What did the court decide?

Sale certificate and auction quashed. Possession restored to borrower. Auction amount refunded to purchaser with 8% interest. Contractual interest charged by bank.

Surender Pandey versus Bank of Baroda and Anr. — Banking and Recovery | DRAT (2024)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD Regular Appeal No. 115/2018

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Surendra Pandey, S/o Jagdish Pandey, R/o Village- Pipra, P.O. Sigrawan, District- Hazaribagh, Jharkhand- 825406.

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

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Versus

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The Authorized Officer, the Chief Manager, Bank of Baroda, Hazaribagh Branch, Kalibari Road, Hazaribagh,- 825301.

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Kumar Amit Anand, S/o Sri Bigan Lal Gupta, R/o Jhanda Chowk, Thana- Sadar, District- Hazaribagh, Jharkhand825301.

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

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Advocates, who appeared in this case:

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For the appellant-Borrower Shri V. K. Shukla, Advocate For the respondent-Bank Shri Girish Kumar Srivastava, Advocate For the respondent-Auction None Purchaser

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JUDGMENT

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Date of Decision: 04.09.2024

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JUSTICE R. D. KHARE, CHAIRPERSON

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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 judgment dated 22.02.2018, whereby the S.A. No. 61/2013 filed by the appellant has been dismissed by the Tribunal below.

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The brief facts of the case are that the appellant had taken a term loan facility of Rs. 2.50 lacs from the respondentBank vide sanction letter dated 06.02.2008, to which the appellant created an equitable mortgage over his property by depositing the title deed with the respondent-Bank. The borrower did not maintain the financial discipline, therefore, the account was classified as NPA on 30.06.2009 and the demand notice dated 26.02.2010 was issued under section 13(2) of the SARFAESI Act for a sum

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of Rs. 2,91,235/-. Since the appellant-Borrower failed to repay the loan amount, therefore, the symbolic possession of the property in question was taken by the Bank by issuing possession notice dated 14.10.2011 under Section 13(4) of the said Act. Thereafter, the respondent-Bank issued possession cum sale notice scheduling the auction of the property on 21.11.2011, which was published in the newspapers on 18.10.2011 and the property was sold for Rs. 3.25 lacs and sale certificate was issued in favor of the auction purchaser on 23.12.2011 and after conclusion of proceeding under section 14, delivery of possession was given to the auction purchaser on 15.07.2016.

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It appears that thereafter an application under section 14 of the SARFAESI Act was filed by the borrower before the Deputy Commissioner (Legal Branch), Hajaribagh, in which notice dated 29.03.2012 was issued to the borrower.

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The appellant-Borrower initially challenged the sale notice dated 18.10.2011 and notice dated 29.03.2012 issued under section 14 of the SARFAESI Act by filing securitization application before the Tribunal below and further, by way of an amendment application dated 03.11.2014, the possession-cum sale notice and sale proceedings dated 22.11.2011 and grant of sale certificate were challenged and the same was allowed. The Tribunal below vide order impugned dismissed the S.A. being barred by limitation and merits also. Being aggrieved by the said order, the present appeal has been filed by the appellant.

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Learned counsel for the appellant has referred to para 12 of the impugned order, which is at page no. 51 of the paper book and has stated that the Tribunal below had taken note that the individual sale notice was not served

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upon the appellant. The learned counsel has further referred to annexure No. 2, which is possession notice dated 07.03.2011 issued by the respondent-Bank, but the said notice was not published, instead the respondentBank published possession-cum-sale notice which is at page No. 39 of the paper book.

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The learned counsel for the appellant also submitted that the appellant was not aware about the SARFAESI proceedings of the Bank and he came to know of the same through a letter dated 29.03.2012 issued by the Deputy Commissioner, Hazaribagh, which is appended as annexure No. 3 at page No. 37 of the paper book. The learned counsel further submitted that the sale certificate was issued by the respondent-Bank and the learned counsel has referred to page No. 85, which is annexure no. H, wherein the respondent-Bank has enclosed the statement of account, according to which the auction amount was deposited on 31.03.2012 just after issuance of sale certificate on 22.12.2011. The learned counsel further submitted that it is admitted fact that the Bank did not issue or serve any sale notice to the appellant and even the auction sale notice, which was published, was not in consonance with the Rules and Law as contained in the Act and Rules made there under, therefore, the order impugned passed by the Tribunal below cannot be sustained and is liable to be quashed. In support of his contention, the learned counsel has relied upon a judgment passed by the Hon’ble Allahabad High Court in Writ- C No. 14755 of 2013. Ashok Kumar Vs. Authorized Officer, Punjab National Bank and Ors., decided on 10.02.2017.

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Learned counsel for the respondent-Bank submitted that the sale was affected on 22.11.2011 and the S.A. was filed on 22.04.2013, which is grossly barred by time. Learned counsel for the respondent-Bank has referred to para 6 of the order impugned passed by the Tribunal below and has argued that the Tribunal below has taken note of the fact that the demand notice under section 13(2) dated 26.02.2010 was received by the wife of the appellant under her signature and even the possession notice under section 13(4) was affixed on the property and the photograph reveals that his wife was present during the time, hence it cannot be said that the said notice was not served upon the appellant.

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The learned counsel for the respondent-Bank has also referred to para 9 of the impugned order at page No. 49 of the paper book, wherein the Tribunal below has held that the limitation for filing the S.A. is 45 days from the date steps under section 13(4) are resorted to by the secured creditor, but in the present case, the S.A. was filed after a delay of 509 days, which has not been properly explained. It was thus contended that the appellant has not challenged the physical possession of the Bank and in this regard, he has referred to para 10 of the order impugned. The learned counsel thus contended that there is no legal infirmity in the order impugned, hence the same does not warrant any interference by this Tribunal. Hence, the appeal may be dismissed with heavy costs.

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In the rejoinder, the learned counsel for the appellant submitted that the respondent-bank has neither filed any document either before the Tribunal below or before this Tribunal with regard to service of notices under section 13(2) and 13(4) or the sale notice and the appellant came

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to know about the auction sale of the property in question only when he received a notice/letter dated 29.03.2012 from the Deputy Commissioner, Hazaribagh and from that date, the S.A. filed by the appellant was not barred by time and the Bank has also not denied the deposit of amount, therefore, the entire action of the Bank is bad in law. It was therefore, prayed that order impugned may be set-aside and the appeal may be allowed.

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Heard the learned counsels for the parties and considered the material available on record.

¶30

The present appeal has been filed against the order dated 22.02.2018, by which the S.A. filed by the borrower has firstly been dismissed being barred by time and secondly on merits also.

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It is to be seen, as to whether the S.A. filed by the appellant before the Tribunal below was barred by time and the provisions of the Act and Rules made there under were complied with by the Bank or not?

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The contention of the appellant is that no notice under the SARFAESI Act has ever been served and he finally came to know about the proceedings of the bank, when a notice dated 29.03.2012 was received by him from the Deputy Commissioner, Legal Branch, Hajaribagh, where the proceeding under section 14 of the SARFAESI Act was going on. In my opinion, it would be appropriate to consider merits of the case first, which would decide the fate of the point of limitation and also the action of the Bank that the same were taken in accordance with the Act and rules there under or not.

¶33

It is averred that the demand notice was issued on 26.02.2010 and the possession notice on 14.10.2011,

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which was only shown to be affixed on the property in question, but the Bank has not filed any documents either before the Tribunal below or before this Tribunal, which may show that the said notices have ever been served upon the appellant and published in the newspapers as required under Rule 3, 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 (In short “The Rules, 2002”).

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So far as the service of demand notice upon the wife of appellant is concerned, the contention of the Bank that Smt. Anita Sharma, who is wife of the appellant, had received the same under her signature, is not tenable, because it has never been seen that any Bank has ever served the demand notice upon the borrower, guarantor or mortgagor personally. As such, the claim of the Bank that Smt. Anita Sharma has received the demand notice and put her signature on the copy of the demand notice itself appears to be not genuine and it has got been done by the Bank to prove the service of demand notice upon the appellant. Besides it, it is also observed that the title of the appellant is different than the title of the recipient, as appellant is Pandey and the recipient is Sharma, which also creates doubt about the genuineness of the recipient, who has been stated to be the wife of the appellant by the Bank, because in this regard, no document is on record to ascertain that Anita Sharma is wife of the appellant. Thus, the finding of the Tribunal below that the demand notice was served upon wife of the appellant appears to be erroneous. In the case in hand, the respondent-Bank itself has admitted in para 18 of its objection to the S.A. that the demand notice was served upon Smt. Anita Sharma and not upon the appellant, whereas Rule 3 of the Rules, 2002 says that “ The service of demand notice as referred

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to in subsection (2) of section 13 of the SARFAESI Act shall be made by delivering (including hand delivery) or transmitting at the place where the borrower or his agent empowered to accept the notice or documents on behalf of the borrower.” As such the respondent-Bank has not filed any document which may authenticate status and signature of the recipient of the notice. Thus there is clear violation of Rule 3 of the Rules, 2002.

¶39

With regard to the auction sale, it is to be seen that the possession-cum-sale notice was published in the newspaper on 18.10.2011 scheduling the auction on 21.11.2011. In this regard, Rule 8(6) says that the authorized officer shall serve to the borrower a notice of 30 days for sale of the immovable secured assets. The Tribunal below in para 12 of the order impugned has held that “ the respondent-Bank fairly conceded that although the sale notice was published, separate sale notice was not tendered personally to the applicant ”. Thus, it is clear that the respondent-Bank has not issued/served any auction sale notice under Rule 8(6) of the Rules, 2002, which is mandatory in nature. Beside it, there is also non compliance of Rule 8(7), because the possession-cumauction sale notice was published in the newspapers on 18.10.2011, but the same was not affixed on a conspicuous part of the immovable property as required under the said Act nor served upon the appellant. As such there is non-compliance of Rules 8(6) and 8(7) of the Rules, 2002. As such the auction sale is liable to be quashed on this count alone.

¶40

From the discussions as held above, it is crystal clear that neither the demand notice not the possession notice or auction sale notice has ever been served upon the

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appellant, therefore, the contention of the appellant that he came to know about the SARFAESI proceedings of the Bank for the first time only when the notice dated 29.03.2012 was received from the Deputy Commissioner, Hazaribagh is correct. If the period of limitation is counted from 29.03.2012, the period of limitation of 45 days for filing the S.A. would expire on 13.05.2012, but the S.A. was filed on 22.04.2013, hence the application for condonation of delay is allowed and the S.A. filed by the appellant before the Tribunal below is treated to have been filed within well within the period of limitation as prescribed under Section 17 of the SARFAESI Act.

¶43

So far as merits of the case is concerned, it has already been held in the preceding paragraphs of this judgment that the respondent-Bank has failed to comply with the Rules 3, 8(1), 8(2), 8(6) and 8(7) of the Rules, 2002, therefore, the demand notice, possession notice and sale notice including the auction are set aside and subsequent actions thereof.

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In view of the above, the order impugned is set aside and the appeal filed by the appellant is allowed with no order as to cost.

¶45

The respondent-Bank is directed to refund the auction amount to the auction purchaser along with 8% interest per annum simple from the date of deposit till the date of handing over the physical possession of the property in question within 15 days from today and restore the possession of the property in question with the appellantborrower within 15 days thereafter.

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The respondent-Bank shall charge the contractual rate of interest on the amount as mentioned in the demand notice

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till the date, on which the actual possession of the property in question has been handed over to the auction purchaser and communicate the same to the appellant within 15 days from today, which shall be paid by the borrower within a month thereafter. In case of failure, the respondent-Bank shall be free to proceed for its recovery from the stage of issuance of demand notice.

¶49

Since all the proceedings have been quashed on fault of the Bank, therefore, all the expenses incurred over the proceedings as well as execution of sale deed etc. will be borne by the Bank and if the Bank intends, the same may be recovered from the officers concerned, who have conducted these proceedings.

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

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CHAIRPERSON

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VN Giri

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Surender Pandey v. Bank of Baroda and Anr.

Case brief

What is this about?

What did the court decide?

Surender Pandey v. Bank of Baroda and Anr.

Case brief

What is this about?

What did the court decide?

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