The Debt Recovery Appellate Tribunal dismissed an appeal challenging the High Court Division's dismissal of a sale application. The court upheld the lower court's finding that all procedural steps under the SARFAESI Act were duly followed and deemed the delayed deposit of 75% of the sale price as valid due to demonetization.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Reportable/ Not Reportable
IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA
(Appeal No. 133 of 2018)
(Arising out of S.A. No. 720 of 2017 in DRT – II, Hyderabad)
THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA
CHAIRPERSON
…Appellants
-Versus-
… Respondents Counsel for the parties Mr. Nemani Srinivas, Learned Counsel for the Appellants Mr. Anirban Pramanik with Ms. Subhasree Dey, Learned Counsel for the Respondents
JUDGMENT : On 12th August, 2024
THE APPELLATE TRIBUNAL :
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Instant Appeal is preferred against a judgment and order dated 22.09.2017 passed by Learned DRT II Hyderabad dismissing the S.A No. 720 of 2017 (Old SA No. 485 of 2016 in DRT-I Hyderabad Sri K. Reddiah versus M/s City Union Bank Ltd and ors).
2. As per pleadings of the parties, a term loan of Rs.30 lacs (Rupees thirty lacs) was availed by the Appellant by creating an equitable mortgage. Repayment of loan became irregular and account was classified as NPA on 03.04.2015. Notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 13.08.2015 while Notice Under Section 13(4) of the SARFAESI Act, 2002 was issued on 19.04.2016. Sale Notice was issued on 16.08.2016 fixing the date of auction on 26th October, 2016. Bids were received. Highest bidder deposited the 25% of the bid amount on the same day while the remaining amount was deposited on 11.11.2016. SARFAESI Application was filed on 08.11.2016 taking grounds that the action of the Bank was against law. Property was sold for under valuation. There is a violation of Rule 9(4) of the Security Interest (Enforcement) Rules, 2002.
3. Bank filed the opposition stating that all the steps were taken in accordance with law. Auction purchaser also filed the statement. It is stated that the bid amount of 75% was ready with him but could not be deposited due to demonetization of rupee. Thereafter the same was
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deposited on 11.11.2016. Appellant failed to avail the right under Section 13(8) of the SARFAESI Act.
4. Learned DRT framed the following two issues: i) Whether the Applicant made out a valid ground for quashing the sale proceedings conducted on 26.10.2016 pursuant to the sale notice dated 16.08.2016? ii) To what relief? 5. Learned DRT recorded a finding that notice under Section 13(2) and 13(4) of the SARFAESI Act, 2002 was duly issued and received. Notice under Section 13(4) of the SARFAESI Act was duly published in two newspapers on 01.02.2016, affixation of notice was also done on the conspicuous part of the secured assets. Possession Notice dated 19.04.2016 was received by the Appellant and was also published in two newspapers i.e Metro India in English and Visalandra in Telegu on 23.04.2016. It was also affixed on the conspicuous part of the secured assets. Sale Notice was also duly served on the Applicant and was duly published in two leading newspapers. Reserve price was fixed after obtaining the report of the approved valuer. Learned DRT further held that the Appellant was well within the knowledge of the action being taken by the Bank. Hence, the contention of the Appellant that he came to know about the auction proceedings on 05.11.2016 is not acceptable.
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6. It is further held that there is compliance of Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 as the deposit of 75% of the sale price was made on 11.11.2016. 7. Learned Counsel for the Appellant has challenged the impugned judgment mainly on the ground of violation of Rule 9(4) Security Interest (Enforcement) Rules, 2002. It is submitted that sale was conducted on 26.10.2016. 25% amount was deposited on the same day although 10% was deposited in cash while 15% was deposited by Demand Draft. It is further submitted that the remaining amount of 75% was not deposited in accordance with the provisions of Rule 9(4) of the security Interest (Enforcement) Rules, 2002.
8. Per contra, Learned Counsel for the Respondent Bank submits that the amount was deposited in accordance with Rule 9(4) Security Interest (Enforcement) Rules, 2002. There was a demonetization scheme enforced by the Government of India. Hence, the amount was deposited on 11.11.2016.
9. Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 reads as under:
“9. (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months].”
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10. A perusal of the record would show that 10% of the amount was deposited by cash, thereafter, 15% was also deposited by draft on 26.10.2016. Admittedly the remaining amount was deposited on 11.11.2016. Now it is to be seen as to whether the deposit of 75% of the amount was in accordance with Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 or not. Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 was amended with effect from 04.11.2016. As far as amendment is concerned, that relates to the extension of time for making the deposit. But in the present case as far as question of deposit is concerned, the 75% of the purchased price has to be paid by the purchaser on or before the 15th day of confirmation of sale. It is not in dispute that the deposit of 75% was made on 11.11.2016. A judicial notice of this fact can be taken that demonetization scheme was implemented by the Government of India and the transaction were stopped for two days. 15th day would be 10th November, 2016 on which date Bank transaction was not being conducted due to demonetization. Thereafter, amount was deposited on 11.11.2016. Hence, the deposit made by the auction purchaser cannot be treated as in violation of Rule 9(4) of the Security Interest (Enforcement) Rules, 2002.
11. Notice dated 16.08.2016 was duly served and affixation of the same on the conspicuous part of the secured asset was also done.
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12. Having considered the submission made by the Learned Counsel for the parties and after going through the record on the basis of the findings recorded above, I am of the considered view that the impugned judgment does not suffer from any material irregularity or illegality. Appeal lacks merit and is liable to be dismissed.
ORDER
Appeal is dismissed. Impugned order dated 22.09.2017 passed by Learned DRT II Hyderabad dismissing the S.A No. 720 of 2017 (Old SA No. 485 of 2016 in DRT-I Hyderabad (Sri K. Reddiah versus M/s City Union Bank Ltd and ors) is confirmed.
No Order as to costs.
File be consigned to Record Room.
Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.
Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.
Order signed and pronounced by me in the open Court on this the 12th day of August, 2024.
(Anil Kumar Srivastava,J) Chairperson
Dated: 12th August, 2024 /tp
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3 issues framed by the court
Whether the deposit of 75% of the sale price by the auction purchaser within the prescribed time limit under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 was valid considering the gove
Whether the lower court's finding regarding the validity of the auction proceedings and the sufficiency of service of notices suffered from material irregularity or illegality?
Whether the appeal filed against the judgment of the Debt Recovery Tribunal should be allowed or dismissed?
4 provisions across 2 enactments
Sri K. Reddiah
M/s. City Union Bank Limited
Mr. G. Murali Kishore
Anil Kumar Srivastava
As recorded by the court registry
9 orders share this CNR
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