Allowed

Union Bank of India and Anr. v. M/S Pargana Danwar Food Processor Pvt. Ltd. and 4 Ors.

DRAT11 Nov 2024REGULAR APPEAL/9/2019

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal allowed an appeal filed by Corporation Bank against an order setting aside SARFAESI proceedings. The Tribunal held that objections under section 13(3A) were validly decided by the bank and communicated through its advocate, and rejected other contention regarding subsequent sale validity.

What did the court decide?

The impugned order setting aside the SARFAESI proceedings is set aside. The appellant Bank is free to proceed further in accordance with law.

Union Bank of India and Anr. versus M/S Pargana Danwar Food Processor… — Arbitration | DRAT (2024)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Regular Appeal No. 09/2019

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The Authorized Officer/Chief Manager Corporation Bank, Zonal Office, Mahatma Gandhi Nagar, Chitragupta Nagar, Patna, Bihar- 800020.

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The Branch Manager, Corporation Bank, Hathikhanan Branch, Near Saguna More, Danapur Cantt. Road, Patna801503.

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.………....……………………...……………………………………………...Appellants

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Versus

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M/s Pargana Danwar Food Processor Pvt. Ltd., Regtd. Office at 110 KA, A/14, Bank of India Colony, Near B.V. College, Patna 800014 and having facrtory at Danwar, Kachhwa, Rohtas 821309.

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Mr. Nagbansh Singh, S/o Late Hari Narayan Singh, R/o A/14, Bank of India Colony, Near B.V. College, Patna800014.

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Mrs. Rajmati Devi, W/o Nagbansh Singh, R/o A/14 Bank of India Colony, Near B.V. College, Patna- 800014.

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Mr. Rabhubansh Singh, S/o Late Hari Narayan Singh, R/o Village Danwar, District- Rohtas, Bihar- 821311.

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………………………………………………………. (Borrowers)

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Shri Chandra Bhushan Tiwari, S/o Chuman Tiwari, R/o NH 30, Main Bye-pass Road, Near Shivam Convent School, Ashok Nagar, Kankarbagh, Patna- 800020

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(Auction-Purchaser)

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

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Advocates who appeared in this case

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For the appellant-Bank Shri S. D. Sahai, Advocate, For the respondents No. 1 to Shri Alok Rai, Advocate, 4-borrowers For the respondent No. 5- Shri Sanjay Kumar Gupta, Auction Purchaser Advocate,

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JUDGMENT

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Date of pronouncement: 11.11.2024

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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 & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter

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referred to as “the SARFAESI Act”) against the Judgment dated 11.02.2019, whereby the securitization application filed by the respondents-borrowers has been allowed.

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The brief facts of the matter are that the respondents No. 1 was granted financial assistance by the appellant-Bank in the year 2014, to which the respondents No. 2 to 4 executed various security documents and mortgaged the properties including the property in question by depositing the title deed with the Bank. The respondents-borrowers did not maintain the financial discipline, therefore, the loan account was classified as NPA and demand notice dated 01.06.20117 under section 13(2) of the SARFAESI Act for a sum of Rs. 8,14,04,325.24/-. Against the said notice, the borrowers filed an objection dated 30.06.2017, which was rejected by the appellant-Bank vide letter dated 12.07.2017. Since the borrowers had not paid any heed to the said demand, therefore, the appellant-Bank took the symbolic possession of the property in question by issuing possession notice dated 04.08.2017 under section 13(4) of the said Act, which was published in the Newspapers on 08.08.2017. Thereafter, the respondent-Bank obtained valuation reports dated 21.08.2017 and 12.10.2017 in respect of the property in question

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The respondents-borrowers challenged the entire proceedings of the Bank by filing S.A. No. 153/2017 before the Tribunal below on 15.09.2017. Thereafter, the respondent-Bank published the sale notice dated 23.11.2017 fixing the auction on 28.12.2017, but the same could not be materialized for want of bidders. The appellant-Bank again issued e-auction notice dated 31.01.2018 scheduling the auction for 21.02.2018 with the reserve price of Rs. 74.01 lacs. The property was sold for

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Rs. 74,11,000/- and sale certificate was issued on 21.04.2018 and subsequently, the sale deed was also executed on 02.06.2018 in favour of the respondent No. 5-aucton purchaser. Thereafter, the auction purchaser was impleaded and the auction sale was challenged by the borrowers by way of amendment in the pending S.A.

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The Tribunal below vide order impugned has allowed the S.A. of the respondents-borrowers and set-aside the entire proceedings of the respondent-Bank holding that the respondent-Bank has not followed the mandatory provisions while deciding the representation u/s 13 (3A) of the SARFAESI applicants. Being aggrieved by the said order, the present appeal has been filed by the appellantBank.

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Learned counsel for the appellant has referred to Para 20 at page No. 244 of the Paper Book, which is order dated 11.02.2019 and has argued that the Tribunal below has held that the respondent-Bank has not followed the mandatory procedures, while deciding the representation u/s 13 (3A) of SARFAESI applicants, as the application of mind of authorized officer is necessary and since the representation of the applicants has not been properly decided, therefore, the entire SARFAESI actions afterwards are totally vitiated. The learned counsel has drawn attention of this court to page No. 64 of the paper book, which is letter dated 12.07.2017 of the advocate of the Bank and has argued that the representation of the S.A. applicants was decided as per law, as is required under section 13(3A) of the SARFAESI Act and as per direction/instruction of the competent authority of the Bank, therefore, it cannot be said that the representation

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was not decided properly by the competent authority of the appellant-Bank.

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The learned counsel for the appellant has next argued that the representation of the S.A. applicant is not on record and only a letter dated 30.06.2017, which was sent by the learned counsel Shri Brajesh Ranjan, (at page 60 of the paper book) is not on record and has contended that this document has not been signed by the borrowers, therefore, it cannot be said that any proper representation under section 13(3A) was made by the borrowers and no contrary averment can be made at this stage. The learned counsel has referred to various judgments passed by this Tribunal as well as the other courts in support of his contention.

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Learned counsel for the respondents-borrowers submitted that an application being I.A. No. 21/2021 is pending consideration with regard to that the appellant-Bank has sold the property in question in spite of status quo order passed by this Tribunal, whereas the Tribunal below has set-aside the entire proceedings of the appellant-Bank, which is under challenge in the present appeal. The learned counsel further submitted that unless the impugned order is set-aside by this Tribunal on merits, the appellant-Bank cannot proceed against the property in question because any interim order does not confer any right to Bank for selling the property in question in view of the interim order passed by this Appellate Tribunal. In support of his contention, the learned counsel has relied upon para 10 of the judgment passed by the Hon’ble Supreme Court in Shri Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI CINOD Secretariat, Madras, reported in (1992) 3 Supreme Court Cases 1.

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The learned counsel further submitted that the sale has been conducted by the appellant-Bank during operation of the status quo order of this Appellate Tribunal, therefore, the I.A. No. 21/2021 filed by the borrowers needs to be decided first.

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The learned counsel has next contended that the representation filed by the borrowers under section 13(3A) of the SARFAESI Act needs to be decided by the secured creditor and not by an advocate, as has been held by the several Hon’ble High Courts as well as the Hon’ble Supreme Court.

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It was next contended by the learned counsel for the respondent-borrower that the possession notice under section 13(4) was issued after 55 days from the date of issuance of notice under section 13(2) of the SARFAESI Act. The demand notice dated 01.06.2017 under section 13(2) was published on 10.07.2017 and possession notice was issued on 04.08.2017, which was sent through registered post on 09.08.2017, i.e. after 5 days, which also violates the provision of Rule 8(1), as the same is required to be set aside.

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Learned counsel for the respondent-auction purchaser submitted that no notice under section 13(2) of the SARFAESI Act was ever given to Brajesh Ranjan, Advocate, who had sent a letter dated 30.06.2017 on behalf of the borrowers to the appellant-Bank. There is nothing on record to show that any such representation was made by the borrowers to the appellant-Bank, therefore, the basis, on which the impugned order has been passed by the Tribunal below holding that the

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representation has been decided by the Advocate of the Bank, is not tenable.

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I have considered the rival contentions of the learned counsels for the parties and perused the record.

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The sole controversy involved in the present case is, as to whether the objection filed by the borrowers under section 13(3A) of the SARFAESI Act has properly been decided by the appellant-Bank or not?

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Admittedly, after declaration of the loan account as NPA, a demand notice dated 01.06.2017 under section 13(2) of the SARFAESI Act was issued, which was represented/objected by the borrowers through its an advocate namely Brajesh Ranjan vide letter dated 30.06.2017. Copy of the same has been filed at page 60 of the paper book. The said representation was disposed off by the appellant-Bank and communicated through its advocate namely Shri Maneesh Kishore vide letter dated 12.07.2017, which was dispatched through registered post on 14.07.2017 and the same was delivered to the advocate of the borrowers on 15.07.2017. Copy of the same has been placed at page No. 64 of the paper book.

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It is evident from the records that the reply dated 12.07.2017 to the objection was sent to the advocate Shri Brajesh Ranjan of the borrower by Shri Maneesh Kishore, Advocate on behalf of the Bank. The contention raised by the respondents that the said reply is not valid, as it was not sent by the authorized officer of the Bank is not tenable because the letter dated 12.07.2017 itself records that “ The Bank authority has carefully examined your representation as is required under section 13(3-A) of the SARFAESI Act and as per instruction of the competent

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authority of the Bank your representation is being replied ”. From it, it is clear that that the authorized officer of the Bank has not delegated any power to the advocate instead it was communicated through advocate and the representation was decided by the Bank and the same cannot be treated as improper method of communication. This view is fortified by the principle laid down by the Hon’ble High Court of Gujrat at Ahamadabad in Special Civil Application No. 18757 of 2015- Pareshbhai Parbatbhai Kothiya Vs. Authorized Officer, HDFC Bank Ltd, decided on 18.02.2016.

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So far as the IA No. 21/2021 filed by the borrowers is concerned, it pertains to the sale of second property, which was not challenged in the present S.A. before the Tribunal below. The admitted fact is that the said S.A. was disposed off on 11.02.2019 and the second property was sold on 29.01.2019, but the borrowers did not bother to challenge the same, while there was remedy available to challenge either in the pending S.A. or by filing fresh S.A. before the Tribunal below, but the borrowers failed to do so. Hence the said application filed by the borrowers cannot be entertained in the present appeal filed by the appellant-Bank. So far as the other issues raised by the respondents are concerned, the same can also not be considered in the present appeal because if the respondents were aggrieved by any part of the order impugned, they ought to have filed their separate appeal for the same, but they did not do so, therefore, the said application filed by the borrowers is rejected.

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In view of the discussions as held above, there is no infirmity or irregularity in disposal of the objections raised on behalf of the respondents-borrowers under section

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13(3-A) of the SARFAESI Act and the Tribunal below has not considered this aspect of the matter in right perspective.

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In view of the aforesaid, the impugned order is not sustainable and is liable to be set aside. Accordingly, the same is set-aside and the appeal is allowed with no order as to costs. The appellant-Bank is free to proceed further in accordance with law.

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A copy of this judgment be supplied 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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Union Bank of India and Anr. v. M/S Pargana Danwar Food Processor Pvt. Ltd. and 4 Ors.

Case brief

What is this about?

What did the court decide?

Union Bank of India and Anr. v. M/S Pargana Danwar Food Processor Pvt. Ltd. and 4 Ors.

Case brief

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What the court decided

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