Dismissed

State Bank of India v. Tadikonda Prabhakar

DRAT10 Dec 2024REGULAR APPEAL/79/2024

Case brief

AI extract

What is this about?

The Tribunal dismissed the bank's appeal against the DRAT judgment that allowed an auction purchaser to recover accrued interest on the deposit of sale consideration, relying on the Supreme Court in Agarwal Tracom to establish locus standi.

What did the court decide?

The appeal was dismissed and the DRT order allowing the auction purchaser Rs.16,99,591 interest payment was affirmed.

State Bank of India versus Tadikonda Prabhakar — Company and Corporate | DRAT (2024)

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Reportable/Non-Reportable

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Appeal No. 79 of 2024-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 79 of 2024 (Arising out of S.A. 239 of 2023 in DRT-II, Hyderabad)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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The Assistant General Manager, State Bank Of India, (Erstwhile State Bank of Hyderabad), Sanathnagar Branch, 7-2-C/47/A, Industrial Estate Sanathnagar Industrial Area, Hyderabad – 500 018.

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… Appellant

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-Versus-

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Tadikonda Prabhakar, Son of Late Tadikonda Purna Chandra Rao, 1-55-185/SAQ/D1/601, Masjid Banda, SVC Tree Walk and Aquaria, Serilingampally, Kondapur, Rangareddi – 500 084.

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… Respondent

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Counsel for Appellant	…	Mr. Soudip Pal Choudhuri Ms. Saswati Sikdar
Counsel for Respondent	…	Mr. Srikant G (Virtual)
JUDGMENT	:	10^thDecember, 2024

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THE APPELLATE TRIBUNAL :

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1. Heard the Learned Counsel for the parties and perused the record.

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2. Instant appeal has arisen against judgment and order dated 13.12.2023, passed by Learned DRT-II, Hyderabad, allowing S.A. 239 of 2023 (Tadikonda Prabhakar -vs- State Bank of India).

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3. As per the pleadings of the parties, Appellant, Respondent herein, namely Tadikonda Prabhakar, participated in the auction conducted on 27.3.2006 pursuant to auction Sale Notice dated 28^th March, 2006. Respondent was declared as successful bidder and paid 25% of the bid amount i.e. Rs.7.20 lac including EMD of Rs.4,05,000.00. Balance sale consideration was to be paid by 10.4.2006 which was paid on 30^th August, 2007. Hence a total amount of Rs.45,00,000.00 was deposited by the Auction Purchaser. Sale Certificate could not be issued due to certain legal disputes.

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Appeal No. 79 of 2024-DRAT-Kolkata Amount deposited by the Respondent was kept in a Fixed Deposit Account by the Bank. From 10.4.2006 amount of Rs.16,99,591.00 accrued as interest on the fixed deposit. TDS amount was deducted on the amount which is separate from this amount. Despite oral and written request by the Respondent amount of interest was not paid. Accordingly, Respondent, Auction Purchaser, filed a Civil Suit No. 911 of 2014 before the IX Chief Judge, City Civil Court at Hyderabad on 15.11.2014. I.A. 1660 of 2016 was filed by the Bank challenging the jurisdiction of the Civil Court which was disposed of by the Civil Court on 9.02.2018 and the plaint was directed to be returned for presentation before the appropriate forum.

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4. Aggrieved by the order the Auction Purchaser filed a Civil Miscellaneous Appeal No. 590 of 2018 before the Hon’ble High Court for the State of Telangana at Hyderabad which was decided on 17.3.2023 and the order passed by the Learned City Civil Court was upheld. Hon’ble High Court also granted liberty to the Auction Purchaser to file an application before the DRT under Section 17 (1) of the SARFAESI Act (hereinafter referred to as the “Act”). In compliance of the order of the Hon’ble High Court, SARFAESI Application No. 239 of 2023 was filed by the Respondent herein before the Learned DRT-II, Hyderabad.

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5. Appellant Bank filed opposition before the DRT stating that the application under Section 17 (1) of the Act is barred by limitation. Cause of action to file the SARFAESI Application has arisen when the sale price was paid by the Auction Purchaser. Hon’ble High Court in its order observed that DRT should decide the application under Section 17 of the Act on its own merits.

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6. It is further stated that the Respondent herein, being the Auction Purchaser, is not entitled to any accrued interest and he is not entitled for any relief.

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7. Learned DRT framed the following issues:

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i) Whether the Securitization Application filed under Sec. 17 of the Act, 2002 is within limitation?

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Appeal No. 79 of 2024-DRAT-Kolkata

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(ii) Whether the applicant is 'aggrieved person' within the meaning given under Sec. 17(1) of the Act, 2002?

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(iii) Whether the applicant made out any valid ground to order the respondent bank for payment of accrued interest?

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(iv) To what relief?

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8. Learned DRT held that the Securitisation Application is filed within time. Further Auction Purchaser is covered under the definition of ‘aggrieved person’ and is entitled to file Securitisation Application. The Auction Purchaser is also held to be entitled for the accrued interest. Accordingly, the SARFAESI Application is allowed with a direction to the Bank to pay an amount of Rs.16,99,591.00 to the Auction Purchaser towards interest accrued on FDR.

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9. Feeling aggrieved by the judgment, Appellant Bank has preferred the instant appeal.

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10. At the very outset Mr. Soudip Pal Choudhuri, Learned Counsel for Appellant Bank, submits that he is only pressing point No. 2 decided by Learned DRT. He did not press any other issue in the appeal.

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11. Learned Counsel for Appellant would submit that the Respondent, Auction Purchaser, is not covered under the definition as ‘aggrieved person’. He cannot file a Securitisation Application under Section 17 of the Act. Learned Counsel has placed reliance upon Apex Court judgment dated 27^th November, 2017 passed in Civil Appeal No. 19847 of 2017 (Agarwal Tracom Private Limited -vs- Punjab National Bank) and argued that once proceeds are offered and the secured creditor has recovered its dues no Securitisation Application by the Auction Purchaser could have been filed.

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12. Per contra, Learned Counsel for Respondent submits that the Respondent was contesting his claim from the very beginning. He filed civil suit before the City Civil Court wherein objection was raised by the Bank to the effect that civil suit is not maintainable in view of Section 34 of the Act. Respondent should file an application under

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Appeal No. 79 of 2024-DRAT-Kolkata Section 17 of the Act which was accepted by the Learned Civil Court. Feeling aggrieved, Respondent herein filed Civil Miscellaneous Appeal No. 590 of 2018 before the Hon’ble High Court for the State of Telangana at Hyderabad wherein Hon’ble High Court affirmed the order of the Civil Court and gave liberty to the Respondent herein to file Securitisation Application under Section 17 (1) of the Act. It is further submitted that now Appellant Bank cannot take a ‘U’ turn what has been submitted by the Appellant before the Hon’ble High Court.

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13. It is admitted in the opposition that the Respondent herein is the Auction Purchaser who deposited auction money with the Bank. Amount was deposited in a FDR by the Bank. Interest was accrued on the FDR wherein TDS was also deducted. TDS certificate was sent to the Respondent. An amount of Rs.16,99,591.00 was the accrued interest on the FDR. But the same was not paid by the Bank to the Auction Purchaser. Civil Suit was filed before the Civil Court, Hyderabad wherein an objection was raised by the Bank by filing I.A. 166 of 2016 that Civil Court has no jurisdiction in view of Section 34 of the Act and the DRT is entitled to entertain the issue. It is also not in dispute that I.A. 166 of 2016, filed by the Bank, was allowed by the Civil Court and the plaints were returned for presentation before the appropriate forum. Order of the Civil Court was challenged by filing Civil Miscellaneous Appeal No. 590 of 2018 before the Hon’ble High Court for the State of Telangana at Hyderabad. Hon’ble High Court decided the same on 17.3.2023 upholding the order passed by the Learned City Civil Court setting the controversy at rest. Liberty was also granted to the Auction Purchaser to pursue his grievance by filing an application under Section 17 of the Act. 14. Thereafter, Respondent files an application under Section 17 of the Act wherein the maintainability of the application under Section 17 of the Act was challenged on the ground that the Respondent, Auction Purchaser, is not the ‘aggrieved person’, which is repelled by the Learned DRT.

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Appeal No. 79 of 2024-DRAT-Kolkata 15. Learned Counsel for the Bank, in appeal, vehemently argued that the Auction Purchaser is not the ‘aggrieved person’; he has no right to file application under Section 17 of the Act; hence the ground of maintainability has been taken relying upon Agarwal Tracom

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Private Limited (supra).

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16. It is very surprising that the Appellant Bank has taken a ‘U’ turn from the stand what was argued before the Hon’ble High Court in Civil Miscellaneous Appeal No. 590 of 2018. Hon’ble High Court in its judgment dated17.3.2023 has recorded in paragraph 11 that :

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“ 11. Per contra, learned counsel for the respondent/ defendant seeks to submit that the transaction is only in respect of the auction conducted by the bank and the amount was paid, it was kept in FDR in view of the continuing civil litigation and the writ petitions filed from time to time, finally with much difficulty possession of the property was delivered to the plaintiff as such, if the plaintiff is aggrieved by the action of the secured creditor, it is for him only to approach the DRT or the Appellate Authority and the jurisdiction of Civil Courts is ousted in terms of Section 34 of SARFAESI Act and relied on the principles laid in the following decisions:

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1. Jagdish Singh (supra).

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2. Agarwal Tracom Private Limited National Bank and others, v. Punjab National Bank “

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17. Thereafter Hon’ble High Court held in paragraphs 12 and 13

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that:

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“ 12. By this time the law is crystallized, Section 34 of SARFAESI Act ousts the Civil Courts jurisdiction. A plain reading of Section 34 of SARFAESI Act shows that jurisdiction of Civil Court is barred in respect of the matters which DRT or an Appellate Tribunal is empowered to determine in respect of any action taken or to be taken in pursuance of any powers conferred under this Act. Therefore, any matter in respect of which an action may be taken even later on the Civil Court shall have no jurisdiction to entertain any proceedings thereof. The bar of Civil Court thus applies to all such matters which may be taken cognizance by the DRT apart from those matters in which measures have already been taken under Sub-Section 4 of Section 13 of SARFAESI Act (Mardia Chemicals Limited etc., etc., v. Union of India and others etc., etc.).

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13. The apex Court in Jagdish Singh case (supra) has reiterated the principles laid in Mardia Chemicals Limited case (supra) and held that Civil Court's Jurisdiction is completely barred so far as the measures taken by secured creditor under Sub-Section 4 of Section 13 of SARFAESI Act against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal to determine as to whether there has been any illegality in the measures taken.”

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Appeal No. 79 of 2024-DRAT-Kolkata

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18. Again in paragraph 14 of the judgment Hon’ble High Court considered the judgment of the Hon’ble Apex Court that:

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“14. The Apex Court in Agarwal Tracom Private Limited case supra) while interpreting Section 13(4) and 17(2) of SARFAESI Act held in paragraph Nos.27 to 30 that an auction purchaser falls within the expression 'any person' as specified under Section 17(1) of the Act. Therefore, auction purchaser is entitled to challenge the action of the secured creditor before DRT by filing an application under Section 17(1) of the SARFAESI Act. It is further held that the Writ Court as well as the Appellate Court was justified in dismissing the Appellant’s Writ Petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act.”

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19. Hon’ble Apex Court in paragraphs 16 and 17 of the judgment held that:

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“16. In the light of the aforementioned discussion, I am of the considered opinion that the trial Court is justified in allowing the application filed under Order 7, Rule 10 of CPC by returning the plaint with a direction to file before the proper Forum on the ground of availability of alternative statutory remedy for filing an application under Section 17(1) of SARFAESI Act before the DRT challenging the action of the defendant bank in not paying the interest accrued on the amount of sale consideration deposited with the bank and I find no ground to interfere with the impugned order of the trial Court.

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17. Therefore, for all the reasons stated above, when the facts of the case on hand are tested on the touchstone of the principles laid by the Hon'ble Apex Court in Jagdish Singh case (supra) and also in Agarwal Tracom Private Limited case (supra), I find no ground to interfere with the order impugned and it is sustained, Accordingly, this civil miscellaneous appeal is dismissed as devoid of merits with a liberty to the plaintiff to file an application before the Tribunal concerned (DRT) under Section 17(1) of the SARFAESI Act, which has got jurisdiction to entertain such application within 45 days from the date of this order. In case, if the appellant/ plaintiff files any such application the Tribunal shall decide the same on its own merits in accordance with law being uninfluenced by the observations made by this Court or the observations made by the trial Court in the impugned judgment.”

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20. Judgment of Hon’ble Apex Court in Agarwal Tracom Private Limited (supra) was considered by the Hon’ble High Court. Liberty was granted to the Respondents by the Hon’ble High Court to file petition under Section 17 of the Act. Thereafter Securitisation Application under Section 17 of the Act was filed by the Respondent. Hence, the applicati0on under Section 17 of the Act was legally maintainable.

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21. Although no other issue is pressed by the Learned Counsel for Appellant but I have gone through the findings recorded by the Learned DRT. I found that the findings are recorded in accordance with law.

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Appeal No. 79 of 2024-DRAT-Kolkata 22. Judgment of the Hon’ble High Court was not challenged by the Bank hence it had attained finality. How the Bank is taking a ‘U’ turn before this Appellate Tribunal or the DRT when the Bank argued before the Hon’ble High Court that the Auction Purchaser has a remedy by filing an application under Section 17 of the Act? Now the Bank is saying that the Auction Purchaser has no locus standi to file an application under Section 17 of the Act. It is a misleading argument. Application under Section 17 of the Act was filed by the Respondent on the basis of the liberty granted by the Hon’ble High Court in its judgment. It is not expected from the Bank to misuse the process of law in such a manner. Bank is not expected to misuse the public money by entering into luxurious litigation by filing a vexatious appeal. When a particular plea is taken before the Hon’ble High Court then Bank should have honoured its own plea. Concerned Bank Officer, who gave permission to file the appeal, should have been conscious enough to pursue the judgment passed by the Hon’ble High Court. But it appears that the concerned officer mechanically accorded approval to prefer the appeal without noticing the liberty granted by the Hon’ble High Court. I am not commenting on the conduct and process followed the concerned Officer, however, the concerned Officer should look into the matter and see that the public money is not wasted in this manner. Competent Authority of Appellant Bank is well advised to look into the matter and issue appropriate directions for future guidance of the officers.

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23. On the basis of the discussion made above, I am of the considered opinion that appeal lacks merits and is liable to be dismissed.

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O R D E R E D

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Appeal is dismissed. The impugned judgment and order dated 13.12.2023, passed by Learned DRT-II, Hyderabad, allowing S.A. 239 of 2023 (Tadikonda Prabhakar -vs- State Bank of India), is affirmed.

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No order as to costs.

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Appeal No. 79 of 2024-DRAT-Kolkata

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Copy of the order be supplied to Appellant and the Respondents

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and a copy be also forwarded to the concerned DRT.

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File be consigned to Record room.

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