Dismissed

Mr. Anand Jayant More v. Bank of India & Ors.

DRAT12 Jul 2024REGULAR APPEAL/80/2011

Case brief

AI extract

What is this about?

Appellant filed an appeal challenging the deduction of a demand notice and subsequent auction of secured assets under the SARFAESI Act. The Tribunal dismissed the appeal, upholding the 226 lakh settlement withdrawal, citing limitation periods and lack of exemption for agricultural land.

What did the court decide?

The appeal filed under Sec. 18(1) of the SARFAESI Act was dismissed with no merit found.

Mr. Anand Jayant More versus Bank of India & Ors. — Company and Corporate | DRAT (2024)

¶1

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

¶2

Appeal No. 80/2011

¶3

Between

¶4

Anand Jayant More … Appellant/s V/s.

¶5

…Respondent/s

¶6

Bank of India & Ors. …Respondent/s Mr Rishabh Shah, i/b M/s Raval-Shah & Co., Advocate for Appellant. Mr A. B. Shinde, Advocate for Respondent No. 1 Bank. Senior Counsel Mr Umesh Shetty along with Ms Somya Tripathi, i/b M/s T. N. Tripathi & Co., Advocate Respondents Nos. 3 and 4.

¶7

-: Order dated: 12/07/2024:-

¶8

This appeal filed under Sec. 18 (1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) challenges the dismissal of Securitisation Application (S.A.) No. 86 of 2007 by judgment and order dated 18/03/2011 of the Debts Recovery Tribunal-III, Mumbai (D.R.T.).

¶9

The facts can be encapsulated thus:

¶10

The appellant as proprietor of Anand Poultry Farm availed a term loan of ₹94,53,000/-and a cash credit facility of ₹ 40 lakhs from the first respondent Bank of India (BOI) for his poultry farming in the year 1996. He defaulted in repayment, and the account was classified as a non-performing asset in September 2001. Original Application (O.A.) No. 81 of 2003 was filed before the D.R.T. under Sec. 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993

¶11

¶12

(“RDDB & FI Act”, for short) was filed by the bank on 05/02/2003 for recovery of ₹1,51,09,909/-together with interest at the rate of 18% p.a. due towards term loan, and a further amount of ₹54,31,628/-with similar interest due towards cash credit account was claimed. The O.A. was allowed on 13/08/2008 and defendants Nos. 1 to 4 therein were directed to pay a sum of ₹98,56,355.17, while defendants Nos. 5 to 8 as legal representatives of one of the deceased guarantors were made liable to the extent of the estate, they had inherited from the deceased.

¶13

During the pendency of the O.A., the bank issued a demand notice under Sec. 13 (2) of the SARFAESI Act on 07/12/2005 demanding the debt due. The appellant allegedly caused an objection to be sent to the demand notice pointing out the irregularities on 03/02/2006. The reply was returned unserved. Thereafter, the appellant had allegedly contacted the officers of the bank for an amicable settlement, offering to pay the amount which, the appellant could afford. The appellant’s business was going through a rough whether any could not salvage it. The appellant received a possession notice on 31/01/2007 from the bank intending to take possession of the secured asset on 09/02/2007. The appellant once again desperately attempted to offer for settlement. Physical possession of property constituted in Gat Nos. 319, 322, 325, and 326 and symbolic possession of a residential farmhouse in Gat No. 44/A and the shop in Gat No. 44/B of Sasawane in Alibaug Taluk. The appellant was aggrieved on receiving the possession notice and hence filed S.A. (Lodging) No. 160 of 2007. The appellant alleges that on acceptance

¶14

¶15

of ₹35 lakhs as upfront payment and had agreed to pay the remaining amount of ₹1,91,00,000/-within 90 days as per the OTS proposal which was accepted, the aforesaid S.A. was withdrawn. A consent term was also agreed to be submitted before the D.R.T. in the O.A. on or before 14/09/2007. However, the bank withdrew the OTS vide letter dated 29/09/2007 for the reason that the consent terms were not filed on time. The appellant was thereafter informed by the bank that the property was being put up for auction on 01/10/2007 and requested him to be present at the time of opening of the tender. The appellant was informed that the highest bid amount received for the properties was ₹2.05 crores. However, the highest bidder could not deposit 25% of the demand and the civil court cancelled. Though the appellant was advised to arrange for the aforesaid amount within three days, he could not do so and hence, a fresh auction was held on 15/10/2007.

¶16

Thereafter, the present S.A. was filed challenging the demand notice under Sec. 13 (2) and the measures taken under Sec. 13 (4) and also that the secured assets were agricultural properties exempted under Sec. 31 (i) of the SARFAESI Act. The S.A. was also subsequently amended incorporating the challenge to the sale and the auction purchasers were also impleaded.

¶17

The bank took possession of the subject properties on 09/02/2007. The respondent bank contends that the appellant had offered to settle the entire debt on payment of ₹226 lakhs and even made an upfront payment of ₹35 lakhs. The balance amount of ₹191 lakhs was agreed to be paid on or before 31/10/2007. The acceptance

¶18

¶19

of the OTS was communicated to the appellant vide letter dated 02/08/2007. However, the appellant failed to file the consent terms and make payments. According to the respondent bank, the total dues as under the cash credit and term loan was ₹348.4 for lakhs, and as of 07/12/2005, inclusive of interest, the amount was approximately ₹400 lakhs. Since the appellant did not comply with the consent terms, the bank opened the tender which was already received on public notice for auction sale. Despite intimation given to the appellant, he was not present on 01/10/2007. As the appellant was not willing to purchase the property for ₹2.05 crores offered by the highest bidder, the bank arranged for an auction sale on 15/10/2007. The 3^rd respondent offered to buy the property for ₹2.06 crores. The entire amount was paid on 16/10/2007. The Sale Certificate was issued in favour of the fourth who was the nominee of the auction purchaser.

¶20

The respondent bank had contended that the S.A. is barred by limitation and that the appellant did not approach the Tribunal with clean hands. On appreciation of the material placed before it, the D.R.T. found that the challenge to the demand notice could not be sustained. The challenge raised about the possession of the property was also not found to be sustainable because the physical possession was taken on 09/02/2007 and the S.A. was not filed within 45 days. 194 days delay in filing the S.A. was not sought to be condoned by applying for it. The challenge to the sale was also found to be not sustainable in the impugned order. The contention that the subject properties were agricultural land was also not acceptable to the D.R.T. and it was found that there were no documents to indicate that the

¶21

¶22

mortgage was created in respect of agricultural land. The S.A. was therefore dismissed.

¶23

One of the main contentions raised by the appellant is that the S.A. is not barred by limitation as observed by the D.R.T. The bank took possession of the property on 09/02/2007 and a panchnama was prepared by the authorised officer of the bank who recorded that fact. The S.A. was originally filed with prayers challenging the demand notice under Sec. 13 (2) and the measures under Sec. 13 (4). Admittedly, the possession was taken on 9/02/2007 and the S.A. was filed only on 08/10/2007, which is clearly beyond a period of limitation. Subsequently, the appellant incorporated an amendment challenging the sale dated 15/10/2007. Challenging the subsequent action of sale will not bring the S.A. which was originally filed out of time, within the period of limitation.

¶24

The plea that the mortgaged properties were agricultural lands liable for exemption under Sec. 31 (i) is also not sustainable. The nature of the land on the date of creation of the mortgage is what is relevant. There is no evidence to indicate that the subject properties were being put to agricultural use at the time of the creation of the mortgage. The Hon’ble Supreme Court has in Indian Bank & Ano. vs. K. Pappireddiyar & Ano. (2018) 18 SCC 252 , following an earlier decision of the Hon’ble Supreme Court in ITC Ltd. vs. Blue Coast Hotels Ltd. (2018) 15 SCC 99 supports this view.

¶25

The appellant also contended that no notice was issued concerning the sale was held on 15/10/2007. It is pertinent to note that the sale notice was issued on 19/06/2007, followed by a

¶26

¶27

corrigendum on 29/06/2007. The initial sale was to be held on 20/07/2007. The appellant approached the bank and submitted a proposal to compromise the dispute, which was accepted by the bank vide letter dated 02/08/2007. The outstanding amount of ₹400 lakhs was agreed to be settled for ₹226 lakhs. The appellant failed to comply with the compromise within the stipulated time and hence the OTS was withdrawn. Fresh notice was not required as per the agreed terms, the appellant was intimated about the opening of the tenders on 01/10/2007. It is not the contention of the appellant that no notice was served concerning the sale, which was originally scheduled to take place on 20/07/2007. The day for the opening of the tenders already received by the bank was decided and also intimated to the appellant, but he was not present on that date. However, the highest bidder for the property, Mr Ranjan Govind Narvekar who had offered to purchase the property for ₹2.05 crores, expressed his inability to pay 25% of the bid amount. Hence, the property was put up for auction again on 20/10/2007 and the appellant was also intimated regarding the same. It is to be borne in mind that when the auction sale is deferred due to the acts of the borrower himself, no further notice needs to be given to him. The Hon’ble Supreme Court has in S. Karthik & Ors. vs. N. Subash Chand Jain & Ors. (2022) 10 SCC 461 it is held that the second sale notice is in continuation of the proceedings of the first sale notice and as the first sale could not be held due to reasons attributable solely to the guarantors, there was no necessity of again following the same procedure of providing a 30 days’ clear notice.

¶28

¶29

Taking the entire facts and circumstances into consideration, I find no reason whatsoever to interfere with the impugned judgment and order of the D.R.T., there is no merit in the appeal and hence, the appeal is dismissed.

Sd/-

Chairperson

mks-01.

Mr. Anand Jayant More v. Bank of India & Ors.

Case brief

What is this about?

What did the court decide?

Mr. Anand Jayant More v. Bank of India & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Shree Ram Proteins Ltd. versus Union Bank of India

Ms Ashok Textiles versus G P Parsik Bank

Mr. Selva Kumar Muthuswamy Nadar & Anr. versus State Bank of India

Ms Golden Leaf Agrotech India Pvt. Ltd. through Its Directors Mr Altaf Rauf Shaikh and Mrs Samreen Altaf Shaikh versus Karnataka Bank Limited

Akar Creations Pvt. Ltd. versus Canara Bank

Deustche Bank versus Shekhar Ramjeet Singh