Dismissed

Sunil Kumar Samanta and Ors. v. Smfg India Credit Company Ltd. and Anr.

DRAT1 Aug 2025MISC APPEAL/9/2025

Case brief

AI extract

What is this about?

The Tribunal dismissed an appeal challenging a DRT order rejecting a revision application against an auction sale procedure. The bench held that the sale notice complied with the SARFAESI Act and Rules, noting the existence of a district magistrate order for possession. The single judge bench found no illegality in the impugned order and dismissed the appeal.

What did the court decide?

The Miscellaneous Appeal is dismissed and the impugned order dated 18.9.2024 is affirmed.

Sunil Kumar Samanta and Ors. versus Smfg India Credit Company… — Banking and Recovery | DRAT (2025)

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Reportable/Non-Reportable

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Misc. Appeal No. 09 of 2025-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 09 of 2025 (Arising out of S.A. 344 of 2022 in DRT-III, Kolkata)

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Sri Sunil Kumar Samanta, Son of the Late Tarapada Samanta, of Part No. 8 Barrackpur, Near Barrackpore Electric Supply Office, North 24-Parganas -700 120;

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Smt. Krishna Samanta, wife of Sri Sunil Kumar Samanta, of Part No. 8 Barrackpur, Near Barrackpore Electric Supply Office, North 24 Parganas-700 120;

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Jayanti Cinema Private Limited, a company under the Companies Act, 2013 and having its registered office at 2, B.T. Road, Barrackpore, Near Chairiamore, North 24 Parganas-700 120.

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… Appellants

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-Versus-

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SMFG India Credit Company Limited, a Non-Banking Financial Company incorporated under the Companies Act, 1956, having its registered office at 53A, Rafi Ahmed Kidwai Road, 2^nd Floor, Kolkata – 700 016;

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The Authorised Officer, SMFG India Credit Company Limited, a Non-Banking Financial Company incorporated under Companies Act, 1956, having its office at Megh Towers, 3^rd Floor, Old No. 307, New No. 165, P.H. Road, Maduravoyal, Chennai, Tamil Nadu - 600 095;

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Mrs. Pramila Jain (Auction Purchaser), Care of Amit Kumar Jain, 14B, Ajmir Apartment, 5B, Beliaghala Road, Alo Chaya Cinema, Kolkata -700 010.

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… Respondents

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Counsel for Appellants	…	Mr. Jayabrata Basu Ray Ms. Somali Bhattacharya Ms. Megha Das
Counsel for Respondents No. 1 & 2/F.I.	…	Mr. Nemani Srinivas, Mr. Rajeev Maity (Virtual)
Counsel for Respondents No. 3/Auction Purchaser	…	Mr. Nimish Mishra Mr. Abir Mondal (Virtual)
JUDGMENT	:	1^stAugust, 2025
THE APPELLATE TRIBUNAL :

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Misc. Appeal No. 09 of 2025-DRAT-Kolkata 1. Instant appeal has arisen against order dated 18.9.2024, passed by Learned DRT-III, Kolkata, dismissing I.A. 3484 of 2024.

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2. As per the pleadings of the parties, the facts of the matter are that the Appellant No. 1 had taken financial assistance from the Respondent wherein Appellants No. 1 and 2 stood guarantors and equitable mortgage was created by Appellant No. 1. Due to Covid-19, loan account became irregular. Notice under Section 13 (2) of the SARFAESI Act (hereinafter referred to as the ‘Act’) dated 26.11.2021 was issued. Possession Notice, under Section 13 (4) of the Act was issued on 21^st March, 2022 and published on 26^th March, 2022. Challenging the sale, Securitisation Application, under Section 17 of the Act, was filed before the Learned DRT being S.A. 344 of 2022 (Mr. Sunil Kumar Samanta -vs- Fullerton India Credit Company Limited).

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3. Pending S.A., an order under Section 14 of the Act was also obtained by the Respondents from the District Magistrate on 5.12.2022.

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4. A notice under Rule 8 (6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules’) dated 26^th December, 2023 was received by the Appellants. On 2^nd February, 2024 another notice dated 30^th January, 2024, issued under Section 8 (6) of the Rules was received wherein date of sale was fixed on 12^th March, 2024. An OTS proposal was submitted by the Appellants. Sale, scheduled on 12^th March, 2024 in pursuance of the notice dated 30^th January, 2024, could not be fructified and was withdrawn by the Respondents. Proposal for OTS was also submitted by the Appellants.

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5. On 26^th July, 2024, notice under Rule 8 (6) of the Rules was again issued stating that physical possession of the secured assets have been taken by the Respondents and e-Auction was fixed on 19^th September, 2024. Sale Notice dated 30^th August, 2024 was published in newspapers namely, “The ECO of India” in English version

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Misc. Appeal No. 09 of 2025-DRAT-Kolkata and “Arthik Lipi” in Bengali version communicating the date of sale on 19^th September, 2024.

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6. Feeling aggrieved, I.A. 3484 of 2024 was filed by the Appellants which was dismissed by the Learned DRT placing reliance upon judgment of the Telangana High Court In Sri Sai Annadhatha Polymers & Another -vs- Canara Bank and a judgment of the Hon’ble Apex Court in CELIR LLP -vs- Bafna Motor (Mumbai) Private Limited.

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7. Feeling aggrieved by the order, Appellant preferred the appeal. 8. I have heard the Learned Counsel for the parties and perused the record.

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9. At the very outset, Learned Counsel for Appellant would submit that this was not a case of subsequent sale rather it was the first sale as the first Sale Notice was withdrawn and was not filed. Learned Counsel further heavily placed reliance upon Annexure IV-A of the Rules and submitted that it is not mentioned in the notice as to whether the possession was symbolic or was physically taken by the Secured Creditor?

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10. Learned Counsel has placed reliance upon the judgment of the Hon’ble Apex Court in Hindon Forge Private Limited -vs- The State of Uttar Pradesh [(2019) 2 SCC 198] . Placing reliance upon the judgments, Learned Counsel argued that since the nature of possession is not described in Annexure IV-A as per the proviso to Rule 8 (6) of the Rules, the notice is bad in law, accordingly, liable to be set aside.

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11. Learned Counsel for Appellant further argued that since it was a case of first sale and not subsequent sale, hence there is violation of Rules 8 (6) and 9 (1) of the Rules. Accordingly, sale is liable to be set aside.

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12. Per contra, Learned Counsel for Respondent would submit that Hindon Forge (supra) is not applicable to the present case as issue involved in that case was different. Annexure IV-A is made for the

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Misc. Appeal No. 09 of 2025-DRAT-Kolkata purpose of Auction Purchasers. No prejudice is caused to the Borrower

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as possession was already taken under order of the Learned District Magistrate passed under Section 14 of the Act. It is further submitted that no case recording illegality of Annexure IV-A has been taken by the Appellants. Compliance of Rules 8 (6) and 9 (1) of the Rules was made by the Secured Creditor.

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13. In the I.A. 3484 of 2024, Appellant has taken a specific plea in paragraph 21 regarding the format, as prescribed under Appendix IV-A of the Rules, whereby it is submitted that whether the possession is constructive or physical is not mentioned accordingly the same is in violation of Rule 8 (7)(d) of the Rules.

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14. I have gone through Apendix IV-A to the Rules which reads as under:

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“APPENDIX IV-A

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[See proviso to rule 8(6)] SALE NOTICE FOR SALE OF IMMOVABLE PROPERTIES

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E-Auction Sale Notice for Sale of Immovable Assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with proviso to rule 8(6) of the Security Interest (Enforcement) Rules, 2002.

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Notice is hereby given to the public in general and in particular to the Borrower (s) and Guarantor(s) that the below described immovable property mortgaged/charged to the Secured Creditor, the constructive/physical............(whichever is applicable) possession of which has been taken by the Authorised Officer of......... ...Secured Creditor, will be sold on "As is where is", "As is what is", and "Whatever there is" on........ (mention date of the sale), for recovery of Rs..............due to the.....Secured Creditor from......... (mention name of the Borrower(s)) and.. (mention name of the Guarantor(s) The reserve price will be Rs.................and the earnest money deposit will be Rs..........

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(Give short description of the immovable property with known encumbrances, if any) For detailed terms and conditions of the sale, please refer to the link provided in........ details of website) ...Secured Creditor's website, i.e., www. (give details of website)”

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15. Reliance is placed by the Appellant upon the judgment Hindon Forge (supra) wherein the Hon’ble Apex Court decided the issue about the maintainability of Securitisation Application filed under Section 17 (1) of the Act. Whether it is maintainable before physical or actual possession is taken by the Secured Creditor in exercise of powers

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Misc. Appeal No. 09 of 2025-DRAT-Kolkata under Section 13 (4) of the Act read with Rule 8 of the Rules? It was held by the Hon’ble Apex Court in paragraph 41 that:

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“This Appendix makes it clear that statutorily, constructive or physical possession may have been taken, pursuant to which a sale notice may then be issued under Rule 8 (6) of the 2002 Rules. Apendix IV-A, therefore, throws considerable light on the controversy before us and recognizes the fact that Rule 8 (1) and 8 (2) refers to constructive possession whereas Rule 8 (3) refers to physical possession.”

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Accordingly, nature of possession has to be mentioned in the notice. 16. It was held by the Hon’ble Apex Court in Hindon Forge (supra) that:

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“Whether possession taken under Rule 8 (1) and 8 (2) is called symbolic possession or statutory possession, the fact remains that Rule 8 (1) and 8 (2) specifically provids for a particular mode of possession taken under Section 13 Clause (4) (a) of the Act.”

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17. Accordingly, I do not find any impropriety in the impugned order to this extent.

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18. Sale Notice was dated 26.7.2024 which was published on 30^th August, 2024; sale was fixed for 19.9.2024 which was a subsequent sale, accordingly, the same was in accordance with the law laid down by the Hon’ble Apex Court in Bafna Motors (supra).

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19. On the basis of the discussion made above, I am of the considered view that there is no illegality in the impugned order. Appeal lacks merits and is liable to be dismissed.

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O R D E R

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Misc. Appeal is dismissed. The impugned order dated 18.9.2024, passed by Learned DRT-III, Kolkata, dismissing I.A. 3484 of 2024, is affirmed.

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No order as to costs.

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File be consigned to Record room.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s Website.

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Order signed, dated and pronounced in open Court.