Dismissed

G Basavaraj and Ors. v. Sri Mahayogi Lakshmamma Co. Op Bank Limited Avvva Bank Ant Anr.

DRAT3 Apr 2025REGULAR APPEAL/104/2018

Case brief

AI extract

What is this about?

The DRAT dismissed the appeal filed under Section 17 of the SARFAESI Act. The tribunal held that appellants waived their right to challenge the auction sale by claiming a share in proceeds in 2005, and their application seeking redemption was barred by limitation.

What did the court decide?

The Securitization Application was dismissed; the impugned order of the DRT was affirmed.

G Basavaraj and Ors. versus Sri Mahayogi Lakshmamma Co. Op… — Company and Corporate | DRAT (2025)

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Reportable/Non-Reportable

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 104 of 2018 (Arising out of S.A. 108 of 2017 in DRT-II, Hyderabad)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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G. Basavaraj, son of Bussanna, 15-315, Victoriapet, Adoni Post, Kurnool District, Andhra Pradesh;

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Sri Manjunath, son of G. Basavaraj, 15-315, Victoriapet, Adoni post, Kurnool District, Andhra Pradesh;

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G. Aravind, son of G. Basavaraj, 15-315, Victoriapet, Adoni post, Kurnool District, Andhra Pradesh.

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… Appellants

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-Versus-

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Sri Mahayogi Lakshmamma, Co-operative Bank Limited (AVVA BANK), No.72, Flower Bazar, Adoni, Kurnool;

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Dr. A. Madusudan, son of A.B. Maddilotti, Sree Padmavathi, Maternity Hospital, Victoriapet, Adoni, Kurnool District.

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… Respondents

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Counsel for Appellants … Mr. Ashok Kumar Jena Sk. Omar Sarif Counsel for Respondent No. 1 … Mr. Nemani Srinivas Counsel for Respondent No. 2 … Mr. Prasenjit Pal JUDGMENT : 3^rd April, 2025

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THE APPELLATE TRIBUNAL:

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1. Instant appeal has been preferred by the SARFAESI Applicants against judgment and order dated 21^st December, 2017, passed by Learned DRT-II, Hyderabad, dismissing S.A.108 of 2017 (G. Basavaraj & Others -vs- Sri Mahayogi Lakshmamma Co-operative Bank Limited (AVVA Bank) & Another).

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Appeal No. 104 of 2018-DRAT-Kolkata 2. As per the pleadings of the parties, Securitization Application under Section 17 of the SARFAESI Act, 2002 (hereinafter referred to as the 'Act') was filed challenging the action of the Bank, Respondent No. 1, in returning the cheque dated 18.3.2013 tendered by the Appellants towards redemption of debt and refusing to accept the Demand Draft No. 198222 dated 30.3.2013 for Rs.1.5 lac with a further relief to set aside the sale held on 30^th July, 2004 and also to quash the Demand Notice dated 24^th December, 2003 and Possession Notice dated 12^th April, 2004.

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3. It is pleaded that the SARFAESI Applicants are the present owners of the secured assets which is the S.A. Schedule property which was originally owned by the father of Applicant No. 1, namely, G. Busanna, who mortgaged the same with the Respondent No.1/Bank on 1^st December, 1995 as security for loan of Rs.50,000.00 sanctioned to M/s. Veerabhadra Swamy Trades. Appellants No. 2 and 3 are the Partners of M/s. Veerabhadra Swamy Trades. There was default in repayment of the loan. Account was classified as N.Ρ.Α. Notices, under Section 13 (2) and 13 (4) of the Act, Auction Sale Notice and Demand Notice of Rs.1,01,329.00 were issued by the Bank. In the auction sale Respondent No. 2, namely Dr. A. Madusudan, was the highest bidder for Rs.5,60,000.00; although the value of the property was much more. 75% of the bid amount was not deposited within the stipulated period of fifteen days. Sale was not confirmed.

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Appeal No. 104 of 2018-DRAT-Kolkata 4. Appellants are in physical possession over the secured assets.

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5. SARFAESI Applicants vide letter dated 6.3.2013 tendered an amount of Rs.1.50 lac towards demand made by the Respondent No. 1 under Demand Notice dated 24.12.2013 by Cheque No. 550753 dated 22.3.2013 which was not accepted by the Bank. Thereafter, Appellants prepared a Demand Draft on 30^th March, 2013 for Rs.1.5 lac and requested the Bank to receive the same. But the same was not accepted on the ground that they are in process of confirming the sale. Appellants were under the belief that Respondent No. 1 has cancelled the sale 30^th July, 2004 as the amount of 75% was not deposited. However, sale was confirmed after a lapse of about eight years and eight months.

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6. An amount of Rs.11,143.00 was kept open by the Borrower Firm for deposit with the Respondent No. 1 with a lien to O.D. account. Had the same been appropriated by the Bank towards the loan amount, outstanding liabilities would not have come within the ambit of the SARFAESI Act. Sale was confirmed on 30.3.2013.

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7. Respondent Bank filed the reply stating that there are repeated rounds of litigation as far as the schedule assets are concerned. Sale was conducted on 30^th July, 2004 wherein Respondent No. 2, the successful auction bidder, vide letter dated 9.8.2004, sought for time to deposit the balance sale amount. On 11.8.2004 one Smt. Chandramma sent a legal notice to the Bank and the Auction Purchaser

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Appeal No. 104 of 2018-DRAT-Kolkata stating that the S.A. Schedule Property was attached in O.S. No. 26 of 1988. Thereafter, another notice dated 16.3.2005 was sent by the Applicants, through one Smt. G.M. Lalitha, Advocate, stating that S.A. Schedule Property is a joint property and they are entitled to get 2/3^rd share in the balance sale proceeds to be deposited by the Respondent No. 2, Auction Purchaser. Auction Purchaser, vide letter dated 20^th October, 2004 informed the Bank that he received notice about the pending litigation and requested the Bank to clear off the litigation and handover the physical possession.

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8. In O.S. No. 464 of 2004 Civil Judge, Adoni restrained the Bank from executing the sale deed. The Auction Purchaser stated that he is willing to deposit the balance sale consideration after the attachment is raised and vacant possession is delivered. After the litigation was over, Bank allowed the Auction Purchaser to deposit the balance sale consideration on 30^th March, 2013. The delay in depositing the balance sale consideration was due to the pending litigation. Applicants were parties to all the cases filed by third parties in respect of schedule properties. Applicants also participated in the auction proceedings. The Applicants cannot challenge the Possession Notice and Sale Notice as the same are time barred. Issue of deposit of Rs.11,143.00 or the higher rate of interest was never raised by the Applicants. Accordingly, S.A. was liable to be dismissed.

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9. Learned DRT framed the following issues:

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i) Whether the applicants are entitled to redeem the S.A. Schedule property?

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Appeal No. 104 of 2018-DRAT-Kolkata ii) Whether relief as to question the measures taken out by the 1^st Respondent Bank under the provisions of SARFAESI Act, is within limitation?

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iii) To what relief?

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10. Learned DRT arrived at a conclusion that the issue of Possession Notice and validity of the auction held on 30^th July, 2004 is barred by limitation. Further the SARFAESI Applicants have waived their right for redemption of property as they themselves sought 2/3^rd share in the balance sale proceeds in the legal notice dated 16.3.2005. Accordingly, Securitisation Application was dismissed.

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11. I have heard the Learned Counsel for the parties and perused the record.

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12. At the very outset, Learned Counsel for Appellant would submit that the Securitization Application under Section 17 of the Act was filed within time. Learned Counsel has drawn my attention towards the order of the Hon’ble High Court Andhra Pradesh at Amravati in W.P. 3894 of 2020 (G Basavaraj & Others -vs- Collector & District Magistrate, Kurnool & Others) dated 11^th July, 2024 wherein Hon’ble High Court in paragraph 14 of the judgment observed that DRAT has to consider whether there was any agreement arrived at, in writing between the parties, including the Borrowers/Petitioners and whether the petitioners had, in fact, waived such a right? In any case, the DRAT has also to consider whether the property was required to be sold in auction in terms of Rule 9 (5) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules) immediately thereafter. In the writ petition challenge

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Appeal No. 104 of 2018-DRAT-Kolkata was made to an order passed by DRAT on 31^st January, 2024 whereby the prayer for staying operation of the order dated 28.7.2023, passed by Collector, Kurnool, was rejected. Hon’ble High Court has also placed reliance on the Hon’ble Apex Court judgment in Siddheswari CoOperative Bank -vs- Ikbal & Others [(2013) 10 SCC 53].

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13. Learned Counsel has further submitted that no agreement was arrived at amongst the Borrower, Auction Purchaser and the Bank, as required under Rule 9 (4) of the Un-amended Act. Learned Counsel further submits that the Auction Purchaser has not deposited the bid amount in accordance with the Rules which should have been deposited in accordance with Rule 9 (4) of the Rules; but was not deposited. It is further submitted that a letter was written by the Borrower/Appellant on 16.3.2005 to the Bank to cancel the sale and to order fresh sale. But no reply was given. When on 7.11.2012 the Appellants came to know that the sale has yet not been confirmed, vide letter dated 6.3.2013, they tendered an amount of Rs.1.50 lac by way of a cheque dated 22.3.2013 but the same was not accepted and returned citing inordinate and unreasoned delay in making re-payment of dues and also the cheque being post dated. Thereafter, a Demand Draft of Rs.1.50 lac was tendered vide letter dated 30.3.2013 towards redemption of mortgage which was refused. Thereafter, Securitization Application, under Section 17 of the Act, was filed which was well within time.

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Appeal No. 104 of 2018-DRAT-Kolkata 14. It is further submitted that the right, under Rule 9 (4) of the Rules, has never been waived by the Appellants.

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15. On the issue of limitation, Learned Counsel has placed reliance upon Indian Overseas Bank -vs- Ashok Saw Mill [(2009) 8 SCC 366] . Further reliance is placed on the Hon’ble Apex Court in Alpine Pharmaceuticals Private Limited -vs- Andhra Bank (2020 SCC OnLine TS 81).

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16. It is submitted that there is question of abundant illegality committed by the Bank in confirming the sale and not cancelling the sale in violation of Rule 9 (4) of the Rules. No consent has ever been given by the Borrower/Appellant for extension of time, as required in the case of Siddheswari Co-Operative Bank (supra). Reliance is also placed upon a judgment of Hon’ble High Court passed in W.P. 1065 of 2014 (Shakuntala Jaiswal -vs- Allahabad Bank).

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17. Learned Counsel further argued that the Appellants have a right to redemption as the sale was conducted under the Un-amended Act. Reliance is placed upon Celir LLP

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-vs- Bafna Motor (Mumbai) Private Limited & Others (AIR 2023 SC 4568). It is argued that the right of redemption continues till the transfer or sale of the property was completed in favour of the Auction Purchaser. It is submitted that in the letter dated 16.3.2005, Appellants have not waived their right of redemption rather they are claiming their share over the profits of sale. It is further submitted that Appellants have every right to redeem their property.

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Appeal No. 104 of 2018-DRAT-Kolkata

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18. Per contra, Learned Counsel for Respondent submits that the Securitization Application, under Section 17 of the Act, was filed beyond time. Relief claimed in the Section 17 Application is for a declaration that the action of the Secured Creditor, by returning the cheque tendered by the SARFAESI Applicants towards redemption of debt and refusing the Demand Draft dated 30.3.2013 for Rs.1.50 lac, vide letter dated 18.3.2013, is against the provisions of Section 13 (8) and needs to be quashed. Further, sale was conducted on 30^th July, 2004, Demand Notice dated 24.12.2003 and Possession Notice dated 12.4.2004 is sought to be set aside. It is submitted that limitation was claimed challenging the action of the Respondent No. 1 in returning the cheque vide letter dated 18.3.2013 and further refusal to accept the Demand Draft dated 30^th March, 2013. It is further submitted that there is no violation of the Rule 9 (4) of the Rules rather Appellants have specifically waived their right to challenge the same. Learned Counsel has also placed reliance upon the judgment of Siddheswari Co-Operative Bank (supra). It is further submitted that the Appellants are seeking right of redemption by depositing post dated cheque and on its refusal to accept the same by the Bank to send Demand Draft vide letter dated 30^th March, 2013 for Rs.1.50 lac. There is no explanation as to how the amount of Rs.1.50 lac is calculated by the Appellants.

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19. It is further submitted that after the date of auction, there were continuous litigations and the Appellants were well aware about the proceedings but they did not choose to

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Appeal No. 104 of 2018-DRAT-Kolkata challenge the auction sale at any point of time within limitation. Auction Purchaser deposited the amount on 4.3.2013 before the Senior Civil Judge, Civil Court, Adoni in EA No. 37 of 2012 in EP No. 82 of 2009 in OS No. 31 of 1997. Thereafter, sale was confirmed. It is further submitted that at no point of time, pending litigation, Appellant had ever moved or prayed for redemption which conduct coupled with the letter dated 16.3.2005 conclusively proves that the Appellants have waived their right of challenge under Rule 9 (4) of the Rules. It is further submitted that once the Appellants No. 2 and 3 have sent a notice through their Counsel, Ms. G.M. Lalitha, Advocate, Adoni to the Bank on 16.3.2005 stating that:

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“ The Bank Authorities have sold away the entire schedule mentioned property in public auction on 30^th July, 2004. After adjusting the loan amount from out of sale proceeds, our clients are entitled to get 2/3^rd share in the balance of sale proceeds”.

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It was a simple consent by the Appellants under Rule 9 (4) of the Rules and the principles of approbate and reprobate will be applicable.

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20. The Hon’ble Apex Court in State of Punjab & Others -vs- Dhanjit Singh Sandhu [(2014) 15 SCC 144] held that-

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“22. The doctrine of “approbate and reprobate is only species of estoppels, it implies only to the conduct of parties. As in the case of estoppels it cannot operate against the provisions of a statute.

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23. It is proposition of law that once an order has been passed, it is complied with, accepted by the other party and derived the benefit out of it, he cannot challenge it on any ground. (Vide Maharashtra State Road Transport Corporation -vs- Balwant Regular Motor Service, Amravati & Ors., AIR 1969 SC 329). In R.N. Gosain -vs- Yashpal Dhir, AIR 1993 SC 352, this Court has observed as under "Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person

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Appeal No. 104 of 2018-DRAT-Kolkata

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cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage."

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21. In Union of India & Others -vs- N. Murugesan (2022) 2 SCC 25, the Hon’ble Apex Court, in para 26, held

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as under :

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“ 26. These phrases are borrowed from the Scott's law. They would only mean that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold. The principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party. We have already dealt with the provisions of the Contract Act concerning the conduct of a party, and his presumption of knowledge while confirming an offer through his acceptance unconditionally.”

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22. There are certain facts which are not in dispute. It is not in dispute that the Appellants are the legal heirs of the Borrower, who was their father. It is also not in dispute that the Loan Account was classified as N.P.A. wherein notices under Sections 13 (2) and 14 (4) of the Act were issued. Sale notice was also issued and Auction Sale was conducted on 30^th July, 2004. It is also not in dispute that 25% of the bid amount was deposited as per Rules but the balance amount of 75% was not deposited in accordance with Rules 9 (4) and 9 (5) of the Rules. The balance amount was deposited on 4.3.2013. It is also not in dispute from the records that the Auction Sale was conducted under the

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Appeal No. 104 of 2018-DRAT-Kolkata un-amended Rules 9 (4) and 9 (5) of the Rules which reads as under:

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“ (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised 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 parties.

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(5) In default of payment within the period mentioned in subrule (4), the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.”

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23. It is also settled legal proposition, as has been held by the Hon’ble Apex Court in Siddheswari Co-Operative Bank (supra) in paragraph 14 that :

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“ 14. In the present case, the DRAT had to consider prima facie whether there was any agreement arrived at, in writing between the parties, including the borrowers/petitioners and whether the petitioners had in fact waived such a right. In any case, the DRAT had also to consider whether the property was required to be sold, yet again in terms of Rule 9(5) of the Rules, immediately thereafter.”

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24. Now, we have to see firstly as to whether there is violation of Rules 9 (4) and 9 (5) of the Rules or Appellants have waived their right under Rule 9 (4) of the Rules?

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22. In Vasu P. Shetty -vs- Hotel Vandana Palace & Others [(2014 5 SCC 660] Hon’ble Apex Court has considered and relied upon the case of Siddheswari CoOperative Bank (supra) and held that Siddheswari Co-Operative Bank proceeds further to lay down the principle that since the provisions are in the benefit of the Borrower, Borrower can always waive his right, that is the procedural requirement. It was further held that the question as to whether there is a waiver or not depends on facts of each case and no hard and fast rule can be laid down in this regard. Hon’ble Apex Court has placed reliance

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Appeal No. 104 of 2018-DRAT-Kolkata

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upon the judgment of the other Bench in the case of State of Punjab -vs- Davinder Pal Singh Bhullar [(2011) 14 SCC 770] wherein it was held that :

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"37. In Manak Lal this Court held that alleged bias of a Judge/official/Tribunal does not render the proceedings invalid if it is shown that the objection in that regard and particularly against the presence of the said official in question, had not been taken by the party even though the party knew about the circumstances giving rise to the allegations about the alleged bias and was aware of its right to challenge the presence of such official. The Court further observed that: (SCC p. 431. para 8)

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‘8. …… waiver cannot always and in every case be inferred merely from the failure of the party to take the objection. Waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question.’

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38. Thus, in a given case if a party knows the material facts and is conscious of his legal rights in that matter, but fails to take the plea of bias at the earlier stage of the proceedings, it creates an effective bar of waiver against him. In such facts and circumstances, it would be clear that the party wanted to take a chance to secure a favourable order from the official/court and when he found that he was confronted with an unfavourable order, he adopted the device of raising the issue of bias. The issue of bias must be raised by the party at the earliest. (See Pannalal Binjraj v. Union of India (AIR 1957 SC 397) and P.D. Dinakaran (1) -vs- Judges Inquiry Committee [(2011) 8 SCC 380]

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39. In Power Control Appliances -vs- Sumeet Machines Private Limited [(1994) 2 SCC 448] this Court held as under: (SCC p. 457, para 26)

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‘26. Acquiescence is sitting by, when another is invading the rights.... It is a course of conduct inconsistent with the claim.... It implies positive acts; not merely silence or inaction such as involved in laches. The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant.....’

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40. Inaction in every case does not lead to an inference of implied consent or acquiescence as has been held by this Court in P. John Chandy & Co Private Limited -vs- John P. Thomas [(2002) 5 SCC 90] Thus, the Court has to examine the facts and circumstances in an individual case.

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41. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. (Vide Dawson's Bank Limited -vsNippon Menkwa Kabushiki Kaisha (1934-35) 62 IA 100: (1935) 41 LW 764, Basheshar Nath -vs- CIT AIR 1959 SC 149, Mademsetty Satyanarayana v. G. Yelloji Rao AIR 1965 SC 1405, Associated Hotels of India Limited -vs- S.B. Sardar Ranjit Singh, AIR 1968 SC 933,

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Appeal No. 104 of 2018-DRAT-Kolkata

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Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn. 1992 Supp (1) SCC 5, Sikkim Subba Associates v. State of Sikkim 19 [(2001) 5 SCC 629] and Krishna Bahadur -vs- Purna Theatre 20 (2004) 8 SCC 229: 2004 SCC (L&S) 1086)

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42. This Court in Municipal Corpn. of Greater Bombay -vs- Hakimwadi Tenants' Assn. 1988 Supp SCC 55 considered the issue of waiver/acquiescence by the non-parties to the proceedings and held: (SCC p. 65. paras 14-15)

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‘14. In order to constitute waiver, there must be voluntary and intentional relinquishment of a right. The essence of a waiver is an estoppel and where there is no estoppel, there is no waiver. Estoppel and waiver are questions of conduct and must necessarily be determined on the facts of each case…..

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15. There is no question of estoppel, waiver or abandonment. There is no specific plea of waiver, acquiescence or estoppel, much less a plea of abandonment of right. That apart, the question of waiver really does not arise in the case. Admittedly, the tenants were not parties to the earlier proceedings. There is, therefore, no question of waiver of rights by Respondents 4-7 nor would this disentitle the tenants from maintaining the writ petition.’"

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25. Now it is established and settled by the Hon’ble Apex Court that in the un-amended Rule 9 (4) of the Rules, meaning of the word “parties” is the Secured Creditor, Borrower and Auction Purchaser. Now we have to scrutinize as to whether there was any waiver of rights by the Appellants, as far as Un-amended Rule 9 (4) of the Rules is concerned?

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26. Legal Notice dated 16.3.2005, written by Smt. G.M. Lalitha, Advocate, was issued to the Respondent No. 1, Secured Creditor. For the purpose of clarity, we may quote relevant paragraphs No. 2 and 3 of the notice which reads as under:

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“2. For the loan taken by my late grandfather from your bank on 1.12.1995 during his lifetime, he mortgaged the schedule mentioned property in favour of your bank. The bank authorities have sold away the entire schedule mentioned property in public auction on 30.7.04. After adjusting the loan amount from out of sale proceeds, our client's are entitled to get 2/3^rd share in the balance of sale proceeds. The public auction has taken place about 7 months back. So, far nothing is heard about said sale.

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Appeal No. 104 of 2018-DRAT-Kolkata

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3. My clients came to know that the purchaser who had purchased the schedule mentioned property has not deposited entire amount into bank. Sir, you are hereby called upon you to cancel the said sale and order for fresh sale, else direct the purchasee to deposit remaining amount into bank immediately, otherwise my client's will be compled to take legal action in this matter, and You will be held responsible for all costs and consequences thereof.”

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27. As has been held by the Hon’ble Apex Court, waiver can only be inferred from the facts of the matter. Waiver cannot always and in every case be inferred merely from the failure of the party to take the objection. Waiver can be inferred even and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons the same.

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28. Contents of the legal notice dated 16.3.2005 unequivocally depicts that the Appellants were having full knowledge about the loan and the mortgage. They also knew about the public auction held on 30^th July, 2004. They also claim that after adjustment of the loan amount, they are entitled to 2/3^rd share in the balance sale proceeds. If we go through the history of the matter, we will find that G. Busanna, father of the Appellant No. 1, namely G. Basavaraj and grandfather of Appellants No. 2 and 3,

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Appeal No. 104 of 2018-DRAT-Kolkata namely Manjunath and G. Arvind Kumar, availed Credit Facilities of Rs.50,000.00 from the Bank and mortgaged the secured assets. He died intestate. Loan account was classified as N.P.A. Securitization action was initiated by the Bank. Notices under Section 13 (2) and 13 (4) of the Act were issued to the Appellants who did not respond and sale notice was also issued in accordance with law. Ultimately, secured assets were put on auction on 30^th July, 2004 wherein the final bid for Rs.5.60 lac was made by the Auction Purchaser. 25% of the bid amount was also deposited. Thereafter, good number of legal proceedings arose. Civil Suit No. 26 of 1988 was filed by the legal heirs of Late K. Kondandappa against the Appellants herein and a decree was obtained. Execution of the decree was filed. When the secured assets were to be sold, Bank filed Claim Petition being EA No. 126 of 2006 in EP No. 1 of 2002 in OS 26 of 1998 to stop the sale of the secured assets. EA was allowed on 15.9.2008. The LRs of K. Kondandappa preferred an appeal in A.S. No. 86 of 2008 against the order passed in E.A. 126 of 2006 which was dismissed on 5.12.2012. Another proceedings was initiated by G. Veerabadrappa by filing Suit No. 31 of 1997 which was decreed. In execution secured assets were attached but Bank filed EA No. 37 of 2012 in E.P. No. 82 of 2009 in OS No. 31 of 1997 under Order XXI Rule 58 C.P.C. which was allowed on 12.3.2013. Thereafter, sale was confirmed and sale certificate was issued on 30^th March, 2013. All these proceedings were well within the knowledge of the

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Appeal No. 104 of 2018-DRAT-Kolkata Appellants as has also been held by the Learned DRT but nowhere any objection was offered or raised by them. Even no Securitization Application under Section 17 of the Act was filed challenging the violation of Rules 9 (4) and 9 (5) of the Rules. Conduct of the Appellants, coupled with the Notice dated 16.3.2005, conclusively proves that they were having full knowledge of their rights but did not exercise their rights at any point of time which amounts to waiver of the right. Accordingly, I am of the opinion that Appellants have consciously waived their right under Rules 9 (4) and 9 (5) of the Rules.

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29. When the Appellants waived their rights then they have no right now to claim redemption under Section 13 (8) of the Act. Section 13 (8) of the Un-amended Rules reads as under:

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“ (8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.”

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30. Learned Counsel for Appellant would submit that the Appellants have deposited a cheque for Rs.1.50 lac with a letter dated 6.3.2013 which was not accepted by the Bank. It was deposited under Section 13 (8) of the Act.

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31. It appears that Cheque No. 550753 of Syndicate Bank dated 23.3.2013 was deposited by the Appellants with a letter 6.3.2013 which was replied by the Bank vide letter dated 18.3.2013 mentioning that the cheque issued is post dated. Subsequently, number of opportunities were given by

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Appeal No. 104 of 2018-DRAT-Kolkata the Bank for redemption of the loan but the same was not complied by the Appellants. Thereafter again 30^th March, 2013 Demand Draft of Rs.1.50 lac was deposited by the Appellants claiming it to be deposit for redemption. A perusal of Section 13 (8) of the Act makes it clear that dues of the secured creditor together with costs, charges and expenses incurred have to be tendered to the secured creditor before the date fixed for sale or transfer. How the amount of Rs.1.50 lac is calculated by the Appellants could not be established by them. Redemption was rightly refused by the Bank on the ground that sufficient opportunities have already been given. Secondly, sale has been concluded. Thirdly, the amount tendered does not comply with the provisions of Section 13 (8) of the Act. Accordingly, I am of the considered view that the right of redemption was rightly not allowed to be executed by the Bank in favour of the Appellants.

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32. Learned Counsel for Respondent would submit that the Securitization Application was filed beyond the period of limitation. In paragraph 6 of the Securitization Application limitation clause was mentioned wherein it is stated that Securitization Application is filed challenging the action of the Bank in returning the cheque tendered to the Bank by the Applicants vide letter dated 18.3.2013 towards redemption of debt.

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33. Learned Counsel for Appellants has placed reliance upon the case laws which settles the law on the issue of limitation as well as the procedure to be followed in the

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¶109

Appeal No. 104 of 2018-DRAT-Kolkata Securitization matters. Section 17 of the Act gives a right to the Borrower or any other person to challenge any of the measures under Section 13 (4) of the Act taken by the secured creditor to make an application before the authority within 45 days from the date of such measures have been taken. Notices under Section 13 (2) and 13 (4) of the Act were duly issued and served upon the Defendants. Factum of initiation of litigations pending before different forums was well within the knowledge of the Appellants but they never chose to file any application under Section 17 of the Act. Even in the Securitization Application, under Section 17 of the Act, challenge is made about the refusal of the Bank to accept the Draft of Rs.1.50 lac tendered for redemption of the mortgage. Even in the legal notice dated 16.3.2005, by Smt. G.M. Lalitha, Advocate for the Appellants, there is mention of the auction sale dated 30^th July, 2004 but no challenge was made. Reliefs sought for, in the present S.A., is for refusal of Bank to accept the Draft of Rs.1.50 lac which is a relief not admitted by limitation, as required to be filed under Section 17 of the Act.

¶110

34. Accordingly, I am in agreement with the findings of the Learned DRT that the Securitization Application is barred by limitation.

¶111

35. On the basis of the discussion made above, I am of the considered view that the Learned DRT has arrived at a finding in accordance with law. Appeal lacks merits and is liable to be dismissed.

¶112

¶113

Appeal No. 104 of 2018-DRAT-Kolkata

¶114

O R D E R

¶115

Appeal is dismissed. The impugned judgment and order dated 21^st December, 2017, passed by Learned DRT-II, Hyderabad, dismissing S.A.108 of 2017 (G. Basavaraj & Others -vs- Sri Mahayogi Lakshmamma Co-operative Bank Limited (AVVA Bank) & Another), is affirmed.

¶116

No order as to costs.

¶117

Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

¶118

File be consigned to Record room.

¶119

Order signed and pronounced in open Court.

¶120

(Anil Kumar Srivastava,J) Chairperson

¶121

Dated: 3^rd April, 2025 ac

G Basavaraj and Ors. v. Sri Mahayogi Lakshmamma Co. Op Bank Limited Avvva Bank Ant Anr.

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G Basavaraj and Ors. v. Sri Mahayogi Lakshmamma Co. Op Bank Limited Avvva Bank Ant Anr.

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