Dismissed

Vallabhaneni Sri Ram Bhupal v. Seas Entertainment Ltd. Represented by Its MD Sri Maruthi Shanker

DRAT13 Feb 2025REGULAR APPEAL/144/2023

Case brief

AI extract

What is this about?

In an appeal against a Debts Recovery Tribunal order quashing a SARFAESI sale, the DRAT held the auction purchaser estopped by conduct from alleging collusion between the bank and borrower. The appellant had received the refunded sale proceeds after complaining about the sale, rendering the appeal without merit.

What did the court decide?

Appeal dismissed; costs easy. Impugned order of DRT-II Hyderabad is upheld.

Vallabhaneni Sri Ram Bhupal versus Seas Entertainment Ltd… — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appl. No. 144 of 2023

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(Arising out of S.A. 1286 of 2017 in DRT-II Hyderabad)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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Order No. 11

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13.02.2025

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Vallabhaneni Sri Ram Bhupal Residing At Dr No 14 92 Varalakshmi Puram 2nd Lane Near Hanuman Temple, Kanuru Village, Penamaluru Mandala Krishna District

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--Vs--

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7 Seas Entertainment Ltd office at 6-3-1239/2/A, 3^rd floor, Kotis Raj Bhavan Road, Somajiguda, Hyderabad 500082.

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2.Smt L Usha Kumari residing at 15-121, Pranbhu Nagar, Pora nki, Krishna district - 521137

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3.Smt L Hemalatha residing at Flat no. 409, Sri Nilaya Estates, Ameer Pet, Hyderabad - 500082

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4.Authorized Officer, Indian Overseas Bank at Rai Bhavan Road Branch, RV’S Kamala Castle, 1^st floor, 6-3-899/1, Opp Shanthi Sikhara Apartments, Raj Bhavan Road, Somajiguda Hyderabad 500082

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5.Assistant General Manager, Indian Overseas Bank at RV’S Kamala Castle, 1^st floor, 6-3-899/1, Opp Shanthi Sikhara Apartments Raj Bhavan Road Branch Somajiguda Hyderabad 500082

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... Respondents

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For Appellant : Mr. P. Sreenivas, ld. adv.

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For Respondent : Mr. Onkar Ganguly, ld. adv for bank Mr. Nemani Srinivas, ld. adv. for borrower

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THE APPELLATE TRIBUNAL :

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Instant appeal has arisen against the judgement and order

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passed by learned DRT-II Hyderabad in S.A. No. 1286 of 2017

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(7 Seas Entertainment Ltd. & Ors. Vs. The AO, Indian Overseas

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Bank & Ors.) whereby learned DRT, while allowing the S.A., has set aside the possession notice dated 08.05.2015, e-auction sale held on 18.12.2019 pursuant to e-auction sale notice dated

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25.11.2019 and consequently sale certificate dated 04.01.2020 registered in favour of auction purchaser, appellant herein, with the direction to refund the entire bid amount deposited by the auction purchaser together with 6% interest per annum simple within 15 days from the date of the order.

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I have heard learned counsel for the appellant auction purchaser as well as the learned counsel for the respondent no. 4 and 5 bank and respondent no. 1 to 3 borrower. I also perused the records.

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SARFAESI application was filed u/s 17 of the SARFAESI Act,

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2002 (hereinafter referred to as Act) by respondent no.1,2 and 3 herein challenging the possession notice dated 25.11.2019, e- auction sale held on 18.12.2019 and sale certificate dated

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04.01.2020 on different grounds. It appears that respondent no.1,2 and 3 are the borrower and guarantors of the bank for different loan amount to the extent of cash credit Rs.3.00 crore

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and term loan Rs.88.00 lakh. Loan amounts became irregular

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and classified as NPA on 31.12.2014. Demand notice u/s 13(2)

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of the Act was issued on 02.02.2015. No payments were made by

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the borrower. SARFAESI action was initiated by the bank. E-

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auction notice dated 25.11.2019 was issued and auction was conducted on 18.12.2019 whereby appellant herein was declared successful bidder, who deposited the bid amount in accordance with law. Sale certificate was also issued in appellant’s favour.

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Action of the bank was challenged by the respondent 1,2 and 3

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on different grounds including the ground of under valuation of the secured asset.

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It appears that SARFAESI application was contested by the

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bank as well as the auction purchaser. Eventually S.A. was allowed by the learned DRT on 28.07.2023 holding violation of Rule 8(1), 8(6), 8(7) as well as 8(5) of the Security Interest (Enforcement) Rules of 2002. Possession notice, sale notice and sale certificate were cancelled and direction was issued to refund

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the bid amount to the auction purchaser with 6% interest.

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Feeling aggrieved by the impugned judgement and order

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auction purchaser preferred the appeal. However, bank did not

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choose to challenge the impugned judgement.

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learned counsel for the appellant auction purchaser mainly

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challenged the impugned judgement on the issue of collusion between the bank and the borrower. It is submitted that S.A.

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was allowed on 28.07.2023, however, prior to that OTS scheme was launched by the bank wherein respondent borrower participated and his preproposal for OTS was accepted pending S.A. No leave of DRT was obtained despite the fact that S.A. was

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pending. It is further submitted that No-due certificate was also

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issued on 11.06.2023 without leave of the DRT. Learned counsel

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further submitted that collusive action of the bank as well as borrower will be proved by the fact that when the judgement was

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delivered on 28.07.2023, on the very same day letter was issued

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by the borrower to the bank to debit the amount from his savings bank account and to remit the same to the auction purchaser and

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the same was also remitted by the bank, although the fact of

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deposit of the amount in the bank account of the auction purchaser was not brought to his notice. It is further submitted

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that purposefully bank did not choose to challenge the impugned

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judgement and order by filing appeal, although bid amount was

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refunded to the auction purchaser. Hence, on the ground of

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collusion appellant preferred the appeal.

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Per contra, learned counsel for the bank submits that in the

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OTS proposal accepted by the bank secured asset of the borrower has not been included as has been stated in the reply filed by the bank. It is submitted that Bank is well within its power to launch OTS scheme wherein an eligible borrower can apply and if found eligible as per terms and conditions of the OTS scheme, bank is empowered to grant OTS in favour of the borrower. It is further submitted that judgement and order delivered by the learned DRT was not challenged by the bank as per its own internal policy. Bank cannot be compelled to challenge the judgement against their own internal policy. It is further submitted that there was no collusion between the bank and borrower. After delivery of the impugned judgement by the learned DRT bank accepted the request of the borrower to remit the amount to the auction purchaser from borrower’s bank account.

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Learned counsel for the borrower submits that nothing is

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brought on record to show collusion between bank and the borrower. Borrower has already challenged the SARFAESI action

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initiated by the bank which resulted in cancellation of the possession notice as well as sale notice consequently auction sale

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and sale certificate were cancelled. On 28.07.2023 when the

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learned DRT allowed S.A., borrower himself requested the bank to demit the bid amount with interest from his account and same was complied with by the bank. Learned counsel further sought the attention to the legal notice dated 27.08.2023 issued by the learned counsel on behalf of the auction purchaser to the bank wherein compensation to the tune of Rs.50.00 lakh and registration charge to the tune of Rs.6,17,780.00 were claimed.

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Admittedly, S.A. 1286 of 2017 was filed by the borrower

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guarantors, respondent no.1,2 and 3 herein on different grounds which was allowed by the learned DRT on 28.07.2023. It is also on record that secured asset in this matter was not included in the OTS scheme lunched by respondent no. 4 and 5 bank. OTS was lunched and proposal of the borrower was considered. OTS was granted in favour of the borrower, S.A. applicant, excluding the secured asset of the borrower. Subsequently S.A. was allowed. Auction process was cancelled. A letter dated

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27.07.2023 was sent by the borrower to the bank requesting

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them to debit the amount of sale proceeds as well as interest as

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directed by the DRT from his savings bank account, which was done by the bank and further request was made to remit the

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same amount to the account of the auction purchaser, which was also done by the bank. Bank has remitted the amount to the auction purchaser’s bank account on the date the judgement, which could not be a ground to infer that there was collusion between the bank and the borrower. Further, this amount was remitted to the account of the auction purchaser on the same date i.e. 28.07.2023, but this fact was no where disclosed by the appellant in their appeal rather on being enquired a supplementary affidavit is filed on 27.01.2025 wherein it is stated that the fact of deposit of Rs.81.50 crore and Rs.17,57,250.00 deposited on 28.07.2023 was never informed to him till the version came from the respondent borrower at the time of hearing in DRAT, Kolkata. This statement of the appellant is nullified by the legal notice issued on behalf of him through his Advocate Mr. Bodapati Vamsi Krishna and Mr. Dheeka Kanishk S on 27.08.2023 wherein the fact of the decision of the learned DRT

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was admitted. Further, through this legal notice appellant

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claimed compensation of Rs.50.00 lakh and refund of registration

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charges of Rs.6,17,780.00. It cannot be accepted that a huge

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amount of around Rs.99.00 lakhs were lying in the personal savings account of the appellant and he was not aware of the fact that such a huge amount was lying in his bank account for one

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and a half years. This fact itself shows that fact of deposit of the bid amount along with interest was well within his knowledge, but

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was not disclosed in the appeal. Further, appellant cannot be

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permitted to blow hot and cold. Principle of approbate and reprobate also bars the same as also been held by the Hon’ble

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Apex Court in State of Punjab & Ors. Vs. Dhanjit Singh

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Sandhu [(2014) 15 SCC 144] wherein it is stated :

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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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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 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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Accordingly, I am of the considered opinion that fact of

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depositing the bid amount along with interest in the personal savings bank account of the appellant was well within his knowledge, however, this fact was intentionally withheld and concealed by the appellant in the appeal.

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Bank has not filed any appeal against the impugned judgement and order delivered by the learned DRT. It is bank’s internal policy. In view of the direction of the learned DRT and on

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the request of the borrower, bank remitted the bid amount along

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with interest from the savings bank account of the borrower to the savings bank account of the appellant auction purchaser.

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There is no collusion between the bank and the borrower.

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