Allowed

Union Bank of Inia v. S.Jagadish & Ors.

DRAT5 Jun 2025REGULAR APPEAL/18/2015

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the bank's appeal against the DRT's order quashing the sale of the property. The Tribunal held that lack of documentary proof for affixing the sale notice was not fatal due to proper service and challenge, and accepted evidence of 25% consideration payment.

What did the court decide?

The appeal was allowed, the impugned order of the DRT in SA 473/2012 was set aside with costs, and the sale, confirmation, and sale certificate held in favor of the 3rd respondent were held valid.

Union Bank of Inia versus S.Jagadish & Ors. — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 5^th of June, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan CHAIRPERSON

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RA (SA) 18/2015

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(SA 473/2012, on the file of DRT, Bangalore)

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Between

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Union Bank of India, Represented by Manager, Shimoga Branch. .

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Appellant

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Vs. 1) Sri S. Jagadish S/o Late Sri.A.N. Siddabasappa, Prop of M/S Nadig & Co, Maruthi Building B.H. Road Shimoga. 2) Sri.P. Padmaraj S/o Papanna, Cinema Road Shimoga Shimoga Taluk & District. 3) Sri.H.S.Shivashankar Sarvasiddehi F.70 GopalagowdaExtention Shimoga. 4) Smt. Anitha W/O Ravi, No. 5/51 D Block, Saraswathi Nagar, Shimoga.

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…Respondents Counsel for Appellant Bank : Mr. S. Sethuraman Counsel for Respondent 1 & 2 : Mr. T. R. Sundaram Counsel for Respondent No.3 : Mr. B. S. Mahendra

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ORDER

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This Appeal is filed challenging the order dated 21.02.2014 of Learned Presiding Office, DRT, Bangalore, in SA 473/2012.

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The SA 473/2012 was filed by Respondents 1 and 2, as Applicants, challenging the Sale Notice dated 29.06.2012, subsequent confirmation, if any. After full-fledged enquiry, SA 473/2012 was allowed. Against the order allowing SA 473/2012, this Appeal is filed by the Appellant Bank.

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Learned Counsel for Appellant Bank submitted that Respondent No.1 is the borrower and Respondent No.2 is guarantor. Since the borrower committed default in repaying the loan, the account was classified as NPA and proceedings were initiated under SARFAESI Act, 2002 and the impugned Sale Notice was issued. The Sale Notice dated 29.06.2012 was issued fixing the sale at 3.00 p.m. on 04.08.2012. Meanwhile, the Respondents 1 and 2 approached DRT and filed SA and in the said SA, they filed

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an Interlocutory Application seeking stay of sale. Learned Presiding Officer passed a conditional order on 31.07.2012 giving permission to the Bank to go ahead with proposed sale, but the confirmation of sale subject to the condition that Respondents 1 and 2 deposit a sum of Rs.2 Lakhs in the loan account of the Bank, within a month from the date of passing the order. Therefore, sale was held on 04.08.2012. Subsequently, sale was confirmed on 15.11.2012, Sale Certificate was issued on 28.02.2013 and got registered.

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3.1 It is the further submission of Learned Counsel for

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Appellant Bank that the Securitisation Application was allowed mainly on two grounds:-

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i. Affixture of Sale Notice was not proved and

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ii. Auction Purchaser not paid 25% of the sale

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consideration on the date of sale.

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3.2 It is true that there is no document was produced to show that there was an affixture of Sale Notice, however, failure to produce any document in support of affixture of

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Sale Notice would not result in causing prejudice to the borrower. The reason is that only after receiving the Sale Notice, the borrower and guarantor filed SA 473/2012 challenging the sale proceedings.

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3.3 With regard to the alleged ground taken for non deposit of 25% of sale consideration on the date of sale, Learned Counsel for Appellant Bank drew my attention of this Tribunal to pages 42 to 46 of typed set, the minutes of the proceedings of the sale in support of his case to show that 25% of the sale consideration i.e. Rs.10.50 Lakhs was paid

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by the Auction Purchaser on the date of sale on 04.08.2012. Without considering these facts, Learned Presiding Officer wrongly allowed the Securitisation Application. Thus, he prayed for reversal of the finding of the Learned Presiding Officer and for allowing this Appeal.

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4. Learned Counsel for R1 and R2 submitted that as per

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the Sale Notice dated 29.06.2012, there were two loans and

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the borrowers of one loan are (i) M/s. Nadig Traders, (ii) Sri.

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S. Jagadish and (iii) Sri. S.Manjunath. The borrowers of other loan are (i) M/s. Nadig and Company and (ii) Sri. P. Padmaraj. Two properties were offered as secured assets for the loans borrowed. Of these two properties, item No.1 of the properties was offered as a common security for both the loans. No Possession Notice was issued for item No.1 of the properties. Without issuing Possession Notice for taking possession of item No.1, item No.1 of the properties was sold.

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4.1 Learned Counsel further submitted that Learned Presiding Officer passed an interim order on 31.07.2012 in SA 473/2012, deferring the confirmation of sale subject to Respondents 1 & 2 depositing a sum of Rs.2 Lakhs to the loan account with the Appellant Bank within a period of one month from the date of the order. It was also ordered that if the Respondents 1 & 2 fail to deposit this amount within the

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time, the order deferring the confirmation of sale shall stand automatically cancelled and Appellant Bank was given liberty

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to confirm the sale of the secured asset, subject to the written permission of the Tribunal.

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4.2 25% of the sale consideration was not paid on the date of sale and the balance sale consideration was also not paid within 15 days of the confirmation of the sale. Learned Counsel drew the attention of this Tribunal to the letter dated 22.11.2012 issued by the Bank to the Auction Purchaser informing about the order of the Tribunal dated 15.11.2012 with regard to confirmation of the sale in favour of the successful bidder and directing the Auction Purchaser to remit the balance sale consideration of Rs.31,50,000/within 15 days from the date of the letter. When an interim order against the confirmation of sale was in force, sale was confirmed and Sale Certificate was issued. It is evident from the letter of the Bank dated 28.02.2013 to the Auction Purchaser.

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4.3 Thus, Learned Counsel submitted that the sale was held without properly serving Sale Notice. Confirmation of

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sale, issuance of Sale Certificate had been done without following the mandatory requirement of deposit of 25% of the sale consideration on the date of sale and the balance sale consideration within 15 days. It is against the Rules made under SARFAESI Act. Thus, Learned Counsel prayed for confirming the order of the Learned Presiding Officer, DRT, Bangalore, in SA 473/2012, and for dismissal of this Appeal.

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In reply to this submission, Learned Counsel for the Appellant Bank submitted that Possession Notice was also issued to the item No.1 of the properties and Learned Counsel drew the attention of this Tribunal to the Kannada edition of the Possession Notice issued for taking possession of the item No.1 of the properties. It is further submitted that the Learned Presiding Officer, DRT, Bangalore passed an order on 15.11.2012 as evidenced from the minutes of the proceedings that the Auction Purchaser paid the balance sale consideration and therefore the Bank was given liberty to confirm the sale. Only thereafter, the Bank addressed a

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letter dated 22.11.2012 to the Auction Purchaser and then sale was confirmed, Sale Certificate was issued. The Sale Notice was deliberately avoided by the borrowers, despite taking the Sale Notice to the address given in the Bank at the time of borrowal. 25% of the sale consideration was paid on the date of sale and sale was confirmed as per the order of the DRT. In the said circumstances, Learned Counsel prayed for setting aside the order of the Learned Presiding Officer, DRT, Bangalore in SA 473/2012 dated 21.02.2014 and for allowing this Appeal.

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The Counsel for Respondent No.3, Auction Purchaser submitted that the Bank had taken proper measures for sale of the property. Respondent No.3 was the successful bidder and he paid 25% of the sale consideration on the date of sale i.e. on 04.08.2012. In support of this submission, a copy of Cheque for Rs.10.40 Lakhs drawn on Corporation Bank available at page 48 of the Memorandum of Appeal is shown to me. The Bank has sent letter on 04.08.2012 to the Respondent No.3 intimating about the grant of stay by DRT,

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Bangalore in IA 2348/2012 in SA 473/2012 against the confirmation of sale. It is informed in the letter that the sale will be confirmed in favour of Respondent No.3 on vacation of stay order. Subsequently, sale was confirmed, and on 28.02.2013, the Sale Certificate was also issued. Counsel

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for Respondent No.3 further submitted that despite sale of the property in the year 2012, till date, the Respondent No.3 is not able to take possession, rather the Bank is not taking any steps for handing over possession.

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Heard the rival submissions and perused the records.

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The perusal of the records shows that the 1^st Respondent, the borrower and 2^nd Respondent, the guarantor, filed SA 473/2012 challenging the Sale Notice dated 29.06.2012. As already stated, SA was allowed mainly

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on the ground that i) Affixture of the Sale Notice was not proved and ii) 25% of the sale consideration was not paid on the date of sale. The other grounds raised such as, reserve price was fixed low; there was no clear 30 days’ notice prior

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to sale had been rejected by the Tribunal. It is brought to my notice that the issuance of Sale Notice to Respondents 1 and 2 had been taken to the address given in the loan documents. The acknowledgement card for issuance of Sale Notice to Respondent No.2 is produced. Notice sent to Respondent No.1 is returned with endorsement ‘addressee left’ . It is the submission of Learned Counsel for Appellant Bank that the Bank is required to take notice of sale to the address given in the loan documents. Therefore, as rightly pointed out by Learned Counsel for Bank, the Respondent No.1 deliberately avoided the receipt of notice and made it to be returned as ‘addressee left’ . Respondent No.2 had received the Sale Notice. Only thereafter, both Respondents 1 and 2 filed Securitisation Application challenging the Sale Notice. Due to the passage of time, the Bank is not able to produce the document with regard to the affixture of Sale Notice. There is no dispute with regard to publication of Sale Notice. When Respondents 1 and 2 had knowledge of Sale Notice and challenged by way of Securitisation Application, it

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cannot be held that non production of affixture of Sale

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Notice, would be a fatal. When proper steps have been taken for service of notice through post and through paper publication, this Tribunal finds force in the submission of Learned Counsel for Appellant Bank that non production of record to show the affixture of Sale Notice, is not a ground for setting aside the sale, especially when the sale measures had been challenged before the Tribunal. This Tribunal also finds from the Cheque dated 04.08.2012 for Rs.10.40 Lakhs drawn on the Appellant Bank that Respondent No.3 had in fact paid 25% of the sale consideration on the date of sale itself. Therefore, the finding recorded contrary to this evidence by Learned Presiding Officer, is not in tune with the evidence available.

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The records show that an interim order was passed on 31.07.2012 to defer the confirmation of sale to be held on 04.08.2012 subject to payment of Rs.2 Lakhs by Respondents 1 and 2. It is informed by the Learned Counsel for Respondents 1 and 2 that this condition was complied

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with. The Bank has sent a letter dated 04.08.2012 to the Auction Purchaser informing about this interim order passed by the Debt Recovery Tribunal and that the confirmation of sale will be done on vacation of stay and on payment of balance sale consideration within 15 days from the receipt of

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the letter from the Bank. Accordingly, the Bank had sent a letter dated 22.11.2012 that Debt Recovery Tribunal passed an order on 15.11.2012 for confirmation of sale in favour of the successful bidder. Therefore the Auction Purchaser was asked to remit the balance sale consideration of Rs.31,50,000/- within 15 days of receipt of the letter. Thus, it is clear that the sale was confirmed by the Bank only as per the direction of the Learned Presiding Officer, DRT.

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As said earlier, the Securitization Application in SA 473/2012 was allowed on the grounds that the affixture of Sale Notice was not proved and 25% of the sale consideration was not paid on the date of sale. It was already found that when the Respondents 1 & 2 were aware of the sale

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proceedings and challenged it before the Tribunal, the nonproduction of proof for the affixture of Sale Notice due to passage of time is not fatal to the case of the Bank and for that reason, the sale measure cannot be set aside. There is evidence available on record to show that the sale consideration of 25% was paid on the date of sale itself. Therefore, allowing the SA on the grounds that no proof of affixture of sale notice was produced and that 25% of the sale consideration was not paid on the date of sale is not in conformity with the factual and legal position.

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In the said circumstances, this Tribunal is constrained to set aside the order of the Learned Presiding Officer, DRT, Bangalore, in SA 473/2012 and allow the Appeal with the costs of the Appellant Bank recoverable from Respondents 1 & 2. Sale held in favour of the 3^rd Respondent, its confirmation and issuance of Sale Certificate are held as valid.

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In the result, the Appeal in RA (SA) 18/2015 is allowed and SA No.473/2012 is dismissed with the costs of the Appellant Bank, recoverable from Respondents 1 and 2. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me this 5^th of June, 2025]

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[ Justice G. Chandrasekharan] CHAIRPERSON

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Union Bank of Inia v. S.Jagadish & Ors.

Case brief

What is this about?

What did the court decide?

Union Bank of Inia v. S.Jagadish & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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