Dismissed

Punjab National Bank v. Rojot Kumar Baruah

DRAT18 Feb 2025REGULAR APPEAL/25/2024

Case brief

AI extract

What is this about?

The Tribunal upheld an order cancelling a securitization auction sale and sale certificate. It held that the bank violated mandatory provisions regarding boundary details in the possession notice and denied the borrower's redemption rights by conducting the auction on strike days, causing the appeal to be dismissed.

What did the court decide?

Appeal dismissed; DRT order confirming auction cancellation confirmed.

Punjab National Bank versus Rojot Kumar Baruah — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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Appl. No. 25 of 2024

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(Arising out of S.A. No. 59 of 2022 – DRT-Guwahati)

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18.02.2025

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PUNJAB NATIONAL BANK having registered office at GS Road Jorhat Jorhat Assam 785001

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2.THE CHIEF MANAGER STREESSED ASSETS TARGETED RESOLUTION AND AUCTION residing at SASTRA CENTRE, JORHAT CIRCLE OFFICE, BABUPATTY, ASSAM

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3.THE BRANCH MANAGER PUNJAB NATIONAL BANK residing at K B ROAD, JORHAT DISTRICT, ASSAM

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... Appellant

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--Vs--

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Rojot Kumar Baruah having office at Club Road, Chandan Nagar, Byelane 13 Jorhat Assam 785001

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2.SMT PRIYANKA SHYAM residing at CLUB ROAD, CHANDAN NAGAR BYE LANE 18, JANAPATH, JORHAT DISTRICT, ASSAM 785001

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3.SMT RASMI REKHA BARUAH residing at CLUB ROAD, CHANDAN NAGAR BYE LANE 13, JORHAT DISTRICT, ASSAM 785001

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... Respondents

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Appl. No. 60 of 2024

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(Arising out of S.A. No. 59 of 2022 – DRT-Guwahati)

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PRIYANKA SHYAM having registered office at CLUB ROAD CHANDAN NAGAR BY LANE 18 JANAPATH JORHAT DISTRICT JORHAT ASSAM

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... Appellant

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--Vs--

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ROJOT KUMAR BARUAH having office at CLUB ROAD CHANDAN NAGAR BYE LANE 13 DISTRICT JORHAT ASSAM

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2.Punjab National Bank residing at North East Circle Office at 1st Floor, Nilgiri Mansion, Bhangagarh, OS Road, Guwahati, District Kamrup (Metropolitan) Assam,

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3.Chief Manager Punjab National Bank residing at Sasira Centre, Jorhat Circle Office, Babupatty, District Jorhat,

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Assam

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4.Branch Manager Punjab National Bank residing at Sasira Centre, Jorhat Circle Office, Babupatty, District Jorhat, Assam

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5.smt Rasmi Rekha Barua residing at Sasira Centre, Jorhat Circle Office, Babupatty, District Jorhat, Assam

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... Respondents

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For Appellant : Ms. Aparajita Rao, ld. adv.

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For Respondent : Mr. Soudip Pal Chowdhury, ld. adv.

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Mr. Ashok Kr. Singh, ld. adv.

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THE APPELLATE TRIBUNAL :

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Since both Appeal No. 25 of 2024 and Appeal No. 60 of 2024 are arising on the same impugned judgement and order dated 31.01.2024 passed by learned DRT Guwahati, both the appeals are taken up together and disposed of by a common judgement.

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Instant appeal hasarisen against the judgement and order dated 31.01.2024 passed by learned DRT-Guwahati in S.A. No. 59 of 2022 (I.A. No. 295 of 2021)) [Sri Rojot Kr. Baruah Vs. Punjab National Bank & Ors.] whereby securitization application was allowed and auction sale held on 16.03.2021 and sale certificate dated 02.04.2021 were cancelled. However, Bank was given liberty to proceed afresh for recovery of their dues in accordance with law.

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As would appear from the record that respondent no. 1 and 3 namely Rajot Kr. Baruah and Smt. Rasmi Rekha Baruah are the borrower and guarantor of the secured creditor bank. Respondent no.1 has availed financial assistance of Rs.11.00 lakh from the secured creditor Punjab National Bank. Loan account

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became irregular and was classified as NPA on 12.10.2018. Securitization proceedings were initiated by the secured creditor bank. Notice u/s 13(2) of the SARFAESI Act (herein after referred to as Act) was issued on 31.01.2019. Thereafter, possession notice was issued u/s 13(4) of the Act on 23.09.2019. Sale notice was issued on 11.02.2021 fixing sale date on 16.03.2021. In the sale notice there was a condition that if the borrower pays the amount due to the bank in full before the date of sale, auction is liable to be stopped. Subsequent thereto challenge was made to the sale notice dated 11.02.2021.

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Respondent bank would submit that securitization proceedings were drawn as loan account was declared NPA on 12.10.2018. Auction sale date was fixed on 16.03.2021, which was conducted on the same day and one Smt. Priyanka Shyam was the successful bidder who deposited the bid amount in accordance with law. Accordingly, auction sale was confirmed and sale certificate was issued on 02.04.2021.

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Learned DRT vide the impugned order has held that right of applicant borrower was violated on the ground that boundaries are not mentioned in the possession notice. Secondly, there was all-bank strike called all over the country on 15^th and 16^th of March, 2021. Applicant was prevented from tendering the amount due to bank on those days, but the auction sale was conducted and there was only single bidder participated in the auction and mortgaged property was sold at reserve price without

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obtaining consent from the borrower. Accordingly, securitization application was allowed giving liberty to the bank to proceed afresh in accordance with law.

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Feeling aggrieved, bank as well as auction purchaser preferred the appeal.

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Heard learned counsel for the parties and perused the records.

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8. L earned counsel for the appellant bank submits that learned DRT in the impugned judgement has recorded that boundary details are required to be mentioned in the possession notice as required in Appendix IV. Learned counsel submits that secured assets were duly described in the possession notice which were identifiable. It is further submitted that auction sale was not conducted by the bank, but some other agency conducted the auction. Respondent borrower did not approach the bank even prior to 15^th or 16^th March 2021 for redemption of the mortgage property while sale notice was issued much before on 11.02.2021. Respondent borrower approached the bank on 17.03.2021 with an application for redemption, even then due amount was not tendered by the borrower for redemption of his mortgage property.

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It is further submitted that there was no law for obtaining consent of the borrower in case single bidder participated in the auction and auction was conducted on reserve price.

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Learned counsel for the auction purchaser accepts the submission made by the learned counsel for the bank.

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Learned counsel for bank has placed reliance upon the judgement passed by the Hon’ble Delhi High Court in Mahipal Singh Yadav Vs. Union Bank of India & Anr. [2022 SCC OnLine Del 241] on the issue of reserve price. Learned counsel also referred the judgement of Hon’ble Apex Court in Varimadugu Obi Reddy Vs. B. Sreenivasulu & Ors. [Civil Appeal No. 8470 of 2022] on the issue of details of boundaries in the possession notice.

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Per contra, learned counsel for the respondents submits that learned DRT has made categorical finding on the issues that secured assets were not identifiable as it was necessary for the bank to mention the details of boundaries in the possession notice, which was not done. Further it is submitted that on 13^th and 14^th of March 2021 were Saturday and Sunday, both were holidays, and there was a nationwide strike called by the bank on the next 15^th and 16^th March, 2021. Borrower could not approach the bank for redemption of the mortgage property on those dates. When the borrower approached the bank on 17^th March, 2021, bank refused to accept the money on the pretext that he did not contact bank or authorised officer before 15^th March, 2021. It is further submitted that no consent of the borrower was obtained in this case, but auction was conducted on

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participation of single bidder and auction was confirmed on reserve price.

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As far as issue of details of boundary in the possession notice is concerned learned DRT referred Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as Rules. Rule 8(1) of the Rules provides that a possession notice should be prepared as nearly as possible in Appendix IV to these Rules. Purpose of possession notice as defined in Appendix IV is that property should be identifiable so that anyone and everyone could be able to look the secured asset. This was the intention of the Legislature while providing the format in Appendix IV. It is settled legal proposition that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner as has been held by the Hon’ble High Court at Hyderabad in M. Shankar Reddy & Anr. Vs. Amara Ramakoteswara Rao & Ors. [2017 SCC OnLine Hyd 426].

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14. In Appendix IV under Rule 8(1) of the Act details of boundaries are required to be mentioned, which are as under :

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“All that part and parcel of the property consisting of Flat No. ..../Plot No.... In Survey No...../ City or Town Survey No..../Khasra No. within the registration siubdistrict and District .... Bounded : On the North by On the South by On the East by On the West by”

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A perusal of the aforesaid provision would show that there is no

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mention of any Plot number or survey number or boundary-side details as required under the Rules in the possession notice. It is not known what prevented the authorised officer to mention the details of boundary in the possession notice. Neither any explanation given to this effect in the written statement filed before the learned DRT nor in the appeal. Hence, there is violation of mandatory provision of Rule 8(1).

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As far as opportunity to the respondent borrower for redemption of the mortgage property is concerned, the condition is mentioned in the sale notice itself. It is mentioned that if the borrower pays the due amount in full to the bank before the sale date auction is liable to be stopped. This condition is imposed by the secured creditor bank itself.Borrower was at liberty to make a deposit before the date of sale i.e. 16^th March, 2021, on that date or before that the bank was not functioning. No doubt auction sale was conducted by some other agency, but at the same time bank should not overlook the fact that there was a nationwide strike called by the bank and functioning of bank was stopped on those days and before that Saturday and Sunday holidays. Then the condition imposed in the sale notice by the bank itself cannot be complete, if the borrower comes to redeem his mortgage property by depositing all dues. It is well within the jurisdiction of

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the bank to postpone the auction sale so that rights of the borrower to redeem his property is not denied, but it was not done. Principle of natural justice has come into play in this matter whereby rights of the borrower to redeem his property is taken away by a government agency i.e. bank. In this case right of redemption was not only denied but directly refused by the bank by conducting auction sale on the day when the bank was closed for nationwide strike. Hence whole exercise of conducting the auction sale was vitiated.

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As far as provision of Rule 9(2) of the Rules is concerned, provision of the rule is as under :

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The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor:

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Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of [rule 8]

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Provided further that if the authorized officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price.

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17. The facts as narrated above shows auction sale was

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conducted on the date when the bank was on strike. It is a case wherein single bidder participated in the auction and sale was confirmed on reserve price. Facts and circumstances of the case required that auction sale should not have been conducted on that date.

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18. In view of the discussion made above, I am of the considered view that impugned order does not suffer from any

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illegality or infirmity. Appeal lacks merit and is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Judgement and Order dated31.101.2024passed by the learned DRT-Guwahati is

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confirmed. Costs easy.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT. Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 18^th day of February, 2025.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 18.02.2025 /pkb

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Punjab National Bank v. Rojot Kumar Baruah

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Rojot Kumar Baruah

Case brief

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What did the court decide?

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