Partly allowed

J Ayyappan v. G Vijaylakshmi

DRAT12 Feb 2025REGULAR APPEAL/38/2023

Case brief

AI extract

What is this about?

The Tribunal confirmed the lower court's order allowing the delay condonation application but set aside the operative portion that set aside the auction sale and restored possession, directing a remand to decide the merits on merits.

What did the court decide?

Delay condonation application allowed; second appeal (challenging sale setting aside) allowed to the extent of setting aside the lower court's order restoring possession and imposing costs; sale setti

J Ayyappan versus G Vijaylakshmi — Banking and Recovery | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 12^th day of February , 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA (SA) 38/2023 & MA (SA) 39/2023

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(arising out of SASR 2409/2020 and MA 36/2020 in SASR 2409/2020 on the file of DRT-III, Chennai)

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I. RA(SA) 38/2023

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Between

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Mr. J. Ayyappan, S/o Jayakodi, No.21, Main Road, Mangudi PO, Tiruvarur 610 103.

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…..Appellant

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And

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1. Mrs. G. Vijayalakshmi W/o Late S. Gunasekaran, No.384, West Street, Pathiniyapuram, Anaikuppam (PO) Nannilam Taluk, Thiruvarur District 610 105.

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2. Mr. G. Suresh, S/o Late S. Gunasekaran, No1/195, Agraharam, Pinnavasal, Mavoor, Thiruvarur District 610 202.

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3. The Authorised Officer

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M/s Equitas Small Finance Bank Limited 14B, Kamalalayam Melkarai Nearby Lakshana Hospital, Tiruvarur 610 001.

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…..Respondents

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Counsel for appellant : M/s R. Srinivasan & A. Jaishankar Counsel for R1 & R2 : Shri S. Giridharan Counsel for R3 : Shri T.K.M. Sai Krishnan

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II. MA (SA) 39/2023

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Between

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The Authorised Officer M/s Equitas Small Finance Bank Limited 14B, Kamalalayam Melkarai Nearby Lakshana Hospital, Tiruvarur 610 001.

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…..Appellant

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And

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1 Mrs. G. Vijayalakshmi W/o Late S. Gunasekaran, No.384, West Street, Pathiniyapuram, Anaikuppam (PO) Nannilam Taluk, Thiruvarur District 610 105.

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2 Mr. G. Suresh, S/o Late S. Gunasekaran, No1/195, Agraharam, Pinnavasal, Mavoor, Thiruvarur District 610 202. 3 Mr. J. Ayyappan, S/o Jayakodi No.21, Main Road, Mangudi PO, Tiruvarur 610 103.

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…..Respondents

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Counsel for appellant : Mr. T.K.M. Sai Krishnan Counsel for R1 : Mr. S. Giridharan Counsel for R2 : None Counsel for R3 : Mr. R. Srinivasan

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COMMON ORDER

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These appeals viz. RA (SA) 38/2023 and MA(SA) 39/2023 are filed under Section 18 of SARFAESI Act against the orders passed in SASR 2409/2020 and in MA 36/2020 in SASR 2409/2020 passed by Ld. Presiding Officer, DRT-III, Chennai dated 19.3.2021 respectively.

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It is the submission of Ld. Counsel appearing for appellant bank in MA(SA) 39/2023 that MA 36/2020 was filed in SASR 2409/2020 for condoning delay of 61 days in filing the said SASR 2409/2020, which was filed challenging the conclusion of sale in the auction conducted by the respondent bank. It is the further submission of Ld. Counsel of appellant that after the MA was allowed, SA has to be numbered and it has to be disposed of on merits. Instead of doing that, Ld. Presiding Officer has disposed of the SA itself without numbering it, which is against any known principles of law.

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Ld. Counsel further submitted that Ld. Presiding Officer, DRT-III, Chennai has not considered the counter, written arguments and the documents produced by the respondent bank and passed the impugned order allowing both MA and SA by setting aside the sale held and concluded on 10.7.2020, restoring the possession to the mortgagor, giving liberty to the appellant to return the money to the auction purchaser and imposed costs of Rs.50,000/- to be paid by the appellant bank to the borrowers after adjusting its expenses. Aggrieved by the said order, these appeals are filed.

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In reply to this submission, Ld. Counsel for R2 submitted that there was total violation of the measures taken by the bank in the conduct of the sale of the mortgaged property. It is submitted that there was national lockdown imposed when the valuation of the secured asset was done on 24.3.2020. Valuation report was prepared at the residence of the valuer on 27.3.2020 based on which

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reserve price was fixed and auction was conducted on 10.7.2020. There was no explanation as to why second respondent in the SA viz. the auction purchaser participated in the valuation process and he is also a witness. It shows that valuation was not done independently and unbiased manner. The borrowers have deposited a sum of Rs.16.00 lakhs which is a few thousand more than the sale price. The documents furnished by respondent bank shows that bank has deviated from the procedure envisaged under the SARFAESI Act and Rules. Ld. Presiding Officer found that measures are not in tune with the provisions of the SARFAESI Act, 2002, therefore, Ld. Presiding Officer allowed both delay condonation application and the SARFAESI Application.

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Ld. Counsel for appellant in RA(SA) 38/2023, who is the auction purchaser submitted that appellant is the bona fide purchaser of the property and Ld. Presiding Officer hurriedly passed the impugned order without going into the merits of the SARFAESI application, therefore, the same is liable to be set aside and prayed this Tribunal to allow the appeal.

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I have considered the rival submissions and perused the records.

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Ld. Presiding Officer in the impugned order dated 19.3.2021 passed in MA 36/2020 in SASR No.2409/2020 had extracted the case of the parties and the submissions of Ld. Counsel appearing for parties and decided both delay application and SASR together. After allowing the delay condonation petition, set aside the measures taken by the bank at SASR stage itself for the reason stated by the Ld. Counsel for respondents. It is pertinent to refer to the order in paragraphs 11 to 13, which is as follows:

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“11. As a consequence and in the result, MA is allowed. Office is directed to number the SA, if otherwise found to be in order and irrespective of whether SA will be numbered or not, the sale held and concluded on 10.7.2020 is hereby set aside. Possession is restored to the mortgagor if

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displaced. Respondent bank will be at liberty to return the money to the auction purchaser after adjusting its expenses.

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12. Accordingly, MA as well as SA filed challenging the concluded sale are hereby allowed with costs of Rs.5000/- payable to the petitioner’s loan account by the first respondent bank, for the wrongful actions by its Authorised Officer. The said fine is also recoverable from the Authorised Officer of the respondent bank.

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13. With the above directions, MA and SA if numbered stands disposed. Interim order if any granted and subsisting till this day stands vacated. All other As, pending, if any, stands closed.”

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It is seen from the order passed that after allowing MA 36/2020 filed for condoning the delay of 61 days, Ld. Presiding Officer directed the Registry to number the SA if it is otherwise found to be in order. But, Ld. Presiding Officer did not stop there but proceeded to observe that “ irrespective of SA will be numbered or not, sale held and concluded on 10.7.2020 is hereby set aside, possession is restored to the mortgager if displaced, respondent bank will be at liberty to return money to the auction purchaser after adjusting its expenses and to pay costs of Rs.5000/- to the borrowers, i.e. respondents 1 and 2 herein.

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This part of the order is against the basic principles of jurisprudence. While directing the office to number the appeal if it otherwise found to be in order, how it is legally possible and permissible to pass further orders with regard to setting aside the sale, restoration of possession, etc. without numbering the appeal. This part of the order is liable to be set aside. It is not known whether the SA filed is found to be in order or not. If SA is found to be not in order, there is no way this order could be passed.

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Thus, this Tribunal is of the view that, part of the order of the Ld. Presiding Officer setting aside the sale held and concluded on 10.7.2020, directing to restore possession to the mortgagor, giving liberty to respondent bank to return money to the auction purchaser after adjusting its expense and to pay costs of

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Rs.5000/- to the borrowers, i.e. respondents 1 and 2 herein, is not correct and is liable to be set aside.

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In the result ;

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a) This Tribunal confirms the order of Ld. Presiding Officer, DRT-III, Chennai dated 19.3.2021 allowing MA 36/2020 in SASR 2409/2020. Accordingly, Appeal MA(SA) 39/203 is dismissed.

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b) This Tribunal set aside the order passed in SASR No.2409/2020 setting aside the sale held and concluded on 10.7.2020, directing to restore possession to the mortgagor, giving liberty to respondent bank to return money to the auction purchaser after adjusting its expenses and to pay costs of Rs.5000/- to the borrowers, i.e. respondents 1 and 2 herein. Accordingly, RA(SA) 38/2023 is allowed.

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c) Ld. Presiding Officer, DRT-III, Chennai is directed to number SASR No.2409/2020, if it is in order and dispose of the same as expeditiously as possible preferably within three months from the date of receipt of a copy of this order, after giving opportunity to both parties, on merits and in accordance with law.

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12. Parties are directed to bear their own costs. Pending IAs, if any, stand closed.

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[Dictated to Steno(SN), transcribed by him, corrected, signed and pronounced by me in open court, this 12^th February , 2025)

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Sd/-

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JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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J Ayyappan v. G Vijaylakshmi

Case brief

What is this about?

What did the court decide?

J Ayyappan v. G Vijaylakshmi

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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