Partly allowed

Radhakanta Panda v. Central Bank of India

DRAT21 Feb 2025REGULAR APPEAL/45/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's appeal to set aside a stay order and dismissed the borrower's appeal. It held that applications challenging concluded auction sales are not maintainable post-dismissal of the underlying suit, and the DRT lacked jurisdiction to pass interim orders in matters not pending before it.

What did the court decide?

The order dated 31.01.2020 directing status quo was set aside. The order dated 05.11.2019 dismissing the M.A. was confirmed.

Radhakanta Panda versus Central Bank of India — Company and Corporate | 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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21.02.2025

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Appeal No. 40 of 2020

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(Arising out of M.A. 2499 of 2019 in S.A. 107 of 2018 – DRT Cuttack)

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The Asstt. General Manager – cum – Authorised Officer CENTRAL BANK OF INDIA having office at Janpath Branch, Unit 3, Bhubaneswar, Dist. Khurda, 751 001.

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... Appellant

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--Vs--

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Ms Sarala Madan Infrastructure Pvt Ltd having office at AtSwayang Tower , Plot No . M -73, PO . Madhusudan Nagar , Unit- IV , Bhubaneswar, DistKhurda 751 001.

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2.Radhakanta Panda residing at S/O. Madanmohan Panda, Swayang Tower, Plot No. M-73, P.O. Madhusudan Nagar, UnitIV, Bhubaneswar, Dist. Khurda, PIN : 751001

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... Respondents.

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3.Smt Bidulata Panda W/O. Radhakanta Panda, residing at Plot No. 14/M Gajapati Nagar, P.O. Sainik School, Bhubaneswar, Dist. Khurda-751001

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4.Sri Swagat Panda S/O. Radhakanta Panda, residing at Plot No. 14/M Gajapati Nagar, P.O. Sainik School, Bhubaneswar, Dist. Khurda-751001

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5.Shri Bishnur Charan Nayak S/O. Late Bansidhar Nayak, residing at Gadakana, P.O.Mancheswar, Bhubaneswar, Dist. Khurda, PIN : 751017

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6.Messers New Laxmi Steel and Power Private Limited office at M-61, Madhusudan Nagar, Bhubaneswar-751001

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7a.Sri Subhrojeet Sahu residing at A/41, Rameshwarpatna, P.O. Bhubaneswar, Dist. Khurda 751002

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7b. Sri Shibangi Sahu residing at A/41, Rameshwarpatna, P.O. Bhubaneswar, Dist. Khurda 751002

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7c. Ms.Susmita Sahu residing at S/O. Biswanath Sahu A/41, Rameshwarpatna, P.O. Bhubaneswar, Dist. Khurda

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... Proforma Respondents

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Appeal No. 45 of 2022

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(Arising out of MA 345 of 2019 in S.A. 107 of 2018 DRT Cuttack)

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RADHAKANTA PANDA residing at S/O. Madanmohan Panda, Swayang Tower, Plot No. M-73, P.O. Madhusudan Nagar, Unit-IV, Bhubaneswar, Dist. Khurda, PIN : 751001 ... Appellant

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--Vs--

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1.AGM CUM Authorised Officer Central Bank Of India residing at Central Bank Of India, Janpath Branch, Unit-3, Bhubaneswar, Dist-Khurda, PIN:751001

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2.New Laxmi Steel and Power Pvt Ltd residing at M- 61, Madhusudan Nagar, Bhubaneswar, Dist. Khurda, PIN:751027

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... Respondents

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For Appellant : Ms. Aparajita Rao, ld. adv. for bank in both the appeal. Mr.P. K. Satpathy, ld. adv. for appellant in appeal 45 and respondent in appeal no. 40.

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For Respondent : Mr. Anirban Roy, ld. adv. for resp.6 in appeal 40 & Resp. No. 2 in Appeal 45

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Mr. Soumalya Ganguly, ld. adv.

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Mr. Jeevan Ballav Panda, ld. adv.

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Mr. Rudra Dev Bagchi, ld. adv. for added respondent in Appeal no. 40 and 45

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THE APPELLATE TRIBUNAL :

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Heard learned counsel for the borrower and the bank as well

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as the auction purchaser in the both the Appeal No. 40 of 2020

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and Appeal No. 45 of 2022 and perused the records. Since both

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the appeals have arisen against a common SARFAESI proceeding,

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these two appeals are taken up together and being disposed of by a common judgement and order.

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Appeal No. 40 of 2020 is filed by the secured creditor

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Central Bank of India against the order 31.01.2020 passed by learned DRT Cuttack in M.A. No. 2499 of 2019 arising out of S.A.

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107 of 2018 whereby learned DRT directed the parties to maintain status quo.

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Appeal No. 45 of 2020 is filed by the borrower, Radhakanta Panda, against the order dated 05.11.2019 passed by learned DRT Cuttack in M.A. 345 of 2019 arising out of S.A. 107 of 2018 whereby learned DRT dismissed the M.A. 345 of 2019.

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Before entering into the factual matrix of both the matter, at the very outset it would be appropriate to observe that this is a matter where unscrupulous litigants and borrower misused and abused the process of law by adopting different tactics and by entering into prolong litigations right from DRT to the Hon’ble Apex Court.

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In the instant two appeals it is not in dispute that an amount of Rs.446.00 lakhs was sanctioned by the secured creditor bank in favour of the borrower wherein various loan documents

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including security documents were executed by the borrower as

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well as guarantors. It is also not in dispute that loan amount became irregular and was classified as NPA. Notice u/s 13(2) of

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the SARFAESI Act, 2022 (hereinafter referred to as Act) was issued by the bank on 06.10.2017 demanding an amount of (Rs.2,99,29,221.53 + Rs.1,45,861.60) Rs.3,00,75,083.13. Notice u/s 13(4) of the Act was also issued 14.12.2017. Sale notice was issued on 14.10.2018 fixing the sale date on 23.11.2018.

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S.A. No. 107 of 2018 was filed by the borrower/guarantor before learned DRT Cuttack on 08.11.2018 challenging possession notice dated 14.12.2017 and sale notice dated 14.10.2018. On 20.11.2018 M.A. 1271 of 2018 arising out of S.A. 107 of 2018 was filed before learned DRT wherein learned

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DRT passed an interim order directing the S.A. applicant i.e. the borrower to pay amount of Rs.1.10 crore in two instalment Rs.55.00 lakhs each,first instalment on 03.12.2018 andsecond on

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19.12.2018 with liberty to the bank to conduct the auction sale, but not to confirm the auction without leave of the Tribunal.

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Writ petition WP(C) No. 17826 of 2018 was filed before the

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Hon’ble High Court at Orissa wherein an interim order dated

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20.11.2018 was passed to the effect not to take any coercive

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action against the petitioner. In terms of the order of the Hon’ble

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High Court auction sale schedule to be held in compliance of the

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slae notice dated 14.10.2018 was deferred. Hon’ble Orissa High

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Court vide order dated 26.11.2018 granted liberty to the petitioner to arrange buyer who could purchase the property or

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who may deposit the amount to the opposite party i.e. the bank. Time for deposit of money was further extended till 21.12.2018. Thereafter again time was extended on the request of the petitioner till 15.01.2019. But when compliance was not made

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and amount was not deposited, Hon’ble High Court ultimately vide order dated 17.01.2019 dismissed the Writ Petition WP(C) no. 17826 of 2018.

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Thereafter, second auction sale notice was published by the

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bank on 21.01.2019 fixing sale date on 12.02.2019, which was again challenged by the borrower by filing Writ Petition being no. WP(C) 2928 of 2019. Writ petition was dismissed by the Hon’ble Orissa High Court on 06.02.2019 with an observation that earlier liberty granted to the borrower in writ petition No. 17826 of 2018

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was not complied. It was further observed that there is no change in the situation except issuance of fresh e-auction sale

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notice.Hon’ble High Court was not inclined to entertain the writ petition. Writ petition was dismissed giving liberty to the borrower to approach DRT u/s 17 of the Act. At this stage it would be appropriate to observe that at that time S.A. 107 of 2018 was pending before the DRT, which was filed by the borrower, but this fact was not brought to the notice of the Hon’ble High Court. Had it been so this fact must have been found place in the order of the Hon’ble High Court. However, auction sale was conducted on 12.02.2019 and sale certificate

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was issued on 20.02.2019.

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The borrower challenged the order passed by the Hon’ble Orissa High Court by filling SLP No. 4384 of 2019 before the Hon’ble Apex Court, which was eventually dismissed vide order dated 22.02.2019. Hon’ble Apex Court observed that “further we reiterated that liberty was granted by the High Court to the petitioner to pursue alternative remedy as permissible in law.” It appears that even before the Hon’ble Apex Court the borrower did not disclose the fact that S.A. 107 of 2018 was pending before the learned DRT Cuttack.

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S.A. 107 of 2018 was decided by the learned DRT Cuttack

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vide judgement and order dated 08.03.2019 wherein borrower

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did not find favour. However, learned DRT Cuttack allowed three

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months’ time to settle the matter i.e. on or before 10.06.2019 and in case the applicant failed to settle the matter within three months i.e. on or before 10.06.2019 respondent bank would be

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at liberty to take steps as per law. Learned DRT further moved ahead by recording that if the borrower submits OTS proposal, secured creditor bank is directed to dispose of said OTS proposal taking lenient view.

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At this stage it would be appropriate to mention that the

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order of learned DRT was challenged by the bank by filing AppealDy no. 126 of 2020 before the DRAT Kolkata wherein borrower was given opportunity of hearing and borrower contested the appeal. DRAT Kolkata observed that time allowed

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by the DRT has already been expired so the later part of the order dated 08.03.2019 and 10.07.2019 have become operative. Hence bank is free to take necessary steps in accordance with law

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and there is no necessity for any further direction by this

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Tribunal. Having said so the appeal was dismissed as infructuous.

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It would be appropriate to observe here that borrower

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sought extension of time for compliance of the order passed in

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S.A. 107 of 2018 by filing M.A. 1549 of 2019 and NDN 1855 of

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2019 wherein learned DRT extended the time upto 22.7.2019 for complying the order. Further it was not complied and even the

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appeal as mentioned above filed by the bank was also dismissed.

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Order from the District Magistrate was obtained by the bank

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u/s 14 of the Act on 13.08.2019.

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Thereafter, M.A. 345 of 2019 was filed by the borrower i.e.

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Radhakanta Panda before the learned DRT on 23.02.2019 seeking

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relief that bank should not confirm the auction sale and to set aside the entire SARFAESI proceeding. In the petition ground

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taken was that auction sale was conducted with single bidder who

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was in connivance with the bank and secondly, borrower has no residential house other than the auctioned property and he is

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leaving with old and aged family members and right to property was alleged.

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Writ Petition No. 13083 of 2019 was also filed by the

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borrower before the Hon’ble Orissa High Court seeking six weeks

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more time to compliance of the direction of the DRT passed in

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S.A. 107 of 2018 wherein Hon’ble High Court on 18.09.2019

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while disposing of the writ petition passed following order :

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“2. This writ petition has been filed by the petitioner challenging the order dated 10.07.2019 passed by the DRT Cuttack in NDN1855/2019 (M.A.) arising out of S.A. No. 107 of 2018 whereby the Tribunal while granting time to the petitioner to settle the matter with the opposite parties – bank observed that no further petition for extension of time is permissible and in case the petitioner fail to comply the direction the bank is at liberty to take steps as per law.

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It appears earlier the petitioner has approached this Court in WP(C) no. 2928 of 2019 challenging the auction notice issued by the OP bank in respect of the mortgage property. Thiis Court by order dated 06.02.2019 not inclined to interf3re with the e-auction sale notice. However, it was observed that it is open to the petitioner to approach the appropriate forum as provided under Section 17 of the Act. Challenging the said or3der, the petitioner preferred SLP © no.4834 of 2019 before the Apex Court, which was also dismissed on 22.02.2019. Thereafter, the petition approached the Tribunal in S.A. No. 107 of 2018, which was disposed of on 08.03.2019 granting three months’ time to settle the matter and in case the petitioner failed to settle the matter within three months, the bank is at liberty to take steps as per law. It was further observed that if the petitioner submits OTS application the bank is directed to dispose of the same by taking a lenient view. Since the petitioner has failed to comply the said order, it has filed M.A. no. 1549 of 2019 before the Tribunal seeking one months’ time to settle the matter with the bank. Considering the stand taken by the petitioner, the Tribunal by order dated 20.06.2019 granted time till 07.07.2019 to settle the matter with the bank and it was observed that no further time will be given. Since the time granted by the Tribunal was not adequate to settle the dispute, the petitioner again filed an application vide NDN1855/2019 (MA) seeking some more time wherein the Tribunal by the impugned order extended the time till 22.07.2019 with a condition that no further application for extension of time shall be entertained.

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Learned counsel for the petitioner submitted that the petitioner has filed M.A. no. 345 of 2019 before the DRT,

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Orissa, Cuttack which is still pending. He further submitted that a direction may be issued for early disposal of the said case.

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In view of the above, since the matter is sub judice before the Tribunal, it is open to the petitioner to approach the Tribunal for early disposal of M.A. 345 of 2019 arising out S.A. 107 of 2018. In such event, the Tribunal shall consider the same on production of certified copy of this order and pass necessary orders in accordance with law. It is also open to the petitioner to move an application before the Tribunal for interim protection, which shall be considered by the Tribunal in accordance with law.“

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On 05.10.2019 an interim order was passed by the learned

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DRT. Learned DRT vide order dated 05.11.2019 dismissed the M.A. 345 of 2019 filed by the borrower holding that the auction was already conducted and auction purchaser has also deposited entire sale price in accordance with law. Despite granting sufficient opportunity and time borrower did not comply the order.

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Order dated 05.11.2019 passed by learned DRT in MA 345 of 2019 was further challenged by the borrower by filing Writ petition being no. 21259 of 2019 which was also dismissed by the Hon’ble Orissa High Court vide order dated 29.11.2019 holding the writ petition is not maintainable and is devoid of any merit. It appears that thereafter on 27.01.2020 one Mr. Lingaraj Sahu,

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since died, respondent no.7 in bank’s appeal (40 of

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2020),deposited an amount of Rs.2.00 crore with the bank

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allegedly introduced himself to be a proposed auction purchaser.

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M.A. 2499 of 2019 was filed by the borrower wherein learned DRT

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has given a direction that parties to maintain status quo, which order was under challenge in appeal no. 40 of 2020 filed by the

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bank.

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Learned counsel for the borrower in appeal no. 45 of 2022 would submit that the original challenge of the borrower was against the first sale notice which got deferred. Thereafter fresh sale notice dated 21.01.2019 was published and M.A. 345 of 2019 was filed by the borrower wherein relief sought was not to confirm the auction sale and set aside the entire SARFAESI proceeding. It is further submitted that although the borrower could not comply the directionof deposit of money, but that does not preclude the borrower from exercising his Constitutional right.

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Learned counsel fairly concedes that borrower was given wrong legal advice and on the basis of that advise M.A. 345 of 2019 was

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filed, but constitutional right of the borrower has to be looked into

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which shows that borrower has right to redeem his property.

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Learned counsel submits that proposed auction purchaser has already deposited Rs.2.00 crore with bank.

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Per contra, learned counsel for the bank submits that the

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borrower is not entitled for any relief. Borrower concealed the fact of pendency of S.A. 107 of 2018 not only before the Hon’ble High Court, but also before the Hon’ble Apex Court. It is a case

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of concluded auction sale which could not be cancelled merely on the asking of the borrower. M.A. 345 of 2019 is not maintainable

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in a concluded auction proceeding.

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As referred to above it is abundantly clear that S.A. 107 of 2018 was filed by the borrower challenging the sale notice with consequential reliefs. Eventually first auction sale could not be

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conducted on the date fixed and it was deferred. It is also

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brought out from the record that borrower was given sufficient time and opportunity to make deposit. Over and above, as and

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when sought, extension of time was granted to the borrower, not

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only by the DRT but also by the Hon’ble Orissa High Court. Even

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in the judgement of S.A. 107 of 2018 time was granted to the

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S.A. applicant, borrower, for making the deposit, but that was not complied despite extension of time. Hence, it is clear that

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borrower is not at all interested to make any deposit rather he intentionally drag on the proceeding by adopting all means permissible under the law. It is clear case of misuse of the process of law. Law nowhere provides or grant any relief to the litigants who misuseor abuse the process of law.

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As far as maintainability of M.A. 345 of 2019 is concerned at

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this stage it is to be observed thatno provision is mentioned in the petition nor could be shown by the learned counsel under what provision of law M.A. was filed? Although prayer was made

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for expeditious hearing, but issue of maintainability is to be looked into by the learned DRT. Learned DRT has rightly observed that despite granting sufficient time no amount was deposited, further if the borrower is inclined to challenge the subsequent sale notice he could have moved an application in the pending S.A., but he did not choose to move any amendment

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application rather he keep on waiting and move an M.A. 2499 of 2019. However, S.A. 107 of 2018 was dismissed on 08.03.2019.

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As has been held by the Hon’ble Apex Court in Ajay Kumar Jain

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Versus State of Uttar Pradesh and Another [2024 SCC

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OnLine SC 3677] a post disposal application for modification or

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clarification of the order would lie only in rare cases where the order passed by this Court is executory in nature and the directions of the Court may have become impossible to be implemented because of subsequent events or developments. It was further held by the Hon’ble Apex Court that Court has become functus officio and does not retain jurisdiction to entertain an application after the appeal was disposed of by the judgment of a three-Judge Bench of this Court on 31.08.2020 through a course beyond that specified in the statute. This is not

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an application for correcting any clerical or arithmetical error. Neither it is an application for extension of time. The factual background of this Application does not fit into that description.

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Hence, M.A. filed by the borrower before the learned DRT was not at all maintainable neither on law nor on merit. In the

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M.A. a ground is taken by the borrower that auction sale was

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conducted with single bidder and borrower alleged that there must have connivance with the bank and the auction purchaser. There is no other ground taken for challenging the auction sale in

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the M.A.

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Accordingly, I am of the considered opinion that learned DRT

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has rightly dismissed the M.A. It is a case of concluded sale. In

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M.A. 345 of 2019 no ground for challenging the sale notice is taken. Even in S.A. 107 of 2018 the ground taken by the borrower was dismissed by the learned DRT which was got confirmed in appeal. Hon’ble Apex Court in the case of

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ValjiKhimji& Co. Vs. Official Liquidator of Hindustan Nitro

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Product(Gujarat) Ltd. & Ors. [(2009) 9 SCC 299] has held that

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once auction sale is confirmed by the authority, certain rights

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accrued in favour of the auction purchaser and these rights cannot be extinguished except in exceptional cases such as fraud.Learned DRT passed the impugned order dated 31.01.2020

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in M.A. 2499 of 2019 whereby a direction was issued to maintain

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status quo. In M.A. 2499 of 2019 relief sought was restraining the

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bank not to proceed with the order of the District Magistrate. In the body of the petition, it is admitted that interim order granted by the Hon’ble High Court was subsisting till 19.12.2019 but on 29.11.2019 that has been vacated by the intervention of intervener petitioner but with the observation that Writ petition is

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devoid of merit and order of DRT passed in M.A. 345 of 2019

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which is appealable in nature. No doubt order passed in M.A. 345 of 2019 was appealable in nature and is also challenged by the

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borrower, but learned DRT by passing the impugned order on 31.01.2020 exercised the power of the appellant Tribunal by passing the impugned order directing the parties to maintain status quo. Borrower was at liberty to challenge the order passed in M.A. 345 of 2019, but if any interim order is needed that could

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have only been passed by the appellate court, DRAT Kolkata in

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appeal, but it does not give any right to DRT to pass the interim

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order in a decided matter, which is not under lis before it. Accordingly, I am of the considered opinion that order dated 31.01.2020 passed by learned DRT is without jurisdiction.

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On the basis of the observation made above, I am of the considered view that order dated 31.01.2020 passed by learned DRT Cuttack in M.A. 2499 of 2019 in S.A. 107 of 2018 is liable to

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be set aside and order dated 05.11.2019 passed in M.A. 345 of 2019 in S.A. 107 of 2018 is liable to be confirmed. Accordingly appeal no. 45 of 2022 is liable to be dismissed while Appeal no.

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40 of 2020 is liable to be allowed.

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ORDER

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