Allowed

Devendranath Das v. Union Bank of India

DRAT17 Jul 2025REGULAR APPEAL/46/2025

Case brief

AI extract

What is this about?

The Tribunal allowed the appeal, quashing the e-auction sale notice and the auction sale. It held that the notice violated the mandatory 30-day publication rule under the SARFAESI Rules. Additionally, the bank exceeded its jurisdiction by calculating debt using a higher interest rate contrary to the finalized O.A. judgment.

What did the court decide?

The e-auction sale notice dated 20.02.2023 is quashed. The e-auction conducted on 28.03.2023 is set aside. The bank is directed to refund the auction sale price with interest at 9% per annum simple.

Devendranath Das versus Union Bank of India — Execution and Attachment | DRAT (2025)

¶1

¶2

Reportable / not reportable

¶3

IN THE DEBT RECOVERY APPELLATE TRIBUNAL - KOLKATA HON'BLE Justice Anil Kumar Srivastava, Chairperson

¶4

APPEAL No. 46 of 2025

¶5

(Arising out of S.A. 44 of 2023 – DRT-Cuttack)

¶6

17.07.2025

¶7

Debendra Nath Das residing at Plot no 1579, Fourth Lane A Talabania, Bhaktamadhu Nagar, Bhubaneswar 751130

¶8

--Vs--

¶9

Authorised Officer-cum- Chief Manager, UNION BANK OF INDIA having office at Square Branch, Plot no 121 and 122, Ground Floor Unit III Kharvela Nagar, Station Square, Bhubaneswar 751130

¶10

2.SRI RAKESH KUMAR MALLICK residing at PRADHANPUR, P.O- BASUDEBPUR, BHADRAK, Odisha 756125.

¶11

... Respondents

¶12

For Appellant : Mr. Nemani Srinivas, Ld. Advocate For Respondent: Ms. Anandita Das, ld. Advocate.

¶13

The Appellate Tribunal

¶14

Instant appeal is preferred by the appellant against the

¶15

judgement and order dated 22.11.2024 passed by learned DRT

¶16

Cuttack in S.A. 44 of 2023 (Debendra Nath Das Vs. AO-cum-Chief

¶17

Manager, Union Bank of India & Anr.) whereby learned DRT dismissed the securitization application filed by the appellant.

¶18

As per pleadings of the parties, facts of the matter are that a

¶19

securitization application u/s 17 of the SARFAESI Act, 2002 (hereinafter referred to as Act) was filed by the appellant

¶20

¶21

challenging the E-auction sale notice dated 22.02.2023 conducted

¶22

on 28.03.2023. The appellant is a guarantor in CC Loan account

¶23

of Rs.90.00 lakh availed by M/s S. R. Retail Zone Pvt. Ltd. from the erstwhile Corporation Bank (now merged with Union Bank of India) by creating equitable mortgage of dwelling house. The loan account became irregular and was classified as NPA. Sale notice dated 20.02.2023 was issued indicating recovery amount of Rs.1,23,11,932.50. Possession notice was issued on 13.07.2012. Even thereto the property of the borrower was sold at Rs.15.00 lakh, property of co-borrower Nalinikanta Pattanaik was sold at Rs.30.00 lakh and release the property of another coguarantor Sri Sarbeswar Samal (deposited by him) and 29.00 lakh was deposited by borrower. Bank has realized Rs.74.00 lakh by selling the mortgage property of borrow and to guarantors.

¶24

An O.A. was filed by the bank u/s 19 of the Recovery of Debts and Bankruptcy Act, 1993 for an amount of Rs.57,79,139.50 which was decided by the learned DRT on 19.02.2021 for a recovery certificate of Rs.34,09,139.50. The

¶25

judgement and order passed by learned DRT in O.A. 237 of 2013

¶26

¶27

was before this Appellate Tribunal as Appeal Dy. No.172 of 2022

¶28

wherein pre-deposit was also made.

¶29

Borrower submitted OTS proposal to the bank which was

¶30

approved by the bank on 13.10.2022 for an amount of Rs.30,31,388.50 with upfront money of Rs.5.36 lakh, out of which Rs.3.00 lakh was paid by the borrower as upfront money,

¶31

but rest amount was not paid. OTS was not fructified. E-auction sale notice was issued on 20.02.2023 fixing the auction date on 28.03.2023 for a reserve price of Rs.86.95 lakhs. Sale notice was

¶32

issued showing recovery amount of Rs.1,23,11,932.50.

¶33

It is contended by the learned counsel for appellant that sale notice dated 20.02.2023 is illegal. It is stated that outstanding amount in the loan account as determined in the O.A. proceeding by the DRT was Rs.34,09,139.50 only. OTS proposal was duly approved, but cancelled for some oblique reasons. Learned counsel for the appellant prays for setting aside the sale notice dated 20.02.2023 with consequential reliefs.

¶34

Reply was filed by the bank stating that O.A. 237 of 2013 was filed by the bank wherein recovery certificate for Rs.34,09,139.50 was issued on 19.02.2021 for realization.

¶35

¶36

Feeling aggrieved by the judgement and order passed in O.A.

¶37

proceeding, borrower filed an appeal before this Appellate Tribunal. OTS proposal was made by the borrower which was approved. Upfront amount of Rs.3.00 lakh was paid, but rest

¶38

amount was not paid. Thereafter, another application dated 10.01.2023 forwarded to the bank with an account payee cheque

¶39

of Rs.32,67,388.50 dated 18.01.2023. OTS proposal was

¶40

cancelled. E-auction sale notice was issued in accordance with

¶41

law. Appellant simply want to drag on the proceeding, which is

¶42

not in the interest of the bank. Auction sale notice was issued

¶43

showing recovery amount of Rs.1,23,11,932.50 as it was outstanding on 31.01.2023 which includes interest as well as legal expenses.

¶44

Learned DRT decided the securitization application

¶45

formulating three issues which are as under :

¶46

whether the bank has issued e-auction sale notice during subsistence of OTS? 2. whether the bank has taken possession during subsistence of the OTS settlement? 3. whether the applicant is entitled to the reliefs a claimed?

¶47

Learned DRT in issue no.1 recorded a finding that OTS

¶48

proposal was cancelled. Thereafter, bank issued e-auction sale notice dated 20.02.2023. Accordingly, appellant’s contention that

¶49

¶50

e-auction sale notice was issued during the subsistence of OTS

¶51

proposal was not accepted by the learned DRT. It is further held

¶52

by the learned DRT that there is no illegality committed by the District Magistrate in passing the order u/s 14 of the Act. Securitization action initiated by the bank was in accordance with law. Accordingly, learned DRT dismissed the securitization application.

¶53

Feeling aggrieved by the impugned order, appellant preferred the appeal.

¶54

learned counsel for the appellant would submit that e-

¶55

auction sale notice dated 20.02.2023 was published on 25.02.2023 and auction conducted on 28.03.2023. Learned counsel for the appellant would submit that there is clear violation

¶56

of Rule 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as Rule).

¶57

Per contra, learned counsel for the respondent bank would submit that bank issued e-auction sale notice in accordance with the law. Hon’ble Apex Court in CELIR LLP -vs- Bafna Motors

¶58

(Mumbai) Private Limited & Others [(2024) 2 SCC 1] at Para 51 of the judgement has held as under :

¶59

¶60

The true purport and scope of the amended Section 13(8) of the SARFAESI Act was looked into by the Andhra Pradesh High Court in Sri. Sai Annadhatha Polymers & Anr. v. Canara Bank rep. by its Branch Manager, Mandanapalle reported in 2018 SCC OnLine Hyd 178. The court took the view that in accordance with the unamended Section 13(8) of the SARFAESI Act, the right of the borrower to redeem the secured asset was available till the sale or transfer of such secured asset. To sum up, the post-amendment scenario inevitably requires a clear thirty day notice period being maintained between issuance of the sale notice under Rule 8(6) of the Rules of 2002 and the publication of the sale notice under Rule 9(1) thereof, as the right of redemption available to the borrower in terms of Rule 8(6) of the Rules of 2002, as pointed out in MATHEW VARGHESE, stands extinguished upon publication of the sale notice under Rule 9(1).” [emphasis supplied]

¶61

12. Hon’ble Apex Court has held at Para 37 as under:

¶62

From the above provisions under Rule 8(6) it is clear that the authorised officer of the Bank shall serve on the borrower a notice of thirty days for sale of immovable property, and that if the sale of such secured assets is by way of public auction, the Bank/secured creditor, shall cause publication of such notice in two leading newspapers, one in vernacular, language having sufficient circulation in the locality by setting the out the terms of sale, mentioned in the said provision; and under sub-rule (1) of Rule 9, such sale of immovable of property under these Rules shall not take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6), or notice of sale has been served to the borrower.

¶63

The e-auction sale notice dated 20.02.2023 published on

¶64

25.02.2023 fixing the sale date on 28.03.2023 is in clear violation

¶65

of Rule 8(6) and 9(1) of the Rule as has been held by the Hon’ble

¶66

Apex Court in Bafna Motors (supra).

¶67

Another issue raised by the learned counsel for the appellant

¶68

that e-auction sale notice dated 20.02.2023 shows the recovery amount as Rs.1,23,11,932.50 and reserve price at 86.95 lakh whereas property was sold at Rs.1,55,45,000/-. Learned counsel would submit that debt due has already been determined by

¶69

¶70

learned DRT in O.A. proceeding which was Rs.34,09,139.50 and

¶71

rate of interest was also awarded @ 10% simple pendente lite and future. It is further submitted that in the supplementary affidavit file by the bank today on 17.07.2025 wherein at page 6 rate of interest charged by the bank is 14.40%. It is submitted that respondent bank travelled beyond the scope of the judgement and order passed by the learned DRT in the O.A. proceeding when the debt has already been determined and rate of interest has also been awarded by the learned DRT which was not challenged by the bank. It means that bank has accepted the judgement and order passed by the learned DRT in the O.A. proceeding. Thereafter, rate of interest could not be increased by

¶72

the bank on any ground whatsoever.

¶73

It is further submitted that sale notice itself was issued for a recovery amount at Rs.1,23,11,932.50 which is against the debt determined by the learned DRT. It is further submitted that bank has committed material illegality in issuing the e-auction sale notice.

¶74

Per contra, learned counsel for the respondent bank submits

¶75

that bank is well within its jurisdiction and right to charge interest

¶76

¶77

as per the contractual rate of interest. It is further submitted

¶78

that sale notice was issued showing debt dues as was reflected in

¶79

the statement accounts of the bank annexed at page 6 of the supplementary affidavit filed today on 17.07.2023.

¶80

It is a settled legal proposition that secured creditor can proceed with the proceeding u/s 19 of the Recovery of Debs & Bankruptcy Act,1993 as well as proceedings u/s 17 of the SARFAESI Act, 2002 simultaneously. Accordingly, O.A. was filed by the bank which was considered and decided by the learned DRT on merit. A recovery certificate was issued for

¶81

Rs.34,09,139.50 and interest was also awarded pendente lite and future interest @ 10% simple. This judgement of learned DRT

¶82

was not challenged by the bank, but it is challenged by the borrower. It means bank has accepted the findings of learned

¶83

DRT as far as rate of interest and debt due are concerned. Accordingly, it is to be observed that debt is determined by the learned DRT in accordance with law in the year 2021.

¶84

In the e-auction sale notice issued on 20.02.2023, how the

¶85

figure of Rs.1,23,11,932.50 calculated by the respondent bank as recovery amount? Answer of the same can be found out from the

¶86

¶87

supplementary affidavit filed by the respondent bank today,

¶88

wherein at page 6 a statement is submitted with effect from

¶89

01.12.2020. The total amount of interest calculated as

¶90

Rs.11,14,670.00. The statement is as under :

¶91

Rate of interest	14.40%
Total interest	Rs.11,14,670.00
As per account statement encl. URI	Rs.76,19,787.00
reversal
Auction paper publication charges	Rs.9,440.00
Postage and photo copy charges	Rs.647.00
Total	Rs.87,44,544.00
Grant total	Rs.1,23,11,932.50

¶92

When the debt was already determined and rate of interest

¶93

was also awarded by the learned DRT, it is apparent that concerned authorised officer of the bank has exceeded its power in calculating the debt due at 14.40% interest. It is settled legal proposition that more a power conferred upon the authorised officer, more are the duties imposed upon him. Ample powers under Securitization Act are given to the authorised officer, but there are also duties to be performed by him in exercising his powers. It cannot be expected from the authorised officer that he should exercise power under the Act without following the established principle of Act and Rules. Authorised officer does not have any unfettered power. If exercise of such power by

¶94

¶95

Authorised Officer given under the Act exceeds its jurisdiction, it

¶96

means that he is misusing his official power which require appropriate action to be taken by the competent authority.

¶97

E-auction sale notice dated 20.02.2023 was issued against the specific provision of law wherein the debt due was wrongly calculated with interest @ 14.40% which is against the judgement and order passed by learned DRT in O.A. proceeding. Debt was also determined by the DRT. How Authorised Officer can increase the debt amount? When he has increased the amount of debt without any lawful authority it means that he has exceeded his powers. Such misuse of powers is resulting in setting aside of auction sale. All the losses incurred by the Bank are due to the actions of the Authorised Officer. This Tribunal is not imposing any penalty upon the Authorised Officer, but left it to the wisdom of the competent authority of the Bank to take appropriate action in accordance with law and rules. Accordingly, I am of the considered view that E-auction sale notice is vitiated. It is liable to be set aside. Accordingly, e-auction conducted by

¶98

the bank is also liable to be set aside. Appeal deserves to be allowed.

¶99

¶100

O R D E R

¶101

Appeal is allowed with costs. Impugned judgement and

¶102

order dated 22.11.2024 passed by learned DRT is set aside. S.A. No.44 of 2023 is allowed to the extent that e-auction sale notice

¶103

dated 20.02.2023 is quashed. E-auction conducted on 28.03.2023 is also set aside. Bank is hereby directed to refund

¶104

the auction sale price to the auction purchaser with interest at the rate of 09% per annum simple with effect from the date of depositing the amount till the date of actual payment. Amount should be refunded within a period 30 days positively. If possession is handed over to the auction purchaser, the Auction Purchaser hand over the possession to the bank. Bank would be

¶105

at liberty to take further appropriate steps to recover its dues in accordance with law.

¶106