Partly allowed

L Sivakumar v. Indian Overseas Bank

DRT5 Aug 2022APPEAL/1/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the appeal in part, setting aside the order forfeiting the deposit while upholding the cancellation of the sale. It remanded the matter to the Recovery Officer to decide on forfeiture afresh after considering relevant precedents.

What did the court decide?

Appeal allowed in part; order on forfeiture set aside for fresh decision; cancellation of sale upheld.

L Sivakumar versus Indian Overseas Bank — Consumer Protection | DRT (2022)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 5^th day of August, 2022

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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Appeal No.1 of 2002 Against MA No.157 of 2021 in DRC No.616 of 2017 in OA No.633 of 2015

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L. Sivakumar Son of Mr. P. Loganathan 23/11, Khan Pagh, 3^rd Lane Triplicane Chennai – 600 005 …Appellant / Petitioner / Auction Purchaser / 3^rd Party

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Versus

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The Manager, Indian Overseas Bank Cathedral Branch, No.763, Anna Salai Chennai – 600 002 …Respondent / Respondent / Certificate Holder / Applicant

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Counsel for the Appellant : Mr. B. Rajesh Counsel for 1^st Respondent : Mr. W.S. Jayaprakash

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FINAL ORDER

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The auction purchaser who bid the property in DRC.616 of 2017 in OA.633 of 2015 had filed this Appeal challenging order passed by the Ld. Recovery Officer had forfeiting the deposit of 25% and rejecting the prayer for extension of time for payment balance 75% of e-auction sale amount.

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Draped in brevity the facts in issue is as follows:.

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The appellant participated in E-auction conducted by the recovery officer on 22.10.2021, wherein he was declared the successful bidder of the property at

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Rs.1,51,00,000/-. It is also stated inclusive of the amount of 10% of the upset price, the appellant had remitted 25% of the sale amount and was bound to pay the balance 75% on or before 6.11.2021. It is the specific case of the appellant that only as there occurred some delay from the part of Bank which sanctioned the loan, the applicant filed the present MA seeking extension of time and had also produced the Demand Draft for Rs.1,14,76,010/- covering the balance 75% of the amount.

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The Ld. Recovery Officer though made a reference as to the bonafide and genuine effort of the appellant to pay the amount as evidenced by the procurement of DD for balance amount, dismissed the application holding that rule 57 and 58 of the second schedule cannot be over looked. The present appeal is filed impugning the same.

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Heard the Ld. Counsel for the appellant and the respondent bank. The certified Debtor who entered appearance through a lawyer, though he was not a party to the appeal.

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The Ld. Counsel for the appellant contended that Rule 58 does not contemplate mandatory or mechanical forfeiture on the rules and provides for an element of discretion on the Ld. Recovery Officer in forfeiting the amount. To buttress his contention, the Ld. counsel for the appellant placed reliance on decision of Hon’ble DRAT Chennai in “Shakura Prime Tanning Co and Another v/s Central Bank of India and another”[111(2007)BC7] where in the scope of rule 57 was considered by the Hon’ble Appellate Tribunal and held that the Recovery Officer has discretion

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to grant time for the remittance of 25% of the purchase amount. The Ld. Counsel further placed reliance on the decision of the Hon’ble Karnataka High Court in “Ramesh Meher v/s The Recovery Officer” (WA.3995/2013) which this Tribunal feels will not come in aid of the appellant.

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Hence in nut shell it is the case of the appellant that there is an element of discretion left with the Authorized Officer for extension of time and to decide whether forfeiture is required. The decision of Hon’ble DRAT was placed on record to harp on the above contention.

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After consideration of the facts in issue in the light of the decision relied by the appellant, this Tribunal cannot find fault with the Recovery Officer in cancellation of sale. However the contention that there is an element of discretion left with the RO as per Rule 58, which mandates the Recovery Officer to apply his mind as to decide whether the forfeiture of entire 25% is required. The impugned order does not evidence any such application and it appears that the Ld. Recovery Officer had forfeited the entire amount without giving any reasoning as aforementioned. This may be due to the fact that the appellant had only sought for extension of time for payment of 75% of the e-auction amount. However the order forfeiting the amount is also directed, this Tribunal feels that this issue needs to decided a fresh by the Ld. Recovery Officer. The appellants had not placed the decisions relied up on by them in the appeal before the Ld. Recovery Officer and in order to facilitate the issue on to forfeiture to be decided fresh, this Appeal is allowed by way of remand.

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Hence appeal stands allowed to the extent of setting aside the order as to the forfeiture. The impugned order to the extent it cancels the sale is upheld. The Ld. Recovery Officer to decide afresh as to the order of forfeiture untrammeled by any of the observations made by this Tribunal while deciding the appeal. The parties are permitted to place all the decisions which they relay in regard to the above issue before the Ld. Recovery Officer. The Ld. Recovery Officer to decide the above limited issue afresh after hearing the affected parties as expeditiously as possible.

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The appeal is stands allowed in part. All pending IA’s stands closed. In the facts and circumstances of the case there is no orders as to cost.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 5^th day of August, 2022)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

L Sivakumar v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

L Sivakumar v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

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