Allowed

Mrs Jagadhambal rep by Poa Holder Mr Aroon Ramadoss v. City Union Bank Limited

DRT4 Aug 2022SA/100/2022

Case brief

AI extract

What is this about?

Debt Recovery Tribunal allowed the bank in an application under SARFAESI Act challenging the validity of an auction sale notice. The tribunal held that service on the Power of Attorney holder deemed service on principals, and the bank strictly complied with notification rules.

What did the court decide?

Sale application (S.A.) dismissed; application against the auction sale notice rejected; parties to bear own costs.

Mrs Jagadhambal rep by Poa Holder Mr Aroon Ramadoss versus City… — Cheque Dishonour | DRT (2022)

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IN THE DEBTS RECOVERY TRIBUNAL-I, CHENNAI

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Dated this 4^th Day of August, 2022

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PRESENT: SHRI A.S.JAYACHANDRA

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Presiding Officer

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SA No.100 of 2022

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1.	Mrs.Jagadhambal, W/o Mr.R.Gurupatham,
	Rep. by POA Holder Mr.Aroon Ramadass, No.8, Kamaraj Street, Mayiladudurai.
2.	Mr.G.Sivapatham, S/o Mr.R.Gurupatham,
	Rep. by POA Holder Mr.Aroon Ramadass, No.8, Kamaraj Street,
	Mayiladudurai. . . . Applicants
	Versus
1.	The Authorised Officer, City Union Bank Ltd., Administrative Office, No.24, Gandhi Nagar, Kumbakonam – 612001.
2.	Mrs. Anbarasi Veerapandiyan, W/o Mr.Veerapandiyan, No.2/68, Nalladai Road,
	Parasalur, Tharangambadi – Taluk, Parasalur – 609308.
3.	Mr.Veerapandiyan Samikannu, S/o Mr.Samikannu, No.2/68, Nalladai Road,
	Parasalur, Tharangambadi – Taluk,
	Parasalur – 609308. . . . Respondents
Cou	nsel for Applicants :- M/s.G.Sanjeevi.
Cou	nsel for Respondent No.1 :- M/s.S.Anuradha Balaji

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: - O R D E R - :

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In this application under Section 17(1) of SARFAESI Act, the applicants challenged the sale held on 21.02.2022. The said sale is in consequence of the sale notice dated 25.01.2022. The sale was conducted by Respondent No.1 Bank and Respondents 2 & 3 are the successful bidders.

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The applicants are the guarantors / mortgagors concerning the loan obtained by them from the Respondent No.1 Bank through their Power of Attorney holder. The total loan availed is Rs.1.30 Crores in the year 2017, by the time the account became a non performing asset, the dues mounted to Rs.3,13,58,271/-. The sale notice was issued for realisation which is challenged on several grounds.

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The grounds urged are that the classification of NPA itself is bad. The demand notice under Section 13(2) is not issued. Opportunity under Section 13(3-A) is taken away. The sale notice is opposed to the principles of natural justice. Rule 3, Rule 9(1) and Rule 8 of the Security Interest (Enforcement) Rules, 2002 were not followed. There was no proper valuation. The demand notice was not affixed as per rules. The sale notice is also not affixed as required under Rule 8(7), the same was also not published. The property is not properly identified.

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Notices were ordered by the Ld. Predecessor and the issuance of sale certificate is deferred by an interim order dated 10.03.2022. Upon notice, the interim order was vacated by a further order dated 24.03.2022.

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The respondents entered appearance through their counsel. The Respondent No.1 Bank had filed a detailed counter and relied on the list of documents. The Counsel for Respondent 2 & 3 has adopted the arguments of the Respondent No.1. The

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applicant had challenged the sale notice dated 25.01.2022, as per the submissions made on 07.06.2022. The matter is heard on both the sides.

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From the counter filed by the Respondent No.1, it is submitted that the application is liable to be dismissed for suppression of facts. It is submitted that borrowers are liable to pay a sum of Rs.3,13,58,271/- including the interest as on 25.10.2021. The borrowers failed to repay and the amount to classified as NPA as per the guidelines of RBI. Though there is no change in address, the demand notice dated 01.06.2021 was managed to be returned with a remark of ‘not known’. The notices were duly served on the power of attorney holder who runs a proprietary concern by name M/s.AArunaa Agencies. The same was received by him on 05.06.2021. Such service on PA holder will suffice the service on the applicants who were represented through him. The demand notices were published in Indian Express and Dinamani dated 20.07.2021. The non service pleaded by the applicants is thus falsified. The Possession Notice was issued on 30.09.2021, which was also sent to the last known address of the borrowers, which were returned with remark ‘not known’. The same was duly affixed on the secured asset on 30.09.2021. They were also published in the Indian Express and Dinamani dated 05.10.2021. All the rules under the Security Interest (Enforcement) Rules 2002 were followed.

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It is also pleaded in the counter that sale notice dated 28.10.2021 was issued fixing the sale to be held on 08.12.2021. There were no bidders.

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The impugned sale notice is the second auction sale notice dated 25.01.2022, which was also posted on the same day to all the parties concerned. There is clear 15 days time as per the rules, thus Rule 8(6) is followed. The applicants are attempting to subvert the sale with fabricated facts. The bank had strictly complied all the mandatory rules. The sale is already concluded. The bank had obtained proper valuation reports.

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In the sale held on 21.02.2022, the highest bid of Rs.4.76 Crores is accepted. The bank prays for dismissal of the SA.

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Upon consideration of the pleadings and the documents relied by the parties and after hearing the Ld. Counsel, the only point that arises for determination in these proceedings is:-

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“Whether the sale notice dated 25.01.2022 is opposed to the law and whether the same is improper in the circumstances or not?”

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To answer the above point for determination, this Tribunal has perused the pleadings of the applicant, the documents and that of list of documents filed by the Respondent No.1 Bank.

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It is clear that the applicants 1 & 2 themselves have described and presented the application through their power of attorney holder Mr.Arunaa Ramadass. He is the signatory to the application. The contention raised by the bank that the said PA holder is the proprietor of M/s.Arunaa Agencies is not disputed by the applicants. The demand notice dated 01.06.2021 is addressed to various persons including the petitioners and the said Mr.Ramadoss and other persons connected to four loan transactions. The same were sent by Registered Post, for which the acknowledgements are found at Page – 16 to 27 of the documents filed by the bank. The same are not disputed. It is also seen that the demand notice is published as stated in the pleadings. The Possession Notice dated 30.09.2021 is also dispatched through post for which the documents can be seen at Pages 36 to 44. As regards affixture, the photographs are produced, the possession notice is also got published in the newspapers as pleaded in the reply. Valuation report is also obtained.

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It is seen from the documents at Page – 49 (the impugned sale notice) the same is re-tender cum auction sale issued under Rule 8(6). It required only 15 days notice

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which is given, the service of such notice, affixture as well as publication in newspapers is seen from the documents filed at Pages 49 to 72.

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The contention of the Ld. Counsel the 30 clear days notice cannot be accepted since the impugned notice is the second such notice, which demands only a notice of fifteen days for subsequent such sale as per Section 9(1) of the said rules.

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The Ld. Counsel for the applicant is vehement in submitting that notices are not served in person on the applicants namely Mrs. Jagadhambal and Mr.G.Sivapatham. It is seen from Pages 25 & 27 of the typed set of documents filed by the Respondent No.1 Bank, the said notices, sent to them by speed post is returned to the bank with remark ‘Not known’. Based on these documents, the Ld. Counsel for the applicant submits that there is no proper service.

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On the other hand, the Ld. Counsel for the Respondent Bank submits that such an argument falls to the ground especially in view of the applicants having been represented by their PA holder who had accepted the service of notices. There has been no change in the matter or style of the demand notice posted to the applicants. The service of notice on the Agent would be a deemed service on the Principals also. The aspect of the applicants being represented by their PA holder is not denied. Therefore, it cannot be said that there is no service.

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This is only a simple controversy. It is common prudence that any act of the Agent empowered under Power of Attorney is binding on the principal. However, the Ld. Counsel for the Respondent No.1 Bank relied on ruling of the Division Bench of the Hon’ble Madras High Court reported in Indian Kanoon – doc/156712332 titled M.Masilamani Vs. M.Veeramani & Anr. Wherein it is held that:

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“28. Thus, notice or intimation given to an agent, or knowledge of any fact material to such transaction acquired by the agent, binds the principal. A principal may be imputed also with knowledge ascribed into facts. Considering the above facts and circumstances of this case, the suit is not barred under the law of limitation. The time is not essence of contract and the suit has been filed well within time.”

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The above ruling clearly answers the doubts raised by the Ld. Counsel for the applicant.

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The Ld. Counsel for the Respondent Bank also relied on the ruling of the DB of Hon’ble Madras High Court in the matter of Mrs. Vasuki and Ors Vs. LNG Trade Import and Exports (P) Ltd. Reported in Law Finder Doc ID No.1464655 to urge that whenever the Possession Notice and the earlier sale notices were not challenged, the subsequent challenge of the sale notice cannot be looked into to negate the entire process. She also emphasised on the ruling of M/s.Velar Engineering Works Pvt. Ltd. Vs. The Authorised Officer, DB, Hon’ble Madras High Court, reported in Law finder

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Doc. ID 1582623 to urge that there is no provision under SARFAESI Act for condoning the delay in filing application under Section 17.

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All the grounds raised by the applicants do not go to establish any illegality or impropriety in the proceedings adopted by the bank under the SARFAESI Act.

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After going through the documents furnished by the Respondent Bank, the contentions raised by the applicant that there was improper service of notice or lack of notice cannot be accepted in the peculiar facts of this present case where the applicants are represented by their PA Holder. This Tribunal does not see any violation of the procedure prescribed under the SARFAESI Act and the Rules governing the sale of the immovable property. Hence, the point arising for determination is answered accordingly as above. Consequently the following:-

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: - O R D E R - :

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The SA stands dismissed. Parties to bear their own costs.

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Sd/-

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(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 4^th day of August, 2022)

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