Allowed application under Section 17 of SARFAESI Act to quash auctioned property due to procedural irregularities, lack of transparency in bid confirmation, unexplained fund reversal, and non-compliance with prescribed auction notice format.
Auction sale set aside; bank to return deposit amount with simple interest at 12% per annum.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
DRT,PATNA
SA 115 of 2022 [J]
DEBTS RECOVERY TRIBUNAL PATNA
Presiding Officer: Shri KaushalendraYadav
SA- 115 of 2022
Versus
--respondents
Present:
Dated: 13.12.2022
JUDGMENT
2
DRT,PATNA
SA 115 of 2022 [J]
issued on 13.10.2021 fixing the date of auction sale on 16.11.2021. Accordingly, property was auctioned on 16.11.2021 to the auction purchaser herein respondent nO.5. The sale certificate in favour of the auction purchaser was issued on 17.02.2022.
Against the auction sale notice, the applicant filed a Writ petition before the Hon'ble High Court of Patna on 16.11.2021 bearing no. CWJC No. 19813 of 2021. The Writ petition was dismissed as withdrawn on 06.04.2022 with liberty to the applicant to approach the DRT, Patna, within a period of two weeks from that day and if any question of limitation arises the same shall not stand in the way of the petitioner. Accordingly, this SA has been filed by the applicant.
In the meantime, the respondent bank shall maintain the status quo for a period of two weeks. This order will endure till the expiry of two weeks only. If any question of limitation arises, the same shall not stand in the way of the petitioner."
In view of the above, this application is within limitation. However, it prayed that if any delay caused in filing the present application, may be condoned.
3
DRT,PATNA
SA 115 of 2022 [J]
sale but has acted further in the matter by receiving sale amount and closed the accounts in question. The property has been auctioned undervalued with the reserve price of Rs.1,19,83,000/- only, for the outstanding of Rs.53,99,499.02. The property is three storied commercial property in which a nursing home is functioning. The applicant wants to redeem the said property on payment of entire dues with cost and charges. The bank has not served the auction sale notice to the applicant prior to publication of notice for auction therefore, the applicant could not exercise its right to pay the dues of the Bank in terms of the section 13(8) of the Act. The bank has published the composite auction sale notice which is bad in the eyes of law as there is proper format as Appendix IV-A has been given under Act for issuance of auction sale notice. The auction purchaser has not deposited the auction amount in time. The bank issued a notice dated 08.03.2022 asking the applicant to vacate the premises/house/building with all moveable assets of the property within 5 days.
4
DRT,PATNA
SA 115 of 2022 [J]
of approved valuer of the bank, accordingly, reserved price was fixed. The auction was conducted through MSTC (Metal Scrap Trade Corporation Limited), a subsidiary of Steel Authority of India Limited (SAIL) which is a Central Government Undertaking. The auction was confirmed on 18.11.2021 due to there being some technical error in the working of the site of MSTC, the auction could not be confirmed on 17.11.2021 and the mail confirming the sale was sent to the auction purchaser on 18.11.2021. The auction purchaser transferred Rs.18,05,OOOI- from his account no. 50399154169 of the Indian Bank to the SARFAESI Auction Proceeds Collection Account of the respondent bank through RTGS toward 25% of the sale price minus EMD on 17.11.2021 but due to some technical error the amount was again credited to the Indian Bank account of the Auction Purchaser which was again sent to the aforesaid account of the respondent bank on 18.11.2021. In view of the above circumstances, the auction was confirmed on 18.11.2021. The bank had sent a mail dated 07.09.2022 to the MSTC requesting to provide the technical issue which prevented the bank in approving the auction on 17.11.2021 but no reply has been received so far. Further, on the request of the auction purchaser, the time to deposit rest 75% of the sale price was extended upto 16.02.2022 by the bank. Accordingly, the auction purchaser deposited full payment till 15.02.2022. There is no embargo in the added Appendix IV A in the rules incorporated by way of amendment of 2018 to publish sale notice of more than one account simultaneously. However, no prejudice has been caused to the applicant by publishing sale notice of different account in one go.
5
DRT,PATNA
SA 115 of 2022 [J]
a notice for E-auction mortgaged property fixing the date of e-auction on 16.11.2021. The property has been auctioned undervalued with the reserve price of Rs.1, 19,83,0001-. The applicant wants to redeem the said property on payment of entire dues with cost and charges. The bank has not served the auction sale notice to the applicant prior to publication of notice for auction therefore, the applicant could not exercise its right to pay the dues of the Bank in terms of the section 13(8) of the Act. The bank has published the composite auction sale notice. The auction purchaser has not deposited the auction amount in time.
6
DRT,PATNA
SA 115 of 2022 [J]
communicating the approval of the alleged highest bid of the auction sale in question. It is also surprising to note that no copy of such mail has been filed. As the best evidence has been withheld, there remains no other option except the adverse inference.
~"" -v/
7
DRT,PATNA
SA 115 of 2022 [J]
amendment of 2018 to publish sale notice of more than one account simultaneously. No prejudice has been caused to the applicant by publishing sale notices of different accounts in one go. In my opinion when a particular thing is required under law to be done in a particular manner, that has to be done in that manner unless the deviation is permitted from the specific format or the procedure. Otherwise it will hold no ground. So far as the prejudice is concerned, it is important to say that the format under appendix 4A has been provided to make it able to draw the attention of the general public for a particular sale. The collective notice for a number of sales or a combined composite notice for different sales will lessen the chances for drawing attention of public at large to a particular sale As such the chances for fetching the maximum price of the secured assets will be minimized. As such the law requires the notice has to be issued in the format prescribed under the appendix 4A. There is no rule or reason to , ..... deviate from the aforesaid provision as it'permitted with respect to appendix IV.
ORDER
The application under Section 17 of the SARFAESI Act filed by Sri Kundan Kumar is allowed with costs. The auction sale inquisition is hereby' set aside. The respondent Bank shall return the amount deposited by the auction purchaser with simple interest @ 12% P.A. from the date of final deposit by the auction purchaser. All pending lAs shall stand disposed of accordingly. 7~
~\-I\oyO [KaushalendraYadav]
Presiding Officer Debts Recovery Tribunal, Patna
Judgment signed, sealed, dated and pronounced in the open courtn this 13TH Day of December, 2022.
~.,I/
.'" '
..( [KaushalendraYadav] Presiding Officer Debts Recovery Tribunal, Patna
3 issues framed by the court
Whether the auction sale under Section 17 of SARFAESI Act should be set aside due to procedural irregularities.
Whether the composite auction sale notice and delay in confirming the highest bid violated mandatory provisions.
Whether an application filed by the applicant is within limitation despite prior proceedings.
3 provisions across 2 enactments
Kundan Kumar Proprietor Mis Siro Automobile
The Zonal Manager, Bank of Baroda, Patna
The Regional Manager, Bank of Baroda, Gaya
The Chief Manager - cum - Authorized Officer, Bank of Baroda, Horilganj
The Branch Manager, Bank of Baroda, Jehanabad
Mr. Yugal Kishore
KaushalendraYadav
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
