Partly allowed

M S Al Lateef Constructions v. Bank of Baroda

DRT21 Jul 2022SA/201/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal quashed SARFAESI notices issued by the Bank for failure to decide the applicant's representation as required by Section 13(3A), deeming subsequent actions illegal. Challenges to sale notices were dismissed as infructuous due to lack of bids.

What did the court decide?

Demands notice, possession notice, and sale notices dated 06-08-21; 29-01-22; 15-03-22; 10-05-22 quashed. Application to quash sale notice dated 15-03-22 dismissed as infructuous.

M S Al Lateef Constructions versus Bank of Baroda — Banking and Recovery | DRT (2022)

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IN THE DEBTS RECOVERY TRIBLNAL LTJCKNOW

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Present: A. H. Khan, Presiding Officer

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Date of order 2l-07-2022

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S.A. No.201 of 2022

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Present:-

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Counsel for the applicant BH of Mr.B.P. Counsel for the bank Mr.Prashant K. Shrivastava

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1' Final arguments were heard on 27-06-2022 and case was reserved for pronouncement of orders.

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The applicant has filed the present SA on [-04 -22 praying to quash the sale notice dtd.l5-03-22 fixing the date of auction on lg/l 9 Apr,22 and has further prayed to quash the possession notice dtd.29-01-22 and, dernand notice dtd.06-08-21 issued by the bank under SARFAESI Act, 2002. Applicant has also prayed to quash the entire proceedings initiated by the bank under the provisions of SARFAESI Acq 2002. By way of amendrnenr, applicant has prayed to quash the sale notice dtd.07-0 5-22 fixing the date of auction as 3l -05-22.

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3' The case of the applicant, in brief is that neither the proprietor of the firm nor his wife who is guarantor are residing on the address on which notices have been sent by the bank and therefore no notice has been seryed on them' That bank had served the possession notice and sale notice to applicant alone and not on all the borrowers. That bank has mentioned wrong description of the secured asset in the sale notice and that sale notice has been published on the same date before affixing the same on the secured asset. That possession notice has been affixed in very casual manner and that applicant has submitted his representation dtd.ol-l}-2l to demand notice dtd'06-08-21 which has not been decided by the bank. That the delay in challenging the possession notice is covered by the suo-moto order passed by Hon'ble Supreme Court. That bank has not affixed sale notice dtd. 10-05-22 on secured asset nor had published the same. That sale notice dtd. lO-05-22 was received by applicant only and has not been served on all borrowers.

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4' Bank had filed short objection/counter reply to the SA wherein it is contended that possession notice was duly served on borrowers and was also affixed on the secured asset and was also published in the newspaper. That demand notice dtd.27-12-18 was issued by bank but no objection was filed by applicant and all notice uls l3(2) and l3(4) were sent to applicants and bank had complied with all the mandatory provisions of SAMAESI Act. That sale notice dtd.15-03-22 was duly served on all borrowfisand was also affixed on the secured asset and published in newspape rr. /( n,

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5. Duly considered submissions and perused the records.

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As regards challange to sale notice dtd.15-03-22 is concerned, perusal of Para 3 of the amendment application filed by the applicant on 23-05-22 reveals that applicant has himself stated that the earlier sale fixed for 18-04-22 has not been materialized in the absence of bid and therefore challange to the same is dismissed being infructuous. Similarly, with regard to challange to sale notice dtd.70-05-22, Counsel for bank has made a specific statement on 27-06-22 before this Tribunal that no bids have been received pursuant to said sale notice and therefore challange to sale notice dtd. 10-05-22 is also dismissed being infructuous.

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7 . As regards challange to demand notice dtd.06-08-21 is concemed, perusal of Annex.4 filed by the applicant alongwith the SA reveals that applicant had preferred detail representation dtd.01-10-21 (Page 22 to 34) against the demand notice dtd.06-08 -21 and the same has been duly received by the bank on 01- 10-21 by putting the seal onpage 22. However , inpara 7 of the counter reply, it is stated that bank had issued demand notice dtd. 27-12-18 against which no objection was moved by the applicant. However, perusal of Page 11 to 25of the reply reveals that bank had itself annexed copy of demand notice dtd.06-08-21 which was sent to borrowers vide postal receipt dd.09-08-21. Bank had not annexed any demand notice dtd.27-12-18 and had also not denied that representation dtd.0l-10-21 was not received by them or that the seal of the bank put on the representation dtd.0l -10-21 is a forged one.

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Hon'ble High Court of Chhattisgarh in WpC No.687/2016 - Mohan Rice Mill Vs. Bank of Baroda, in Para 11 has held that "respondent bank has acted illegally in not taking ony decision on petitioner's representation/objection, as per statutory requirement of Sec.t3(3A) of the Act of 2002. This view finds support.fro* the decision of this court in the case of Anil Kumar Agarwal Vs. ICrcI Bank and another, AIR 2011 Chhattisgarh 1".

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Hon'ble Orissa High Court in the case of Swastik Agency Vs. State Bank of India, vide its judgment dtd.08-01-09 has held that the entire action of bank is in gross violation ofjudgment of the Hon'ble High court rvhich specifically provided that mandatory provisions have to be followed in a particular manner and no other course is permissible. Para 75 of the said judgment is as under :-

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"Para75 - Non-compliance of such a mandatory requirement vitiated the proceedings. The Tribunal and DRAT have dealt with various issues without touching the most material issues involved in this case as explained hereinabove.TheTribunalandDRAThavemisdirectedthemselveswithout entering into the legal issues, particularly the requirement and compliance of / ,/ statutory provisions as non-compliance hereof would vitiate the entire)/ -""-'71 ,/,'

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proceedings. It seems to be highly arbitrary and unreasonable that for the recovery ofa sum of amount about Rs.04 Lacs, a property had been sold for Rs.14 Lacs and after adjusting its outstanding dues a sum of rupees more than double of their outstanding dues had been remitted to the petitioners." It is furlher held that'Non-compliance of statutory requirements of publication of possession notices and auction notice in vernacular language rendered the statutory requirement as farce. There should be purposeful compliance of the provisions of law and it cannot be reduced to an empty formality. The requirement to cause publication in 'vernacular language' in the newspaper is fundamental and the statutory requirement which cannot be compromised. It is not for the borrower or guarantor to establish that non-publication of the said notices in 'vemacular language' in the newspaper has caused any prejudice to its cause. It is for the respondent to establish that noncompliance ofthe statutory requirements has not caused any prejudice at all."

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Thus, in view of law laid down by the Hon'ble High Courts as discussed above, it has to be held that bank has violated Sec.l3(3A) by not deciding the representation of the applicants as per provisions of SARAESI Act, 2002 and therefore all the actions pursuant to demand notice dtd. 06-08-21 cannot sustain in the eyes of law and is accordingly dismissed. Since the demand notice itself has been quashed, all subsequent action pursuant to demand notice dtd.06-08-21 including possession notj 29-01-22 is also dismissed.

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File be consigned to record room.

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Khan) Officer

M S Al Lateef Constructions v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

M S Al Lateef Constructions v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

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