Jayakumar versus Uco Bank

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S.A. 04 of 2022 22.09.2022

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 22^nd day of September, 2022

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Present: Shri Ganapathi K.R.K. Presiding Officer

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SARFAESI APPLICATION No. 04 of 2022

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Mr.M.Jayachandran

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S/o. D.Munusamy (Late) No.50/100, A.Adhiyaman Bypass Road Near Saravana Bhavan Hotel Dharmapuri – 636 701 ….Applicant

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Vs.

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1. The Authorised Officer

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UCO Bank

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Dharmapuri Branch No.102, Bypass Road, Four Roads Dharmapuri – 636 701

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2. Mr.Subramanian Rajasekar

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Residing at 47/11D, Pennagaram Road Kumarasamipettai Dharmapuri – 636 701 ….Respondents

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Counsels on record / appeared:

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Counsel for Applicants : M/s. R.K.M.Suresh, Adhitya.D & Kathikeyan Counsel for Respondent : M/s. R.Mariappan & M.Rajesh

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ORDER

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This SA is filed challenging the Possession Notice dated 23.11.2021 issued by

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respondent bank for recovery of a sum of Rs.8,32,716/- from applicant.

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2. Respondent bank had entered appearance and filed their counter and typed set

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of documents evidencing the actions taken by them under the Act.

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S.A. 04 of 2022 22.09.2022

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Heard Ld. Counsels appearing for both the parties. It is the case of applicants that the schedule mentioned property is a severable property comprising of shop rooms in ground floor and office space in first floor which is earning a sum of Rs.40,000/- per month as rentals. It is also submitted that applicants had been continuously approaching respondent bank for a negotiated settlement but however respondent has not considered the same. Ld. Counsel for applicant submitted that the outstanding amount is only Rs.8,00,000/- and as the property is severable, a part of the property would have been sufficient to answer the claims of the respondent and that the entire property ought not to have been brought up for sale. It is also submitted that there was a sole bidder and hence no auction took place and the sale is confirmed on a single increment of Rs.10,000/- over and above the reserve price. It is also submitted that applicants had deposited the entire outstanding due to the respondent bank pursuant to approaching this Tribunal, after complying the interim condition imposed by this Tribunal. Notwithstanding the above factual submissions, Ld. Counsel submitted that respondent bank, without waiting for the statutory period of 60 days, after issuing the Demand Notice dated 22.07.2021, acknowledged by the applicants / borrowers on 24.07.2021, respondent bank has got issued a Possession Notice on 22.09.2021and the impugned sale notice scheduling sale to 15.12.2021. Ld. Counsel reiterated that applicants made several negotiations with the Auction Purchaser and in fact Auction Purchaser has trespassed into the property and has been forcibly collecting monthly rentals from the existing tenants from the past 9 months. Ld. Counsel further stated that respondent bank has not taken physical possession of the property but has

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S.A. 04 of 2022 22.09.2022

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contemplated the sale and did not even obtained delivery of the property for the Auction Purchaser to collect rents from the tenants.

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Whereas Ld. Counsel appearing for the respondent bank has filed their counter and typed set of documents evidencing their actions. Ld. Counsel has conceded that Demand Notice is dated 22.07.2021 was served on 24.07.2021 and the Possession Notice is issued on 22.09.2021 and except for that small infirmity, respondent bank has followed the procedure as warranted under law and has not violated any rules. Ld. Counsel did not answer as to why the entire property has been put up for sale when it is severable and the amount due from the borrower is only a small sum of Rs.8.34 Lakhs and the property is sold for Rs.34.50 Lakhs. It is also not submitted as to the procedure as to how secured creditor / respondent bank had taken physical possession of the property or any document establishing delivery of the property to the Auction Purchaser is filed.

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From the foregone submissions it is evident that respondent bank has not followed the procedure while invoking their SARFAESI actions at the Demand Notice stage itself, but had proceeded further and conducted a sale in favour of a sole bidder of the entire schedule property when the outstanding due from the borrowers is less than 25% of the reserve price fixed for the property and also when the property is severable either in the form of individual shop rooms or at least floor wise as can be evidenced from the details of schedule mentioned in the impugned possession notice. For the said reason, this Tribunal is unable to accept the contentions of the Ld. Counsel for respondent bank that the respondent bank had followed the procedure as warranted

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S.A. 04 of 2022 22.09.2022

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under law. It is a fact borne on record that applicants had discharged their entire dues by making deposit of the same into the bank. Ld. Counsel for respondent bank submits that consequent upon conclusion of sale on 15.12.2021, Auction Purchaser has paid the initial amount of 25% and also remitted the balance bid amount which was adjusted against the borrower’s loan account and Sale Certificate is duly issued even by 30.12.2021. Considering the respective contentions of the parties, it is therefore thought fit to hold that the respondent bank has not followed the procedure as warranted under law and could not establish their actions through their typed set of documents.

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In the circumstances, this SA is liable to be allowed and is accordingly allowed. Consequently, Sale Notice scheduling sale to 15.12.2021 is hereby set aside. Respondent bank is directed to refund the Auction Purchaser the amount deposited by him as bid amount. Since it is submitted that Auction Purchaser has trespassed into the property and was enjoying the rents by appropriating the same towards himself, from the past 9 months, there shall be no order as to cost. Respondent bank is permitted to adjust the amounts paid by applicants herein towards discharge of their loan. Respondent bank is directed to ensure that the Auction Purchaser shall hand over / deliver / restore possession and enjoyment of the property to the applicants herein.

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Interim order, if any granted and subsisting till this day stands vacated and all other IAs, if any pending stand closed.

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With the above directions, this SA stands disposed.

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S.A. 04 of 2022 22.09.2022

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A copy of the order be communicated to the parties concerned as per extant guidelines.

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(Dictated to Stenographer (DD), transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 22^nd day of September, 2022)

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Sd/-

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(GANAPATHI K.R.K) PRESIDING OFFICER

Jayakumar v. Uco Bank

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Jayakumar v. Uco Bank

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