The DRT dismissed the applicant's plea challenging a sale notice for granting only 15 days notice, ruling that the prior notice withdrawal was due to the applicant's default, thus the proviso allowing a 15-day notice applied. The stay was denied.
Sale notice challenged admitted; application for stay dismissed; applicant directed to participate in auction.
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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI
Dated this 27th Day of September, 2022
PRESENT: SHRI A.S.JAYACHANDRA
Presiding Officer
S.A. No.417 of 2022
Mr.Natarajan, New No.2/280, Old No.2/210, Spring Field Salai, East Coast Road, Chennai – 600119. . . . Applicant
Versus
The Authorised Officer, Kotak Mahindra Bank Ltd., Samson towers, 4th Floor, No.402 & 403, Pantheon Road, Egmore, Chennai – 600008. . . . Defendant
Counsel for Applicant :- M/s.Anil Relwani Counsel for Respondent :- M/s.Ananda Gomathy
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c) Since the sale notice was withdrawn, the same has lost its legality and therefore the subsequent sale notice must afford 30 clear days of notice before the sale is held. In the instant case the sale notice date 09.09.2022 does not extend this 30 clear days notice.
d) The second leg of the argument to assail the sale notice is that during May, 2022 the applicant himself had found out a purchaser to whom a private treaty is sought by the bank. Such intending purchaser had transferred 4.54 crores to the designated bank account of the defendant herein. He quoted the highest amount of Rs. 10.27 crores which was higher than the amount of Rs. 10.26 crores quoted by the other bidder next below him. Therefore, it is submitted that the applicant had been very vigilant and interested to clear the loan amounts. In view of the above, the applicant counsel seeks stay of the proposed auction.
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SARFAESI Act and the Rules. It was only withdrawn having become infructuous. Furthermore it is submitted that this argument is also fallacious since there had been five sale notices prior to the instant one and the same was detailed in the counter. The sale notices fixing auctions are 19.03.2021, 29.09.2021, 28.01.2022, 16.03.2022 and 25.05.2022. It is submitted that none of the above sale notices were questioned by the applicant, which had allowed only 15 days time as per the proviso to Rule 9(1) of the Security Interest (Enforcement) Rules 2002.
“It is to be noted that redemption of the security interest over the Mortgaged Property can be permitted only in favour of the Mortgagor and Owner of the Mortgaged Property and hence we cannot enter into the Private Treaty arrangement with the third party. At the best, against Bank’s realization of agreed consideration, the Bank can release its mortgage charge over the Mortgaged Property in your favour and then you are free to convey the Mortgaged Property in favour of any person of your choice. In view of the same, I Authorised Officer, returning and rejecting your request made vide your letter dated 25th May, 2022 and request you to furnish Bank account details, on immediate basis, for completing the refund process to the concerned third party.”
“56. It will be relevant to note that this Court in the case of Mathew Varghese (supra) itself has held that in the event of any such sale properly notified after giving a 30 days' clear notice to the borrower does not take place as scheduled for the reasons, which are not solely attributable to the borrower, then the secured creditor cannot effect the sale and he will have to initiate the procedure de novo. Therefore, the question, that will have to be considered, is, as to
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whether the sale, which was notified as per the notice dated 21.1.2012, could not take place on the date scheduled in the said notice for the reasons, which are solely attributable to the guarantors or not.
60. It could thus be seen that the Second Sale Notice dated 9.7.2012 was in continuation of the proceedings of the First Sale Notice dated 21.1.2012, which sale could not be effected only on account of the interim orders passed by the DRT, Chennai, on the representation made by the appellants and respondent Nos. 2 to 4. It could further be seen that even in view of the law laid down by this Court in the case of Mathew Varghese (supra), since the sale scheduled on 27.2.2012, as per the First Sale Notice dated 21.1.2012, could not be held due to the reasons attributable solely to the guarantors, there was no necessity of again following the same procedure of providing a 30 days’ clear notice. In any case, the respondent Bank issued a fresh second Sale Notice on 9.7.2012 to the appellants, scheduling the sale on 20.7.2012. There is a substantial distinction of facts in the present case as compared to those in the case of Mathew Varghese (supra). In the case of Mathew Varghese (supra) after the dismissal of S.A., the respondent Bank had surreptitiously accepted the tender of the auction purchaser on the very next day of dismissal of S.A. without issuing a notice to the guarantors/borrowers and also confirmed the sale, and only after the confirmation of sale and receipt of the entire amount, informed the borrowers/guarantors about the sale being confirmed. It is not the case here. In the present case, after the S.A. was dismissed on 2.7.2012, the respondent Bank again issued a fresh Notice on 9.7.2012 scheduling the sale on 20.7.2012.”
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for failure of the first notice. However, if such first notice is held as opposed to the scheme of the rules and declared as improper by any of the Judicial Fora and the Tribunal constituted under act such notice would become non-est in law. In such an event the subsequent sale notices would follow the procedure denovo. In the instant case the earlier orders leading disposal of SA/92/2021 sprouts from the memo filed by the bank. This is also furnished by the applicant. it is stated that the interim order was passed with certain conditions. The same were not met by the applicant to deposit the amounts under two installments. Bank has noted this reason. It is also stated that on knowing the interim orders the bidder had withdrawn the EMD. Therefore, the bank had withdrawn the sale notice.
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by the applicant. In view of the above, this Tribunal does not see any illegality or impropriety in the impugned sale notice. Hence, the following order:
SA stands dismissed as having no merits and consequently IA stands dismissed.
However, the applicant may participate in the auction to be held either by himself or by his proxy and such persons may approach the Authorised Officer on or before 5.00pm at 28.09.2022.
This opportunity to inspect or otherwise shall not be a ground to be agitated in the event of any one questioning the sale if fructified. SA stands disposed of.
Sd/-
(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI
(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 27th Day of September, 2022)
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2 issues framed by the court
Whether the sale notice fixing auction after a withdrawn notice constitutes a de novo sale requiring 30 clear days notice under the second proviso to Rule 9(1) of the Security Interest (Enforcement) R
Whether the applicant's finding of a prospective purchaser justifies a stay of the proposed auction.
Colour shows how this judgement treated each authority
S. Karthik and others Vs. N. Subhash Chand Jain and othersDistinguished¶25
S. Karthik and others Vs. N. Subhash Chand Jain and others, MANU/SE/SC/0703/2021
1 provisions across 1 enactments
Natarajan
A.S. Jayachandra
As recorded by the court registry
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