Dismissed

Karamveer Pratishthan Jalna v. Maharastra Gramin Bank

DRT18 Oct 2023SA/290/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitization Application challenging a bank's auction of secured industrial assets. The court held that the applicant failed to deposit settlement amounts prior to the auction and that no material legal defects warranted setting aside the sale conducted at a higher realized value.

What did the court decide?

Securitization Application dismissed with no orders as to costs. Applicant dehors liability. Bank at liberty to proceed with sale confirmation.

Karamveer Pratishthan Jalna versus Maharastra Gramin Bank — Company and Corporate | DRT (2023)

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Presented on: 31/08/2023 Registered on: 01/09/2023 Decided on: 18/10/2023 Duration: Y M D 01 – 01- 18

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IN THE DEBTS RECOVERY TRIBUNAL, AT AURANGABAD

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Securitization Application No. 290 of 2023

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1 Karmveer Pratishthan Jalna, a Registered Charitable Trust through its President Mr Sanjay Nilkanthrao Lakhe-Patil, PAN – ACZPL3311Q Shri Sail, Lakhe Farms, near Jalna Co-op. Sugar Mill, Ramnagar, Jalna 431203 … Applicant

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VERSUS

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1 The Authorised Officer, Maharashtra Gramin Bank, Mashtgad Mahadevi Chowk Taluka & District Jalna - 431203

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2 Maharashtra Gramin Bank, Mashtgad Mahadevi Chowk Taluka and Dist. Jalna – 431203

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3 Mrs Indirabai Lakhe Patil Lakhe Patil Farm, near Jalna Co-op. Sugar Mill, Ram Nagar, Jalna Tal. & Dist. Jalna 431203

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4 Mr Vikas Namdeorao lakhe Patil, Gauri, Plot No. 13, near Police Ground, Bhagyoday Nagar, Jalna 431 203

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[PJM] (SA No.290/2023) Page 1 of 13

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5 Mr Pralhadsing Raghunathsing Gahlot (deceased) through his L.R.: Mr Yuvraj Pralhadsingh Gahlot R/o Plot No. 8, Telicom Colony Road, Jalna 431203

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6 Mr Vikas Namdevrao Lakhe Gouri plot No. 13, near Police Ground, Bhagyoday Nagar, Jalna 431203

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7 Mr Ranjeet Ramesh Patil R/o Kokate Towers, Roop Nagar Ambad Tal. Amad Dist. Jalna.

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8 Mr Lahurai Anandrao Patil, Lakhe Patil Farm, near Jalna co-op. Sugar Mill, Ram Nagar, Jalna Tal. & Dist. Jalna.

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9 Mr Sanjay Appasaheb Bhosale, Shani Mandir, old Jalna, Jalna 431203

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10 Mr Shivraj Kalyanrao Patil, Bhale Nagari, Mastgad, Jalna Dist. Jalna

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11 Mr Mahendra Shivajirao Pawar, Nilkanth Nagar, Jalna Tal. & Dist. Jalna

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12 Mr Narendra Nilkanthrao Patil, Lakhe Patil Farm, near Jalna Co-op. Sugar Mill, Ram Nagar, Jalna Tal. & Dist. Jalna 431203

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13 Mr Rajkumar Haribhau Mhaske, Lakhe Patil Farm, near Jalna Co-op. Sugar Mill, Ram Nagar, Jalna Tal. & Dist. Jalna 431203 …Respondents

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APPEARANCE : For the Applicants Mr. S.R. Vakil, Advocate

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[PJM] (SA No.290/2023) Page 2 of 13

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For Respondents No.1 & 2 Mr. J.R. Kalyankar, Adv. For Respondents No. 3 to 13 None

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Shri Vimal Gupta Presiding Officer

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JUDGEMENT PRONOUNCED ON : 18^th October 2023

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J U D G M E N T

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This is an application under sub-section (1) of Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the 2002 Act”) and the Security Interest (Enforcement) Rules (for short “the said Rules”).

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The present Securitization Application is filed by the Applicants challenging the action of the respondents-bank for selling the secured assets-plot and building No. P-17 admeasuring area 4000 sq.mtrs in additional Jalna PH-1 industrial area MIDC Jalna in the nae of Karmaveer Pratisthan, Jalna, bounded by the MIDC on Eastern side, open space No.3 on the Western side, Plot No. C64 on the Southern side and open space No.3 on the Northern side under the sale notice dated 07/08/2023 issued by

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[PJM] (SA No.290/2023) Page 3 of 13

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respondents-bank and issuance of sale certificate of the secured assets.

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The facts of the case are as under:

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(i) The applicant submits that applicant is a registered Charitable trust, engaged in educational activities and it is running schools and colleges in Jalna District. Applicant pleads that with a view to provide necessary infrastructure in the form of building, trustees of applicant unanimously decided to carry out construction over the aforesaid property belonging to the trust, obtained on lease from the MIDC authority, for which the applicant was in need of funds. Accordingly the applicant approached to respondents-bank to sanction loan upto Rs. 1.5 crore for carrying out the construction activities. Thereafter the respondent-bank considering the feasibility of the loan proposal, conveyed the sanction of Rs. 91,57,000/- vide letter dated 01/10/2010 in the nature of term loan subject to acceptance of terms and conditions of the loan by the applicant and its trustees. Applicant agreed to repay the term loan amount by half yearly installment of Rs. 7,25,000/- in seven years alongwith interest @ 13.50% p.a. with monthly rests. In order to secure the loan amount,

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[PJM] (SA No.290/2023) Page 4 of 13

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applicant mortgaged the aforesaid property in favour of applicant after obtaining consent of the MIDC Authorities on 28/09/2010 to raise capital of trust by availing loan facility of Rs. 91.57 lakhs as against MIDC plot allotted to applicant trust. Applicant also submitted tripartite agreement dated 29/09/2010. Applicant pleads that as it could not follow the repayment programme, respondent No.2-bank issued notice U/S. 13(2) of the Recovery of Debts and Bankruptcy Act, 1993 and consequently filed Original Application bearing No. 342/2016 for recovery of Rs. 1,01,35,281/- in which applicant appeared and filed its written statement and it is pending at the trial stage. Applicant further pleads that notice U/s. 13(2) did not serve upon it and the notice is defective as bank failed to mention date of NPA. It is against the guidelines of the RBI and natural principles of justice. Further more, the bank without complying the mandatory provisions of law, proceeded further with possession on 03/09/2019 on which date Respt.-bank took possession of the property and pasted the notice on the wall stating that the respondent has taken the possession of the said premises. However, auction sale dated 20/03/2023 failed as no bids received by Respt.bank. It is further pleaded that as the aforesaid bid

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[PJM] (SA No.290/2023) Page 5 of 13

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failed, applicant withdrew its Securitization Application bearing No. 45/2020, in which the Respt.bank had appeared, vide order dated 15/03/2023. Applicant further pleads that Respts. No. 3 to 5, being guarantors to secure the loan amount, had filed separately Securitization Application No. 76/2020, in which present applicant as per order dated 19/04/2023 approached the bank by submitting one time settlement proposal of Rs. 80.00 lakhs on 19/06/2023 and deposited 10% downpayment as directed. However, Respt.bank communicated to applicant that the offer is not accepted vide letter dated 06/07/2023 without assigning any reason.

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4 Applicant further pleads that in the midst of settlement talks, Respt. Bank issued auction sale notice on 07/08/2023 scheduling auction on 28/08/2023 reserving the price of the secured assets Rs. 90.00 lakhs, which is silent on the very vital point of the total outstanding as the notice only states that an amount of Rs. 79,24,911.64 ps. is due as on 30/09/2014 plus interest thereon. Applicant pleads that after a brief meeting with the higher officials of the respondent bank, the OTS was arrived at Rs. 1,32,42,072/- and the issue remained was of only time period as applicant was insisting time by the end of

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[PJM] (SA No.290/2023) Page 6 of 13

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December 2023 for which bank was not ready. Meanwhile applicant received communication dated 28/08/2023 served on 29/08/2023 informing that the bank has auctioned the property through e-auction for an amount of Rs.2,79,00,000/- and successful purchaser has deposited 25% amount. It is further pleaded that thereafter applicant approached the bank on 30/08/2023 accepting the original terms of OTS vide letter dated 25/08/2023 and agreed to deposit it by the end of Sept. 2023, however, the bank rejected stating that already auction is done and bidder has paid 25% of the amount. Applicant pleads that the bank has charged excessive interest and against the RBI guidelines. Possession of the secured assets is still with the applicant. Panchnama prepared is not as per requirement under the Rules 2002 and it is wrong. Notice is not published in two daily local newspapers. Thus, applicant lastly prayed to grant injunction restraining Respts. No. 1 & 2 from proceeding further U/S. 13(4) of the SARFAESI Act as per E-auction sale notice published on 07/08/2023 and further action of finalizing sale dated 28/08/2023.

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5 On 01/09/2023 during hearing, both the parties appeared in the matter. Learned counsel for applicant submitted that

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[PJM] (SA No.290/2023) Page 7 of 13

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the applicant is ready and willing to deposit amount of Rs. 1,32,42,072/- by 30^th September 2023. In the meantime, sale has taken place and 25% amount has come. Therefore, respondent bank was directed not to proceed further, vide order dated 01/09/2023. Learned counsel for applicant submitted that applicant is ready to comply with the first condition of deposit of 25% of the amount and Respt.bank was directed it may encash the same and keep the same with them for further directions of the Tribunal. Matter was directed to be placed before the Lok Adalat for settlement on 09/09/2023 and thereafter before this Tribunal on 16/09/2023, vide aforesaid order.

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6 It would not be out of place to mention here that Respondent-bank submitted praecipe to take the matter on board seeking urgent orders and reliefs and Respt.bank submitted interim application bearing No. 1564/2013 for allowing the time to accept balance amount of auction sale. The Respt.bank submits in this application dated 05/09/2023 that the property in question was sold in e- auction by Respt.bak on 28/08/2023 in pursuance of notice dated 07/08/2023 for the consideration of Rs. 2.79 crores to the higher bidder against the reserved price of Rs. 90.00 lakhs and accordingly its 25% amount at Rs. 69,75,000/-

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[PJM] (SA No.290/2023) Page 8 of 13

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has been deposited by the auction purchaser on 28/08/2023 itself. The auction purchaser has already deposited Rs. 9,00,000/- as EMD on 25/08/2023. Respt.bank contended that applicant approached it on 25/08/2023 at head Office at Aurangabad and offered to pay Rs. 1,32,42,072/- as full and final settlement upon which applicant was suggested that it will have to deposit atleast 25% of the amount immediately on 25/08/2023 alongwith proposal in writing and unless 25% amount is paid the proposal cannot be placed before the competent authority. It is contended that the applicant neither deposited 25% amount on 25/08/2023 nor did he give any written offer on that day and there was no compromise proposal pending before the Respt.bank as on the date of e-auction i.e. on 28/08/2023. It is contended that in view of above, the property came to be auctioned at Rs. 2,79,00,000/- and the bidder is already declared as successful bidder and now it is logical and practical for the bank not to accept anything less than the sale amount towards full and final settlement of the account. It is contended that in such a situation, if the applicant deposits equivalent amount of Rs. 2.80 crores the bank will be in a position to consider the offer and accordingly the Respt. Bank prayed to direct the applicant to deposit said amount

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[PJM] (SA No.290/2023) Page 9 of 13

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on or before 11/09/2023 otherwise, the Respt. May be allowed to proceed further with confirming the sale in favour of successful bidder as the prima-facie case exists in favour of Respt. Bank. On going through the interim application and arguments of learned counsel of both the sides, said application is allowed by detail order dated 08/09/2023 and the matter was directed to be placed on 09/10/2023. It clearly shows that applicant has no desire to avail this opportunity also to deposit the full bid amount.

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7 On 09/10/2023 heard both the sides and they were directed to place on record written notes of argument on 11/10/2023. Accordingly, learned counsel for applicant submitted written notes of argument dated 12/10/2023, which are on the same lines as stated in Sec. application.

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I have gone through the record and contents therein. The main contention of applicant that no notice U/S. 13(2) and 13(4) of the Act of 2002 served upon it and without following the due process of law, the respondent-bank initiated the action under the provisions of the SARFAESI Act and thereby the impugned notice is not sustainable in law. On going through the application para No. 32(n) it

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[PJM] (SA No.290/2023) Page 10 of 13

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clearly states that on receipt of the notice, it took objection to the notice and; as such, said contention of the applicant is redundant. It is pertinent to note that applicant availed sufficient opportunity approaching the applicant time and again and also during the e-auction sale process putting the OTS proposals which though he assured to comply with and, that too, in less amount than the e- auction sale price, could not comply till passing final order.

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9 In this matter there is an averment that Pralhadsing Gahlot expired and, as such, the notice is not tenable issued in the name of the dead person. Applicant /borrower is a trust and, as such, death of any other trustee will not make action of the bank to be redundant. Applicant had his choice to redeem the property prior to publication of the notice under Section 13(8) of the Securitization Act. Once the notice is published, applicant cannot seek redemption of the property and/or cancellation of the same on the ground of settlement though it can be challenged on other grounds. While going through the pleadings and arguments, there is no concluded contract or settlement between the parties. This being a bank, the power of officers is limited and any settlement can be done with the

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[PJM] (SA No.290/2023) Page 11 of 13

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approval of the Board/Higher Authorities. Even if we consider the proposal having been a concluded contract, the applicant himself has not complied with the said conditions of deposit. More interestingly, the property which is put to auction for Rs. 90.00 lakhs, has been sold for Rs. 2.79 crores and more interestingly, it was a third attempt by the Respt.bank and at an earlier attempt the applicant had offered the same for Rs. 80.00 lakhs as a settlement amount and has deposited Rs. 8.00 lakhs with the bank. Having auctioned the property at such a high price, the bank now cannot accept settlement as right of redemption was not available after publication of the notice and the Tribunal has not found any material defect in the measures taken by the Respt.bank, which could have entitled the applicant to set aside the sale notice. Death of a trustee is akin to death of the Director of the company, who is not a guarantor. Amount of Rs. 1.32 crores now under any circumstances cannot be accepted because the liability of the bank due to applicant is more than 3.00 crores. The applicant did not lead any evidence, oral or documentary, in support of their contentions. In view of the above facts and circumstances and that loan availment is admitted, default in repayment is admitted and

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[PJM] (SA No.290/2023) Page 12 of 13

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subsequent non-payment is accepted and all the actions of the bank are not pleaded to be against the law, the application deserves to be dismissed. Hence I pass following order.

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O R D E R

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A. Securitisation Application No. 290 of 2023 is dismissed with no orders as to costs.

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B. In view of dismissal of the S.A., interlocutory applications, pending, if any, stand disposed of accordingly.

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C. The Respt.Bank is at liberty to accept balance amount of 75% and period spent in litigation/Stay order will not be counted for deposit. Respt. Bank to continue its action under the SARFAESI Act.

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File be consigned to the Record Room.

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Copy of the judgment be uploaded on the official website and free copy be sent to all the parties.

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(Vimal Gupta) PRESIDING OFFICER, Aurangabad, DEBTS RECOVERY TRIBUNAL, Date: 18/10/2023 Aurangabad.

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[PJM] (SA No.290/2023) Page 13 of 13

Karamveer Pratishthan Jalna v. Maharastra Gramin Bank

Case brief

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Karamveer Pratishthan Jalna v. Maharastra Gramin Bank

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