Allowed

Mr B Arumugam Son of Balasundaram v. Tamilnad Mercantile Bank Limited

DRT3 Oct 2023SA/310/2023

Case brief

AI extract

What is this about?

SA allowed to set aside sale in favour of applicants redeeming mortgage and extinguishing debt. Respondent bank directed to refund auction purchaser's amount with interest and release title deeds upon repayment.

What did the court decide?

Sale set aside; applicant allowed to redeem mortgage and extinguish debt by 30.10.2023; bank to refund auction purchaser with interest and release title deeds.

Mr B Arumugam Son of Balasundaram versus Tamilnad… — Execution and Attachment | DRT (2023)

SA No. 310 of 2023

12.10.2023

IN THE DEBTS RECOVERY TRIBUNAL - III, CHENNAI

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Dated this the 12^th day of October, 2023

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

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SARFAESI APPLICATION No. 310 of 2023

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Mr. B.Arumugam S/o. Balasundaram No.1/2, Kannappan Street Kancheepuram – 631 501 ….Applicant

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Vs.

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The Authorised Officer

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Tamil Nad Mercantile Bank Limited No.40A, Vanigar Street, Kancheepuram Branch Kancheepuram – 631 501 ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. D. Durairaj Counsel for Respondent : M/s. E. Kumar

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ORDER

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This SA is filed challenging the sale held on 12.06.2023 pursuant to sale notice

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dated 05.05.2023 issued by respondent bank for recovery of a sum of Rs.34,60,906.23p from applicant.

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Heard Ld.Counsel appearing for both parties.

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It is the case of applicant that respondent bank has initiated the SARFAESI action of bringing the property to sale, when there is an interim order from this Tribunal,

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12.10.2023

since applicant had complied the interim conditions imposed by this Tribunal in their challenge to the Sec.14 measures initiated by respondent bank in yet another SA.

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Ld.Counsel for applicant vehemently opposed the valuation of the property and the conclusion of bid in favour of a sole bidder, since the same auction purchaser has already contracted with applicant for purchase of the property at Rs.1.5 crores, which was frustrated, owing to respondent bank issuing the sale notice fixing the sale price at Rs.83 lakhs. As the property was being offered at a value, for little over 50%, Auction purchaser has only caused a single increment of only Rs.10,000/- and acquired the property for Rs.83,10,000/-, while it is the express case of applicant that they wish to redeem their mortgage and also extinguish the debt. Ld.Counsel submits that applicant, to prove his bonafides, have complied the interim conditions imposed by this Tribunal and even today are ready and willing to discharge the remaining due amounts payable to respondent bank. Ld.Counsel submits that despite their express undertaking, respondent bank has been refusing to receive the amounts saying that sale is concluded and therefore they cannot accept the amounts from borrower. Ld.Counsel submits that it is the only dwelling house of applicant and since he has already become old, it would not be possible for him to purchase or acquire yet another home. Ld.Counsel for applicant submits that applicant is ready with demand draft for the balance amount to extinguish their debt with respondent bank as it is their express case that the sale certificate is not yet registered and therefore there is no formal conveyance of the property in favour of the Auction purchaser and that the sums deposited by him, are lying with the respondent bank only and not adjusted to the loan account. Ld.Counsel further submitted that applicant is in physical possession of the property and

SA No. 310 of 2023

12.10.2023

therefore prayed that the sale may be set aside and an opportunity be provided to applicant to redeem the mortgage and extinguish the debt, by which act there will not be any loss to any of the parties. Ld.Counsel further submitted that applicant is ready and willing to bear any costs and expenses including interest charges payable to respondent bank and the auction purchaser, as well, if an opportunity is given to him to redeem their mortgage. Submitting so, Ld.Counsel prayed for appropriate orders.

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Whereas Ld.Counsel appearing for respondent bank submitted that respondent bank has followed the procedure as warranted under law, while issuing the impugned sale notice and that there are no infirmities. Ld.Counsel had demonstrated the actions of the respondent bank through their counter and typed set of documents, copies of which are duly served on the Ld.Counsel for applicant, and which are found to be in accordance to law.

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From the foregone submissions, it is evident that applicant could not make out any infirmities in the procedure adopted by the respondent bank while issuing the impugned sale notice except stating that valuation of the property has been grossly low and that applicant had already contracted with the Auction purchaser for sale of the property at Rs.1.5 crores and Auction purchaser knowing fully well about his commitment to purchase the property at Rs.1.5 crores had participated in the auction collusively with the respondent bank and is attempting to purchase it at Rs.83,10,000/-, which is a little over 50%. It is the further case of applicant that they intend to exercise their right of redemption and also extinguish their entire debt if an opportunity is given as they are already ready with demand draft for the sale notice amount, notwithstanding their compliance of interim conditions in a sum aggregating to Rs.12,60,000/-. It is

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12.10.2023

vehemently argued that the outstanding is only Rs.34 Lakhs while the property has been sold for Rs.83,10,000/- and that too in a haste in favour of sole bidder, which is contrary to the provisions of law as was held by the Hon’ble Supreme Court that the single bid is not any auction amongst the bidders, but more or less a conclusion of sale without any bidding process, which is the essential element of a public auction.

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In the circumstances, as applicant intend to redeem their mortgage by extinguishing their debt and also in view of respondent bank not able to convey the property in its total sense, in the interest of justice and fair play, it is thought fit that a final opportunity be given to applicant to redeem their mortgage and extinguish the debt, while also equally take care of the amounts deposited by the Auction purchaser by making a reasonable compensation for the amounts lying in deposit with respondent bank. Accordingly,

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i. Applicant is permitted to extinguish his remaining debt after taking into consideration the amounts deposited by them as compliance of interim conditions of this Tribunal, as well as any other amounts.

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ii. On applicant discharging and extinguishing his debt with respondent bank, respondent bank is permitted to refund the amounts deposited by Auction purchaser together with interest at the rate of 12% per annum simple from the respective dates of deposit till the actual date of repayment and in any case not later than 30.10.2023. Applicant to make good the interest payable to Auction purchaser along with SARFAESI expenses incurred by respondent bank. The interest of 12% per annum simple, directed to be paid to Auction purchaser, shall

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however be subservient to the applicable periodical rate of interest payable to deposits by the bank, over the amounts deposited by Auction purchaser from respective dates.

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iii. All the above acts are to be concluded immediately and in any case not later than 30.10.2023.

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iv. On receipt of entire outstanding due or such other amount as mutually accepted and admitted between the parties, respondent bank to discharge the mortgage and release the title deeds in favour of applicant / mortgagors.

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v. In case applicant does not come forward, in terms of their undertaking before the bench, respondent bank will be entitled to proceed further in accordance to law by confirming the sale in favour of Auction purchaser for value received, beyond 30.10.2023

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In the result, SA is allowed to facilitate applicant to redeem their mortgage and extinguish their debt, by or before 30.10.2023 failing which for respondent to proceed further in accordance to law. 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.

SA No. 310 of 2023

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

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guidelines.

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(Dictated to Steno (DD), transcribed by her, corrected, signed and processed through e-drt, on this the 12^th day of October, 2023)

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Sd/- (GANAPATHI K.R.K) PRESIDING OFFICER

Mr B Arumugam Son of Balasundaram v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

Mr B Arumugam Son of Balasundaram v. Tamilnad Mercantile Bank Limited

Case brief

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What did the court decide?

What the court decided

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