Dismissed

Pradeep Kumar Goyal v. Union Bank of India

DRT14 Jul 2023SA/56/2022

Case brief

AI extract

What is this about?

This Tribunal dismissed an application challenging the cancellation of an e-auction and forfeiture of the earnest money by Union Bank of India. The court found the applicant failed to deposit the balance consideration within the 15-day limit mandated by the auction terms, dismissing the relief sought.

What did the court decide?

Application dismissed with costs; sale cancelled and EMD forfeited upheld.

Pradeep Kumar Goyal versus Union Bank of India — Banking and Recovery | DRT (2023)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK

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SECURITISATION APPLICATION NO.56/2022

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DATE OF INSTITUTION: 03.03.2022

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DATE OF DECISION: 14^th DAY OF JULY, 2023

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Sh. Pradeep Kumar Goyal S/o Sh. Jaili Ram aged around 47 Years, earlier R/o House No.11, Kalgidhar Enclave, Baltana Mohali, Punjab and presently residing at House No.257, Sector-9, Panchkula

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Correspondence Address : Plot No.455, Industrial Area, Phase-II, Chandigarh

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….. Applicant

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Versus

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Union Bank of India, having its Head Office at # Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai-400021, Maharashtra, India, through its Managing Director

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Union Bank of India, having its Branch Office at S.C.O. No.63, Sector32-C, Chandigarh, through its duly Authorised Officer (Branch Manager)

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…..Respondents

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Argued by: Sh. Anmol Goyal S/o Sh. Pradeep Goyal (with authority letter) for the applicant (SA) Sh. Nitish Kumar, Branch Manager for the respondent bank

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FINAL ORDER

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This Securitisation Application has been filed under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity).

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In brief, the present SA has been filed by the applicant, who was aggrieved by the action of the respondent bank, wherein the respondent bank, after declaring the applicant successful in the E-auction of the property, i.e. residential house No.156 (Plot area 116 Square Yards), Village Bhabat Shivalik Vihar, MC Zirakpur, SAS Nagar, Mohali, Punjab, cancelled the E-auction in favour of the applicant despite the fact that

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more than 95% of total sale consideration, i.e. amount of Rs. 38,18,750/against the total auction price of Rs.40,75,000/-, was lying with the respondent bank before issuing the impugned order/communication dated 28.10.2021; that through this communication dated 28.10.2021, the respondent bank forfeited the earnest money (25% of the reserve price, i.e. Rs.10,18,750/-; that the applicant participated in the E-auction and therefore, the respondent bank sent the bid form on email ID of the applicant through its auction agency “auction tiger” on 02.07.2020; that the applicant gave the bid for an amount of Rs.40,75,000/- and requested for confirmation vide email dated 23.07.2020, whether his e- bid was accepted or rejected; that the total bid amount to be deposited by the applicant was Rs. 40,75,000/- and as per terms and conditions of the E-auction sale, the applicant was supposed to deposit 25% of the bid amount, i.e. Rs. 10,18,750/- by 23.07.2020; that it was categorically mentioned that in case the applicant failed to deposit the amount then the initial 10% of the bid earnest money would be forfeited; that the applicant through email dated 23.07 2020 (4:44p.m.) replied that the e- mail dated 23.07 2020 (3:51 p.m.) was received by the applicant at 3:51 p.m. (23.07.2020) and it was practically impossible to deposit the initial 25% amount by 23.07.2020, as the closing time for the bank was around 4 p.m.; that the applicant sought extension of one day and requested that he would deposit the initial 25% of the E-bid amount by 24 07.2020; that the said extension was duly granted to the applicant to deposit the amount till 24.07.2020, and the same was communicated to the applicant through email dated 23.07.2020; that on 27.07.2020, a letter was received by the applicant declaring the applicant to be the successful bidder of the auctioned property after depositing initial 25% of the bid amount, i.e. Rs. 10,18,750/- (Rupees Ten Lacs Eighteen Thousand Seven Hundred Fifty only) - including EMD amount of Rs. 3,50,000/- received on 04.07.2020 and Rs. 6,68,750/- received on 24.07.2020; that it came to his knowledge that the auctioned property was having certain pending dues, i.e. electricity bill towards PSPCL, for an amount of Rs.1.00 lacs, Municipal Corporation water bill for an amount of Rs. 15,000/- and property tax was also not paid; that the applicant thereafter, wrote an email to the respondent bank whereby he requested to sort out the issues regarding the E-auctioned property and asked for documentation related to E-Auction of the property, since no documents were handed over by the respondent bank to the applicant; that to clear the pending

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balance sale consideration as per the terms of E-auction within the stipulated time, since there were financial constraints with the applicant, therefore, the applicant approached Central Bank of India, Industrial Area Phase -II, Chandigarh and sought term loan, but due to COVID-19 Pandemic, again the country went into lockdown in the months of August and September 2020, therefore, the applicant could not pursue his case for availing of the loan; that the Central Bank of India asked the applicant to handover documentation regarding the property against which the loan was to be applied, i.e. maps of auctioned property, inventory (fard) of the auctioned property, and other formal documents related to auctioned property; that the applicant again made a request to the respondent bank to settle the issue of other pending dues towards the E-auctioned property; that the applicant again wrote email dated 05.08.2020 and asked the respondent bank to provide documentation pertaining to E- auctioned property like an agreement of sale in favour of the applicant as no document had been provided to the applicant so far; that no positive response was received from the respondent bank; that the respondent bank replied vide e-mail dated 05.08.2020, stating that the auction purchaser must have participated in the auction after going through all the terms and conditions of the auction and the property was sold on "AS IS WHERE IS", "AS IT WHERE IT", "WHATEVER THERE IS" and "WITHOUT RECOURSE BASIS”; that e-mail dated 16.09.2020 was received from Central Bank of India asking the applicant to provide the documentation pertaining to the property against which the loan facility was to be availed of; that it was relevant to state that the formal documentation pertaining to e-auctioned property was sought as it was mandatory requirement to avail of the said loan facility; that on 17.09.2020, the applicant through an e-mail again, requested the respondent bank to handover documentation pertaining to the e-auctioned property and it was also stated that applicant was ready and willing to pay the balance payment/sale consideration at the earliest; that no documentation pertaining to e-auctioned property was provided to the applicant, rather the applicant was verbally intimated by the respondent bank, to deposit balance sale consideration; that to show his bona fide , the applicant managed and collected certain funds and deposited an amount of Rs.28.00 lacs through a DD issued in favour of the respondent bank vide No. 504811 dated 18.09.2021; that even a communication to this effect was also made through email dated 18.09.2021, vide which it was

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categorically stated that in case of any balance payment left towards the auctioned property, the same shall be paid immediately; that the only grievance of the applicant was that since there were certain undisclosed pending dues/encumbrances towards the auctioned property and no documentation pertaining to the auctioned property was handed over to the applicant, therefore, the issue could not be resolved; that despite depositing more than 95% of the total sale consideration, no action had been taken by the respondent bank, rather the amount of Rs. 28 lacs which was deposited through a DD issued in favour of the respondent bank vide No. 504811 dated 18.09.2021, was also returned on 21.12.2021 along with impugned communication (A-1); that to direct the respondent bank to confirm the sale of the E-auctioned property, in favour of the applicant and execute a Sale Certificate and NOC in the name of the applicant after accepting the balance sale consideration, if any, since the applicant was declared the successful bidder as per letter dated 27.07.2020 (A-7); that through the impugned communication dated 28.10.2021 (received on 21.12.2021) the respondent bank had cancelled the sale/rights of the applicant qua the auctioned property and the applicant even sent e-mail dated 21.12.2021 (5:14 p.m.) and confirmed the receipt of the impugned communication.

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Reply to the SA was filed wherein inter alia it was contended that the applicant was barred by law of limitation, since the letter for forfeiture of the 25% of the auction amount was issued by the respondent bank on 18.08.2020, whereas the present SA was filed on March, 2022; that as per Section 9(5) of the Security Interest (Enforcement) Rules, 2002, in default of payment within period mentioned in sub rule (4), the deposit should be forfeited and the property should be resold and the defaulting purchaser should forfeit (to the secured creditor), all claim to the property or any part of sum for which it might be subsequently sold; that the applicant participated in the e-auction after going through the terms and conditions of the auction and he was fully aware of the fact that the entire e-auction payment was to be paid within 15 days from the date of auction and Municipal Taxes, Society dues, Electricity dues, if any, had to be paid by successful bidder only; that the said property was sold on e- auction to the applicant for the auction price of Rs. 40,75,500/- in the auction held on 22.07.2020; that the applicant deposited 25% of the auction amount, i.e. Rs.10,18,750/-; that further the applicant had failed

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to deposit the rest of the auction amount in the notified time period and the amount deposited by him was forfeited by the respondent bank; that the respondent bank vide letter dated 18.08.2020 and email dated 18.08.2020, had informed the applicant that the time to deposit the balance amount had been elapsed as the applicant was unable to deposit the amount within 15 days and the amount deposited by the applicant being 25% was also forfeited; that the applicant had intentionally not attached letter dated 18.08.2020 along with S.A. in order to mislead this Tribunal; that as per terms and conditions of the e-auction, it was specifically mentioned in point No.24 that the successful bidder should deposit 75% of the bid amount (including EMD) within 15 days from the date of auction; that it was specifically mentioned in para No. 25 of the terms and conditions of auction that in case of default in payment of above stipulated amounts by the successful bidder/auction purchaser within stipulated time, the sale would be cancelled and the amount already paid (including EMD) will be forfeited and the property would again be put to sale; that it was specifically mentioned in para No. 27 of the terms and conditions of the auction that Municipal/Panchayat Taxes, Society dues, electricity dues (if any) [has to be paid by the successful bidder only]; that in Annexure-III (declaration by bidder), duly filled and signed by the applicant, it was specifically mentioned that: ‘I have read the entire terms and conditions of the sale and had understood them fully’; that it was also specifically mentioned in Annexure-II (detail of bidder), duly filled and signed by the applicant that: ‘I declare that I had read and understood all the terms and conditions of the auction sale and auction notice’; that the respondent bank had sold the property on as is where is basis, whatever there is any without recourse basis; that it was specifically denied that the applicant in the email dated 29.07.2020 had demanded any documents regarding the property from the respondent bank; that the petitioner was very much aware of the fact that entire auction amount was to be paid by the applicant to the respondent bank within 15 days from the date of auction; that the respondent bank vide email dated 05.08.2020, had duly informed the applicant to please refer to the terms and conditions of the auction notice published in the newspaper as well as displayed on the bank website and e-auction service provider site, in which it was clearly stated that property was sold on as is where is, as what is, whatever there is and without recourse basis; that the applicant had participated in the auction after going

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through the terms and conditions of the e-auction; that moreover, the respondent bank was not aware of any dues or charges at the time of auction; that all the dues or charges which came to the notice of auction purchaser at a later stage, i.e. after the auction were to be borne by the auction purchaser only; that no sale agreements were executed in the auctions conducted by the banks or the financial institutions; that the respondent bank vide email dated 23.07.2020, had informed the applicant to deposit the 25% of the bid amount, i.e. Rs.10,18,750/- by 23.07.2020; that the respondent bank had further informed the applicant that remaining 75% amount was to be deposited by 06.08.2020, being within 15 days; that vide letter dated 18.08.2020, the applicant was informed that the time to deposit the balance amount had been elapsed as the applicant was unable to deposit the amount within 15 days; that the applicant had not informed the Central Bank of India about the forfeiture of the amount; that the respondent bank vide letter dated 28.10.2021, had duly informed the applicant that the letter dated 18.08.2020, regarding forfeiture of the 25% amount was duly sent to the applicant; that the applicant was further informed that competent authority of the bank had declined the request of the applicant as per Recovery Management Policy of the Bank and further requested the petitioner to collect the Demand Draft No.504811 for Rs. 28.00 lacs from the Branch; that the applicant had duly collected the said demand draft from the respondent bank on 21.12.2021; that the applicant had failed to deposit the remaining 75% of the auction amount and visited the Branch after 14 months from the date of auction along with his request letter and demand draft dated 18.09.2021 of Rs. 28.00 lacs.

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Rejoinder to the reply to SA was filed wherein the averments made in the SA were reiterated and that of the reply to the SA were controverted.

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This Tribunal had granted opportunity of hearing to both the sides but no argument was advanced. I have gone through the record carefully. 6. It is the case of the applicant that since there were financial constraints with the applicant, therefore, the applicant had approached Central Bank of India and sought term loan and the applicant could not pursue his case for availing of loan. As a matter of fact, the financial constraints of the applicant or his inability to take the loan, cannot be

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attributed to the respondent bank. The respondent bank was interested only in deposit of the amount in question. Therefore, the contention on behalf of the respondent bank that there was a concocted story to mislead this Tribunal in view of the fact that the applicant had failed to comply with the terms and conditions of the auction and failed to deposit the remaining 75 per cent of the auction amount within stipulated period, cannot be brushed aside. The entire amount of auction was to be paid by the applicant to the respondent bank within 15 days from the date of the auction. This amount was paid at a very belated stage. There is hardly any explanation for not complying with point No. 24 of the terms and conditions of the e-auction (Annexure R2).

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It is specifically mentioned in point No. 24 that the successful bidder shall deposit 75 per cent of the bid amount (including EMD) within 15 days from the date of auction. It is specifically mentioned in para No. 25 of the terms and conditions of the auction that in case of default in payment of the above stipulated amount by the successful bidder/Auction Purchasers within stipulated time, the sale will be cancelled and the amount already paid (including EMD) will be forfeited and the property will again be put to sale.

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It has been mentioned in para No. 27 of Annexure R2 that Municipal/Panchayat Taxes, Society dues, Electricity dues (if any) has to be paid by the successful bidder only.

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With regard to the terms and conditions of the online e-auction sale in question, i.e. Annexure R2, in the reply in para No. 5(1) there was specific mention and in the rejoinder to the reply of para No. 5(1), there is hardly any specific denial or explanation and there is only bald denial which has no meaning in the eyes of law.

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In the facts and circumstances of the case, this Tribunal has reached the conclusion that there was hardly any occasion for the applicant to be remiss in meeting out the conditions as enumerated in Annexure R2 especially with regard to deposit of the 75 per cent of the amount of sale within the stipulated period of 15 days. This Tribunal finds that there is concoction on the part of the applicant which has no grain of truth and there is no valid explanation for not paying the amount within the stipulated period. There is no case of concealment of any term and condition of the sale in question. There is no breach of any condition on

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behalf of the respondent bank. An unholy and unwholesome attempt has been made by the applicant to pull the wool over the eyes of this Tribunal. This Tribunal refuses to prove to be credulous as expected by the applicant. Therefore, this SA is without any merit and the same is hereby dismissed with costs.

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Announced in the open Tribunal (M.M. Dhonchak) Presiding Officer DRT-2, Chandigarh

Pradeep Kumar Goyal v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Pradeep Kumar Goyal v. Union Bank of India

Case brief

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What did the court decide?

What the court decided

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