Allowed

Ms Shirin Foods Limited and Others v. State Bank of India

DRT8 Jun 2023SA/63/2022

Case brief

AI extract

What is this about?

The Tribunal set aside a sale of secured assets by the Respondent Bank as the notice served to the borrower was less than the mandatory 15 days. The court ordered the refund of sale proceeds to the purchaser with interest and dismissed the bank's objection to the stay application.

What did the court decide?

The sale notice and sale were set aside; respondent bank directed to refund Rs. 2,59,00,000 with 9% interest to the purchaser within 15 days.

Ms Shirin Foods Limited and Others versus State Bank of… — Execution and Attachment | DRT (2023)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA JEEVANSUDHA BLDG. 9^TH FLOOR, 42/C, J.L.NEHRU ROAD, KOLKATA – 700071

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BEFORE SHRI AMBUJA MOHAN DAS, PRESIDING OFFICER

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SA No. 63 of 2022

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M/s. Shirin Foods Ltd. Mouza-Amnaberia, on NH-6,P.S. Uluberia Dist.Howrah, West Bengal,Pin-711 315

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And also at

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116,Mezannine Floor Surya Kiran Building 19,KG Marg, Connaught Place, New Delhi-110 001.

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Najmu Sakib Qureshi, At B-6,Dev Tower, Kobar Danga More(M.G. Road), Tolly Ganj, Kolkata-700 104

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P.S. Thakurpukur.

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Smt. Khurshida Begam At B-6,Dev Tower, Kobar Danga More(M.G. Road), Tolly Ganj, Kolkata-700 104 P. S. Thakurpukur. - Applicants Vs. 1. Authorised Officer, State Bank of India Stressed Assets Recovery Branch (Retail) 23,Nagafgarh Road New Delhi-110 015

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State Bank of India Stressed Assets Recovery Branch(Retail) 23,Nagafgarh Road New Delhi-110 015

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Mr. Jitender Singh Bagga(S/o.Sh.Surinder Singh At Gajghanta, IBP Road, Minajpur Magra Hooghly, West Bengal-712 148.

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Respondents.

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Present:

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For Applicant: Mr. Samik Basu and Mr. Kausik Das, Ld. Counsels

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For Defendant : Mr. Anirban Pramanik and Ms. Ahana Rakshit Ld Counsels. For Purchaser: Mr. Debashis karmakar ,Syed Aurul Arefin,Mr. Rahul Singh, and Mr. S. Ojha, Ld. Counsels

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J U D G E M E N T

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Delivered on 8^th June, 2023.

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The Sarfaesi Applicant has challenged Sale Notice dated 12/01/2022 for e-auction sale on 27/01/2022 in the SA as well as IA/467 of 2022.

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The Auction Purchaser has filed the application being no. IA/1884/2022 to refund the sale consideration of Rs. 2,59,00,000/with interest on the sale consideration.

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The Sarfaesi Applicant has pleaded in their application that Applicant no. 1 is the Company and Applicant nos. 1 and 2 are the directors of the said Company. Respondent no. 2 has sanctioned term loan of Rs. 3 Crores in favour of the Company in June, 2013 for construction of processing plant but against the said term loan the Applicant has Received Rs. 235/- lac only and the Respondent Bank discontinued to pay the remaining loan amount. The said term loan account was classified as NPA on 23/01/2014 and demand notice was issued on 21/02/2014 demanding a sum of Rs. 4,30,30,009.80. the Applicant has contended that they have applied for restructuring of the loan account but the same was rejected by the Respondent bank. On 19/01/2015 the Respondent Bank has issued Possession Notice and affixed the same on the conspicuous part of the property as per the statutory procedures and rules. The Applicant has preferred SA being no 54 of 2015 and the said SA was dismissed for non-prosecution by order dated 07/01/2020. Thereafter Respondent no. 2 offered OTS for settlement of Rs. 2,01,53,842.90. As per the terms of the OTS proposal 5% of the said amount has to be deposited by the Applicant. The Applicant has deposited Rs.25,00,000/- which has credited in the ‘No lien’ account’ but the said OTS proposal was rejected by the

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Respondent Bank. Thereafter, the Respondent Bank has issued sale notice under Rule 8(6) received by the Applicant in two addresses on 15/01/2022 and 22/01/2022 without giving statutory period of 15 days before sale of the secured property on 27/01/2022. The secured property was sold to Defendant no. 3. The Applicant has challenged the sale in the SA as well as in IA/467/2023 that no clear 15 days time was given from the receipt of notice till the date of sale for which the sale is infructuous and is liable to be set aside.

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The auction purchaser has filed IA/1884/2022 contending that as per the publication of sale notice dated 12/01/2022, the Applicant/ Auction Purchaser participated in the e auction and he was declared as Successful Bidder. The Applicant/Defendant no. 3 has deposited consideration amount of Rs.2,59,00,000/- but the Respondent Bank unable to complete the formalities of sale.

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Defendant no. 3 has come to know on 09/07/2022 that SA/63/2022 has been filed by the Applicant challenging action on various grounds. Defendant no. 3 has brought to the notice that the Authorised Officer of the Respondent Bank is suffering from an order of the Tribunal dated 20/07/2022 for which Respondent no. 2 is unable to register the Sale Deed. Respondent no. 3/Auction Purchaser has prayed for refund of the consideration amount of Rs.2,59,00,000/- with interest.

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The Respondent Bank has filed objection to the SA and IA and has contended that the Applicants defaulted to make payment for which the account was declared as NPA on 23/01/2014 for which the Respondent Bank has issued Demand Notice on 21/02/2014 and Possession Notice issued on 19/01/2015 and published in the two newspapers on 25/01/2015. The Applicant did not bother to pay to the Defendant Bank for which the Respondent Bank took possession of the

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vacant premises i.e. the secured property on 10/07/2015. The said action was challenged by the applicants and the applicants had filed an application being no. SA/54/2015 before this Tribunal and the said SA was dismissed for default on 07/01/2020. Thereafter, Defendant no. 2 came to know that on 21/08/2021 the Borrower has taken possession forcefully of the property at Mouza Amraberia, Village Uluberia, Dist.-Howrah, West Bengal and posted Guard at the property. The Respondent Bank was about to take action against the Applicant/Borrower but Applicant handed over the property and Respondent Bank had posted their own security guard. The Respondent bank made three attempts on 22/11/2021, 16/12/2021 and 27/01/2022 and the property sold on 27/01/2022 to Defendant no. 3.

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Ld. Advocate for the Bank has contended that there is no violation on the part of the Bank. The main issue in this matter whether the sale notice is valid or not?. The Sale Notice was issued on 07/01/2022 which was received by the Borrower on 15/01/2022 and 22/01/2022 and the sale was scheduled to be conducted on 27/01/2022. The Sale notice was published in two newspapers on 11/01/2022.

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Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 provides that

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“The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale “

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Rule 9(1) of the Security Interest (Enforcement) Rules, 2002 provides that

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“No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower.”

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If the first sale failed 15 days notice is required for any subsequent sale. In this case the Borrower has received notice on 15/01/2022 and sale was scheduled to be conducted on 27/01/2022. There is no clear 15 days notice. Hence, the sale notice as well as sale conducted on 27/01/2022 are vitiated and liable to be set aside. The order is as follows:

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Order

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i) Sale Notice dated 07/01/2022 and sale conducted on 27/01/2022 are set aside.

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ii) Respondent No 2 is directed to refund the sale consideration amount of Rs.2,59,00,000/- with interest @ 9% to Defendant no. 3 within 15 days.

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iii) SA/63/2022 is allowed on contest against the Respondents. IA/467 of 2022 is disposed of.

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iv) IA/1884/2022 is also allowed.

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Any other pending I.A.s are also disposed of.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s website.

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File is consigned to the Record Room.

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(Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 8^th June 2023.

(Ambuja Mohan Das)

Presiding Officer

	Order Sheet (continuation)
Case NO. S	A/63/2022 M/s Shirin Foods Ltd & ors vs. The A.O. State Bank of India & Anr.
Date of the Order	Order with Signature Office action with date and dated Signature of Parties when necessary
08.06.2023	Ld. Advocate Mr. Samik Basu and Mr. Kausik Das appeared for the Sarfaesi Applicant. Ld. Advocate Mr. Anirban Pramanik and Ms. Ahana Rakshit appeared for the Respondent Bank. Ld. Advocate Mr. Debashis karmakar ,Syed Aurul Arefin, Mr. Rahul Singh, and Mr. S. Ojha appeared for the Purchaser. Order
	i) Sale Notice dated 07/01/2022 and sale conducted on 27/01/2022 are set aside.
	ii) Respondent No 2 is directed to refund the sale consideration amount of Rs.2,59,00,000/- with interest @ 9% to Defendant no. 3 within 15 days.
	iii) SA/63/2022 is allowed on contest against the Respondents. IA/467 of 2022 is disposed of. iv) IA/1884/2022 is also allowed Any other pending I.A.s are also disposed of.
	(Dictated to P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 8^thJune 2023.
	(Ambuja Mohan Das) Presiding Officer

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Ms Shirin Foods Limited and Others v. State Bank of India

Case brief

What is this about?

What did the court decide?

Ms Shirin Foods Limited and Others v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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