Allowed

Shawkat Ahmad Naikoo v. Jammu and Kashmir Bank Limited

DRT25 Apr 2024SA/119/2024

Case brief

AI extract

What is this about?

In this Securitization Application, the Debts Recovery Tribunal set aside an auction of a secured asset conducted by the Respondent Bank under SARFAESI proceedings. The Tribunal held that the sale was vitiated as the Court stayed the confirmation of the auction, preventing the purchaser from depositing the full consideration.

What did the court decide?

Auction set aside; bank directed to refund Rs.34,26,750 to auction purchaser.

Shawkat Ahmad Naikoo versus Jammu and Kashmir Bank Limited — Company and Corporate | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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SA/119/2024 SHAWKAT AHMAD NAIKOO Vs JAMMU AND KASHMIR BANK LIMITED

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25.04.2024 Item No.81

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Present: Sh. Sahil Khunger, Counsel for the Applicant.

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Sh. Vivek Verma, Counsel for respondent bank.

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Shawkat Ahmad Naikoo and another (Applicants) have filed this Securitization Application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against the Jammu and Kashmir Bank Limited and others (Respondents).

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In the year 2017 applicant No.1 executed loan documents for Rs.13.00 Lacs. Applicant No.2 was the guarantor. Applicant No.2 had created security interest in respect of 5K-18M of land in favor of the respondent bank. Since, applicants made default in the repayment of the loan, the Bank initiated the SARFAESI proceedings and issued notices under Section 13(2) followed by 13(4). The Secured asset was put up for auction. This deserves to be mentioned that whereas, the notice under Section 13(2) was for Rs.24.13 Lacs; the reserve price of the secured asset was fixed at Rs.63.07 Lacs. Ultimately A.O. got the highest bid of the secured asset for Rs.1.37 Crores on 22.03.2024. Applicant had challenged the sale notice in this SA. On 21.03.2024, this Tribunal passed the order that in case the applicant deposits Rs.3.00 Lacs by 22.03.2024 and Rs.5.00 Lacs by 01.04.2024 and the remaining sum on or before 15.04.2024 and in case bank receives any bid, the bank would not confirm the auction till 15.04.2024. However, on 12.04.2024 this time was extended up to 22.04.2024 and again to 23.04.2024. Applicant duly deposited the remaining sum by 23.04.2024. This also deserves to be mention that auction purchaser had deposited Rs.34,26,750/- i.e. 25 percent of the sale consideration. On account of the fact, that the confirmation was stayed by this Tribunal, it appears that auction purchaser did not deposit the remaining payment.

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Mr. Khunger, Counsel for the applicant argues that the bank has not fixed the reserve price of the property properly. To buttress his argument counsel for the applicant has argued that the very circumstance that the bank has fixed the reserve price for 63.00 Lacs and the highest bid was for Rs.1.37 Crores shows that bank did not value the property properly.

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On the other hand Mr. Verma, counsel for the respondent bank disputes this fact. He states that the valuer of the bank has given the value of Rs.63.00 Lacs. Be that as it may, this deserves to be mentioned that the amount due from the applicant was Rs.24.13 Lacs. In these circumstances, the bank should have also taken into consideration as to how portion of the secured asset should be sold. The bank should not have sold the whole of the secured asset.

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In view of this, I hereby set aside the auction. It is hereby ordered that bank would refund Rs.34,26,750/- to the auction purchaser. Applicant undertakes to deposit Rs.35.000/- as lumsum interest within 3 days. On the said sum of Rs.34,26,750/being deposited by the applicant, Bank would also pay the same to the auction purchaser alongwith the Rs.34,26,750/- deposited by the auction purchaser. With these observations the SA stands disposed of.

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File be consigned to record room after due compliance.

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Pronounced in open Court Dated: 25.04.2024 PANKAJ

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(A S Narang) Presiding Officer DRT-I, Chandigarh

Shawkat Ahmad Naikoo v. Jammu and Kashmir Bank Limited

Case brief

What is this about?

What did the court decide?

Shawkat Ahmad Naikoo v. Jammu and Kashmir Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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