Allowed

Sai Trading Co. v. State Bank of India

DRT12 Dec 2024SA/166/2022

Case brief

AI extract

What is this about?

Debt Recovery Tribunal allowed an application challenging an e-auction sale notice issued under the SARFAESI Act. The Tribunal held that the bank failed to prove service of notices to the specific borrower and failed to provide adequate justification for the sale price relative to the valuation, quashing the notices and directing a fresh process.

What did the court decide?

The notice under Section 13(2), notice under Section 13(4) and E-auction sale notice dated 17.10.2022 are quashed. The Respondent Bank is directed to take fresh steps as per law and refund the amount

Sai Trading Co. versus State Bank of India — Execution and Attachment | DRT (2024)

¶1

¶2

BEFORE THE DEBTS RECOVERY TRIBUNAL, CUTTACK PRESENT:- SHRI JITENDRA PRASAD SINGH PRESIDING OFFICER.

¶3

S.A. No.166 OF 2022

¶4

DATE OF DELIVERY OF ORDER: 12.12.2024

¶5

Sai Trading Co.,

¶6

At: Ambodala,

¶7

Dist: Rayagada, through

¶8

Appellant No.2

¶9

V. Srinivasa Rao, aged about 39 years, Son of V. Bhaskar Rao, Partner, Sai Trading Co.,

¶10

At: Ambodala, Dist: Rayagada,

¶11

… Applicants

¶12

-VERSUS-

¶13

State Bank of India, Stressed Assets Recovery Branch, Plot No. 778, 1^st floor, Saheed Nagar, Bhubaneswar

¶14

Authorized Officer, State Bank of India, Regional Business Office, Rayagada, Dist: Rayagada

¶15

State Bank of India, through Branch Manager, Ambadola Branch Ambodala, Dist: Rayagada

¶16

Santosh Kumar Patra, S/o. Lachhu Patra, Nuapada, Bhabani Patna Sadar, Bhawanipatna

¶17

Santosh Kumar Senapati S/o. Krushna Chandra Senapati, Hilltown, Lane No.6, Near Rajput tools, Sadar, Dist: Kalahandi

¶18

… Respondents Counsel for the Applicant:Shri S. S. Rao Counsel for the Respondents No.1 to 3:- Shri M. K. Mohapatra Counsel for the Respondents No.4 to 5:- Shri B. Mohapatra

¶19

¶20

JUDGEMENT

¶21

This is an Application under Section 17(1) of the Securitization and reconstrucion of Financial Assets and Enforcement of Security Interest Act, 2002, filed by the applicant challenging the notice under Section 13(4) of the SARFAESI Act and for quashing the sale notice and sale on 08.12.2022 and further consequential actions and for other reliefs.

¶22

The brief facts of the applicant case is that the sale of the property of the appellant No.2, through e-auction of the sale of the land and building situated at Vill: Ambadola, Dist- Rayagada Tahsil-Muniguda, P.S-Ambadola, Mouza- Ambadola, in Khata No.184/737, Plot No.1381/2112 Area Ac 0.30 dec & 1380/2113 Area Ac 0.50 dec, total Ac 0.80 dec, Kisham Gharabadi standing in the name of V.Srinivas Rao (appellant No.2) on the grounds that the sale of the said properties by the respondent No.1 Bank without adhering to the provisions of SARFAESI Act and without considering the ground realities, sold the property at thrown away price in flagrant violation of the Provisions of the SARFAESI Act and the rules made there under and violating the principles of natural justice. The appellant No.2 even now is willing to pay back the entire loan amount and seeks for the sale to be set aside. It is humbly submitted that the bank deliberately shown the appellant No.2 as a defaulter by not adjusting the rent of another premises, where the Bank itself is a tenant, in the loan account which was the understanding.

¶23

The sale notice was published in the newspapers having no circulation in the locality as a result the property worth more than 1.2 crores was sold at Rs.55,84,000/-.The appellant No.2 was carrying on business under name and style M/s. Sai Trading & Co., the appellant No.1. he availed cash credit loan account with a limit of Rs.24,90,000 (Rupees twenty four lakhs ninety thousand) from the State Bank of India on 09.03.2020 by mortgaging the subject property. The business was continuing without any hindrance since then till the year 2021.

¶24

¶25

The appellant No.1, a partnership firm, consisting of partners; appellant No.2 and his wife, who have availed a cash credit loan in the year 2020 for a limit of Rs.24,90,000 from the State Bank of India in Ambadola Branch at Rayagada District, Odisha, mortgaged the subject property which is a land and building thereon, belonging to appellant No.2 to secure the loan. The appellant No.1 Firm was dealing with the business regularly, was dealing and operating the bank account. The transactions from 01.04.2020 till 13.04.2020 would show that the appellants had deposited money leaving balance of Rs.8,45,236.05/-. By 16.04.2020 the balance was Rs.9,92,236.05/-. Similarly by end of April 2020 he had utilized Rs.24,80,054/-. The transactions continued but unfortunately the appellant No.2 fell sick due to the fact that he was affected by Covid-19 and was admitted in the hospital on 14.08.2020 and was discharged on 08.09.2020.The business of the appellant had to be closed due to ailment of appellant No.2 and there was family disturbance as proceedings between the appellant No.2 and his wife who was also a partner in the business have started in the court of Civil Judge Senior Division, Bissam Cuttack in MAT Case No. 17/2020.

¶26

When the matter stood thus bank, the respondent No.3, issued a notice under section 13(2) of the Securitization Act on 22.09.2021. Thereafter the loan account was transferred to respondent No.1 Branch for recovery. On 06.11.2021 the respondent No.1 again issued a notice indicating that the account became NPA on 05.09.2021, another notice was also given by the respondent No.1 on 14.03.2022 under Section 13(2) of the Act and therefore the entire amount needs to be paid.

¶27

The appellant No.2 owned another house at Ambadola which was let out to the State Bank of India only by which the bank agreed to pay rent of Rs.34,500/- per month being the rent for premises as well as rent for the Generator which was in amenity provided to the

¶28

¶29

premises. There was an understanding that the rent will be credited to the personal account of appellant No.2 and the bank shall be at liberty to appropriate the rent amount towards the loan account of appellant No.1.The bank had appropriated a sum of Rs.1,00,000/- from the personal account of the appellant No.2 towards loan account of appellant No.1 on 24.06.2021 and alter also have appropriated a sum of Rs.34,500/- each on 05.08.2021, 03.09.2021 and 14.10.2021. The bank however did not withdraw the amount thereafter.

¶30

The appellant No.2 who has no information about the developments in the meantime, had been to the bank respondent No.3 on 13.12.2022 to make payment of some amount towards the outstanding. He was informed that the account had been closed as the mortgaged property was already sold and the loan amount has been adjusted. He was also informed that the balance amount after adjusting the loan amount was kept under suspense account. When the appellant requested for the particulars was informed that the entire file was transferred to respondent NO.1 and he can have the informations from that office only. Immediately he rushed to Bhubaneswar and applied for particulars on 15.12.2022. He was supplied the relevant documents by the respondent No.1 on 17.12.2022.

¶31

From the document supplied in Annexure 10 series, annexure 10/4 the appellant No.2 could know that the newspaper publications both the Odia and English were made at Bhubaneswar Publications having no circulation in the place of the appellants. He could also know that from the letter that the possession was not yet given to the purchasers and there has been no registration of sale deeds in their favour. It could also be ascertained that the sale was made for a paultry amount of Rs.55,84,000/- whereas the value of the property which is a land and building would cost not less than 1.2 crores.

¶32

¶33

The sale of the land and building by the respondent bank as disclosed in the letter at Annexure-10 was without following the rules and the provisions of the securitization Act which mandates sale notice to be served on the borrower, guarantor and also in the locality. In the instance case there being no notice on the appellant No.2 and there being no publication in the locality is vitiated. The property was sold at a throw away price and there has been flagrant violation of the rules and the principles of natural justice.

¶34

The appellant could not have shown as a defaulter as there were regular payments and it is the bank who has not adjusted the rent amount after October 2021. Although the bank has declared the account as NPA on 05.09.2021 yet took the amount by way of adjustment thereafter on 14.10.2021. Issuing a notice and taking steps vindictively to deprive the property from the appellants is not in the interest of the appellants. As such the sale in annexure-10/4 is liable to be quashed. The appellant is willing to pay the entire loan outstanding immediately and it is the bank who has not accepted the amount stating that the account has been closed.

¶35

The respondent Bank has grossly violated the provisions as laid in Rule-9 and Rule 8 sub rule (6) of the Securitization Act that clearly states as follows;

¶36

Rule 9- “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”.

¶37

Further sub rule (6) of rule 8 states- “The authorized 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

¶38

¶39

language having sufficient circulation in the locality by setting out the terms of sale”.

¶40

But to the utter surprise, the respondent bank has invited tender from the public for auction of the subject property in newspapers that are being circulated in Bhubaneswar region which is far away from the locality of the appellants’ locality. Hence from this act of the respondent bank, it is quite clear that the bank has ill intention in selling the property of the appellant at such a throw away price in the market.

¶41

The impugned sale notice dt. 07.10.2022 and the sale dt. 08.12.2022, are contrary to law, in violation of mandatory provisions of Act, 2002 and Rules 2002.

¶42

There was no individual notice to the appellant No.2, who is the owner of the property while putting the same to auction. The Bank in their letter under annexure-10 had wrongly stated that the appellant No.2 had refused to receive notice. In the facts and circumstances, when he was not in the village, there is no question of refusal of the notice. The assertion by the bank if any is outcome of clear manipulation and cannot be accepted. The sale in the premises without notice is out and out illegal.

¶43

There is no material wroth acceptance to show that there was notice. Assuming that the wife of the appellant No.2 received notice, even then, it can be said that the firm-appellant No.1 had notice and certainly not appellant No.2, who is the owner of the property. This is in clear violation of the provisions of the Act and rules made thereunder.

¶44

The property is in village Ambadola, and in view of the location and construction made thereon the value of the same cannot be less than 1.2 crores. The sale of the property for a paultry amount of Rs.55,84,000 is too less and it is submitted that for the purpose of liquidation of loan of only 25 lakhs, sale of the property wroth Rs.1.2 crores that too throw away price of 55 lakhs is not only unjust

¶45

¶46

improper and cannot be sustained. No equities in favour of Bank exist in the back ground of the situations, as depriving the person in possession is not the object and purport of the provisions of SARFAESI Act.

¶47

The respondents have acted in violation of Rules 8 (1) (2), 8(5) (6) and of the Rules, 2002 should be restrained from proceeding further under the Act, 2002 or Rules 2002 made thereunder.

¶48

Notices were issued to the Respondent No.1 to 5 to show cause as to why the relief prayed for by the applicant be not granted. After receiving the notice, the Respondents No.1 to 2 appeared and filed their written statement and Respondents No.4 & 5 appeared and filed their written statement and written notes of submission.

¶49

The Respondents No.1 to 2 filed their counter affidavit contending that M/s. Sai Trading Co. taken the Cash Credit facility of Rs.24.90 Lakhs on dtd. 09.03.2010 through the applicants for running its business and the said applicant No.2 mortgaging his immovable properties on depositing the Original title deeds in favour of the Respondent-Bank as security and availed the said credit facility in favour of M/s. Sai Trading Co. After execution of security documents and creation of equitable mortgage M/s. Sai Trading Co. availed the aforesaid credit facility and operated the said loan account. Thereafter due to deliberate default of payment of loan dues the loan account became irregular and classified/declared as Non-Performing Assets (NPA) on dtd. 05.09.2021. Thereafter the RespondentBank finding no other alternative invoked the provisions of SARFAESI Act, 2002 by issuing Demand Notice dtd. 14.03.2022 to the applicants U/s. 13(2) of SARFAESI Act, 2002 and the Demand Notice was published in daily newspaper such as OdiaSambad and English-Business Standard on dt. 12.04.2022. As the borrower has failed to pay the demanded amount the Respondent-Bank as a secured creditor initiated steps for

¶50

¶51

enforcement of the secured assets and took Symbolic Possession on dtd. 03.08.2022 U/s. 13(4) of SARFAESI Act, 2002 and was published in daily newspaper as per the applicable provisions of law. The Respondent-Bank took further steps and finally issued the E-Auction/Sale notice dtd. 17.10.2022 of secured immovable mortgaged properties to the applicants and published the said E-auction/sale notice on dtd. 20.10.2022 in the daily news paper such as English-Business Standard and Odia-Sambad. The secured mortgaged property was successfully sold by E-auction/Sale dated. 25.11.2022 for Rs.55.84 lakhs and after payment of full auction amount by the auction purchasers the Sale Certificate issued by the Respondent Bank on dtd. 08.12.2022 in favour of the Auction purchasers. Finally the physical possession of secured mortgaged property handed over to the Auction purchasers & the Registration of Sale Deed of secured mortgaged property executed on dtd. 31.01.2022 by the Respondent-Bank in favour of the Auction purchaser.

¶52

Due to deliberate default of payment of loan dues the applicants loan account declared as NPA and thereafter the SARFAESI actions including the E-auction/Sale of the secured immovable mortgaged property has been done as per the SARFAESI Act, 2002.

¶53

The said notice was issued to the Applicant No.2 but those were returned unserved with postal endorsement “Refused” (RTS). Everything is in knowledge of the Applicant No.2, but intentionally he was not received the notices of the Respondent-Bank.

¶54

The Respondent-Bank transferred the stated amount from the personal account of the Applicant No.2 to the loan account when the loan account to be declared as NPA and there is balance in the personal account of the Applicant No.2.The Respondent-Bank has strictly followed the provisions of securitization Act by issuing the Sale Notice

¶55

¶56

to the borrower & guarantors, the Sale Notice on the Applicant returned unserved with postal endorsement “Refused-RTS”. Everything is in knowledge of the Applicant No.2, but intentionally he “refused” and was not received the sale notice of the RespondentBank. The Respondent-Bank also published the E-auction/Sale Notice in the Newspaper (English & Odia). The secured mortgaged property has been sold as per the valuation of the approved valuer. In the year 2018 the realizable value of the secured mortgaged property was Rs.35.55 lacs which was accepted by the borrower, whereas, in the year 2022 at the time of E- auction/Sale the realizable value of secured mortgaged property is Rs.55.34 Lacs. The Respondent-Bank has done the Securitization proceeding strictly as per the provisions of the SARFAESI Act & Rules 2002 by issuing the Sale notice to the borrower & guarantors and publish the E-auction/Sale notice in the newspaper as per the provisions of SARFAESI Act & Rules 2002.

¶57

On month prior to auction sale of the secured mortgaged property the notice was issued to the Applicant No.2 but that was retuned unserved as “the Applicant No.2 is always absent” which was endorsed by the postal department. The said notices for the applicant No.1 and the another partner was received by the wife of the Applicant No.2. The sale notice was published as per the provisions of the SARFAESI Act & Rules 2002.

¶58

The mortgaged property has been sold by E-auction/Sale as per the valuation of the approved valuer which is as per the provisions of SARFAESI Act & Rules 2002 .Due to the continuous default of payment of loan dues and closure of the business unit of the Applicant No.1 the Respondent-Bank declared the Cash Credit loan account as NPA and thereafter the Respondent-Bank initiated SARFAESI proceeding by issuing the Demand Notice U/s.13(2) &

¶59

¶60

taken Symbolic Possession U/s.13(4) of SARFAESI Act, 2002 on the secured mortgaged properties of the applicants. At last due to nonpayment of outstanding loan dues to close the loan account and to save the public money, the Respondent-Bank took steps for E- auction/Sale of the secured mortgaged property as per Rule 8 & 9 of SARFAESI Act, 2002 and finally sold in favour of the auction purchasers, the Respondent No.4 & 5 and after full payment of the auction bid amount by the auction purchasers, the Sale Certificate has been issued in their favour and the loan account of the Applicant No.1 has been closed after appropriation of the auction amount to the loan account, by the Respondent-Bank. Finally the physical possession of secured mortgaged property handed over to the Auction purchasers on dtd. 08.12.2022 & the Registration of Sale Deed of secured mortgaged property executed on dtd. 31.01.2023 by the Respondent-Bank in favour of the Auction purchasers but till date the said Regd. Sale Deed has not received by the RespondentBank. Hence there is nothing any illegality has been done by the Respondent-Bank by initiating the SARFASESI proceeding and auction sale of the secured mortgaged properties of the Applicant No.2 to save the public money.

¶61

The Respondents No.4 and 5 filed W.S.E, written noes of submission contending that the Respondents No. 4 & 5 came across the auction sale notice published by the respondent bank in newspaper on dtd 20.10.2022 of the immovable property described in the schedule property of the memorandum of appeal. The date of auction was fixed to 25.11.2022.

¶62

In the said auction the reserve price was fixed to Rs.55,34,000/and EMD amount was Rs.5,53,400/-. The respondent No.4 and 5 deposited the EMD amount in order to participate the auction. And when auction was held, respondent No.4 & 5 came up with highest bid of Rs.55,84,000/- and became successful bidder in the auction. Then

¶63

¶64

the respondent bank acknowledged the receipt of the sale price and handed over the delivery and possession of the said property.

¶65

The respondent No.4 & 5 were having no knowledge regarding the procedure followed by the respondent bank under the SARFAESI Act 2002. The respondent No.4 & 5 have already paid the whole sale price to the respondent bank by availing loan from another bank in order to purchase the said property and finally the physical possession of the secured mortgaged property was handed over to the respondent No. 4 & 5 on dtd 08.12.2022 and the registration of the sale deed of the said property was executed on 31.01.2023 and in the meantime registered sale deed has also been received.

¶66

Heard both the Counsels and perused the record.

¶67

On the perusal of the pleadings of the rival parties, the following issues arise for consideration.

¶68

(i) Whether the Bank has issued notice under Section 13(2) & 13(4) of SARFAESI Act to all the parties as per provisions of law? (ii) Whether the Bank has taken proper valuation of the property before putting the property into auction sale? (iii) Whether the bank has issued individual auction sale notice under Rule 8(6) & 9(1) of the Security Enforcement Rules 2002 as per provisions of law?

¶69

(iv) Whether the applicant is entitled to the reliefs as claimed?

¶70

Issue No.(i):- (i) Whether the Bank has issued notice under Section 13(2) & 13(4) of SARFAESI Act to all the parties as per provisions of law?

¶71

The contention of the applicant is that the Bank issued notice under Section 13(2) of Securitisation Act, which was received by the wife of the petitioner No.2 and no notice was there to the petitioner No.1, as he remained ill and out of station. In the said notice an amount of Rs.24,72,425/- was shown to be due. Further on

¶72

¶73

06.11.2021 notice from the Opp. Party No.1 that the account was migrated to them from the Opp. Party No.2, this notice was also served on the wife of the petitioner No.2 and not on the petitioner No.2. It is further submitted that again notice U/s 13(2) of Securitisation notice was given by the Opp. Party No.1 indicating outstanding of Rs.26,46,455.80. This notice was also served on the wife of the petitioner No.2 and not on the petitioner No.2. All the above notices were served on the wife of the appellant No.2 and not on the appellant No.2.

¶74

The contention of the Respondent Bank is that due to deliberate default of payment of loan dues the loan account became irregular and classified/declared as Non-Performing Assets (NPA) on dtd. 05.09.2021. Thereafter the Respondent-Bank finding no other alternative invoked the provisions of SARFAESI Act, 2002 by issued the Demand Notice dtd. 14.03.2022 to the applicants U/s. 13(2) of SARFAESI Act, 2002 and the Demand Notice was published in daily newspaper such as Odia-Sambad and English-Business Standard on dt. 12.04.2022. As the borrower has failed to pay the demanded amount the Respondent-Bank as a secured creditor initiated steps for enforcement of the secured assets and took Symbolic Possession on dtd. 03.08.2022 U/s. 13(4) of SARFAESI Act, 2002 and was published in daily newspaper as per the applicable provisions of law.

¶75

From the perusal of the record it is seen that the applicant has disputed with regard to receipt of the notice under Section 13(2) and 13(4) of SARFAESI Act, 2002. Though the Respondent Bank has contended that the notices under Section 13(2) and 13(4) have been served but no proof has been filed in this regard. From the perusal of the notices annexed to the SA application by the applicants it shows that the notices under Section 13(2) dated 22.09.2021 and 14/03/2022 have been issued to Smt. V. Geetanjali and not to Mr. V. Srinivas Rao. Respondent has not filed any proof regarding service of

¶76

¶77

notice under Section 13(2) to the applicant No.2. As such the contention of the applicants that notices under Section 13(2) and 13(4) have not been served to the applicant No.2 holds good. Accordingly Issue No.(i) is answered.

¶78

Issue No.(ii):- Whether the Bank has taken proper valuation of the property before putting the property into auction sale?

¶79

The contention of the applicant is that the property is in village Ambadola, and in view of the location and construction made thereon the value of the same cannot be less than 1.2 crores. The sale of the property for a poultry amount of Rs.55,84,000 is too less and it is submitted that for the purpose of liquidation of loan of only 25 lakhs, sale of the property wroth Rs.1.2 crores that too throw away price of 55 lakhs is not only unjust improper and cannot be sustained. No equities in favour of Bank exist in the back ground of the situations, as depriving the person in possession is not the object and purport of the provisions of SARFAESI Act.

¶80

The contention of the Respondent Bank is that the secured mortgaged property has been sold as per the valuation of the approved valuer. In the year 2018 the realizable value of the secured mortgaged property was Rs.35.55 lacs which was accepted by the borrower, whereas, in the year 2022 at the time of E-auction/Sale the realizable value of secured mortgaged property is Rs.55.34 Lacs.

¶81

From the perusal of the record it is seen that the Respondent Bank has filed the valuation report showing the value of the property along with the building dated 27.09.2022 i.e. market value Rs.61,53,000/-, realizable value Rs.55,34,000/- and distress value Rs.49,22,000/-. Respondent Bank has also filed valuation report of the land only dated 20.02.2020 which shows that the government value-Rs.16,56,000/-, fair market value – Rs.39,50,000/-, Realizable value-Rs.35,55,000/- and distress sale value – Rs.33,57,000/-.

¶82

¶83

The applicant has also filed valuation of the building valued by the Government at Rs.89,56,000/-. If land value Rs.16,56,000/- is taken into consideration the total value of the land and building is Rs.10512000/-. But the Respondent Bank has sold the property at Rs.55.84 Lacs which is much less than the present value of the property. As such it is proved that the Respondent Bank failed to prove that the Bank has taken proper valuation of the property before putting the property into auction sale. Accordingly issue No.(ii) is answered

¶84

Issue No.(iii):- Whether the bank has issued individual auction sale notice under Rule 8(6) & 9(1) of the Security Enforcement Rules 2002 as per provisions of law?

¶85

The contention of the applicant is that the Respondent Bank has grossly violated the provisions as laid in Rule 9 and Rule 8 sub-rule(6) of the Securitisation Act. It is further contended that there was no individual notice to the appellant No.2, who is the owner of the property while putting the same to auction. It is further contended that Notice was published in Bhubaneswar and not at village. No compliance of Rule 8 & 9.

¶86

The contention of the Respondent bank is that the Respondent Bank has strictly followed the provisions of Securitisation Act by issuing the sale notice to the borrower and guarantors, the sale notice on the applicant returned unserved with postal endorsement “Refused RTS”. Everything is in knowledge of the applicant No.2, but intentionally he “refused”.

¶87

Rule-8(6) of SARFAESI Rules, 2002 stipulates that- The Authorized 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 assets is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the form given in

¶88

¶89

Appendix IV-A to be published in two leading newspaper including one in vernacular language having wide circulation in the locality”

¶90

From the perusal of the record it is seen that notice under Rule 8(6) was issued to the applicant No.2 on 17/10/2022 fixing the date of auction sale on 25/11/2022 and the same was refused by the applicant No.2 on 25/10/2022 as is evident from the postal acknowledgement filed by the Respondent bank in his counter affidavit. It is evident from the Newspaper publication notices have been published in Jeypore edition which comes within the Rayagada locality As such, there is no violation of Rule 8(6). Applicant failed to prove that there is violation of Rule 8(6) by the Respondent Bank. Accordingly issue No.(iii) is answered.

¶91

Issue No.(iv):-Whether the applicant is entitled to the reliefs as claimed?

¶92

From the perusal of the record it is seen that after availing the credit facilities from the bank, the applicants did not adhere to the terms and conditions of the sanction and did not clear the amount despite several correspondences and request from the bank for which the said loan accounts of the applicant became NPA. Thereafter the Respondent Bank had initiated the actions against the applicant under the provisions of the SARFAESI Act. But the Respondent Bank failed to prove that the notices under Section 13(2) and 13(4) have been served on the applicant No.2. Further the Respondent Bank also failed to prove that the valuation of the property has been made properly.

¶93

Learned Counsel for the applicant also filed memo on dated 11/09/2023 and on 23/08/2023 stating that the Respondents No.4 and 5 have no interest in the property and we will accept whatever this Hon’ble Court may decide.

¶94

¶95

Respondent Bank filed reply to the aforesaid memo stating that everything is over, now at this stage the Respondent Bank cannot do anything on the memo filed by the Respondents No.4 and 5.

¶96

Applicant relied on the following decisions:-

¶97

(i) Judgement in the case of Swastik Agency -v- State Bank of India, By Hon’ble High Court of Orissa in W.P.(C) 7361 OF 2008 dt. 08.01.2009.

¶98

(ii) Judgment in the case of Bhikchand -versus- Shamabai Dhanraj Gugale in Civil Appeal no.5026 of 2023 dt. 14.05.2024 by Hon’ble Supreme Court of India.

¶99

(iii) W.P.(C) 3260 of 2023 dt. 07.02.2023 passed by Hon’ble High Court of Orissa.

¶100

(iv) IN THE SUPREME COURT OF INDIA CIVIL APPEAL NO.6843 OF 2023 (ARISING FROM SLP (C) No.16771/2018) in the matter of SURINDER PAL SINGH VERSUS VIJAYA BANK & ORS

¶101

Respondent Bank also relied on the following decision:-

¶102

Civil Appeal Nos. 5542-5543 of 2023 (SC) CELIR LIP -VERSUSBAFNA MOTORS (MUMBAI) PVT. LTD, & ORS.

¶103

In view of the aforesaid discussions made above, and the issues already answered in the preceding paragraphs and considering the facts and circumstances of the case and the decisions cited by the applicants and the Respondent bank and the material available on record, this Tribunal is of the view that the Respondent Bank failed to

¶104

¶105

prove its case and the applicant established its case against the Respondent Bank. Therefore, the instant SA bearing SA No.166/2022 is allowed and the notice under Section 13(2) dated 22.09.2021 and 14.03.2022, notice under Section 13(4) dated 03.08.2022 and E- auction sale notice dated 17.10.2022 published on 20.10.2022 being violative of the provisions enshrined in the SARFAESI Act are hereby quashed. Accordingly Issue No.(iv) is answered.

¶106

O R D E R

¶107

In the result, S.A. No.166 of 2022 is allowed in favour of the applicants declaring the notices under Section 13(2), and 13(4) of the SARFAESI Act so also the E-auction sale notice dated 17.10.2022 published on 20.10.2022 are hereby set aside. Respondent Bank is directed to take fresh steps as per law. It is also a fact that the auction purchaser is not interested in the matter and he is only interested in his money along with interest. Hence, Respondent Bank is further directed to refund the amount deposited by the auction purchaser along with accrued interest within 30 days from the date of this order.

¶108

Since the main SA is disposed of, hence all the IAs, pending, if any, stands disposed of and interim order, if any, stands vacated.

¶109

Let a copy of this order be supplied to the parties forthwith as per rules.

¶110

Let the file of SA No.166 of 2022 be consigned to the record room.

¶111

This order is dictated and corrected by me and pronounced in the open Court under my signature, this the 12^th day of December, 2024.

¶112

(Jitendra Prasad Singh) Presiding Officer.

¶113