Allowed

G Balaji Arunkumar v. State Bank of India

DRT27 Aug 2024SA/200/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the applicant's application to set aside an impugned Sale Notice and the subsequent auction sale. The bank failed to affix the Possession Notice immediately, violated the requirement of a good faith valuation, and misrepresented facts regarding the auction confirmation to the Tribunal. Consequently, the sale was set aside, and the bank was directed to refund the

What did the court decide?

Sale held on 15.06.2023 set aside. Bank directed to refund entire sale consideration plus 4% interest to the auction purchaser.

G Balaji Arunkumar versus State Bank of India — Contract and Commercial Disputes | DRT (2024)

¶1

SA No.200/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 27^th DAY OF AUGUST, 2024

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No.200/2023

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G. Balaji Arunkumar, S/o. P. Gopal, No. 7/150, Main Road, Periyaoorseri, Vadipatti Taluk, Madurai. --- Applicant

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-Vs-

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The Authorized Officer, State Bank of India,

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Stressed Assets Recovery Branch, No. 8, Dr. Ambedkar Road, Vinayaga Nagar First Floor, Madurai – 625 020. --- 1^st Defendant Bank

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1. Santhana Gopalakrishnan, 3^rd Lane Mela Chetty Street, South Avani Moola Street, Madurai - 625 001. --- 2^nd Defendant/Auction Purchaser

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Appearance of Advocates: Mr. S. Suresh ---- Counsel for the Applicant Mr. P. Pethu Rajesh ---- Counsel for the 1^st Defendant Bank Mr. M. Senthil Kumar ---- Counsel for the 2^nd Defendant/Auction Purchaser

¶14

This SARFAESI Application was heard in the presence of Counsels for the Applicant and the 1^st Defendant Bank and Counsel for the 2^nd Defendant/Auction Purchaser and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

Page 1 of 15

SA No.200/2023

O R D E R

1 . This Application has been filed under Sec.17 of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to set aside impugned Sale Notice dated 11.05.2023 issued by the Defendant Bank and pass such further or orders as this Hon'ble Tribunal may be fit and proper in the circumstances of the case and thus render justice.

¶19

2 . The brief averments of the Application filed by the Applicant are as follows:-

¶20

The Applicant submitted that the Applicant is the principal borrower and one Mr. M. Kathirvel stood as guarantor for the credit facility availed by the Applicant. The Applicant availed credit facility namely SBF-CC Facility (Ac. No. 36018553620) to the tune of Rs. 24,00,000/- (Rupees Twenty Four Lakhs only) from the Defendant Bank on 11.08.2016, to develop his business activities and the Applicant also mortgaged the property which is morefully described in the impugned Sale Notice dated 11.05.2023 issued by the Defendant. The Applicant company was regular in repayment of the loan initially and due to the financial crunch on account of the existing market conditions, there were some defaults in repayment of the loan amounts.

¶21

In the meanwhile, the Defendant Bank issued a Demand Notice U/s. 13(2) of SARFAESI Act dated 31.07.2018 for a sum of Rs. 23,32,953/- as on 27.07.2018 and the Defendant Bank classified his account as NPA w.e.f. 07.07.2018. In continuance of the action, the Defendant Bank issued a Sale Notice and aggrieved against the same, the Applicant filed SA No. 603/2019 before this Hon'ble Tribunal and this Hon'ble Tribunal was pleased to pass an order of conditional stay in IA No. 2519/2019 in SA No. 603/2019. Due to heavy loss incurred in the business and the same was not complied with. The Defendant issued subsequent Sale Notice and the same was challenged before the Hon'ble High Court of Madras (Madurai Bench) in WP (MD) No. 8382/2022 and the same was closed. The said Sale Notice was challenged before this Hon'ble Tribunal in SA No. 253/2022 and the sale did not materialize due to the reason for want of bidders and the same is pending for adjudication.

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Page 2 of 15

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SA No.200/2023

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It is further submitted that the Defendant Bank issued the Impugned E-Auction Sale Notice dated 11.05.2023 under SARFAESI Act informed that the Defendant Bank has taken possession of the Landed property, in exercise of the powers conferred U/s. 13(4) of the SARFAESI Act, 2002 read with proviso to Rule 8 of the Enforcement rule for a sum of Rs. 43,81,1 06/- as on 09.05.2023. The sale is scheduled to be fixed on 15.06.2023 for a reserve price of Rs. 29,00,000/-. The Applicant further submitted that the upset price fixed by the Defendant Bank is very low. The value of the mortgaged property is more value than the outstanding amount. The action of the Defendant Bank wholly is illegal and arbitrary. The Defendant Bank is also violating the law with regard to equitable mortgage created on the property of the Applicant. The Defendant Bank has not properly calculated the interest.

¶25

It is further submitted that the Defendant Bank has undervalued the property and brought the same for sale which is against the principles of natural justice. The Defendant has not obtained fresh valuation report before bringing the property for sale as per the rules and the undervaluation of the impugned e-auction Sale Notice dated 11.05.23 is liable to be set aside. The Petitioner is taking bonafide steps to repay the loan amount because of the financial crunch; the loan could not be repaid. The Applicant may be permitted to take additional grounds at the time of final hearing. Therefore, the Applicant approaches this Hon'ble Tribunal by filing this present Application for appropriate relief for the following among other -

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Main grounds:-

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The impugned auction Sale Notice dated 11.05.2023 is illegal, arbitrary and in violation of provisions of the SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002 and hence, the same is liable to be set aside as null and void.

¶28

The Defendant Bank is denying the right of the Applicant to redeem his property despite the fact that the Petitioner is willing to repay part of the outstanding amount in respect of the properties mentioned in

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Page 3 of 15

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SA No.200/2023

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the impugned e-auction Sale Notice and hence, the impugned Sale Notice dated 11.05.2023 is liable to be set aside.

¶32

The Defendant Bank ought to have considered the request of the Applicant to redeem his properties mortgaged with the bank on payment of the part of the outstanding amount and by denying the same; the Applicant is deprived of his right to property guaranteed under Art. 300(A) of the Constitution of India.

¶33

The properties mortgaged with the Defendant Bank has not been valued properly in accordance with law and the impugned Sale Notice does not contain reserve price for the mortgaged property and hence, the impugned Sale Notice dated 11.05.2023 is liable to be set aside as null and void.

¶34

SCHEDULE OF PROPERTIES

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Residential land and building measuring to an extent of 2050 sq.ft. comprised in Resurvey No. 130/10A (Old), 130/10C (New) Town Survey no. 81, Ward No. 22, Assessment Nos. 137208 @ 314016, Door Nos. 57 & 57/1 at Ayyanar Kovil Street, Kochadai Village, Virattipathu Hamlet, Madurai South Taluk, Madurai District within territorial jurisdiction of the Arasaradi Sub-Registration District and Madurai South Registration District.

¶36

The Applicant has submitted the following List of documents in support of his claim in the SA, which are as follows:

¶37

S.No.	Date	Description of documents
1.	31.07.2018	Demand Notice
2.	11.05.2023	Impugned Sale Notice

¶38

3 . On the other hand, the Counsel for the 1^st Defendant Bank appeared before this Tribunal and filed Vakalat, Written Arguments and Typeset in which the bank has submitted that the Applicant engaged in Civil Contract Business, approached one of the Applicant Bank namely Alanganallur

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Page 4 of 15

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SA No.200/2023

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Branch and availed a Cash Credit Facility to the tune of Rs. 24,00,000/- on 19.08.2016. One Mr. Kathirvel stood as a Guarantor and offered his property as collateral security to the Bank by executing the Registered Deposit of Title Deed dated 18.08.2016, deposited the title deed and created a Registered mortgage in respect of the Schedule mentioned property. After availing the loan the borrower and the guarantor failed to service the same properly and the loan account become NPA on 07.07.2018. Following are the steps taken under the SARFAESI Act:-

¶42

Demand Notice :- Issued on 31.07.2018 to the borrower and the Guarantor and the same was acknowledged. Admittedly, no reply was given to the Demand Notice.

¶43

Possession Notice :- Issued on 13.11.2018 to the borrower and the Guarantor and the same was acknowledged. Copy of the said notice is affixed on the mortgaged premise on the same day. Paper Publication made in "The New Indian Express English and Dinathanthi Tamil Daily Newspaper on 15.11.2018.

¶44

Sale Notice :- Issued on 11.05.2023 to the borrower and the guarantor and the same was acknowledged. Copy of the said notice is affixed on the mortgaged premise on the same day. Paper Publication given in "The New Indian Express English and Dhinamani Tamil Daily Newspaper on 12.05.2023.

¶45

SARFAESI Application challenging the 1^st Sale Notice dated 17.11.2019 challenged by filing SA No. 603 of 2019. Though, interim orders were passed in the said Application, the Applicant failed to comply the same. * Challenging the 2^nd Sale Notice dated 23.03.2022, the Applicant filed a Writ Petition before the Hon'ble Madurai bench of Madras High Court in WP (MD) No.8382 of 2022 and obtained conditional order, but failed to comply the same.

¶46

The impugned order in the present SA is the 3^rd Sale Notice. Even in the present SA, the Applicant failed to comply with the interim orders as

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Page 5 of 15

¶48

SA No.200/2023

¶49

directed by this Hon'ble Court. Only, after ascertaining the non-compliance of the interim order and further default clause in the said interim order passed by this Hon'ble Tribunal, the sale happened on the date of the auction was confirmed in favour of the 2^nd Defendant the H1 bidder in the E-Auction.

¶50

At present the property was sold out in the E-Auction and the 2^nd Defendant had bided the property. Right of the bidder is now accrued. As per the judgment of the Hon'ble Apex Court in Civil Appeal Nos. 55425543 of 2023 reported in Celir LLP Vs Bafna Motors (Mumbai) Pvt Ltd and others

¶51

(i) The successful Auction Purchaser is having a vested right to obtain a certificate of Sale of the immovable Property

¶52

(ii) Right to redeem the property under the SARFAESI Act is available to the secured creditor to redeem the same only till the Auction notice is issued by the secured creditor and the said right extinguish at once the auction notice is issued.

¶53

In the present case the Applicant/Borrower had lost his right to redeem the property and the 2^nd Defendant/Auction Purchaser is having all his right to claim Sale Certificate.

¶54

Hence, it is therefore prayed that this Hon'ble Tribunal may be pleased to DISMISS the above SARFAESI Application with exemplary cost and thus render justice.

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Typed set of Papers filed by the 1^st Defendant Bank

¶56

S.No.	Date	Particulars
1	17.12.2019	Interim Orders passed in SA No.603 of 2019 by this Hon'ble Tribunal
2	31.07.2018	Demand Notice U/s. 13(2)with AD Cards
3	13.11.2018	Possession Notice with AD Cards
4	13.11.2018	Photograph showing affixture of the Possession Notice
5	15.11.2018	Paper Publication in Tamil Daily and in English dailyin respect of the Possession Notice

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Page 6 of 15

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SA No.200/2023

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6	11.05.2023	Sale Notice with AD Card
7	11.05.2023	Photograph showing affixture of Sale Notice
8	12.05.2023	Paper Publication in Tamil Daily and in English dailyin respect of the Sale Notice
9	14.11.2022	Order passed by the Hon'ble High Court of Madras (Madurai Bench)in WP(MD)No.8382 of 2022
10	09.02.2023	Valuation Report for the mortgaged property

¶60

Additional Typed set of Papers filed by the 1^st Defendant Bank

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S.No. Date Particulars 1 11.09.2016 CERSAI Report for the mortgaged property

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4. In this case, the 2^nd Defendant/Auction Purchaser has also appeared and filed his Reply Statement which are as follows:-

¶63

The Ld. Counsel for the 2^nd Defendant/Auction Purchaser has submitted that the Applicant is a borrower under the 1^st Defendant, having availed a Cash Credit Facility to the tune of Rs. 24,00,000/- (Rupees Twenty Four Lakhs only) from the 1^st Defendant Bank for his business purposes. The property more fully described in the Sale Notice has been mortgaged by the Applicant as security. Due to financial crunch on account of existing market conditions, the Applicant was not in a position to repay the debt properly and there is some default and the Bank had issued Demand Notice U/s. 13(2) of the SARFAESI Act to the Applicant mentioning the amount due as Rs. 23,32,953/- and the account was classified as Non Performing Assets on 07.07.2018. Subsequently, the 1^st Defendant Bank has issued Sale Notice and the Applicant herein has filed SA No. 603 of 2019 on the file of this Hon'ble Tribunal and a conditional stay order was passed in IA No. 2510/2019 by this Hon'ble Tribunal. The Applicant was not able to obey the conditional stay order passed by this Hon'ble Tribunal. The Applicant has also challenged subsequent Sale Notices by filing a Writ Petition in WP (MD) No.8382 of 2022 before the Hon'ble High Court, Madurai Bench, and the same was closed. Another Sale Notice was also issued and the same was also challenged by the Applicant in SA No. 253/2022 and the same is pending.

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Page 7 of 15

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SA No.200/2023

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Save those that are herein after expressly admitted, all the other allegations made in the Application are hereby denied as incorrect and misleading and the Applicant is put to strict proof of the same. The present Application is not maintainable either in law or on facts. The present Application is barred by limitation.

¶67

This Defendant submitted that the Applicant appears to have earlier filed SA No. 603/2019 and SA No. 253/2022 challenging the earlier Sale Notices but he has not come forward to deposit the conditional stay order amount as directed by this Hon'ble Tribunal. Hence, the Applicant is not having any right to challenge the Sale Notice. This Defendant submitted that the Applicant has not chosen to challenge the Possession Notice. The Applicant has not chosen to send any objections/representation to the Demand Notice issued by the 1^st Defendant. Hence, the Applicant is not having any right to challenge the consequential Sale Notice.

¶68

It is further submitted that the Applicant's loan account was classified as NPA as early as on 07.07.2018. Despite lapse of more than five years, the Applicant has not chosen to pay any amount for settling the loan outstanding. The Applicant has not pointed out/pleaded any procedural irregularity in his Application. The 1^st Defendant Bank has filed the Valuation Report obtained before fixing the upset price in its typed set. The allegation that the value of the secured asset will be around Rs. 65,00,000/are all utter falsehood. The Applicant has also not produced any documents to demonstrate the value of the secured asset. The Applicant has repeatedly approached this Hon'ble Tribunal challenging the Sale Notices without making any payment. This will show the lack of bonafide on the part of the Applicant. The Applicant has failed to comply with the condition imposed by this Hon'ble Tribunal in IA No. 1010 of 2023 dated 09.06.2023.

¶69

It is further submitted that he had seen the newspaper publication regarding the sale of the property and he has approached the 1^st Defendant Bank, verified the property documents and participated in the e-auction held on 15.06.2023 by depositing the Earnest Money Deposit. This

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Page 8 of 15

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SA No.200/2023

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Defendant submitted that the 1^st Auction Notice was published by the 1^st Defendant Bank on 17.11.2019 itself and the Applicant has lost his right to redeem the property on 16.11.2019 itself as per section 13(8) of the SARFAESI Act. It is to be noted that the right to redeem the mortgaged property extinguishes as on the date of issuance of the Sale Notice. As such the Applicant is not having any legal right to redeem the property.

¶73

It is further submitted that even in the present SA No. 200 of 2023, the Hon'ble Tribunal was pleased to pass a conditional stay order on 09.06.2023 directing the Applicant to deposit Rs. 10,50,000/- on or before 07.07.2023 and another sum of Rs. 10,50,000/- on or before 04.08.2023 to the 1^st Defendant Bank. This Defendant submitted that the Applicant has failed to comply with the condition imposed by this Hon'ble Tribunal in IA No. 1010 of 2023 dated 09.06.2023. As such the Applicant lost his right to continue to prosecute the present Application. Further, the Hon'ble High Court, Madurai Bench in its order dated 07.08.2023 also not passed any order in favour of the Applicant with regard to merits of the case. This Defendant submitted that since this 2^nd Defendant has paid entire sale consideration, Sale Certificate was also issued in favour of this 2^nd Defendant on 26.07.2023 by the 1^st Defendant Bank, due to the interim order passed by this Hon'ble Tribunal, the Sale Certificate is not registered so far.

¶74

It is therefore, prayed that this Hon'ble Tribunal may be pleased to dismiss the above SA with costs and thus render justice.

¶75

Typed set of Paper filed by the 2^nd Defendant

¶76

S.No.	Particulars
1	Sale Certificate issued in favour of Mr. Santhana
	Gopalakrishnan dated 26.07.2023

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Page 9 of 15

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SA No.200/2023

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5. ON THE BASIS OF ABOVE PLEADINGS THE POINT WHICH ARISES FOR CONSIDERATION IS:-

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WHETHER THE APPLICANT IS ENTITLED TO GET THE RELIEFS AS PRAYED FOR?

¶81

6 . Having heard the parties and after going through the entire documents available on the records, this Tribunal find that there is no dispute with regard to the availment of loan facilities and also no dispute in creation of equitable mortgage on the property of Applicant. The Defendant Bank contended that since the borrower failed to repay the loan amount that made the loan account as NPA on 07.07.2018. It is the contention of the counsel for the Defendant Bank that the Applicant after availing the above said loan facilities, has created an equitable mortgage of property but he failed to repay the outstanding loan dues regularly. Therefore, the Defendant Bank was constrained to issue Demand Notice dated 31.07.2018 U/s. 13(2) of SARFAESI Act. In the typed set of papers at page nos. 2 to 10, the Defendant Bank has produced the copies of AD Cards also. Thereafter, on 13.11.2018 the Defendant Bank had issued Possession Notice U/s. 13(4) of SARFAESI Act. I perused the documents filed by the Defendant Bank and at page nos. 11 to 16 of the typed set of papers, copies of AD Cards, photo copy showing the affixture of Possession Notice in the property and Paper Publication effected in both English and Tamil daily all are available.

¶82

However, on perusal of documents, I find that the Defendant Bank has submitted a photo copy of affixture of the Possession Notice dated 13.11.2018 at page no. 14 of typed set of papers, but the document produced by the Defendant Bank is not clear enough to verify the mandatory details, such as, on which property they had affixed, because in the document, the date is shown as "13.11.2019" whereas, the Possession Notice is issued on 13.11.2018, i.e. the Notice was pasted on the property one year after the issuance of Possession Notice. Hence, it is established that the Defendant Bank has failed to affix the photo copy of Possession Notice in the conspicuous part of the Schedule mentioned property as

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Page 10 of 15

¶84

SA No.200/2023

¶85

mandated in the Rule 8 (1) of Security Interest (Enforcement) Rules, 2002. Hence, this point is decided in favour of the Applicant.

¶86

Thereafter, the Defendant Bank had issued Sale Notice on 11.05.2023 Under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 for a sum of Rs. 43,81,106/-. I perused the documents filed by the Defendant Bank and at page nos. 17 to 24 of the typed set of papers, copies of AD Cards, photo copy showing the affixture of Sale Notice in the property and Paper Publication effected in both English and Tamil daily all are available.

¶87

The Applicant has further alleged that the Defendant Bank has not valued the property in accordance with the law and the impugned Sale Notice does not contain the Reserve Price for the mortgaged property. I perused the documents filed by the Defendant Bank and I find that the Valuation Report has been filed by the Defendant Bank which is available at page nos. 29 to 42 and I perused the Valuation Report and find that the Guideline value of the property has been mentioned as Rs. 9,44,000/(including land & building) and open market value of Property is Rs. 28,82,000/- (including land & building) and the Distress Value has been fixed at Rs. 24,50,000/- (including land & building). This Valuation Report was prepared by the Registered Valuer namely, Lion Er. A. Arivazhagan, who inspect & valued the property on 09.02.2023. Thereafter, the Bank has issued Sale Notice on 11.05.2023, so it is well within the scheduled time. In the Sale Notice, the bank has fixed the Reserve Price of Rs. 29,00,000/-.

¶88

On the other hand, the Applicant has not filed any documentary evidence to prove his allegation that the Bank has not valued the property properly. However, the Bank has filed the CERSAI Report dated 11.09.2016 for the Mortgaged property vide Additional Typed Set dated 01.03.2024. In the top of the Report, it is mentioned as "The following Security Interest has been submitted by maker but is yet to be approved by the Checker". Further, I find that the property details mentioned in the CERSAI Report does not matching with the Property details given in the Sale Notice, i.e. in the sale notice the property details are given as follows:

¶89

Page 11 of 15

¶90

SA No.200/2023

¶91

"Residential land and building measuring to an extent of 2050 sq.ft. comprised in Resurvey No. 130/10A (Old), 130/10C (New) Town Survey no. 81, Ward No. 22, Assessment Nos. 137208 @ 314016, Door Nos. 57 & 57/1 at Ayyanar Kovil Street, Kochadai Village , Virattipathu Hamlet, Madurai South Taluk, Madurai District within territorial jurisdiction of the Arasaradi Sub-Registration District and Madurai South Registration District."

¶92

Whereas, in the CERSAI Report, the property details are given as "Residential Plot, Survey No. 130/10A, Plot No. 5, Built up area 2500 Sq.ft. Street No. 62/66, Village Viralipatti, Madurai 625501.

¶93

And, the evaluated price of asset (as on Security Interest Creation date within Bank) is given as Rs. 75,00,000/- as on 01.09.2016, whereas, the loan secured amount for the security interest is given as Rs. 24,00,000/- & loan account no. 36018553620 has been given correctly. However, in the Sale Notice, I find that the reserved price has been fixed only for Rs. 29,00,000/- on the basis of Valuation Report dated 09.02.2023 done by a Registered Valuer. Here, I find that the value of the property has been drastically reduced from Rs. 75,00,000/- to Rs. 29,00,000/-, i.e. Rs. 46,00,000/- has been reduced. Hence, the Valuation Report in question cannot be accepted as correct. The Bank has failed to prove that the valuation made by the above valuer is correct. Admittedly, the value of the Residential Land is increasing day by day, but the Bank has fixed the reserve price of Rs. 29,00,000/- only in the Sale Notice, and, hence, the property has been sold for a lesser price. Further, in the 1^st page of the said report Mr. Kathirvel. M is mentioned as a borrower, whereas, as per the Sale Notice & Other SARFAESI Notices, the name of the borrower is given as Mr. G. Balaji Arunkumar . Therefore, I find that the CERSAI Report submitted by the Bank is also not in order and cannot be accepted as correct. The Bank has failed to produce the genuine documents for adjudication. Hence, these issues are decided in favour of the Applicant.

¶94

Page 12 of 15

¶95

SA No.200/2023

¶96

On perusal of records, I find that in this case, the Tribunal has granted an interim order vide order dated 09.06.2023 and directed the Applicant to pay the 1^st installment of Rs. 10,50,000/- on 07.07.2023 and 2^nd installment he has to pay on or before 04.08.2023. I also find that on 10.07.2023, the Applicant has filed an Extension Petition in IA No. 1220/23, seeking extension of time for payment of 1^st Installment. And, on 10.07.2023 itself, the bank had informed before this Tribunal that they had confirmed the Sale held on 15.06.2023 and requested this Tribunal to grant time to file Counter in respect of an Extension Petition in IA No. 1220/23. However, in the Reply Statement, the 2^nd Defendant/Auction Purchaser submitted that

¶97

"he has paid a sum of Rs. 2,90,000/- as EMD and subsequently paid a sum of Rs. 4,50,000/-aggregating to Rs. 7,40,000/-. Subsequently, the 1^st Defendant Bank has given Sale Confirmation advice on 11.07.2023 and directed this Defendant to pay the balance amount of Rs. 22,10,000/- by its letter dated 25.07.2023…."

¶98

Here, I find that neither the Bank nor the Auction Purchaser has revealed the dates of payments made by the Auction Purchaser as EMD and the bank has given Sale Confirmation advice to the 2^nd Defendant only on 11.07.2023 , whereas, the counsel for the 1^st Defendant Bank was informed before the Court on 10.07.2023 that the sale was confirmed. So, I find that the Bank has given false statement before the Tribunal on 10.07.2023 that sale was confirmed. The Defendant Bank has failed to produce before the Tribunal the evidence that the Auction Purchaser has paid the entire sale amount within the stipulated period.

¶99

Moreover, while seeking time to file Counter for Extension Petition before this Tribunal, simultaneously, the bank has proceeded further and confirmed the Sale and Sale Certificate also issued to the 2^nd Defendant on 26.07.2023. But, when the Court held on 07.08.2023 again, the Bank Counsel again prayed time for filing Counter for Extension Petition. In the meantime, the Applicant filed a Writ Petition vide WP (MD) No. 18980 of 2023 before the Hon'ble High Court of Madras (Madurai Bench) and the

¶100

Page 13 of 15

¶101

SA No.200/2023

¶102

Hon'ble Court has closed the Writ Petition with the liberty preserved to the Petitioner to approach the Debts Recovery Tribunal and to prosecute the Application seeking extension of time. And, the Hon'ble Court has directed the Applicant to file an Application before the Debts Recovery Tribunal not to register the Sale Certificate and also directed the Defendant Bank that not to precipitate the matter further, till such time, the Petitioner moves an Application before the Debts Recovery Tribunal, for appropriate relief, in the manner known to law. And, hence, the Sale Certificate is not registered by the Bank.

¶103

The Applicant has no doubt being a defaulter is liable to pay the loan amount to the 1^st Defendant Bank and the Bank has been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of any Court. But, it shall not allow the Bank to sell the property of the Applicant without following the due process of law.

¶104

However, the Applicant has already made payment of Rs. 31,00,000/(Rupees Thirty One Lakhs only) on 31.07.2023 in compliance of the Order of Hon'ble High Court of Madras (Madurai Bench) and this Tribunal, while the property was sold only for a sum of Rs. 29.00 Lakhs (Rupees Twenty Nine Lakhs only).

¶105

Considering the entire facts and circumstances of the case, and in view of the above discussion, I find that though the Applicant has not given reply to the Demand Notice, the Bank has issued the Possession Notice without following the procedures as mentioned in the SARFAESI Act. Hence, Possession Notice issued by the Bank is not in accordance with the law. And the Sale Notice issued on the basis of said Possession Notice is also not sustainable in the eye of law. Therefore, this Tribunal holds that this case is maintainable and the Applicant is entitled to get the reliefs.

Page 14 of 15

SA No.200/2023

In the result,

(a) SA No.200/2023 is allowed as prayed for. Sale held on 15.06.2023 in pursuance to the sale notice dated 11.05.2023 is hereby set aside.

¶110

(b) The 1^st Defendant Bank is directed to refund the entire sale consideration amount paid by the Auction purchaser along with 4% of interest from the date of deposit of money to the Auction purchaser till the refund.

¶111

(c) The 1^st Defendant Bank is at liberty to initiate fresh action, against the Applicant, towards recovery of loan dues after adjustment of Rs. 31,00,000/- (Rupees Thirty One Lakhs only) paid by the Applicant in accordance with law.

¶112

Consequently, all pending IAs (if any) are also disposed of.

¶113

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 27^th August, 2024.

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Dictated & Corrected by me

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Typed by me

(D. Krishnaveni, PA)

¶123

Page 15 of 15

G Balaji Arunkumar v. State Bank of India

Case brief

What is this about?

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G Balaji Arunkumar v. State Bank of India

Case brief

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