The Debts Recovery Tribunal dismissed the applicant's security application challenging a bank's auction sale certificate and surplus refund letter. The court held the bank complied with SARFAESI procedures and the applicant could not quash the sale after the Supreme Court dismissed his SLP for default.
Application dismissed; order communicated to parties.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL. I AT HYDERABAD
DATED THIS THE 28TH DAY OF MAY. 2C.24
PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER
SA.No.2 r 1/2C22
Dilip Bhosale, S/o Vital Rao Bhosale, Rlo 7- 1J6, Lane No.S, Road No. 5ll&5F' Crossing, 1"t floor, Panchavati colony, Opp.Harivillu, Marrichertu Road, Manikonda, Hyderabad.
..Applicant
Versus
l.Kotak Mahindra Bank Ltd., q-3-1IO9/I lp2O2, t"t floor, Jewel Pavani Tower, Raj Bhavan Road, Somajiguda, Hyderabad-50O 082 Rep. by Authorized officer
..Respondents.
Counsel for the Applicant w Associates C^ounsel for the l"t Respond.en
Counsel for the Respoidents |RamaMurthy Kumar
S"-ee:fiAYzo'z{ I 1. This application is tilcd O, hH Respondent Bank ^ a"rrlr ndilr al s(r o t hn esanr**igiilEi*ffie dt.27.o7.2022 issued in favour of Respondcnts No.2&3 in respect of the apprication
to.No.211/2022
,
schedule property and also confirmation of sale dt.o3.o4.2olg pursuant to auction conducted on O3.o4.2olg and to declare the same as null and void.
The Applicant availed housing loan from the 1"t Respondent Bank to a tune of Rs.68,14,462/- and he created mortgage in respect of the schedule property towards security. Due to ill health, the Applicant could not repay the loan amounts and so the lstRespondent Bank initiated proceedings under SARFAES r Act,2oo2 against the scheduleproperty. The Applicant received only possession notice whereas demand notice was not served upon him. In Janua ry, 2or9, the bank officiars camc ro l.hc Appricant ancr crirccted him to vacate the schedulc propcrty rn r5 da1,s. on 29.0 r.,2o2rg, the bank officiars along with Advocate commissioner forcibry dispossessed the Applicant from the schedule property and took physical possession of the schedule property. So, the Appricant filed w.p.No.3 7o2 r rg challenging the actionof the l rr*cspondcnt Bank in taking physical possession of the schedule property.
SA.No.211/2022
Applicantdeposited Rs.3 lakhstou,ards soh by I)emand draft. on o8.o4.2019, wP.Nos.37o2l19 and 6013ltg were dismissed as infructuous in view of filing of SA lO9l2O19 by the applicant before this Hon'ble Tribunal. But a direction was given to the l"t Respondent Bank herein to re-deliver the possession of the schedule propert5r to the Applicant herein on payment of balance loo/o ol the amount as ordered by this 'tribunal in sA ro9l19 vide order dt.2g.03.2olg. Thereafter the lstRespondent herein filed Review petition No.3/2019 in W'P.No.3702119 sccking revicw of thc order for re-delivery of the schcdulc propcrty. Thc said rcvicr.r, pctition was partly allowed and while affirming the ordcrs passcd in w.p.No.3702l19 and confirming that the balance 10% shall also be paid by the Applicant, the Hon,ble High court further directed the Bank to redeliver the propert5r on condition that the Appticant shall pay the instalments regularly before l2th of every month and directed the bank to deliver possession on payment of l"tinstalment on or before 12.os.2org. Thereafter the Applicant paid the rst instalment and requested the bank to deliver the possession vidc lctter clt. i 3.os.20lg. lstRespondent Bank endorsed on the said lettcr that ttrc llank preferred SLp before the I{on'ble Suprcmc c<>urt and will act according to thc dccision of the Hon'ble supreme court and thus possession was not delivered. The Applicant has not received any notice from the Hon,ble Supreme court. while the matter stood thus, the Applicant received letter dt. 02.o8,2022 from the lstRespondent Bank informing that it has issued sale certificate in favourof auction purchasers by receiving the balance sale consideration after disposal of SLp Dairy No.1g7 lollg pending beforc the lron'ble Supreme court and called upon the Applicant to takc back somc amountlying with the bank after adjusting the l,an liability our of the sale proceeds of Rs.1,49,00,01 l /- As per the s clear that the 1 "tRespondent Bank received at the time of auction and balance7soh of ofuia u- t was cted from the auction purchasers after di f fltnfTm+d ntly sale certificate was issued and r over to the e#
SA.No.211/2022
auction purchasers. The Applicant camc to know that slp Dy.No.I8710/19 was dismissed as infructuous on Lr.os.2o22 and, the Hon'ble Supreme court has observed that since sA 109l lg filed by the Applicant was dismissed for default on 16.07.2019 and no steps are taken by the Applicant for rcstoration, nothing survives in the SLP.
Though sA lo9ll9 was dismissed for default on t6.o7.2olg, the Applicant herein moved an application for restoration of the said SA vide MA 9912019 and the said MA was dismissed for default on 18.09.2019 and the Applicant filed MA t lg/19 to restore MA ggltg in sA log l 19 but the said MA was dismissed on merits on 13.11.2019. The applicant was unaware of these proceedings and he camc to knor,r, about thc said procccdings only after perusal of the orders of FIon'ble Supreme Court.
The mode and manner in which, auction was conducted on03.04.2o19 is illegal and against the provisions of SARFAESI Act, 2oo2. Respondents NO.2&3, auction purchasers of the schedule property have not paid 2soh of the bid amount within the mandatory period and joint bidding is not contemplated as per the provisions of SARFAESI Act and Rules. As the Applicant has complied with the interim order dt.28.03.2or9 in sA loglrg, thc sale shall not be confirmed and thc assumption of the lsrRespondent Bank that it can continue the sale process from the stage where it was stalled after disposal of sLP Dy.No. lBTroltg before the Hon,ble supreme court is based on conjectures and surmises and does not stand to the test of law. If the 1st Respondent Bank wanted to confirm the sale, it ought to have confirmed the sam stipulated time from 16.07.2O 19 when the SA 1 ismissed for default and it cannot take ,n tffa:' fr ,n;ffii"rrrtJ er dt.1 1 .O5.2O22 passed by the Hon'ble $irpreme ' .': court.'The .- (..t , ,,1.1 auctiiortji :? i: conducted- by the l"tRcspor-rdcnt llank is iiicSal anr d hir lr tlr'iiipr<;v.isi6ns ol Rulc 8&9 of the SARF-nl,lsI Rulcs. fdn,ll*rRc "tUapk.{:.A",# not obrainedany
SA.No.211/2022
consent from the Applicant while allowing the purchasers to pay Tsoh of the bid amount at such belated time which is beyond themandatory time prescribed under Rule 9 of the SARFAESI Rules, 2OO2. Hence the SA.
The lst llesp.ndcnt Ilank lilcd its Rcply Statement denying all the adverse allegations made in the sA. The contentions of the lsr Respondent Bank are that sA 109/2019 filed by the Applicant herein challenging the Auction sale Notice d,t.27.o3.20r9 was dismissed for default on 16.0r.2or9 anci thc Appricant fircd MA 991 19 to set aside the said dismissal order dt.r6.or.2org passed in SA rogl19 and the said MA was also dismissed for defaurt and another MA 11g/ 19 filed to set aside the dismissal order dt.1g.09.2olg passed in MA ggllg, was also dismissed by this Hon'bre tribunal. The Applicant herein has not challengcd thc saicr .rcicr passccl in MA I 1g/ 19. Aftcr a lapse of three years, thc prcscnt sA is rircd chalrenging the letter dt. o2.o8.2o22 which is issued by the 1"t Respondent Bank to the Applicant informing about the surplus amount lying in the Applicant,s account after adjusting the salc proceeds to the loan account and so the SA is not maintainablc.
As the Applicant committed defaurt in repayment of amounts due, the 1st Respondent Bank initiated proceedings under SARFAESI Act and issued demand notice, possession notice and also obtained warrant for taking physicar prsscssion of thc schedule property through advocate commissioner by following due process. In sA 109119, the Applicant herein admitted that demand notice was served on him. Aggrieved by the orders passed by_ the Hon,ble High court in W.p.No.3Z02l t9 P,the l "rRespondentBank prefcrrcd Rcvicw I)ctiti same was partly allowed and aggrieved with ffiame, ferred SLP before the Hon'ble Supreme rmed to the Applicant on 13.05.2019 and .o ascertain the details ^;,fl!I[q1.ryf,{;; of the SI".P Nos. 13 sposal of the SLp on
SA.No.211/2022
11.o5.2022. The auction purchascrs, Respondents NO.2&3 are husband and wifc and parl.icipatccl in thc bid as joint bidders and paid 25oh of the bid amount within the due time and also paid 75% of bid amount after dismissal of slp before the Hon'ble supreme court. The Applicant is not having any right to challenge the auction conducted on o3.o4.2o19 in respect of the schedule property as earlier SA 1o9l 19 which was filed challenging the Auction Notice dt.27.o3.2o19 was dismissed for default. Accordingly, the l"t Respondent Bank prayed to dismiss the SA.
Points No,(i) & (iit:-
- During the course of a the Applicant and Ld. Counsel for thc I &fl"t;{Apfiffrei their respective versions as statcd su
@,r,ffi99
SA.No.211/2022
"undoubtedly, public monea should. be recouered and recouery should be made expeditiously. But it d.oes not mean that the financialinstitutions which are concerned. only with the recouery of their loans, may be permitted. to behaue like property d.ealers and be permitted further to d"ispose of the seanred. asse/s in any unreasonable or arbitrary manner in flagrant uiolation of statutory prouisions.,,
Hc also rclicd on thc .jr-rclgcmcnt <>f IIon,blr: Iligh court ol Odisa reported in AIR 2OO9 Orissa l)agc l47,u,hercin it is held that
"It is held that uhen the statute prouides for a particular procedure, the authority has to follow the same and it cannot be permitted to act in contrauention of the same and. to uncontrouerted legal position that where a statute requires to d"o a certain thing in a certain way, the thing must be one in that wag or not at all".
Thc Applicanr also rcricd on anothcr jucrgcmcnl of Flon,blc Supreme court between vasu p. Shctty vs. I-lotcl vandana palace in Civil Appeal No.4679 l2ot4 in sr,p(civil) No.35 168 l2o1 1 wherein it is held in Para 13 that:
6 It is hel, @ruon rt that, as held in the case of * case of Rajiu SubramanAan, giues a free hand to the , for the enforcing the seanred interest
SA.No.211/2022
without the interuention of court or Tribunal. But such enforcement should be strictly in conformity with the prouisionsof the SARI"AIiSI Act, 2002. That the prouision contained. in Section 13(8) of the SARFAESI Act,2002 is specificatlg for the protection of th-e borrowers in as much as, ownership of the secured. asse/s is a constitutional right uested. in the borrowers and protected. under Article 300A of the Constitution of Ind.ia. Therefore, the seanred creditor QS a truslee of the secured. assef cannot d,eal with the same in ang manner it tikes and. such an asset can be disposed of only in the manner prescribed. in the SARFAES/ Acl, 2002."
13' The undisputed facts of the case are that the Applicant availed housing loan from the lstRespondent Bank and thereafter he committed default in repayment of the dues. So, the l"tRespondent Bank initiated proceedings under the SARFAESI Act by issuing demand notice and posscssion notice ancl sale notice to the Applicant. When the lstRespondent Bank has initiated proceedings for taking physical possession of the schedule property, the Applicant herein filed w.p.No.3zo2l19 before the Hon,ble High court of Telangana. Thercaftcr w'hcn thc l.t Rcspondcnt Bank issued sale notice for conducting auc[ion of t.hc s<;hcdulc property, the Applicant filed WP.No'6078/ 19 challenging the said sale notice. The Applicant also filed sA rogr2org, challenging the Auction Notice dt.27.o3.2019 issued by the 1st Respondent Bank, before this Tribunal and this Tribunal was pleased to pass interim order directing the lst Respondent Bank to proceed with the auction of the schedule property but not to confirm the sale subject to deposit of l5o/o of outstanding dues in two i 1"t instalment of 5% shall be paid within o"" *rfk;tt\6TfiSq$naid within two weeks thereafter. The npp$k hcrcirffia= n";th\rmpried with the said r ''['""lment'vide order conditionar '''-:l1S FfliilftY ltff dt.08.04.2019, tne uf,fihle r{igh co".[ti"posfrfw.p.No.607 8l rg and
SA.No.211/2022
w.P.No.37o2llg with a direction to the lstRespondent Bank to redeliver the possession of the scheduleproperty to the petitioner therein if the Applicant herein complies with the second part of the conditional order passeci by this Tribunal in SA logllg. challenging the said order dt.0g.04.20rg passed in the writ petitions, the lstRespondent bank I'iled Review petition No.3/ 2019 and the same was partly allowed by the Hon'ble High Court of Telangana vide order dt'30'04'2019 by modifying thc earlier order passed and directed the Petitioner Bank to put the Respondent back into possession, subject to the Respondent i.e. Appricant herein making payments of the future monthly instalments regularly and the l"tinstalment shall be paid on or before 12th ffi&y, 20rg. challenging the said review order, the lsrResponclent Rank hcrcin prclerred s,,p Nos.1 3241 & 13242l2olg before the l.ron'brc Suprcmc court and the said slps are dismissed as infructuous vide ordcr dt.rr.os.2022. In the said order dt.11 .O5.2022, the l{on,ble Apex court observed that SA logllg filed by the Applicant herein v'as dismisscd for defaurt on 16.07.2or9 and no steps were taken by the Appricant for its restoration. It is also further observed that on o3.or.2olg, the Hon,bre Supreme court granted interim rerief to the petitioner and directed the parties to maintain statusquo.
SA.No.2L1/2022
present SA, the Applicanl. cannot qucsl.ion the validity or otherwise of the steps initiated by the 1st Respondent Bank for conducting auction of the schedule propertv. Now the Applicant cannot contend that he has not received demancl notice, possession notice and auction notice issued by the 1"t Respondent Bank and that they are not legal and valid.
- The main challcnge in thc present sA is regarding the issuance of Sale ccrtificate by thc 1sr Rcspondenl Irank, in lavour of Respondents No.2&3 who arc aucr.ir>n purchascrs, subsequent to the dismissal of SLP by the Hon'ble Supreme court and also the payments made by the Respondents No.2&3 towards 7so/o of the bid amount.
SA.No.211/2022
herein, it is clear that the said sale certificate was issued by the 1st Respondent Bank in favour of Respondents No.2&3 on 27.o2.2022 and it is also clear that balance Tsoh of the bid amount was paid by the Respondents No.2&3 by r4.o7.2022 i.e. within the time extendcd by thc l "rRcsponclcnt Ilank. so, 7s(h, of the sale consideration was paid by the Respondents No.2&3 within three months from the date of confirmations of the sale by the l.t Respondent Bank after dismissal of the sl.ps by the Hon,ble Supreme Court. The question of confirmation of sale conducted on o3.o4-2o19 does not arise tilr thc disposal of SLps in view of statusquo order passed by the Hon'ble supreme court in the sLps filed by the l"tRespondent Bank herein. A perusal of the retter dt.o2.08.2022, which is bcing challengcd in the present SA by the Applicant, makes it clcar l.hat thc said lcttcr was adclressed to the Applicant herein by thc I "tlle sponclcnL I3ank intimating that in the auction conducted on o3.o4.2otg, Respondents No.2&3 became successful bidders and the sale could not be confirmed due to the pendency of SLps before the Hon,ble Supreme court and that the Bank has received the entirc sare consicreration of Rs. r,4g,oo,orrf _ in the auction of the schedule property and the same was adjusted towards theloan account of the Applicant and certificate of sale was issued in favour of auction purchasers and possession of the schedule property was also delivcrcd to the auction purchasers. It is further informcd Lo .hc Appricant that aftcr acrjusting the sale proceeds to the loan account, some surplus amount is lying in the account of the Applicant which needs to be claimed by the Applicant. So the said letter was issued only for payment of surplus amount to the Applicant herein. There is no illegality or irregularity on the part of the lstRespondent Bank in issuing tbe said letter to the Applicant. The Applicant is entitled lus amount out of the sale proceeds of the sch iving the said letter by thc Applicant canno tion for filing the prescnl SA. 2 I ilAY mzi
1f
SA,No.211/2022
Point No.(iil:-
transcibed' bv her, corrected, signed and pronounced by me in the open court on thi.s the 2Eh '*ryrt:ffr:;)#f;f
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3 issues framed by the court
Whether the Applicant is entitled to challenge the sale certificate issued by the Bank in favour of auction purchasers subsequent to the dismissal of SLP.
Whether the Applicant is entitled to challenge the bank letter intimating surplus amount after adjusting sale proceeds.
Whether the auction conducted by the Bank followed the procedure laid down under the SARFAESI Act and Rules.
Colour shows how this judgement treated each authority
Ram Kishun and others Vs. State of U.P. & othersRelied on¶48
Ram Kishun and others Vs. State of U.P. & others, Civil Appeal No.6204/2009
AIR 2009 Orissa Page 147Relied on¶50
Vasu P. Shetty vs. Hotel Vandana PalaceRelied on¶52
Vasu P. Shetty vs. Hotel Vandana Palace, Civil Appeal No.4679/2014
Raju Subramaniam caseReferred¶52
3 provisions across 2 enactments
Dilip Bhosale
Kotak Mahindra Bank Ltd.
M. Raj Heerekar
Smt. Rajini Heerekar
Gumjadi Gopichand
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
