Dismissed

Aparna Sar and Anr. v. South Indian Bank

DRT30 Jul 2024SA/310/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a SARFAESI application challenging a foreclosure sale because the applicant failed to implead the auction purchaser as required. The Tribunal also noted that contractual provisions protecting sureties do not apply when the creditor proceeds against security interests.

What did the court decide?

The SARFAESI application and connected IA were dismissed on contest; the interim restraint order regarding the sale was vacated.

Aparna Sar and Anr. versus South Indian Bank — Execution and Attachment | DRT (2024)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA

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JEEVANSUDHA BLDG. 9^TH FLOOR,

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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. 310 of 2022

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Aparna Sar, wife of Sudip Sar, residing at 14/3, Sarkular Road 2 Lane, Sibpur, Howrah – 711102. PAN NO: MMOPS0046J.

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Sudip Sar, son of Late Sasanka Sekhar Sar, residing at 14/3, Sarkular Road 2 Lane, Sibpur, Howrah – 711102.

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..............................Applicants.

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-Versus-

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South Indian Bank, Regional Office Kolkata having office at 20A, Mother Teresa Sarani, Park Street, Kolkata, West Bengal, Pin – 700016;

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South Indian Bank, having its branch at 2, Harazimull, Janaki Shah Road, Bandhaghat, Howrah, West Bengal, Pin – 711106; IFSC Code: SIBL0000156;

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Authorised Officer, South Indian Bank, having its branch at 2, Harazimull, Janaki Shah Road, Bandhaghat, Howrah, West Bengal, Pin – 711106;

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Patra Industries, Proprietor – Mr. Arnab Patra, Residing at 15/1/5, Nabin Senapati Lane, Khurut Road, Dist – Howrah, Pin – 711101.

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......................Defendants

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Present:

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For Applicant : Mr. Madhu Jana, Mr. Rahul Agarwala, Mr. Golam Zaky, Ld. Advocates

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For Respondents : Mr. Avishek Guha, Ms. Akansha Chopra, Ms. Ritika Pal, Ld. Advocates

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J U D G M E N T

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Delivered on 30^th July 2024

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The Sarfaesi Applicant has filed an application under Section 17 of the Sarfaesi Act, 2002 challenging the Sarfaesi action of the Respondent Bank under section 13(4) of the Sarfaesi Act, 2002. The applicant has also

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filed IA/2355/2023 challenging the sale notice dated 20/10/2023 and e – auction scheduled to be held on 04/12/2023.

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The Respondent bank has filed Affidavit in opposition to the SA and IA/2335/2023 and supplementary affidavit of IA/2355/2023 have been filed . The respondent bank has also filed IA/02/2024 for early hearing of IA/2355/2023. Both the SA and IA/2355/2023 were heard from both sides on 10/06/2024.

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IA/2355/2023 was heard on 04/12/2023. Ld. Advocate for the respondent bank submitted that the sale has been conducted by the respondent bank and the property has been sold to the highest bidder. The Respondent Bank has disclosed the name of the auction purchaser with copy to the Sarfaesi applicant. As the auction purchaser is required to be impleaded in SA, there was a direction to the respondent bank to disclose the name and address of the successful auction purchaser with sale transaction with copy to the Sarfaesi applicant. The respondent bank has filed supplementary affidavit disclosing the name and address of the auction purchaser as well as the sale transactions vide Annexure ‘A’ of the Supplementary affidavit dated 22/12/2023 but the Sarfaesi applicant has not impleaded the auction purchaser as a party to the SA.

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As per the decision of the Hon’ble Supreme Court in Celir LLP vs. Bafna Motors case, the auction purchaser has to be impleaded as a party once the sale has been conducted.

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Ld. Counsel for the Sarfaesi applicant has referred to Section 134, 135, 137 & 143 of the Indian Contract Act, 1872.

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Section 134 of the Indian Contract Act, 1872 speaks that:

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“Discharge of surety by release or discharge of principal debtor. - The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or

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omission of the creditor, the legal consequence of which is the discharge of the principal debtor.”

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Section 135 speaks that:

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“Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor – A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.”

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Section 137 speaks that:

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“Creditor’s forbearance to sue does not discharge surety. – Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the gurantee to the contrary, discharge the surety.”

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Section 143 speaks that:

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“Guarantee obtained by concealment, invaild. – Any gurantee which the creditor has obtained by means of keeping silence as to a material circumstances, is invalid.”

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Ld. Counsel for the Respondent Bank on the contrary submitted that both the principal borrower and the guarantors are equally liable in respect of all the loan amount to the creditor. There is no evidence that the respondent bank discharged the principal borrower from the liability. The respondent bank proceeded against the guarantor’s property.

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Section 2 (f) of the Sarfaesi Act, 2002 defines ‘Borrower’ as “any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution. Any person who becomes an Asset Reconstruction

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Company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance or who has raised funds through issue of debt securities.”

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Section 2(zf) defines Security Interests as “right, title or interest of any kind, other than those specified in Section 31, upon property created in favour of any secured creditor and includes –

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(i) any mortgage, charge, hypothecation, assignment or any right, title or interest or any kind, on tangible asset, retained by the secured creditor as an owner of the property, given on hire or financial lease or conditional sale or under any other contract which secures the obligation to pay any unpaid portion of the purchase price of the asset or an obligation incurred or creditor provided to enable the borrower to acquire the tangible asset; or

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(ii) such right, title or interest in any intangible asset or assignment or licence or such intangible asset which secures the obligation to pay any unpaid portion of the purchase price of the intangible asset or the obligation incurred or any credit provided to enable the borrower to acquire the intangible asset or licence of intangible asset.”

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So, the borrower includes the grantor’s security interests also. The contention of the Sarfaesi applicant is that before proceeding against the borrower, creditor cannot proceed against guarantors is not tenable. Sections 134, 135, 137 & 143 of the Indian Contract Act, 1872 speak that the creditor cannot proceed against the guarantor when the principal borrower is discharged. These sections are not applicable to this case.

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Besides, the SA cannot be decided in absence of the auction purchaser. In spite of order of this Tribunal dated 04/12/2023 and direction given to Sarfaesi applicant to implead the auction purchaser as a party to the SA, the sarfaesi applicant did not implead auction purchaser as a

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party. Therefore the SA and IA are liable to be dismissed. It is ordered as follows:

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O R D E R

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i) SA and IA are dismissed on contest against the respondent bank.

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ii) Interim order dated 04/12/2023 directing the respondent bank not to confirm the sale is vacated.

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iii) Consequently, other pending I.A.s, if any, are also disposed of.

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Copy of the Judgment/Final Order be uploaded in the

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Tribunal’s website.

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File is consigned to the Record Room.

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(Dictated to Stenographer, transcribed by him, corrected, signed and pronounced by me in the open Court on this the day 30^th July, 2024.

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(Ambuja Mohan Das)

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Presiding Officer

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	Order Sheet
Case No. SA 96 of 2021	Aparna Sar & Anr. VS. South Indian Bank & Ors.
Date of the Order	Order with Signature	Office action with date and dated Signature of Parties when necessary

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30/07/2024	Present: For Applicant : Mr. Madhu Jana, Mr. Rahul Agarwala, Mr. Golam Zaky, Ld. Advocates
	For Respondents : Mr.Avishek Guha, Ms. Akansha Chopra, Ms. Ritika Pal,Ld. Advocates
	Matter was heard in open Court on this the day of 10.06.2024.
	The detailed order in five pages annexed separately. The gist of the order is as follows: O R D E R
	i) SA and IA are dismissed on contest against the respondent bank.
	ii) Interim order dated 04/12/2023 directing the
	respondent bank not to confirm the sale is vacated.
	iii) Consequently, other pending I.A.s, if any, are also disposed of. Copy of the Judgment/Final Order be uploaded in the Tribunal’s website. File is consigned to the Record Room. (Dictated to Stenographer, transcribed by him, corrected, signed and pronounced by me in the open Court on this the day 30^thJuly, 2024)
	(Ambuja Mohan Das)
	Presiding Officer

Aparna Sar and Anr. v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Aparna Sar and Anr. v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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