Dismissed

D Sathiyanarayanan v. Hinduja Leyland Finance Limited

DRT20 Aug 2024SA/372/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the application filed by an unsuccessful auction bidder seeking to set aside the sale of the secured asset. The Tribunal held the application not maintainable because the applicant was neither a borrower nor a guarantor and could not establish that he was aggrieved by the measures initiated under Section 13(4) of the SARFAESI Act.

What did the court decide?

Application under Section 17(1) of SARFAESI Act dismissed as not maintainable.

D Sathiyanarayanan versus Hinduja Leyland Finance Limited — Banking and Recovery | DRT (2024)

SA No.372/2024

20.08.2024

M/s D. Sathiyanarayanan, Door No.17, Desai Street, Arni, Tiruvanamalai District – 632 301

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– Vs. –

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(i) The Authorised Officer, Hinduja Leyland Finance Limited, No.27 A, Developed Industrial Estate, Guindy, Chennai – 600 032;

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(ii) Mr. Ramalingam, Door No.69/1, BajanaiKovil Street, Kealayyampettai, Alliyabad, Kalambur (Post), Polur (Taluk), Thiruvanamalai District, Tamilnadu – 606 603;

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(iii) Mrs. Mahalakshmi R., Door No.69/1, BajanaiKovil Street, Kealayyampettai, Alliyabad, Kalambur (Post), Polur (Taluk), Thiruvanamalai District, Tamilnadu – 606 603;

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(iv) Mr. Chandrasekar V, Door No.69/1, BajanaiKovil Street, Kealayyampettai, Alliyabad, Kalambur (Post), Polur (Taluk), Thiruvanamalai District, Tamilnadu – 606 603;

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(v) Mrs. DharaniAnnamalai, Door No.69/1, BajanaiKovil Street, Kealayyampettai, Alliyabad, Kalambur (Post), Polur (Taluk), Thiruvanamalai District, Tamilnadu – 606 603;

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(vi) Mr. Suresh, No.1, Bharathiyar Street, Polur(Taluk), Thiruvanamalai District, Tamilnadu – 606 603;

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Applicant by : Ld. Counsel Shri. Sathish Notices to defendants dispensed with.

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Orders on maintainability

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The application under Section 17(1) of SARFAESI Act is filed by one of the unsuccessful bidders and he comes up with the prayer that the sale held on 12.06.2024 in pursuance of the sale notice dated 24.05.2024 be declared as null and void.

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Since the applicant is neither a borrower, nor a guarantor and having not acquired any interest in the proceedings initiated by the defendant bank, the Registry

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has put up this matter to be heard on the maintainability. The office had raised the following objections:

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“This SA is filed by 3^rd party bidder applicant to set aside the sale dated 12.06.2024 in pursuance of Sale Notice dated 24.05.2024. Registry has returned this SA to clarify as to how this prayer is maintainable? For that counsel has represented that applicant is the aggrieved party in the auction sale conducted on 12.06.2024.”

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This Tribunal directed the Registry to register the SA keeping open all the questions of maintainability and the limitation by an order dated 01.07.2024.

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Heard the Ld. Counsel Shri. Sathish for the applicant. He contends that this applicant cannot be termed as a total stranger to the transaction and the terminology employed under Section 17(1) of the SARFAESI Act, allows anybody to approach this Tribunal questioning the measures.

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5. He also relied on the ruling of Hon'ble Delhi High Court the ‘Seema Sahni - Vs- Punjab National Bank’ Neutral Citation Number : 2023:DHC:3344-DB , to

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emphasize his contentions.

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In the peculiar context of the facts pleaded that this applicant adverted to the sale proclamation issued by the defendant No.1 in the newspapers dated 25.05.2024, which was in the nature of physical as well as E-auction notice and that he was interested in Item No.3 of the property, he submits that he remitted the EMD. He further submits that tender was made for Rs.50,70,000/-. According to him, the first defendant bank had dictated new terms and conditions. The process of bidding

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is objected with regard to the minimum intervals of increments in bidding. He submits that auction is in total violation of the SARFAESI Act and the Rules.

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The prayer of this unsuccessful bidder is to declare the sale held as null and void. Since the matter is to be heard on the maintainability, notices to the defendants are dispensed with.

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In order to answer whether the unsuccessful bidder could maintain the SARFAESI application / appeal under Section 17 of the SARFAESI Act, the provisions of Section 17 is to be understood which reads as under:

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Section 17

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Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken:

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The Ld. Counsel submits that „any person‟ as mentioned in the said part of the enactment includes each and every person. He relies on the ruling of Seema Sahni (supra) .

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The case law urged by the Ld. Counsel is based on different set of facts. The appellant therein was a “Successful bidder” and she deposited 25% of the total bid amount. Later the auction was cancelled.

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While dealing with the LPA, the Hon‟ble Delhi High Court had noted the following:

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9. It is thus seen that the Hon'ble Supreme Court in unequivocal terms has held that the auction purchaser, if is

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aggrieved by the action of the secured creditor in forfeiting his money, is entitled to avail the remedy under Section 17(1) of the SARFAESI Act, 2002.

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13. I have carefully considered the submissions. In the considered opinion of this court, the aforesaid argument is not LPA 417/2023 Page 5 of 8 Neutral Citation Number:2023:DHC:3344-DB acceptable as there is no such embargo under Section 17 of the SARFAESI Act, 2002. The provisions of Section 17 cannot be read so as to exclude the remedy for any person who is aggrieved by the cancellation of the auction sale or any other steps arising thereto (emphasized) which were taken pursuant to the measures under Section 14 of the SARFAESI Act, 2002.

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From the above ruling, it is clear that “any person” as per the terminology employed in Section 17 can approach the DRT. So far, the locus of any person cannot be doubted but at the same time, the „pick and choose‟ of the words and dissecting the provision of law according to the whims and facies cannot be entertained. Section 17 is to be read in whole. No doubt „any person‟ including the borrower can approach the DRT aggrieved by the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor as employed in the said provision cannot be overlooked. For this purpose, the peculiarity of the facts of the present case is to be reckoned. To answer this, this Tribunal has to invariably find out whether this petitioner is aggrieved by the measures under Section 13(4) of the Act.

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At the cost of repetition, the applicant is neither a borrower nor a guarantor or anybody who is associated with the debt for which the defendant No.1 has taken steps under Section 13(4) of the SARFAESI Act. From the averments in the SA, this Tribunal is unable to find that this applicant is aggrieved by such measures.

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In order to entertain an application / appeal under Section 17 of the SARFAESI Act, two components are to be necessarily satisfied. Firstly, there should be a person approaching. This may include „any person‟. However, such „any person‟ must be aggrieved by the measures initiated under Sub-Section 4 of Section 13 of the SARFAESI Act. It is not “any person” simplicitor, such “any person” – must be aggrieved by the measures under Section 13(4) of the Act. Hence a condition follows. In the absence of such grievance and the applicant not making out a grievance flowing from such measures initiated cannot maintain this petition.

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In the ruling relied by the Ld. Counsel for the applicant, the successful bidder was aggrieved after the process of auction concluded had clearly made out that the financial institution entertained the plea of settlement under OTS by the borrower and in such a backdrop, the bank had cancelled the auction. Therefore the grievance was made out. Here, in the instant case, the applicant was one of the participants among the several bidders, whose bid was not accepted. Therefore, he cannot be said to have been aggrieved by the measures.

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In this context, it is very relevant to note that, the Hon;ble Supreme Court in

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the case of K.Kumara Gupta Vs. Sri Markendaya and Sri Omkareswara Swamy Temple & Ors reported in 2022 (5) SCC P710 in Para 17 had opined as under:

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“17. If the auction/sale pursuant to the public auction is set aside on the basis of such frivolous and irresponsible representations made by such persons then the sanctity of a public auction would be frustrated and the rights of a genuine bidder would be adversely affected.”

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Having taken note of the peculiarity of the case, this Tribunal is unable to sail with the argument of the Ld. Counsel for the applicant that the petition is maintainable, in the backdrop having not made out any grievance by the measures

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initiated. Furthermore, entertaining such petitions by a totally unconnected parties to the measures initiated (which springs from several stages like declaration of NPA, issuance of Demand Notice, demanding the reply to such Demand Notice, symbolic Possession Notice etc. etc.), who are not aggrieved by such measures would open flood gate of litigations leading to the chaos in the functioning of the system under the SARFAESI Act. This further adds to uncertainty and the public losing faith in the wings of the functionaries acting under the Special Acts. For the above reasons, this Tribunal is of the opinion that the petitioner has no “locus” so as to invite the interference of this Tribunal under Section 17 of the SARFAESI Act at his behest. Hence the following:

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ORDER

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SA stands dismissed as not maintainable.

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Sd/-

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PO, DRT-I, Chennai (In Charge for DRT-III)

D Sathiyanarayanan v. Hinduja Leyland Finance Limited

Case brief

What is this about?

What did the court decide?

D Sathiyanarayanan v. Hinduja Leyland Finance Limited

Case brief

What is this about?

What did the court decide?

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