Dismissed

Ramesh Kumar B v. PNB Housing Finance Ltd.

DRT20 Dec 2024SA/58/2022

Case brief

AI extract

What is this about?

The tribunal dismissed the applicant's securitization application challenging a property sale under the SARFAESI Act. The court held the applicant estopped from challenging NPA classification and subsequent steps after waiving objections in the demand notice, finding all procedural requirements regarding notice and valuation were complied with.

What did the court decide?

The Securitisation Application No.58 of 2022 stands dismissed with no order as to costs.

Ramesh Kumar B versus PNB Housing Finance Ltd. — Cheque Dishonour | DRT (2024)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 20^th DAY OF DECEMBER, 2024

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 58 of 2022

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Between

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Ramesh Kumar B., S/o. Balakrishna Pillai, Sreekrishnalayam, Perumbotta Road, Elamakkara P.O., Ernakulam 682 026.

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--- Applicant

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And

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PNB Housing Finance Ltd. 48/559 C, 1^st Floor, R.P. Arcade, Near Gold Souk Mall, Ponnurunni, Vyttila, Ernakulam -682 019, Represented by Authorized Officer.

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Faisal C.H., Champarambil House, XVIII/313, Vadakode P.O., Kangarapady, Kalamassery, Thrikkakara North-682 021.

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--- Defendants

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SA No.58 of 2022

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This Securitization Application coming on 19.11.2024, 21.11.2024 and 28.11.2024 for final hearing before me in the presence of Mr. N.K. Mohanlal, Counsel appearing for the Applicant and Mr. Nelson Joseph, Counsel appearing for the 1^st defendant and Ms. Sumeed M.S., Counsel appearing for the 2^nd defendant and upon hearing arguments of learned Counsels for all the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 05.02.2022 seeking to set aside Annexure-A2 Demand Notice, Annexure-A8 sale notice dated 22.02.2023, Annexure-A11 sale notice dated 10.08.2023, Annexure-A12 sale notice dated 08.12.2023 and to declare that the applicant is liable to pay interest at the rate of 12.75% as per Annexure-A1 loan agreement and to direct the 1^st defendant to restore the physical possession of the land and building to the applicant and to set aside the sale of secured assets held on 08.12.2023 and to permit the applicant to regularise the loan amount by remitting the overdue amount in 10 equal monthly instalments along with the regular equal monthly instalments and to allow the cost of this proceedings.

¶17

The applicant has admitted the availment of financial assistance to the tune of Rs.39,19,208/- from the 1^st defendant bank pursuant to the execution of Annexure-A1 loan agreement. He has also not disputed creation of security interest over his immovable property comprised in Re.Sy.No.198/6 B of Edappally village, Kanayannoor Taluk, Ernakulam district in favour of the 1^st defendant bank as the collateral security for the availment of the aforesaid financial assistance.

¶18

The applicant has also admitted his default in repayment of the outstanding loan due. Hence the loan account of the applicant came to be classified as NPA and Annexure-A2 Demand Notice dated 03.08.2020 was issued to the applicant calling upon him to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Admittedly, the applicant neither sent any objection/representation to the demand notice nor did he clear off his liability due to the defendant bank.

¶19

Therefore, possession notice dated 15.12.2020, was issued for symbolically taking physical possession of the secured asset. Subsequently, the 1^st defendant approached the Additional Chief

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Page 2 of 18

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SA No.58 of 2022

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Judicial Magistrate (MPs/MLAs) Ernakulam and filed application and affidavit, Annexure-A4 under Section 14 (1) of the SARFAESI Act, 2002. Order came to be passed in MC No. 280/2021 appointing Advocate Commissioner to take physical possession of the secured asset. Pursuant to the direction given to the Advocate Commissioner, issued notice dated 03.12.2021, Annexure-A5 to the applicant calling upon him to hand over the vacant possession of the property. Subsequently the Advocate Commissioner took the physical possession of the secured asset on 15.03.2022 and submitted his report, Annexure-A7 before the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam.

¶23

The 1^st defendant issued sale notice dated 22.02.2023, Annexure-A8 for sale of the secured asset. Sale was not fructified. Hence another sale notice dated 10.08.2023, Annexure-A11 was issued. Sale was not fructified. Therefore, another sale notice dated 08.12.2023 Annexure-A12 was issued. Sale was held on 29.12.2023. The auction purchaser, who is the 2^nd defendant, bid the property for higher price of Rs.61,26,000/-. Hence he became the successful bidder. Sale of the property was confirmed in favour of the 2^nd defendant as per confirmation letter dated 03.01.2024, Annexure-D2.

¶24

Argument of both sides’ counsels was heard. Written argument notes submitted by both sides’ counsels and pleadings of the SA and written statement and material records were perused.

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The point which arises for consideration is as to whether the applicant is entitled to get the reliefs sought for in the SA or not.

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Point: It is submitted by the counsel appearing for the applicant that security interest was not registered with the Central Registry and that the loan agreement Annexure-A1 specifies fixed rate of interest at Rs.12.75% and that but in Annexure-B11 statement of account interest is calculated either at 15.92% or 18% from 01.11.2014 to 12.11.2024 and that hence the classification of loan account based on the interest at 15.92% or 18% is illegal and arbitrary.

¶27

It is further submitted by the counsel appearing for the applicant that due to illegal classification of loan account as NPA, subsequent measures under Section 13 (4) and 14 of the SARFAESI Act are null and void and that if the interest had been calculated as per Annexure-A1 agreement, the account would not have slipped into NPA.

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Page 3 of 18

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SA No.58 of 2022

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The further submission of the counsel appearing for the applicant is that secured asset is not properly described in AnnexureA2 Demand Notice and possession notice and that at the time of availment of loan, building bearing Door No.48/1767 A was in existence in the property and not shed as contended by the 1^st defendant and that two upper floors were constructed thereafter as revealed from valuation report, Annexure-B10 and that hence taking physical possession of the secured asset both symbolic and actual possession is not in accordance with law.

¶31

It is further submitted by the counsel appearing for the applicant that in Annexure-A4 application and affidavit, the Door No. of the building is wrongly mentioned as 33/951 instead of 33/950 and that the sale notice does not show the entire buildings in the property for the first sale notice, Annexure-A8 and that 30 days’ time was not provided as per Rule 9(1) of Security Interest (Enforcement) Rules 2002, and that for subsequent sale notices, Annexure-A11 and A12, 15 days’ time was not provided and that Annexure-A12 sale notice was not affixed on the secured asset.

¶32

According to the counsel appearing for the applicant, the valuation of the property and fixing its reserve price is unjust and illegal. As against the market value of Rs.88,66,275/- fixed by the approved Valuer, the reserve price was fixed initially at Rs.75,00,000/- and thereafter Rs.61,06,000/- below the market price and the property was sold for a paltry and throw away price. As per Annexure-A13 sale deed, 1% of nearby property was sold for Rs.20 Lakhs for land alone and that in the valuation report dated 08.01.2024 obtained by the applicant from the approved Valuer, the value of the property is shown as Rs.8,37,000/-.

¶33

The counsel appearing for the applicant further submitted that the balance sale price was not paid within three months and that no agreement was written for extending the time for payment of balance sale price as provided in Rule 9(4) of the Security Interest (Enforcement) Rules 2002 and that no document has been produced to show that, the Valuer who submitted the report Annexure-B10, is an approved Valuer as defined under Section 2 (d) of the Security Interest (Enforcement) Rules 2002 and that the applicant may be permitted to regularize the loan account after setting aside the sale of the property and handing over the physical possession of the secured asset.

¶34

Per contra, the counsel appearing for the 1^st defendant submitted that security interest has been registered with the CERSAI

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Page 4 of 18

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SA No.58 of 2022

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and that the rate of interest is fixed at Rs12.75% as per the loan agreement Annexure-A1 and that the applicant has agreed to adopt the fixed rate of interest followed by floating rate of interest and that for floating rate of interest, period cannot be ascertained, since change of interest will be uploaded in the website. It is further submitted that at the time of creation of mortgage, there was a small shed in the property and that the present building was subsequently built in the land and that only at the time of taking physical possession of the property, the details of the property could be noticed.

¶38

It is further submitted by the counsel appearing for the 1^st defendant that Annexure-A8 sale notice which was issued on 22.02.2023 was collected by the applicant from the Post Office after seven days and that hence the date of collection of the notice of the Post Office is irrelevant and that however sale notice was published on 26.02.2023 as per Annexure-B4 and that 30 days’ period was given for Annexure-A8 sale notice.

¶39

The further submission of the counsel appearing for the 1^st defendant is that Annexure – A8 sale notice was affixed and published in newspapers as per Annexure – B4 on 26.02.2023 and that final sale notice dated 08.12.2023 Annexure – A12 (produced by the 1^st defendant as Annexure – B5) was published on 14.12.2023 and that sale was conducted on the 15^th day and that hence there was clear notice of 15 days prior of the sale of the property even after excluding the one day at the beginning or end as per the General Clauses Act.

¶40

It is further submitted by the counsel appearing for the 1^st defendant that Annexure – B5 sale notice was served on the applicant on 13.12.2023 as evidenced from the acknowledgment cards produced by the 1^st defendant alongwith memo dated 19.11.2024. According to the counsel for the 1^st defendant, though sale notice was affixed on the secured asset, it was removed by the applicant with his men and hence the 1^st defendant fixed a big board displaying the sale of the property in the premises of the secured asset and it can be seen from perusal of Annexure– B13 photocopy of photograph.

¶41

It is the further submission of the counsel appearing for the 1^st defendant that an interim order had been granted by this Tribunal not to confirm the sale, on 29.12.2023, and that thereafter since another interim order not to issue sale certificate had been granted, the 1^st defendant extended the time for payment of balance consideration by the 2^nd defendant.

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Page 5 of 18

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SA No.58 of 2022

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With regard to valuation of the secured asset, the argument advanced by the counsel for the 1^st defendant is that the reserve price for the 1^st sale notice, 2^nd sale notice and 3^rd sale notice was fixed at Rs.75,37,000/-, Rs.67,84,000/- and Rs.61,06,000/- respectively and that the above systemic reduction in the reserve price was done due to the non-availability of bidders for the first two sales. In the valuation report dated 08.01.2024 of the approved valuer produced by the applicant, the value of the property is shown as Rs.83,70,000/- which is much lesser than the valuation fixed by the approved valuer of the 1^st defendant in Annexure – B10 valuation report.

¶45

According to the counsel appearing for the 1^st defendant, the property bearing Sy. No.174/7A mentioned in the sale deed relied on by the 1^st applicant is no way near or adjacent to the SA subject matter of the property and the fair value per Ares in that survey number is Rs.25,34,400/- and the market value shown is Rs.22,00,000/- per Cent. Whereas the fair value for the SA subject matter of the property which is comprised in Sy. No.198/6B is Rs.8,44,800/- per Ares (that is to say Rs.3,41,885/- per Cent) and the market value for 4.40 Ares is Rs.32,26,665/-. In view of the above submissions, the counsel appearing for the 1^st defendant prayed to dismiss the SA with costs to the 1^st defendant.

¶46

The counsel appearing for the 2^nd defendant who is the auction purchaser submitted that the 2^nd defendant was declared as the highest bidder in the e-auction conducted on 29.12.2023 and that letter of confirmation of sale was issued on 03.01.2024. The 2^nd defendant remitted 25% of the bid amount within the stipulated time i.e. on 30.12.2023 and he remitted the sale consideration from and out of the amount borrowed by him from the State Bank of India, M. G. Branch.

¶47

It is further submitted by the counsel appearing for the 2^nd defendant that when the latter was ready to remit the balance sale proceeds in order to get the property registered in his favour, he was informed by the 1^st defendant with regard to granting of status quo order by this Tribunal restraining the 1^st defendant from issuing the sale certificate and that hence, the 2^nd defendant was not permitted to remit the balance sale consideration.

¶48

The further submission of the counsel for the 2^nd defendant is that pursuant to sending of E-mail dated 22.03.2024 by the 2^nd defendant, he remitted the balance sale consideration of Rs.45,94,500/- on 16.04.2024 by way of Bankers’ Cheque. It is also

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Page 6 of 18

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SA No.58 of 2022

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submitted that the right of the borrower to redeem the secured asset under Section 13(8) of the SARFAESI Act, 2002 stood extinguished on the very date of publication of the sale notice as laid down by the Hon’ble Apex Court in Celir LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd. & others - [2024 (2) SCC 1]. Since the applicant failed to redeem the property is not entitled to challenge the sale of the property, therefore, the SA is liable to be dismissed with costs to the 2^nd defendant.

¶52

The 1^st defendant has produced copy of CERSAI certificate along with memo ID No.18929/2024 dated 26.11.2024. A perusal of the same shows that mortgage over the property was created on 01.12.2014 and that security interest for the above property was registered with the CERSAI in ID No.400009045077, dated 15.12.2014. Hence the contention of the applicant that security interest over the secured asset was not registered with the Central Registry does not hold good.

¶53

In Annexure-A1 loan agreement, vide page No.43, it is mentioned that the initially fixed rate of interest shall be @ 12.75% per annum followed by floating rate of interest to be applicable and that thereafter for the balance loan amount based on the prevailing PNBHFR at that time per annum for the remaining period as per the term of the loan agreement is applicable. Thus it is evident that the applicant has chosen the option of initially paying fixed rate of interest and subsequently payment of floating rate of interest. The applicant has signed in all pages of Annexure-A1 loan agreement. The applicant having agreed to the aforesaid terms of the loan agreement is estopped from contending now that in Annexure-B11 statement of account interest is calculated either @ 15.92% or 18% and that hence classification of loan account based on the interest @ 15.92% or 18% is illegal and arbitrary.

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Further, the applicant did not send any objection/ representation to Annexure-A2 Demand Notice raising the aforesaid issue and also classification of loan account as NPA is illegal. If he had raised the above issue by sending objection/representation, the 1^st defendant would have been in a position to clarify the applicant by way of reply. The applicant having waived to avail the aforesaid statutory remedy as per Section 13 (3A) of the SARFAESI Act 2002 is estopped from raising the aforesaid issue now. Therefore, this Tribunal does not find any force in the submission of the counsel for the applicant that due to illegal classification of loan account as NPA, subsequent measures under Section 13 (4) and 14 of the SARFAESI Act, 2002 are null and void and that if the interest had been

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Page 7 of 18

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SA No.58 of 2022

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calculated as per Annexure-A1 agreement, the account would not have slipped into NPA.

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Admittedly, in Schedule-II of Annexure-A2 Demand Notice, though the place where the property is situated, Sy. No. and its extent with boundaries are furnished, the nature of the property as to whether building is situated or not, is not mentioned. The object of sending Demand Notice to the borrower/guarantor is to inform him of his default in repayment of the outstanding loan due and call upon him to clear off his liability due to the bank and the consequences which he is likely to suffer if he does not act as per the terms of the Demand Notice. In the present case on hand it is not the case of the applicant that the property mentioned in Schedule-II of Annexure-A2 Demand Notice is not the secured asset. Therefore, the contention of the applicant that the secured asset is not properly described in Annexure-A2 Demand Notice lacks merits.

¶59

It is the contention of the applicant that the secured asset is not properly described in the possession notice. He has not produced copy of the possession notice. On perusal of copy of the valuation report dated 18.11.2014 and the photographs filed by the 1^st defendant along with memo in ID No.18115/2024 dated 19.11.2024 shows that it was obtained prior to availment of credit facility by the applicant ie., on 29.11.2014 and that an extent of the said is admeasuring 189 sq. ft. (super built up area). There is no reference with regard to existence of ground floor and two upper floors in the above valuation report. Hence this Tribunal finds considerable force in the contention of the 1^st defendant that, at the time of creation of mortgage, there was only a small shed in the property and that buildings were constructed subsequently.

¶60

The 1^st defendant has produced Annexure-B2, copies of paper publications and Annexure-B3 copy of photograph in order to show that possession notice dated 15.12.2020 was published in the New Indian Express edition dated 17.12.2020 and Kerala Kaumudi edition dated 17.12.2020 and that it was affixed conspicuously on the secured asset. It will be pertinent to mention herein that the above possession notice was not challenged by the applicant within the period of 45 days from the date of issuance of the possession notice. On this ground alone, the applicant is estopped from raising any contention in respect of the possession notice dated 15.12.2020.

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Annexure-A4 is the certified copies of the application and affidavit filed by the 1^st defendant under Section 14 (1) of the SARFAESI Act, 2002 in MC No.280/2021 before the Chief Judicial

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Page 8 of 18

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SA No.58 of 2022

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Magistrate Court, Ernakulam. The copy of general power of attorney which was filed by the 1^st defendant herein in MC No.280/2021 has been produced by the applicant in the SA as Annexure-A6. It is seen from the perusal of Annexure-A6 that the Regional Collection Manager of PNB Housing Finance Ltd., Vyttila, Ernakulam has been appointed as the Authorised Officer as well as the secured creditor of the petitioner bank (1^st defendant herein). Hence this Tribunal does not find any reasoning in the submission of the counsel for the applicant that there is no valid authorization as per Rule 2 (a) of Security Interest (Enforcement) Rules 2002.

¶65

In Annexure-A4 application and affidavit, the details of statutory requirements, such as availment of credit facility by the respondents (applicant herein and another borrower), upon creation of security interest over the immovable property, description of the secured asset with boundaries, the quantum of credit facility availed by them, default in repayment of the outstanding loan due, classification of loan account as NPA, issuance of Demand Notice to the respondents, issuance of Demand Notice and service of the Demand Notice on the respondents, failure of the respondents to make repayment, issuance of possession notice, secured asset being free of any valid lease prior to creation of charge, as contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 were furnished.

¶66

The Chief Judicial Magistrate, who considers the application and affidavit filed under Section 14(1) of the SARFAESI Act, 2002 is required to examine as to whether the aforesaid statutory requirements has been complied with by the secured creditor in respect of filing of the application and affidavit and he is not required to look into the details as to whether the rate of interest charged as per the agreed terms of the contract is correct or not and also as to whether it is arbitrary or exorbitant, for the reason that the Chief Judicial Magistrate merely exercises the administrative function in order to consider as to whether order could be passed for taking physical possession of the secured asset.

¶67

In the present case on hand, the applicant has not produced copy of the order passed by the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam in MC No. 280/2021 for perusal. Be that it may so, the Advocate Commissioner issued Annexure-A5 notice to the applicant for taking physical possession of the secured asset, pursuant to the direction given to him by the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam in MC No. 280/2021. Without challenging the order passed in MC No. 280/2021, challenging Annexure-A5 notice is unsustainable for the

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SA No.58 of 2022

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reason that Annexure-A5 notice is not the measure contemplated under Section 14 (1) of the SARFAESI Act, 2002.

¶71

Annexure-A8 sale notice is the first sale notice issued for the sale of the secured asset on 29.03.2023. The above sale notice was published in Financial Express - Kerala Edition on 26.02.2023 and Janmabhoomi – Kochi edition on 26.02.2023, as evidenced from the perusal of Annexure-B4 produced by the 1^st defendant. Hence the contention of the applicant that sale notice was not published as per the Security Interest (Enforcement) Rules 2002 does not hold good.

¶72

In Annexure-A8 sale notice, the description of the property is given with its extent, Sy. No. and the building bearing Door No.33/951. It is sufficient for the prospective auction purchasers to inspect and identify the property prior to bidding the property in the auction. Hence the contention of the applicant that building is not properly described in Annexure-A8 sale notice is absolutely incorrect.

¶73

The one of the contentions raised by the applicant in the SA is that Annexure-A8 sale notice was not affixed on the secured asset. The rival contention of the 1^st defendant is that sale notices were affixed in the secured asset and that the applicant along with men kept on removing the affixed sale notices and that hence the 1^st defendant fixed a big board displaying the sale of the property in the secured asset as per Annexure-B13. It can be noticed on perusal of Annexure-B13 that a notice board displaying as “This property is under possession of PNB Housing Finance Ltd. Property for sale”, has been fixed conspicuously on the grilled door of the secured asset. Therefore, Annexure-B13 strengthens the contention of the 1^st defendant that since the applicant and his men kept on removing the affixture of sale notice, the 1^st defendant was constrained to put up the above notice board on the secured asset.

¶74

The applicant has produced copies of three postal covers and copies of three postal track reports in connection with Annexure-A8 sale notice as Annexure-A9 series and Annexure-A10 series respectively contending that sale notice was served on him only on 08.03.2023 and that hence 30 days’ notice period was not given prior to sale of the property. On perusal of Annexure-A9 and A10 series shows that Annexure-A8 sale notice was dispatched on 28.02.2023 and that notice was attempted to be delivered on 04.03.2023 and 06.03.2023 and that it could not be delivered to the applicant as the door of his residence had been locked and that however intimation was served on 04.03.2023 and 06.03.2023. Finally the sale notice was delivered to the applicant on 08.03.2023 as evidenced from

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Page 10 of 18

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SA No.58 of 2022

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Annexure-A10. What has to be looked into is as to whether there was a clear 30 days’ notice from the date of dispatch of the sale notice to the borrower and the date of sale of the property. Admittedly, in the present case at hand, Annexure-A8 sale notice was dispatched through registered post on 28.02.2023 and the date of sale was 29.03.2023. Thus it is evident that a clear 30 days’ notice was given prior to sale of the secured asset. This Tribunal fully concurs with the submission of the counsel for the 1^st defendant that the date on which the applicant collected the notice from Post Office is irrelevant.

¶78

Further rule 9 (1) of the Security Interest (Enforcement) Rules 2002 mandates that no sale of immovable property under this Rule, in the first instance shall take place before the expiry of 30 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) of Rule 8 or notice of sale has served to the borrower. In the present case at hand, Annexure-A8 sale notice dated 22.02.2023 was published as per Annexure-B4 on 26.02.2023. Thus it is evident that there was more than 30 days period between the date of publication of sale notice and the date of sale. Hence this Tribunal does not find any force in the submission of the counsel for the applicant that there was no compliance in respect of providing 30 days’ notice between the service of sale notice and the date of sale.

¶79

Admittedly, sale was not fructified pursuant to issuance of second sale notice dated 10.08.2023, Annexure-A11. Therefore, the 1^st defendant issued the third sale notice dated 08.12.2023, AnnexureA12. As already observed in para 5 of this order, the 2^nd defendant, who bid the property for higher price of Rs.61,26,000/- became the successful bidder.

¶80

In E.K. Rajan Vs. Authorised Officer Canara Bank [2022 ICO 614] relied on by the counsel for the applicant, the Hon’ble High Court of Kerala has held that as per Rule 9 (1) of the Security Interest (Enforcement) Rules 2002 the Authorised Officer must serve, affix and publish the notice of sale of not less than 15 days to the borrower, for any subsequent sale and that since in the instant case there was a failure on the part of the respondent to serve notice of not less than 15 days upon the petitioner, the subsequent sale is liable to be set aside.

¶81

According to the submission of the counsel for the 1^st defendant, as per the General Clauses Act, one day at the beginning or the end needs to be excluded and if one day is excluded, there was clear 15 days’ notice from the date of publication of sale notice and the date of sale of the property. Annexure-A12 sale notice was

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SA No.58 of 2022

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published on 14.12.2023 as evidenced from the perusal of AnnexureB5 paper publication. Sale was conducted on 29.12.2023. Even if the date of publication of the sale notice is to be excluded, there was a clear 15 days’ of notice between the publication of sale notice and the sale of the property. Hence this Tribunal does not find any merit in the submission of the counsel for the applicant that sale of the property is invalid for want of 15 days’ notice.

¶85

The reserve price fixed in the sale notice, Annexure-A8 is Rs.75,37,000/-. The reserve price fixed for the second sale notice Annexure-A11 is Rs.67,84,000/- whereas the reserve price fixed for the third sale notice Annexure-A12 is Rs.61,06,000/-. For the first two sale notices, sale did not fructify, probably for the reason that the aforesaid reserve price would not have attracted the prospective purchasers to bid the property. Admittedly, sale was materialized only pursuant to issuance of the 3^rd sale notice, Annexure-A12. The reduction of the reserve price from first sale notice to third sale notice in the aforesaid manner step by step would show that the aforesaid systematic reduction in the reserve price was effected on account of no biding for the two sale notices, Annexure-A8 and Annexure-A11. Hence this Tribunal does not find any force in the submission of the counsel for the applicant that reserve price for the property was drastically reduced. In Annexure-B10 valuation report filed by the 1^st defendant, the approved Valuer fixed the total value of the property at Rs.88,66,275/-. But in the valuation report dated 08.01.2024, which has been produced by the applicant, the approved Valuer has fixed the value at Rs.83,70,000/- which is apparently lesser than the valuation fixed by the approved Valuer of the 1^st defendant bank in Annexure-B10.

¶86

The applicant has produced copy of the sale deed purporting to be the property which is said to be the adjacent to the secured asset. The applicant has not produced the location certificate in order to show that the property mentioned in the above said sale deed is situated either near to or adjoining the secured asset. Hence no reliance can be relied upon to the aforesaid sale deed so as to accept the contention of the applicant that, as per the value of the property bearing Sy. No.174/7 A in the sale deed is Rs.25,34,400/- per Are.

¶87

In the written argument note submitted on behalf of the 2^nd defendant, who is the auction purchaser, it is submitted that the 2^nd defendant remitted 25% of the bid amount within the stipulated time ie., on 30.12.2023 and that when he expresses his willingness to remit the balance sale consideration to get the property registered, the 1^st defendant informed him of granting a status quo order by this

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SA No.58 of 2022

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Tribunal restraining the 1^st defendant from issuing the sale certificate and other measures relating to the e-auction sale. The above averment of the 2^nd defendant cannot be rejected for the reason that in view of granting of status quo order by this Tribunal against issuance of the sale certificate, the 2^nd defendant could not remit the balance sale consideration amount.

¶91

Rule 9 (4) of the Security Interest (Enforcement) Rules 2002 stipulates that balance amount of purchase price shall be paid by the purchaser to the auction purchaser on or before the 15^th day of confirmation of the sale of the immovable property or such extended period as may be agreed upon in writing ( emphasis odded) between the purchaser and the secured creditor in any case not exceeding three months. The above rule impliedly makes it clear that it is not mandatory for such agreement in writing. In the present case on hand it could be gathered that due to granting of interim stay against issuance of sale certificate, the secured creditor refused to receive the balance sale consideration amount, which was offered by the 2^nd defendant. Be that it may so, the above Rule is intended only to put a riddle on the auction purchaser so that he cannot make delay in paying the balance sale consideration amount and if he fails to pay the balance sale consideration amount, the earnest money deposit made by him is liable to be forfeited. Therefore, Rule 9 (4) of Security Interest (Enforcement) Rules 2002 is not a measure as contemplated under Section 14 (1) of the SARFAESI Act 2002. On this ground alone, the applicant is not entitled to raise the above contention.

¶92

One of the reliefs sought for by the applicant in the S.A is to permit him to regularize the loan account as repayment period will be expired only in the year 2029. The counsel appearing for the applicant relied upon the judgment of the Hon’ble High Court of Kerala delivered in Elavakkattu Ceramics & Ors. Vs. Authorised Officer Standard Chartered Bank & Anr [2015 (1) KLJ 518] submitting that, this Tribunal has got power to direct the 1^st defendant for regularization of the loan account of the applicant. It has been held in the above case that, if the entire amount is satisfied by the borrower in the case of a loan account classified as NPA, the loan account should be regularized and that the word “may” in clause 4.2.5 of the Master Circular issued by the RBI is subject to the first link, wherein positive declaration has given to the effect that the account should no longer be treated as “Non performing” and that this word “may” occurring in the second link has to be considered as subserving to the first link where it is mandatory.

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SA No.58 of 2022

¶95

On perusal of the above judgment, it can be noticed that since the petitioners deposited a sum of Rs.20 Lakhs pursuant to the direction of the Hon’ble High Court of Kerala, the entire overdue amount as on date which was as nearly Rs.14.7 Lakhs would stand wiped off. Since there cannot be any overdue amount in the loan account, the loan account of the petitioner has to be declared as regularized. In the present case at hand, the facts of the case is entirely different from the facts of the case narrated in the aforecited judgment. It is not the contention of the applicant that, he remitted any amount to the 1^st defendant bank so as to regularize the loan account in view of wiping off the overdue amount. Hence this Tribunal considers that, the aforecited judgment has no application to this case.

¶96

The counsel appearing for the applicant during his advancement of argument relied upon the judgment of the Hon’ble High Court of Kerala in Ajmal K.V. & Anr. Vs. Union Bank of India & Ors. [2024 ICO 828] submitting that as long as the certificate was not issued, the 1^st defendant bank can enter into a One Time Settlement with the applicant. It is held in the aforecited judgment as follows :

¶97

“The right of redemption available to the borrowers will stand extinguished upon publication of notice of auction. However, that will not prevent the parties to a loan agreement from entering into a One Time Settlement. As long as the sale of the mortgaged assets is not confirmed in favour of the auction purchasers and as long as the Sale Certificates are not issued, the auction purchasers cannot be heard to contend that the bank should not enter into a One Time Settlement with the borrowers”.

¶98

The brief facts of the above case is as follows. The auction purchasers purchased the secured asset and they deposited the entire amount. However, the 1^st respondent bank granted One Time Settlement facility to the borrowers and cancelled the sale. The borrowers filed S.A before the Debts Recovery Tribunal-I Ernakulam praying to pass order for One Time Settlement scheme. The Tribunal dismissed the S.A stating that S.A became infructuous in view of granting of OTS by the 1^st defendant bank. The auction purchasers preferred writ petition, WP(C) No.24087/2023 before the Hon’ble High Court of Kerala contending that once auction sale notice was published, the mortgager lost the right to redeem the secured asset and that cancellation of sale and refusal of the bank to issue the sale

¶99

Page 14 of 18

¶100

SA No.58 of 2022

¶101

certificate was unlawful. The Hon’ble High Court of Kerala held that when the borrowers offered a One Time Settlement, and the Bank has accepted the proposal, there is nothing which prevents the Bank from entering into One Time Settlement with the borrowers as long as sale certificate is not issued.

¶102

It is pertinent to mention herein that it is not the case of the applicant that he approached the 1^st defendant bank for One Time Settlement and that the 1^st defendant accepted his request for One Time Settlement. An OTS can be entered into between the borrower and the bank only by way of mutual consent. If the Bank considers that the OTS proposal offered by the borrower does not satisfy the prescribed Rules framed for such proposal, the borrower cannot insist on acceptance of the OTS proposal.

¶103

In the present case at hand, in the absence of the OTS proposal between the applicant and the 1^st defendant bank and the 1^st defendant bank itself is ready and willing to issue the sale certificate to the 2^nd defendant, this Tribunal cannot pass an order for OTS proposal based on the dictum laid down by the Hon’ble High Court of Kerala in the aforecited judgment.

¶104

This Tribunal having considered the pleadings and the documents put forth by both the parties comes to a conclusion that the applicant has miserably failed to establish his case so as to get the relief sought for in the SA.

¶105

Resultantly this S.A No.58 of 2022 stands dismissed. There shall be no order as to costs.

¶106

Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 20^th day of December, 2024.

¶107

(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 15 of 18

SA No.58 of 2022

List of documents filed by the Applicant along with the S.A.

¶112

Sl. No.	Date	Particulars
1.	29.11.2014	Certified copy of the loan agreement.	Annexure-A1
2.	19.06.2020	Certified copy of the Demand Notice.	Annexure-A2
3.	03.08.2020	Certified copy of the paper publication of Demand Notice dt.19.06.2020 taken out in the New Indian Express and in KeralaKaumudidailies.	Annexure-A3
4.	---	Certified copy of M.C. No.280/2021 along with affidavit on the file of Additional Chief Judicial Magistrate (MPs/MLAs)Ernakulam	Annexure-A4
5.	03.12.2021	Notice issued by the Advocate Commissioner.	Annexure-A5
6.	21.12.2019	Certified copy of the power of attorney.	Annexure-A6
7.	15.03.2022	True copy of the report and inventory submitted by the Advocate Commissioner.	Annexure-A7
8.	22.02.2023	True copy of the sale notice.	Annexure-A8
9.	---	True copies of 3 postal cover in connection with Annexure-A8 sale notice.	Annexure-A9 series
10.	---	True copies of 3 postal track report in connection with Annexure-A8 sale notice.	Annexure-A10 series
11.	10.08.2023	True copy of the sale notice.	Annexure-A11
12.	08.12.2023	True copy of the sale notice.	Annexure-A12
13.	15.01.2024	Certified copy of the sale deed No.121/2024of Edappally SRO.	Annexure-A13

¶113

Page 16 of 18

¶114

SA No.58 of 2022

¶115

List of documents filed by the 1^st defendant

¶116

Sl. No.	Date	Particulars
1.	---	True copies of the postal receipts of the possession notice sent to the applicant	Annexure-B1
2.	17.12.2020	True copies of the newspaper publication of Possession Notice in New Indian Express and in Kerala Kaumudi daily.	Annexure-B2
3.	--	True copy of the photographs showing theaffixture ofthe possession notice	Annexure-B3
4.	26.02.2023	True copies of the newspaper publications of the sale notice dated 22.02.2023.	Annexure-B4
5.	14.12.2023	True copies of the newspaper publications of the sale notice dated 08.12.2023	Annexure-B5
6.	---	True copies of the postal receipts for sending the salenotice to the applicant.	Annexure-B6
7.	29.12.2023	Copy of the declaration of highest bidder letter issued by 1^stdefendant to Mr.FaisalC.H.	Annexure-B7
8.	03.01.2024	Copy of the confirmation of sale and demand to deposit balance amount auction sale of mortgaged property letter issued by the 1^stdefendant to Mr.FaisalC.H.	Annexure-B8
9.	27.09.2022	Copy of the valuation report by EngineersandValuers Chamber	Annexure-B9
10.	16.11.2023	Copy of the valuation report of the property at the time of sale by engineer Ratheesh V.A.	Annexure-B10
11.	----	Copy of the statement of account from 01.11.2024 till 12.11.2024 maintained by the 1^stdefendant in its ordinary course ofbusiness.	Annexure-B11
12.	25.08.2023	Copy of the newspaper publication of the sale notice in daily newspaper namely The Financial Express, Kerala Kochi(Englishedition).	Annexure-B12
13.	10.08.2023	Photocopy of Photograph of affixture of the salenotice.	Annexure-B13

¶117

Page 17 of 18

¶118

SA No.58 of 2022

¶119

List of documents filed by the 2^nd defendant along with IA No.4102/2024

¶120

Sl. No.	Date	Particulars
1.	29.12.2023	Photocopy of the letter declaring Faisal C.H. as the highest bidder issued by the 1^st defendant.	Annexure-D1
2.	03.01.2024	Photocopy of the sale confirmation letter.	Annexure-D2
3.	---	Photocopy of the bankers cheque for Rs.45,94,500/- issued in the name of 1^st defendant.	Annexure-D3
4.	---	Photocopy of the arrangement letter issued by the State Bank of India for the loan account 42619074195 for Rs.58,64,000/-.	Annexure-D4

¶121

(Su. WILLYAHM) PRESIDING OFFICER

¶122

Mj/

¶123

Page 18 of 18

Ramesh Kumar B v. PNB Housing Finance Ltd.

Case brief

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Ramesh Kumar B v. PNB Housing Finance Ltd.

Case brief

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What the court decided

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