Allowed

Kumbam Sai Siddarth v. Canara Bank

DRT16 Apr 2024SA/71/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application under Section 17 of S. & R. Act to direct the secured creditor bank to accept the balance sale consideration, noting the High Court granted liberty for such approach, despite the bank's reliance on the 90-day rule.

What did the court decide?

Direction to respondent bank to accept balance sale consideration of Rs. 1,36,26,300/- together with interest @12% p.a. from 05.04.2023 till date of appropriation.

Kumbam Sai Siddarth versus Canara Bank — Company and Corporate | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL-II^{AT HYDERABAD}

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DATED THIS THE 16'H^{DAYOF APRIL, 2024}

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PRESENT: SH, RAMESHWAR^{KOTHE,B'COM.L'LB.(HONS'), M.A.} PRESIDING OFFICER

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Securitization Application^{No.71 OF 2024}

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Kumbam Sai Siddarth

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S/o Venkateshwar Rao

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Aged 26^years, Occ:Doctor R/o Plot No.3164, Phase-I,^SaketColony ECIL, Kapra, Secunderabad-500062

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.......APPlicant

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Versus

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Canara Bank

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Assets Recovery Management^Branch(ARM) Ground Floor, Circle^{Office Building} Beside Rail Nilayam,^{Secunderabad-500026}

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Rep. by its Authorized^Officer

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K. Venkateshwar^Rao

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S/o Vasudeva Rao

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Aged about 60 Years,^Occ:Business

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R/o Flat No.201, Ellen^{Lakshmi Narslmha Apts} Street No.20, HimaYathnagar

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Hyderabad-500 029

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Smt. K. Pramadha

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W/o Venkateshwar^Rao

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Aged about 52 Years,^{Occ:Housewife} PJo Flat No.201,^{Ellen Lakshmi Narsimha Apts} Street No.20,^{HimaYathnagar} Hyderabad-5,' 029

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"""'Respondents

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Counsel for the Applicants :Sri T' Sridhar^Reddy Counsel for F^{R;spondentBank :9ri Manav GrecilThomas} :Sri K' SureshK' SureshSuresh Counsel for^{Respondents2 & 3}

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:Sri K' SureshK' SureshSuresh ,lAtw, a'/'vux

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SA No.7112024

-:ORDER:.

The Applicant filed the present Securitisation Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter "the Act" for short) to set aside the proceedings of the respondent bank pursuant to sale notice dated 10.01.2024, to set aside the rejection letter dated 13.11.2023 and to direct the 1.t respondent bank to receive balance sale consideration of Rs.1,36,26,300/- in respect of the SA schedule property.

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The case of the applicant, in brief, is that he participated in the auction in respect of the SA schedule property on 30.12.2022 and was declared as successful bidder at Rs.2,56,37,000/-. The 1st respondent bank confirmed the sale vide letter dated 05.01.2023 pursuant to which the applicant deposited 25o/o of bid amount of Rs.38,50,000/-. He sought three months time for payment of 75o/o of the bid amount vide letter dated 18.01.2023 which was accepted whereupon the applicant deposited Rs.26 lakhs, Rs.15 lakhs, and Rs.8 lakhs on 29.03.2023, 31.03.2023 and 15.04.2023 respectively making totat payment to Rs.1,20,10,700/-. Vide mail dated 26.O4.2023, the respondent bank informed the applicant to make balance payment otherwise the partial amount shall be forfeited. The applicant vide mail dated 30.06.2023 requested the bank to grant further time for payment due to non-availability of funds. Again vide letter dated 29.09.2023, the applicant informed his readiness to pay Rs.40 lakhs immediately and balance amount by 15th October, 2023. However, the respondent bank vide letter dated 73.77.2023 rejected the request letter dated 29.09,2023 and informed that the 250lo of bid amount of Rs.1,20,10,700/- had been forfeited. On the other hand, the z v*,, U-/ravr\

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3of5

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SA No.7712024

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respondent bank issued fresh sale notice dated 10.01.2024 fixing auction of SA schedule property on 2t.02.2024 with reserve price of Rs.2,38,55,000/- which is very low than the previous reserve price and bid quoted by the applicant. The wp No.1966 of 2024 filed by the applicant challenging the sale notice dated 10.01.2024 was dismissed as withdrawn by the Hon'ble High Court granting liberty to approach the respondent bank for redressal of grievance. Accordingly, the applicant once again submitted letter dated 30.01.2024 expressing his willingness to pay total bid amount by LO.OZ.2O24 together with interest for the delayed period and also submitted no objection letter from owners of the property i.e., respondents 2 and 3 along with three demand drafts totalling to Rs.60 lakhs. However, the respondent did not consider the request. The rejection of request after 240 days is illegal, arbitrary and against the principles of natural justice. Hence this application to direct the respondent bank to accept the balance bid amount and quash the fresh sale notice dated t0.01.2024,

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The respondent bank filed reply statement stating, inter alia, that the 1st respondent bank cannot go beyond 90 days as per Iaw. The applicant was supposed to approach the respondent bank as per Hon'ble High Court order in the writ petition but the applicant filed the present case in violation of Iiberty granted. The fresh auction is proposed to be conducted and the amount was fixed as per rules. All other adverse contents of the applicant have been denied by the respondent bank.

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Respondents 2 and 3 reported no reply statement.

ffi*n

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sA No.71l2024

and learned^counselfor 5. Heard learned^{counselfor the appllcant} the 1st^{respondentbank.Perused the written} arguments filed^{by the} 1st respondent^{bank and the material brought} on record.

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counsel for^applicant 6. During course of arguments,^learned relterated^his version as^{in the applicationand} prayed to allow the SA

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The learned^{counselfor the 1st respondent bank submits that} law does not^{permit extension of time beyond90 days and it ls the} sole reason for^{rejecting the request of applicantLearnedcounsel} sought for dismissal^{of the SA may be dismissed and further submits} that if the^{Tribunalconsidersto exerclsediscretion,the interest of the} bank may^be Protected.

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Now, the^points that^{arise for considerationare;-}

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(i) Whether the applicants^{made out any valid groundto} direct the^{7st respondentbank to acceptthe balance} consideration and set^{aside the sale noticedated} 10.01.2014 in^{respectof the 5A schedule property as} PraYed^for?

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(ii) To what relieP

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Ee!!8-NtP4):-

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The averments of the application^{and reply statement of the} respondent bank make it^clear that^{the applicant sought for extension} of time beyond^permissible limit under^{Rule 9(4) of the Security} lnterest^{(Enforcement) Rules, 2002. The Hon'ble High Court also left} it open to the applicant to approach the^{respondentbank for} consideration of request for extension of^{time. Thereis no doubtthat}

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sA No.7tl2024

the 1st respondent bank righfly rejected the request of the applicant. Therefore, the present application has to be considered only in the view point of empathy and bonafide intenuon of the appticant to retain the property.

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It is not under dispute that the applicant stood as successful bidder of SA schedule property i.e., Lot No.5 of the impugned sale notice dated 70.07.2024 and deposited a total amount of Rs.t,20,10,700/ - out of sale consideration amount of Rs.2,56,37,000/- and an amount of Rs.1,36,26,300/- remained unpaid.

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In para 9 of the application, the applicant stated as follows:

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"9. Immediately, the applicant vide Letter dt.30.01.2024, requested the 1st respondent bank his willingness to pay the total balance bid amount by 10th February, 2024 and also ready to pay the interest if any for the delayed period on the balance amount......"

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The concern of the 1st respondent bank is protection its interest if the application is considered positively. The interest of a secured creditor is obviously recovery of debt by enforcing the security. Therefore, having considered the circumstances of the case and in the interest of principles of natural^justice, I deem it appropriate to allow the SA with a direction to the 1st respondent bank to accept^the balance sale consideration of Rs.1,36,26,30O/- from^{the appllcant} together with interest @120lo^{p.a. simple from 05'04.2023till date of} appropriation. It is a matter of^{record that the applicantdeposited} Rs.1,36,26,300/- with the respondent^{bank as per interim orderdated} 19.02.2024. It appears the auction on^{27.02.2024 did not take place} due to compliance of the^{said lnterim order.Hencethe prayerwith} regard to setting aside the auctlon^{nolice date940.u.2024does not} //!(:tr\ //

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sA No.7tl2024

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survive. The amount^under deposit with the^{1st respondent bankis} of balance sale^{considerationas directed} adjustable towards^deposit above.

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Point No.(ii):

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In the result,^{the Securitization Applicationis allowedwith a} direction to the^{1st respondentbank to accept the balancesale} consideration of^{Rs.1,36,26,300/-from the applicanttogetherwith} interest @120/o^{p.a. simple from 05.04.2023till date of appropriation.}

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t4. Consequently, the^{InterlocutoryApplicationspending if any,} shall also stand disPosed^of.

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No order as to costs.

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Communicate a^copy of^{this order to the partiesconcernedand} upload in the Web Portal.

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(Typed to my dictotion by the PS, corrected, signed^{ondpronounced by me in theopen} court on this the 76h doy of April,^2024).

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MESHWAR KOTHE) PRESIDING OFFICER

Kumbam Sai Siddarth v. Canara Bank

Case brief

What is this about?

What did the court decide?

Kumbam Sai Siddarth v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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