Dismissed

Ms Economic Research Laboratory and Anr. Partner Smt Soma Maitra v. Central Bank of India

DRT13 Jan 2025SA/140/2022

Case brief

AI extract

What is this about?

In a SARFAESI Act suit, the Debts Recovery Tribunal dismissed the challenge to the bank's sale of secured assets. The court held that the borrower failed to tender dues to redeem the property and the auction purchaser was not impleaded, necessitating dismissal. Prior interim stay orders were vacated.

What did the court decide?

The sale of the property in favour of the highest bidder is confirmed; sale certificate to be issued to the purchaser; interim stay order vacated.

Ms Economic Research Laboratory and Anr. Partner Smt Soma… — Banking and Recovery | DRT (2025)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA JEEVANSUDHA BLDG. 9^TH FLOOR, 42/C, J.L.NEHRU ROAD, KOLKATA – 700071

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BEFORE SHRI AMBUJA MOHAN DAS, PRESIDING OFFICER

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SA 140 of 2022

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1. M/s. Economic Research Laboratory, Partner : Smt. Soma Maitra, 60, Gopal Banerjee Lane, Ramkrishnapur, Shibpur, Howrah – 711101.

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1. Smt. Soma Maitra, Partner of M/s. Economic Research Laboratory, W/O- Late Sarba Sunder Maitra, Ambika Kundu Bye Lane, P.S.Jagachha, Dist.- Howrah, Pin- 711101.

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1. Smt. Kalyani Ganguly (Guarantor), W/O- Late TirthankarGanguly, 60, Gopal Banerjee Lane, Ramkrishnapur, Shibpur, Howrah – 711101.

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

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The Authorized Officer, Central Bank of India, Regional office : Kolkata (South), 5^th Floor, 33, N.S. Road, P.S.- Hare Street, Kolkata – 700001.

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…………………Respondent

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Present:

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For Applicants: Ld. Advocate Mr. K.C. Das and Ms. Tania Majumder Ld. Counsels

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For Respondents: Mr. Gautam Chakraborty and

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Mr. Surath Chakraborty Ld. Counsels

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J U D G E M E N T

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Delivered on 13^th January, 2025

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In the SA SarfaesiApplicants havechallenged Demand Notice dated 05/02/2018 and Possession Notice U/R 8(1) dated 18/06/2018 of the Security Interest (Enforcement) Rules 2002 and notice under rule 9(1) and 8(6) under Sarfaesi Act and Rules with prayer for injunction.

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The case of the Applicants is that Applicant no. 1 is the Borrower and Applicants nos. 2 and 3 are the guarantors. Applicant no. 1 is the partnership firm manufacturing homeopathy drugs. Applicant no. 1 has

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taken Cash Credit loan and Term Loan from the Respondent Bank. The Limit of Cash Credit is Rs. 16 lac and Term Loan is for Rs. 15.25 lac and total facilities taken from the Bank is Rs.31.25 lac. The term loan was to be paid in 24 installments and EMI is Rs. 63,550/-from 11/01/2008 with initial moratorium period of six months.Applicants have hypothecated plant and machinery and stocks, fixed LIC Policies with equitable mortgage of immoveable properties which are described in Schedule’A’ pertaining totwo properties:

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Property no. 1 Plot of land about 10 Cottahwith factory building at Mouza Bhandadaha,J.L. NO. 32, R.S. Khatian NO. 35,R.S. Dag no. 3207,L.R. Khatian No. 2208,L.R. Dag No. 3280 under Domjur Gram Panchayat, P.S. Domjur, Dist. Howrah.

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Property no. 2 is a plot of vacation land of 8.25 Cottach, at Mouza Bhandadaha, J.L. NO. 32, L.R.Khatian No. 2114 &2115,R.S.Khatian no.35 ,L.R. Dag No. 3280 R.S. Dag no. 3207, under Domjur Gram Panchayat, P.S. Domjur, Dist. Howrah.

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It is contended by the Applicants that Managing partner of the partnership firm Mr. Sarba Sunder Maitra died due to renal failure in the year 2011. Due to his death and owing to shortage of fund operation of the business was closed.

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Applicants have made substantial payment to the loan account but the Respondent Bank issued Demand Notice dated 05/02/2018 which shows that the A/c was classified as NPA on 26/10/2011 with outstanding dues of Rs. 93,40,020.00 as on 05/01/2018 against the Cash Credit of Rs. 16 lac and Term Loan of Rs. 15.25 lac. Respondent Bank has not issued statement of account. It is alleged by the Applicants that interest claimed by Respondent is exorbitant. It is contended by the Applicants that there is no indication of redemption u/s 13(8) of the Sarfaesi Act.

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It is contended by the Applicants that Respondent Bank without complying the Rules has taken measures under the Sarfaesi Act and also contended that description of the property mentioned in the Demand

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Notice is different from the description of the property mentioned in the Sanctioned letter.

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It is further contended by the Applicants that they did not get any opportunity to challenge the account as NPA before classification of account NPA. Applicants also challenged the possession notice.Respondent Bank took possession of the property on the basis of order of the Ld. D.M.Howrah. It is also contended that no Section 13(4) Notice was issued to the Applicants. Thereafter, Respondent Bank issued publication of Sale Notice dated 11/02/2022 in the Eco of India (in English) and Lipi(Bengali). It is alsocontended by the Applicants that Rule 9(1) has been contravened by the Respondents by not giving 15 daysnotice to the Borrower for redemption. There is no gap of 30 days from the issuance of Demand Notice and Possession Notice. Applicants also challenged the Sale notice and publication of Sale Notice in the Application.

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The Applicants have also filed IA/942/2022 with similar prayer in the SA and prayed for interim order staying the sale which was heard on 17/06/2022. During hearing it is submitted by the Ld. Advocate for Respondent Bank that property no. 3 has already been sold on 16/03/2022. It is also directed to the Respondent Bank not to create any third party interest and confirm the sale in respect of property no. 3.

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Thereafter Applicants have filed IA/653/2023 for implementation of the order dated 17/06/2022. During hearing of the SA and IA/942/2022 and IA/653/2023 Respondent Bank filed objection to the SA and IA. In the objection Respondent Bank has stated that Applicants have availed Cash Credit facilities of Rs. 16 lac and Term Loan of Rs. 16.25 lac and annexed Sanctioned Letter dated 13/07/2007 as Annexure ‘A’. The Respondent Bank issued Demand Notice dated 01/12/2011. After 60 days of issuance of Demand Notice, possession notice was issued on 26/09/2012. The Applicants have challenged the Possession Notice by filing application u/s 17(1) of the Sarfaesi Act before DRT-3 being SA/117/2012. The said SA has beentransferred to this Tribunal and renumbered as TSA/68/2014. Copy of SA was not served upon Respondent no. 1. There was stay order passed on

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24/11/2014 which was not communicated to the Respondent Bank. The matter was not heard before 21/08/2018.

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The Respondent Bank on 05/02/2018 issued fresh Demand Notice upon the Borrower and Guarantor which was duly received by the Borrower and Guarantor. Copy of Demand Notice dated 05/02/2018 is annexed as Annexure ‘B’. Thereafter, Respondent Bank has issued Possession Notice on 18/06/2018 u/s 13(4) which is annexed as Annexure ‘C’ and proposed the Applicant for OTS under NDND Special Scheme vide letter dated 03/11/2021 offering Rs. 19,49,000/- against dues of Rs. 72,18,454/- which was received by the borrower but did not bother to settle the dues. The Bank has annexed the OTS proposal as annexure ‘D’.

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Thereafter, Respondent Bank has issued Sale Notice dated 04/01/2022 for e-auction on 25/01/2022. Sale Notice was published in the newspapers, in The Eco of India (in English) and Lipi (Bengali) which is annexed as Annexure ‘E’. which did not materialise for want of bidder. Another sale notice was issued on 11/02/2022.This is the second Sale Notice and the sale date was fixed on 07/03/2022 which has deferred to 16/03/2022.

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It is contended that the Respondent Bank has followed all the Sarfaesi Rules and ultimately sold the property to M/s AKC Umbrella Pvt. Ltd, the highest bidder who has paid full consideration and prayed for dismissal of the SA and IA.

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During hearing of SA and IA Ld. Advocate for the Applicant has alleged that Respondent Bank issuedSale Notice for sale of the property on 07/03/2022 which has deferred to 16/03/2022. Ld. Advocate for the Sarfaesi Applicant has argued that corrigendum should be published with entire sale notice with terms and conditions of sale. Applicant has not filed any publication of corrigendum. There is no evidence of publication of corrigendum in the application as well as objection.

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It is also alleged by the Applicant that no clear 30 days noticehas been given to the Borrower for redemption of the property. At the time of hearing Ld. Advocate for the Applicant has relied upon the authority of

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Hon’ble DRAT, Allahabad in the matter of Syndicate Bank vs. Anand Industries dated 01/03/2021 in Appeal Dy. No. 214/2019.

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In this Appeal it is observed by the Hon’ble DRAT that:

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“Thus, the Bank was required to publish the sale notice dated 15.07.2016 in the newspaper instead of publishing a corrigendum only to the effect that for the sale notice published in the newspaper on 30.06.2016, the date of auction be read as “26.08.2016”. This corrigendum does not clarify, as to what were the conditions of the sale notice and the other details thereof. The public at large cannot gather any inference from such corrigendum in order to participate in the bid. Therefore, this corrigendum was not sufficient to take place of the publication of sale notice dated 15.07.2016 in the newspaper as required under Rule 8(6) of the Rules, 2002.”

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There is no pleading in the SA and IA and there is no evidence of publication of corrigendum of sale. In absence of point raised by the Applicant in the pleadings the point raised by the Applicant is not sustainable.

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So far as giving of 30 days period of notice to the Borrower, Ld. Advocate for the Applicant has relied upon the authority of Hon’ble DRAT, Kolkata in Misc. Appeal no. 34 of 2023 dated 03/05/2024 wherein Hon’ble DRAT observed referring to the authority of Hon’ble Supreme Court of India in the matter of CelirLlp vs Bafna Motors (Mumbai) Pvt. Ltd. on 21 September, 2023, wherein Hon’ble Supreme Court upheld the decision of the Hon’ble Andhra Pradesh High Court in Sri Sai Annadhatha Polymers (supra) that lays down the correct position of law while interpreting the amended Section 13(8) of the SARFAESI Act. Referring to the judgment Hon’ble DRAT observed that in case of subsequent sale Authorised Officeris required to give 15 days notice under Rule 9(1) of the Security Interest (Enforcement )Rules,2002.

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The Hon’ble Supreme Court Of India in Contempt Petition (C) NOS. 158-159 OF 2024 INCIVIL APPEAL NOS. 5542-5543 OF 2023 in the matter of CELIR LLP VS. Mr. Sumati Prasad Bafna&Ors. has observed that before

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exercising the right of redemption, borrower has to tender outstanding dues with interest. Without tendering dues borrower cannot take plea of not given adequate opportunity to redeem the secured property.

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The Hon’ble Supreme Court of India in the Contempt Petition referring to their own judgment ValjiKhimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd.&Ors, reported in (2008) 9 SCC 299 held that auction-sale which stands confirmed can only be interfered with when there was any fraud or collusion, and entertaining of issues regarding the validity of such auction would amount to reopening issues which have achieved finality.

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The Hon’ble Supreme Court of India in the matter of CelirLlp vs Bafna Motors (Mumbai) Pvt. Ltd. has held that :

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“The confirmation of sale by the Bank under Rule 9(2) of the Rules of 2002 invests the successful auction purchaser with a vested right to obtain a certificate of sale of the immovable property in form given in appendix (V) to the Rules i.e., in accordance with Rule 9(6) of the SARFAESI Act. “

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It is also held that right of redemption stands extinguished on publication of sale notice. After having confirmed the sale under Rule 9(2) of the Rules of 2002 Bank could not have withhold the sale certificate under Rule 9(6) of the Rules of 2002.

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The Hon’ble Supreme Court of India in the matter of CelirLlp vs Bafna Motors (Mumbai) Pvt. Ltd. upheld the decision of Hon’ble Andhra Pradesh High Court in Sri Sai Annadhatha Polymers (supra) and the decision of the Hon’ble Telangana High Court in the case of K.V.V. Prasad Rao Gupta that lay down the correct position of law while interpreting the amended Section 13(8) of the SARFAESI Act.

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The Hon’ble Supreme Court at paragraph 63 has observed that the failure on the part of the borrower in tendering the entire dues including the charges, interest, costs etc. before the publication of the auction notice as required by Section 13(8) of the SARFAESI Act, would also sufficiently constitute extinguishment of right of redemption of mortgage property by the act of parties as per the proviso to Section 60 of the

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Transfer of Property Act 1882. It is further observed by the Hon’ble Supreme Court that there was no claim for right of redemption by the borrower either before the publication of the auction notice or even thereafter.

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In the present case Applicant/Borrower has not tendered the outstanding dues,interest and cost. He challenged the sale notice and publication of sale notice that there is no 30 days period given to the Borrower for redemption.

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After perusal of the authority of the Hon’ble Supreme Court of India in the matter of CelirLlp vs Bafna Motors (Mumbai) Pvt. Ltd. dated 21/09/2023 it is observed that borrower can redeem the mortgage property by tendering the entire dues including the charges, interest, costs etc. before the publication of the auction notice as required by Section 13(8) of the SARFAESI Act. It is also observed that failure to tender dues, extinguishes right of redemption of mortgage property.

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The Hon’ble Supreme Court of India in Contempt Petition decided on 30/12/2024 at paragraph 205 directed that the courts and tribunals should refrain from interpreting or examining the scope or effect of such decisions on their own as the same would amount to relitigating the very same issues and rather should relegate the parties to seek clarification from the court that passed the order and adjourn further proceedings sine die .

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After perusing the authority of the Supreme Court of IndiaCelirLlp vs.Bafna Motors (Mumbai) Pvt. Ltd. on 21 September, 2023 and Contempt Petition decided on 13^th December, 2024 there would not be any scope to challenge the sale notice on the ground of not given opportunity to redeem unless the borrower tenders the dues with interest and cost.

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In this case the property has been sold and sale is confirmed in favour of the highest bidder M/s AKC Umbrella Pvt. Ltd. but the Applicant has not impleaded Auction Purchaser as a party in this SA. In absence of the Auction Purchaser the SA cannot be heard. There is no merit in the SA

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and IAs. Therefore, SA and IAs filed by the Applicants 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/140/2022 is dismissed on contest against the Respondents.

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ii) Consequently, pending I.A.s are also disposed of.

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iii) Interim order passed on 17/06/2022 is vacated.

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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 P.S., transcribed by her, corrected, signed and pronounced by me in the open Court on this the day 13^th January, 2025.

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Place: Kolkata (Ambuja Mohan Das ) Date: 13^th January, 2025 Presiding Officer

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Order Sheet (continuation)

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Case No. SA/140/2022 M/s. Economic Research Laboratory &ors. vs. The Authorized Officer, Central Bank of India Office action with date and dated Date of Order with Signature Signature ofParties when the Order necessary

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13/01/2025	Present:
	For Applicants:	Ld. Advocate Mr. K.C. Das and Ms. Tania Majumder Ld. Counsels
	For Respondents:	Mr. Gautam Chakraborty and Mr. Surath Chakraborty Ld. Counsels
	Heard Ld. C The detaile The gist of the orde	ounsels for the parties on 04/11/2024. d order in eight pages annexed separately. r is as follows:
		O R D E R
	i)	SA/140/2022 is dismissed on contest against the Respondents.
	ii)	Consequently, pending I.A.s are also disposed of.
	iii)	Interim order passed on 17/06/2022 is vacated.
	Copy the Tribunal’s	of the Judgment/Final Order be uploaded in website.
	File i (Dictated to P.S., pronounced by me January, 2025.	s consigned to the Record Room. transcribed by her, corrected, signed and in the open Court on this the day 13^th
	Place: Kolkata )	(Ambuja Mohan Das
	Date: 13^thJanuary,	2025 Presiding Officer

Ms Economic Research Laboratory and Anr. Partner Smt Soma Maitra v. Central Bank of India

Case brief

What is this about?

What did the court decide?

Ms Economic Research Laboratory and Anr. Partner Smt Soma Maitra v. Central Bank of India

Case brief

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What did the court decide?

What the court decided

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