Dismissed

Viorica Hotels Pvt. Ltd. v. Union Bank of India

DRT25 Nov 2025SA/147/2024

Case brief

AI extract

What is this about?

Applicants challenged an auction sale of mortgaged properties by Union Bank of India under the SARFAESI Act, citing procedural lapses, incorrect valuation, and pending litigation. The Debts Recovery Tribunal found the sale conducted in compliance with rules, noted the appellant's withdrawal of surplus proceeds indicated waiver, and dismissed the application.

What did the court decide?

Securitisation Application dismissed with costs; pending interlocutory applications deemed disposed of.

Viorica Hotels Pvt. Ltd. versus Union Bank of India — Banking and Recovery | DRT (2025)

¶1

Presented on: 22.02.2024 Registered on: 25.02.2024 Decided on: 25.11.2025 Duration: Y M D 1 9 3

¶2

IN THE DEBTS RECOVERY TRIBUNAL AT PUNE (Before Shri Dilip G Murumkar, Presiding Officer)

¶3

SECURITISATION APPLICATION No.147/2024

¶4

M/s. Viorica Hotels Pvt. Ltd., (Hotel Ramada Plaza) (Earlier Holiday Inn) Through it’s Director Mr. Sharad Yadav, Age: Adult, Occu: Service, Address – Pune – Bangalore Highway, Next to Balewadi Sports Complex, Mhalunge, Hinjewadi, Taluka: Mulshi, Dist. Pune – 411 045.

¶5

Neemco Traders Ltd. A Limited Company registered under The Companies Act, 1956 represented through it’s Authorized Person Mr. Maruti N. Navale Address – Sinhgad Technical Society Campus, 44/1, Vadgaon (Budruk), Opp. Sinhgad Road, Pune – 411 041.

¶6

Mr. Maruti Nivrutti Navale Address: Sinhgad Technical Education Society Campus, 44/1 Vadgaon (Budruk), Opp. Sinhgad Road, Pune – 411 041.

… Applicants

(SA No.147/2024)

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Versus

Authorised Officer Union Bank of India Mid Corporate Branch, 619 Sacha Peer Street, Pune Camp, Pune – 411 001.

¶13

Union Bank of India Mid Corporate Branch, 619 Sacha Peer Street, Pune Camp, Pune – 411 001.

¶14

Mr. Prasad Narayan Iyer Ramkrishna Age : Adult, R/at : A Wing, 601, Opp. German Remedies, Dr. Annie Besant Road, Mumbai – 400 099. 4. Mr. Ishwarchand Kishorilal Goyal Age: Adult, R/at: Mohini Apartment, Prabhat Road, Galli No.11, S. No.94/11, Pune – 411 004.

¶15

Siddharth Vasudeo Moorthy Age: Adult Address: 201 Phoenix Building, Bund Garden Road, Camp, Pune – 411 001. And also at “Vatsalya” Bungalow No.1, 315, Woods, Koregaon Park, North Main Road, Pune – 411 001.

¶16

M/s. Vascon Engineers Limited A Limited Company registered under The Companies Act 1956 having its registered address at 15/16 Hazari

(SA No.147/2024)

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Baug, L.B.S. Marg, Vikhroli (W), Mumbai – 400 083. Corporate Office at: Phoenix Building, Bund Garden Road, Camp, Pune-411 001.

¶21

1. Jasper Realtors Pvt. Ltd., A Partnership firm having it’s Office at “Symphony” 2^nd Floor, 316 Nehru Road, Ville Parle (E), Mumbai – 400 057.

¶22

1. Jasper Developers Pvt. Ltd., A Partnership firm having it’s Office at “Symphony” 2^nd Floor, 316 Nehru Road, Ville Parle (E), Mumbai – 400 057.

¶23

1. Pristine Hospitalities Pvt. Ltd., A Private Limited Company registered under the Companies Act 1956 having address at – Office No.100, East Street, Camp, Pune – 411 001. Also at – 501-502 Fortune House, Prabhat Road, CTS No.117A Erandwane, Pune – 411 004.

¶24

1. M/s. Teerth Spaces Unit 4 LLP Address: C 708 Teerth Techno Space C Wing, Baner, Mumbai – Bangalore Highway, Pune – 411 045. ... Defendants

¶25

APPEARANCES For the Applicants Mr. Mandar Pandit - Advocate For Defendant Nos.1 & 2 Mr. Narayan L. Khamkar - Advocate

(SA No.147/2024)

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For Defendant No.10,	Mr. N.K. Khasbardar – Advocate.
Auction Purchaser
Defendant Nos.3 to 9	Formal Parties

¶30

JUDGMENT

¶31

(Delivered on 25^th November, 2025)

¶32

By the present Securitisation Application, the applicants have challenged the measures taken by defendant bank under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) in respect of the mortgaged properties more particularly described in Schedule A to F of the Application (hereinafter referred to as “suit property”).

¶33

At the outset, I deal with only pleadings relating to sale of the suit property as it is main challenge.

¶34

During the pendency of the Securitisation Application, the Securitisation Application was amended vide Order dated 3^rd April, 2025 passed below IA No.855/2025.

¶35

At the outset, I hereby mentions that since the applicants have challenged the auction sale of the suit property, averments made in the original and amended Securitisation Application can be summarized as under:

¶36

Applicant No.1, the Private Limited Company is doing business of Hotel and owner of the suit properties and is represented by it’s Authorized Person Mr. Sharad Yadav. Applicant No.2 is Corporate

(SA No.147/2024)

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Guarantor represented through it’s Director Mr. Maruti Nivrutti Navale and applicant No.3 is the Guarantor in his personal capacity.

¶41

1. Defendant No.2 is the secured creditor and defendant Nos.3 to 9 are the formal parties. Defendant No.10 is the Auction Purchaser.

¶42

It is the case of the applicant that defendant bank vide Notice u/s 13(2) of SARFAESI Act has stated that credit facilities to the tune of Rs.41,93,00,000/- were granted to applicant No.1 and amount due is Rs.51,09,83,441/-. The applicant No.1 mortgaged the suit properties to defendant bank. The applicant No.1 defaulted repayment of the loan, hence defendant bank classified the loan account as NPA on 31^st March, 2021 and issued Notice u/s 13(2) of the SARFAESI Act. By reply dated 19^th April, 2021 the applicant Nos.1 and 2 objected the contents in the said Notice. Thereafter, defendant bank gave reply to the objections raised by the applicant Nos.1 and 2.

¶43

It is further alleged that on 2^nd July, 2021 defendant bank took symbolic possession of the suit properties. The said action has been challenged by filing SA No.131/2021 which is pending.

¶44

It is alleged that after taking symbolic possession, the defendant bank issued Auction Notices from time to time i.e. on 9^th August, 2021, 30^th September, 2021, 1^st January, 2022, 16^th February, 2022 and 18^th February, 2022. However, the auction did not materialize. However, on 24^th January, 2024 the defendant bank issued disputed Auction Notice and conducted the auction on 14^th February, 2024.

¶45

It is further alleged that the said Auction Notice is bad in law as the

(SA No.147/2024)

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person who has issued the Auction Notice and has conducted the said auction has no authority. The Notice u/s 13(2) is issued on the basis of two loan contracts i.e. one extinguished Loan Contract and other one Subsisting Loan Contract which is not permissible. The defendant bank has failed to give detailed reply to the objections raised by the applicants to Notice u/s 13(2). There is violation of Section 13(3-A).

¶50

There is no proper description of the suit properties in the Auction Notice. The defendant bank has not stated in the Auction Notice that there is 4 Star Hotel consisting of 16914.25 sq meter construction on the said property but has reproduced the description of the original title documents.

¶51

It is further alleged that the applicants from the date of NPA have paid Rs.11,08,66,711/- and after passing the order by this Court in SA No.286/2022 till date have paid Rs.22,18,23,496/-. Thus, total Rs.33,26,90,207/- amount has been paid. The subsequent payments made by the applicants entitles applicants to upgrade the said account and come out of NPA. However, the defendant bank has claimed Rs.51.09 Crores u/s 13(2) Notice and has conducted the auction on the basis of said notice. Hence, wrong claim amount is mentioned.

¶52

It is further alleged that defendant bank did not inform the fact of deposit of huge amount by the borrower to the Central Registry and sold out the suit property. Further, the amount due from the

(SA No.147/2024)

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applicants was Rs.35 Crores but defendant bank has put the property worth Rs.176 Crores for auction which is not justified. Further, as per the Valuation Report the market value of the property was Rs.176 Crores, the distress value was Rs.140 Crores, however the defendant bank has fixed the Reserve Price for Rs.105 Crores, much below the distress value. Hence, it is case of disproportion sale.

¶57

It is further alleged that as per valuation done by defendant bank in the year 2018, the fair market value of the suit property was Rs.178 Crores and in the year 2021, it was Rs.176 Crores as the suit property was in the Grampanchayat area. However, in the year 2022, the suit property got included in the Pune Municipal area. The defendant No.1 bank intentionally reduced the valuation in the year 2023 to Rs.105 Crores although the Realizable Value was Rs.106 Crores as per valuation drawn by it’s own valuer and sold the property of more than Rs.240 Crores for Rs.105.05 Crores.

¶58

It is further alleged that there are series of litigation pending by and between the applicants and defendant Nos.1and 2. In the Auction Notice dated 24^th January, 2024 defendant No.1 has stated that the sale would be outcome of SA No.286/22 and SA No.592/2023. Hence, the defendant No.1 was not justified in conducting the auction and further issuing sale confirmation letter in favour of defendant No.10, Auction Purchaser.

¶59

Further, there is collusion between defendant Nos.1, 2 and

(SA No.147/2024)

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defendant No.10, Auction Purchaser. Defendant No.1 has virtually given the entire movable property to defendant No.10 worth Rs.36 Crores without describing the same in the Auction Notice. The Sale Certificate issued in favour of defendant No.10 is bad in law as it does not mention about the pendency of SA 286/2022.

¶64

Based on the aforesaid facts, the applicant has claimed following relief/s:

¶65

(A) The Present Securitisation Application may kindly be allowed with cost.

¶66

(B) The Auction Notice issued by the Defendant No.1 dated 24/01/2024 may kindly be set aside.

¶67

(C) The Auction done by the Defendant No.1 on the basis of the Auction Notice dated 24/01/2024 by virtue of which the Auction was performed on 14/02/2024 in favour of Defendant No.10 may kindly be set aside in the interest of justice.

¶68

C1) The Defendant No.1 and Defendant No.10 both of them may kindly be directed to restore the physical possession of the suit property to the Applicants as was on the date of taking the said possession.

¶69

C2) The Sale Certificate issued by the Defendant No.1 in favour of the Defendant No.10 dated 30/03/2024 may kindly be set aside in the interest of justice thereby redelivering physical possession of the suit properties and construction standing

(SA No.147/2024)

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on it to the Applicant No.1.

¶74

(D) The possession be ordered to be restored back to the Applicant No.1 by setting aside the Auction dated 14/02/2024.

¶75

Defendant Nos.1 and 2 by filing Reply Affidavit (Exhibit-32) and Additional Statement of Objection (Exhibit-41) resisted the application and denied the allegations made by the applicants. It is stated that all the allegations made in the Securitisation Application are false, incorrect, misleading, misconceived, devoid of merits and not maintainable in law. The account of the applicants was classified as NPA as the applicants failed to service the interest obligations for a continuous period of three months prior to 31.03.2021. Hence, the classification of loan accounts as Non-Performing Assets was made strictly in accordance with RBI’s norms. As per RBI guidelines, a borrower account classified as NPA cannot be upgraded unless the entire overdue amount is fully repaid. The payments referred to by the applicants were not made pursuant to their own undertaking and conditional liberty granted by this Tribunal in SA No.286/202. The said payments to the extent made were duly appropriated towards the outstanding dues of the applicants in accordance with the terms of the loan agreement. The defendant No.2 bank through defendant No.1, the Authorised Officer has duly responded to all the representation made by the applicants in relation to the Demand Notice issued u/s 13(2) of the SARFAESI Act. The description of the

(SA No.147/2024)

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property described in the Auction Notice is same and identical with the description as mentioned in the Mortgage Deed executed by applicant No.1 in favour of defendant No.2. The amount mentioned in the Auction Notice dated 24^th January, 2024 is correct and lawful outstanding dues of the applicants.

¶80

The auction sale impugned in the present Securitisation Application was conducted under the seventh and final Sale Notice dated 24^th January, 2024. Earlier auctions failed for want of bidders. The applicants have not challenged any of the previous six auction notices. Hence, the applicants are now deemed to have accepted the valuation and reserve price. The Reserve Price was fixed based on the valuation of a government-approved independent Valuer in accordance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002.

¶81

In Auction dated 14^th February, 2024 defendant No.10 emerged as the highest and successful bidder, having paid the entire sale consideration of Rs.105 Crores in accordance with the terms and conditions as set out in the Sale Notice. The defendant No.10 deposited 25% of the bid amount on the same date i.e. on 14^th February, 2024 and thereafter remitted the remaining 75% within the prescribed limit. Accordingly, the sale was duly confirmed in favour of defendant No.10 in compliance with Rule 9(2) and 9(3) of the Security Interest (Enforcement) Rules, 2002. There is no collusion between defendant bank and defendant No.10.

(SA No.147/2024)

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The amount of Rs.105 Crores deposited by defendant No.10 was duly appropriated towards the secured debts and after adjusting the dues, the surplus amount of Rs.68.69 Crores was credited to the Current Account of the applicant No.1 on 30^th May, 2024. Initially the applicants protested the said credit, subsequently utilized the entire surplus amount without any further challenge or objection. By accepting and utilizing the surplus, the applicants are estopped from challenging the auction. Further, the auction conducted by defendant bank was in accordance with the SARFAESI act and Rules framed thereunder. Hence, the fact that litigation was pending does not, in any manner, restrict the bank from proceeding the sale of the secured asset, especially in the absence of any stay or injunction. They, therefore, pray for dismissal of the present application.

¶86

Defendant No.10, Auction Purchaser by filing Statement of Objection (Exhibit-44) contested the application. It is contended that the applicants have not approached the Tribunal with clean hands and have concealed various material facts and documents. The applicants have prolonged and protracted the matter by filing various applications.

¶87

It is contended that the entire structure standing on the suit property was illegal and unauthorized. Further, the suit property was put to auction for six occasions. The seventh auction was conducted on 14^th February, 2024 in accordance with Sale Notice dated 24^th January, 2024 with reserve price of Rs.105 Crores. The defendant No.10 was

(SA No.147/2024)

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declared as successful bidder and defendant No.10 paid balance of 25% amount on 15^th February, 2024. However, the applicants challenged the sale dated 14^th February, 2024 by filing present Securitisation Application on 21^st February, 2024 i.e. after the sale was confirmed by defendant bank in favour of defendant No.10.

¶92

Further, the applicants have withdrawn almost entire residual amount of the sale consideration which was credited to their account.

¶93

Further, the applicants did not pay the outstanding dues despite opportunities given by the Hon’ble Tribunal. The applicants breached their own Undertaking. The applicants sought extension of time for making payments, however failed to make the payment. Hence, the defendant bank issued Notice dated 5^th February, 2024 from the Tahsildar for taking possession of the suit property on 17^th February, 2024. The applicants then moved IA No.337/2024 for restraining the defendant bank from taking physical possession of the suit properties. The Hon’ble Tribunal by Order dated 15^th February, 2024 dismissed the said IA. Thereafter, the applicants again moved IA No.382/2024 with prayer that applicants are going to prefer Appeal before Hon’ble DRAT, Mumbai against the order of Hon’ble Tribunal, the defendant bank may kindly be restrained from taking physical possession of the suit properties on 17^th February, 2024. The Hon’ble Tribunal allowed the said IA and protection was granted to the applicants’ subject to applicants’ deposit Rs.1.40

(SA No.147/2024)

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Crores by 21^st February, 2024. Thereafter, applicants approached Hon’ble DRAT Mumbai. However, since applicants did not comply the order of Hon’ble DRT of making payment of Rs.1.40 Crores by 21^st February, 2024, defendant bank through Tahsildar issued Notice for taking physical possession of the suit properties on 18^th March, 2024. Thereafter, the applicants approached Hon’ble High Court, Mumbai. However, since the Hon’ble High Court was not inclined to grant any relief to the applicants, the applicants withdrew their Petition. While allowing such withdrawal, the Hon’ble High Court directed that possession of the suit property shall be taken on 18^th March, 2024 itself by the defendant bank. Thereafter, the defendant bank took possession of the suit property and handed over the same to defendant No.10 on 31^st March, 2024. In view of these facts, the Securitisation Application is liable for dismissal with exemplary costs.

¶98

The applicant by filing Counter Affidavits (Exhibit-43 and 46) to the Statement of Objections filed by defendant Nos.1 & 2 and defendant No.10 tried to expunge the contentions raised in the Statement of Objections.

¶99

Heard all the parties. The learned Advocate for the applicants, defendant Nos.1 and 2 and defendant No.10 filed Written Notes of Arguments (Exhibit-53, 58 and 56 respectively) and also made oral submissions which are in consonance with their Written Notes of Arguments and pleadings.

(SA No.147/2024)

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The learned Advocate for the applicants relied upon the following Judgments:

¶104

Babu Verghese Vs. Bar Council of Kerala reported in LAW (SC) 1999-3-38.

¶105

Dharimin Bai Kashyap Vs. Babli Sahu and Others [Civil Appeal No.2517 of 2023 decided on 16^th August, 2023].

¶106

Sravan Dall Mill P. Limited Vs. Central Bank of India reported in LAWS (APH)-2009-9-37

¶107

M/s. Oswal Spinning & Weaving Mills Ltd., Vs. Reserve Bank of India and others [Civil Writ Petition No.13888 of 2015 decided on 11.04.2016].

¶108

Venish Pharma Chem (P) Limited and another Vs. State Bank of India and Others reported in 2018 DGLS(Hyd.) 77.

¶109

Rakesh Birani (D) Through LRS. Vs. Prem Narain Sehgal and Another [ Civil Appeal No.3156 of 2018 (Arising out of SLP (C) No.7626 of 2017 decided on 21^st March, 2018].

¶110

The learned Advocate appearing for defendant Nos.1 and 2 relied upon the following Judgments:

¶111

1. Pahwa Buildtech Pvt. Ltd. Vs. Mr. Jagmohan Singh Arora and Others [W.P. (C) 10164/2021 & CM APPL. 31351/2021 decided on 10^th June, 2022].

¶112

2. M/s. Only Wheel & Ors. Vs. Bank of Baroda & Ors. [C.O. 3813 of 2024 decided on 4^th September, 2025].

¶113

3. Celir LLP Vs. Sumati Prasad Bafna and Others reported in 2024

(SA No.147/2024)

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DGLS (SC) 1272.

The learned Advocate appearing for defendant No.10 relied upon the following Authorities:

¶119

1. Deepika Paresh Thakkar Vs. Gruh Finance Limited & Ors [Writ Petition No.873 of 2015 decided on 11^th June, 2015].

¶120

2. ITC Limited Vs. Blue Coast Hotels Ltd., & Ors. [Civil Appeal Nos.2928-2930 of 2018 (Arising out of SLP (C) Nos.1019610198/2016 decided on 19^th March, 2018].

¶121

3. Sea Poly Plast India Pvt. Ltd. And Ors Vs. Union of India and Ors. Reported in MANU/MH/1429/2011

¶122

4. Arce Polymers Private Limited Vs. Alphine Pharmaceuticals Private Limited and Ors. Reported in MANU/SC/1184/2021.

¶123

5. CELIR LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd. And Ors. [Civil Appeal Nos.5542-5543 of 2023 decided on 21^st September, 2023].

¶124

6. Suzuki Parasrampuria Suitings Pvt. Ltd. Vs. The Official Liquidator Mahendra Petrochemicals Ltd. (In Liquidation) and Ors. [Civil Appeal No.10322 of 2018 (Arising Out of S.L.P. (C) No.12073 of 2017) decided on 8^th October, 2018].

¶125

The following points arise for my determination and I record my findings thereon as under:

¶126

(1) Whether applicants prove procedural lapses in sale of the suit property conducted on 14^th February, 2024 on the basis of auction Sale Notice dated 24^th January, 2024 by defendant

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bank in favour of defendant No.10, Auction Purchaser?

¶131

(2) Whether applicants are entitled for relief of setting aside and cancellation of Auction Sale Notice, auction Sale and Sale Certificate in respect of suit property?

¶132

(3) Whether applicants are entitled for restoration of possession of suit property by setting aside disputed auction sale?

¶133

(4) What Order?

¶134

Findings:

¶135

Point No.1 – In the negative

¶136

Point No.2 – In the negative

¶137

Point No.3 – In the negative

¶138

Point No.4 – As per final order below.

¶139

Reasons

¶140

Point Nos.1 to 3

¶141

Since all these points are interconnected with each other, I record my findings thereon simultaneously.

¶142

The main challenge of applicants in this application is auction

¶143

sale of suit property conducted on 14^th February, 2024 in pursuance of auction Sale Notice dated 24^th January, 2024.

¶144

The procedure for conducting sale of mortgaged immovable property has been provided in Rule 8 and 9 of the Security Interest (Enforcement) Rules, 2002 and important provisions thereof are as under:

¶145

(a) For the first sale the Secured Creditor is required to serve

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thirty clear days Sale Notice to the borrower.

¶150

In respect of subsequent sale, Sale Notice of fifteen clear days is required to be served.

¶151

(b) Before sale, Valuation Report from authentic Valuer is required to be obtained by Secured Creditor for fixing Reserve Price.

¶152

¶153

(d) Publication of Sale Notice in two newspapers i.e. one in English newspaper and another in newspaper of vernacular language is required to be made.

¶154

(e) Sale shall be confirmed in favour of Auction Purchaser who has offered highest sale price.

¶155

(f) Auction Purchaser shall immediately i.e. on the same day or not later than next working day pay 25% of sale price inclusive of earnest money deposited. The balance amount shall be paid on or before 15^th day of confirmation of sale or such extended period by the Authorised Officer of Secured Creditor but not exceeding three months.

¶156

(g) On deposit of full sale price, the Authorised Officer shall deliver property to Auction Purchaser.

¶157

(h) The Sale Certificate in respect of property sold shall be issued and shall be registered in favour of Auction Purchaser.

¶158

Keeping these provisions in mind, I scan the evidence on record.

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The applicants have challenged the disputed sale on following grounds:

¶163

Ground No.1

¶164

According to the applicants, the description of 4 Star Hotel Building is not mentioned in the Sale Notice. Hence, it is the case of non-disclosing of exact description of suit property and therefore, on this count Auction Sale Notice is bad in law and auction sale conducted on its basis is wrong as it is violation of Rules regarding the sale.

¶165

However, whatever description of mortgaged property is mentioned in the Mortgage Deed produced on behalf of defendant bank has been given in Auction Sale Notice i.e. Land and existing structure and structure to be erected on that land. Therefore, I do not find any substance in this allegation of the applicants.

¶166

Ground No.2

¶167

According to the applicants, in the Auction Sale Notice, an amount due and recoverable is mentioned as Rs.51,09,83,441/-. However, applicants have paid substantial amount about Rs.35 Crores before Sale Notice. Therefore, after deducting that amount exact due was required to be shown in the Sale Notice. Thus, false amount has been mentioned in the Sale Notice which was not due and payable by applicants and therefore, Auction Sale Notice is bad in law and auction conducted on its basis is wrong and illegal.

¶168

However, on cursory perusal of Sale Notice the defendant bank

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has clarified that the amount claimed in the Demand Notice is mentioned in Sale Notice. Thus, it cannot be said to be illegal.

¶173

Further, it is alleged that in the Terms and Conditions of Sale Notice, particularly, in Clause 10 it is mentioned that moveable property may be inspected by the purchaser/bidder which is to be sold. In fact, moveable property was not mortgaged and cannot be sold.

¶174

However, the Clause 10 mentions property as “immovable/movable”. Admittedly only immovable property was mortgaged and hence defendant bank had intention to sale only immovable property and not movable property. Further, it is printed format which refers both immovable and movable property.

¶175

It is to be noted that Sale Notice was served upon the applicants in advance before sale. However, they have not taken an opportunity to raise objection in respect of this allegation. Per contra, they have filed this Application after confirmation of sale. From these facts, I have no hesitation to infer that applicants have waived their right to raise objection to the contentions in the Sale Notice and hence they are estopped from raising these objections now.

¶176

Ground No.3

¶177

According to the applicants, the suit property is 4 Star Hotel of which value was about Rs.249 Crores on the date of auction. As per Valuation Report given by Mr. Mandlik and Mr. Thite value of suit property was Rs.176 Crores and Rs.175 Crores, respectively. However, the Reserve Price of the suit property was fixed at Rs.105

(SA No.147/2024)

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Crores and sold at Rs.105 Crores means at very low price big suit property has been sold.

¶182

Further, the Valuation Report given by M/s. S G Associates obtained by defendant bank shows that Realizable Value of the suit property is Rs.105,99,80,639/- and Valuation Report of M/s. Reveara obtained by defendant bank shows that Realizable Value of suit property is Rs.106,24,73,000/-. However, the defendant bank reduced value against these Valuation Reports and fixed Reserve Price at Rs.105 Crores, which is illegal. Therefore, sale is required to be set aside.

¶183

However, admittedly this was seventh sale. Reserve Price was kept at higher price in earlier six Sale Notices. The above mentioned Valuation Reports were obtained on 19^th June, 2023 and thereafter, once again the suit property was put for sale. Fifth sale with Reserve Price of Rs.117.92 Crores and Sixth sale with Reserve Price at Rs.106.13 Crores were conducted on 27^th October, 2023 and 15^th December, 2023. Even then, that auction failed for want of bidders. As per Banking Practice, Reserve Price used to be reduced by 10% of Reserve Price put for earlier sale. In the present case, the defendant bank without reducing 10% of Rs.106.13 Crores has reduced only Rs.1 Crore.

¶184

At this juncture, it is to be noted that Sale Notice was duly served upon the applicants. They did not raise objections regarding quantum of Reserve Price and also not obtained Valuation Report

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from their side. Though they have taken Valuation Report of Mr. Nitin M. Lele produced on record, it is of 11^th June, 2024 i.e. after registration of Sale Certificate and not before date of sale. Therefore, much importance should not be given to it.

¶189

Ground No.4

¶190

According to the applicants, the defendant No.10, Auction Purchaser though has paid 25% amount on 14^th February, 2024 i.e. on the date of sale of the suit property, remaining 75% has not been paid within fifteen days i.e. on or before 28^th February, 2024. Thus, there is violation of Rule 9(4) of the Security Interest (Enforcement) Rules, 2002. Therefore, it was the duty of defendant bank to forfeit 25% deposited by Auction Purchaser and cancel the sale.

¶191

Further, extension for deposit of 75% amount was not given by defendant bank within fifteen days after confirmation of sale. Therefore, on this ground sale may be set aside.

¶192

However, both the defendant bank and Auction Purchaser have produced on record correspondence regarding deposit of balance 75% amount of sale price. On perusal of this correspondence it glaringly shows that on 15^th February, 2024 defendant No.10, Auction Purchaser had written Request Letter and sought time for deposit of remaining amount and defendant bank by Reply dated 23^rd February, 2024 granted it with direction to deposit Rs.5 Crores on or before 29^th February, 2024 and another Rs.5 Crores on or before 31^st March, 2024 out of remaining amount of Rs.78,78,75,000/- (75%

(SA No.147/2024)

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amount) and balance Rs.68,78,75,000/- on or before 14^th May, 2024. Defendant No.10, Auction Purchaser again wrote Request Letter dated 24^th February, 2024 to defendant bank and intimated that instead of deposit of Rs.5 Crores by 29^th February, 2024, they will deposit Rs.5 Crores on or before 31^st March, 2024 and balance amount on or before 14^th May, 2024 and said request has been accepted by defendant bank by reply through e-mail dated 29^th February, 2024.

¶197

In view of these facts, it could not be said that extension to deposit remaining 75% amount of sale price was granted to defendant No.10, Auction Purchaser on 29^th February, 2024 for first time i.e. beyond fifteen days. Further, since extension of deposit of 75% amount was given question of depositing this amount within fifteen days from confirmation of sale does not arise. Thus, there is no violation of Rules 9(5) of the Security Interest (Enforcement) Rules, 2002. Therefore, I do not find substance in this ground.

¶198

Ground No.5

¶199

According to the applicants, the outstanding amount of Rs.35 Crores was to be paid by the applicants at the time of sale of the suit property. Therefore, it was not necessary for defendant bank to sale whole suit property of which value is about Rs.249 Crores. The defendant bank should have sold the part of suit property to the extent of outstanding amount of Rs.35 Crores. However, by selling entire suit property, the defendant bank has committed illegality as

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it is the case of disproportionate sale. Therefore, sale may be set aside.

¶204

However, the suit property consists of land and building thereon and it is not divisible. If suit property would have been in parts/pieces and have been mortgaged separately, then only it could be possible to sale part of the suit property to the extent of outstanding amount. Therefore, I do not find merits in this ground. Ground No.6

¶205

According to the applicants, sale was conducted on the basis of symbolic possession of suit property and same was mentioned in the Sale Notice. Further, in the Auction Notice it has been mentioned that auction sale is subject to outcome of SA No.286/2022 in which Order of District Magistrate passed u/s 14 has been challenged regarding possession of the suit property, which is still pending. However, the defendant bank handed over physical possession of the suit property to defendant No.10, Auction Purchaser. Therefore, applicants are entitled for restoration of suit property.

¶206

However, the documents produced on record by defendant bank candidly shows that defendant bank had taken out Possession Notice of suit property which was challenged by the applicants by filing IA No.337/2024 in SA No.286/2022 on 16^th February, 2024 thereby claiming relief of restraining defendant bank from taking physical possession of the suit property scheduled on 17^th February, 2024. The said Interlocutory Application was dismissed. Therefore,

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applicants sought Stay for operation of that Order by filing IA No.382/2024 on the ground that they would prefer appeal against that impugned order and therefore that IA No.382/2024 was granted by imposing condition of deposit of Rs.1.40 Crores by 21^st February, 2024.

¶211

The applicants preferred Appeal bearing Appeal (D) No.560/2024 before the Hon’ble DRAT, Mumbai. In the meantime, since the applicants failed to deposit Rs.1.40 Crores as directed by this Tribunal in the Order passed below IA No.382/2024 in SA No.286/2022, the defendant bank again took out physical Possession Notice and possession was fixed on 18^th March, 2024. The applicants filed Writ Petition before the Hon’ble High Court, Bombay. Since Hon’ble High Court decline to grant any relief, they withdrew the same. While allowing such withdrawal, Hon’ble High Court directed that the possession of the suit property shall be taken on 18^th March, 2024 by the defendant bank itself. Accordingly, physical possession of the suit property was taken by the defendant bank on 18^th March, 2024.

¶212

That apart, question of restoration of possession would be decided when SA No.286/2022 will be decided in due course.

¶213

It would not be out of place to mention that if mortgaged property is sold in auction without possession, no purchaser would come forward to purchase it. So also Securitisation Law regarding sale would become futile. In the present case when suit property has

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been sold for huge amount, what is the purpose of keeping possession with defendant bank. The defendant No.10, Auction Purchaser has invested huge amount i.e. more than Rs.105 Crores for purchasing the suit property, therefore, he is definitely entitled for physical possession of the suit property when it is with defendant bank. Therefore, much importance should not be given in respect of term in Sale Notice that sale of the suit property is on the basis of symbolic possession.

¶218

Ground No.7

¶219

According to applicants, the loan account was classified as NPA on 31^st March, 2021 and Demand Notice issued u/s 13(2) of SARFAESI Act shows that outstanding amount was Rs.51,09,83,441/-. The applicants have deposited substantial amount after loan account was classified as NPA and after Demand Notice as per order of this Court in earlier SA No.286/2022. Therefore, loan account has become standard and had come out of NPA.

¶220

However, copy of Statement of Accounts produced by defendant bank along with Affidavit (Exhibit-59) glaringly shows that applicants have deposited some amount. However, the amount deposited had never covered overdue amount and account remained irregular throughout. Therefore, it could not be said that loan has come out of NPA and has become standard.

¶221

Further according to the applicants, Demand Notice was issued to present applicants and defendant Nos.3 to 9 who were earlier

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Directors of applicant No.1 Company. However, when applicants executed fresh guarantee and loan documents, earlier guarantors have been discharged. Thus, there is substitution of loan contracts i.e. old and new. Both loan contracts cannot be enforced by the defendant bank. This objection was taken by the applicants in Reply/Objection to Demand Notice of the defendant bank.

¶226

However, on perusal of these loan documents anybody can infer that it is continuing guarantee executed by earlier guarantors and not substituted by guarantee executed by applicants. Therefore, objection to that effect raised in Reply/Objection to Demand Notice is devoid of consideration.

¶227

The applicants have not challenged pasting of Sale Notice on the suit property and publication of Sale Notice in the Newspaper. Thus, indirectly admitted the same.

¶228

In view of these observations, I do not find any procedural lapses or illegality in conducting sale of the suit property.

¶229

Most pertinent is that the suit property has been sold in auction for Rs.105.05 Crores and amount due was about Rs.36 Crores. The defendant bank by deducting outstanding amount credited balance amount of Rs.68.69 Crores in the Current Account of the applicants. The applicants have withdrawn an amount of Rs.58.59 Crores out of the said amount. The applicants in IA No.2455/2024 contended that since sale has been challenged, they will not withdraw the said residual amount and utilize in any way. However, later on they

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themselves withdrew the said amount alleging that defendant bank has given consent for the same. Thus, there is approbation and reprobation of this fact. Anyhow, it is not disputed that applicants have withdrawn major part of residual amount and this conduct of the applicants drive me to hold that applicants have indirectly given consent for sale of the suit property and waived right to challenge it.

¶234

Resultantly, I hold that applicants are not entitled for relief as claimed. Therefore, I answer these points accordingly.

¶235

Point No.4

¶236

From the evidence on record, I hold that defendant bank has conducted sale of the suit property within the framework of Securitisation Law and Rules. Therefore, applicants are not entitled for reliefs as claimed. Hence, application is liable for dismissal.

¶237

Before parting with Judgment, I, with great regards, mention that Authorities cited on behalf of the applicants are not applicable to present case as they turn on different points than facts of the present case. Per contra , Authorities cited by defendant bank and defendant No.10, Auction Purchaser are squarely applicable to the present case.

¶238

Therefore, by answering this point accordingly , I proceed to pass the following order:

¶239

ORDER

¶240