Dismissed

Bansidhar Behera v. Punjab National Bank

DRT7 Feb 2025SA/161/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the Securitization Application challenging the District Magistrate's order allowing the bank to take physical possession of a mortgaged residential house. The Tribunal held that the bank complied with notice requirements under SARFAESI Act and Rules, proper valuation was done, and procedural violations were not established on record.

What did the court decide?

Application S.A. No.161 of 2023 dismissed; notices under Section 13(2), 13(4) and auction sale notice declared valid; District Magistrate's order confirmed as per law.

Bansidhar Behera versus Punjab National Bank — Banking and Recovery | DRT (2025)

¶1

¶2

BEFORE THE DEBTS RECOVERY TRIBUNAL, CUTTACK PRESENT:- SHRI JITENDRA PRASAD SINGH

¶3

PRESIDING OFFICER.

¶4

S.A. No.161 OF 2023

¶5

DATE OF DELIVERY OF ORDER: 07.02.2025

¶6

Banshidhar Behera, aged about 77 years, S/o- Late Bairagi Behera, At- Mallaha Sahi, P.O.-Buxi Bazar, P.S- Mangalabag,

¶7

Dist- Cuttack-753001, Odisha,

¶8

Pramod Behera, aged about 48 years, S/o- Banshidhar Behera, At- Mallaha Sahi, P.O.-Buxi Bazar, P.S- Mangalabag,

¶9

Dist.- Cuttack-753001, Odisha,

¶10

… Applicants

¶11

-VERSUS-

¶12

Authorized Officer, Punjab National Bank, Circle Sastra Centre, Cuttack, Plot No.766, 1^st Floor, Konark Centre, NH-16, Telengapentha, Cuttack-754001, Dist- Cuttack, Odisha

¶13

The Branch Manager, Punjab National Bank, Buxibazar Branch, At/PO-Buxi Bazar, Town/Dist.-Cuttack, Odisha-753001

¶14

Collector & District Magistrate, Cuttack, Office At-Collectorate, Cuittack-753002

¶15

Mamata Maharana, D/o-Ankar Sahoo, Mallaha Sahi, Cuttack. … Respondents Counsel for the Applicant:Shri N. K. Dash Counsel for the Respondents No.1 & 2:- Shri Anjan Kumar Biswal Counsel for the Respondent No.3:None Counsel for the Respondent No.4:Shri S. K. Mishra

¶16

JUDGEMENT

¶17

This is an Application under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filed by the applicant for setting aside the impugned order dated 05.08.2023 passed by the learned District Magistrate, Cuttack in Bank Misc. Case No.27 of 2022 for taking

¶18

¶19

physical possession of the residential house of the applicants and further to pass an order restraining the Respondent Bank to take physical possession of the secured asset and for other reliefs.

¶20

The brief facts of the applicant case is that the Applicants had applied for and availed a Housing Loan of Rs.11,00,000/- (Rupees Eleven Lakhs Only) from the Respondent bank in the year 2013 for construction of their house and to secure the said credit facility the Applicants had extended the guarantee and stood as guarantors by mortgaging schedule of the immovable property as security. Further, being satisfied with the repayments the Respondents had again sanctioned a House Loan for Rs.7,00,000/- and OD of Rs.4,00,000/for said construction of the house. However, the Respondent Bank in totality has sanctioned a sum of Rs.22,00,000/- (Rupees Twenty Two Lakhs Only) to the Applicants for construction of their house. The EMI of the said Housing Loan was being paid regularly till November, 2021 without any fail despite the Covid-19 pandemic. Though the performance of the Applicants in repaying the loan EMI was good but due to the prolonged pandemic and the post COVID-19 impact minimized the transactions with the Bank. The Respondent Bank in terms of Section-13(2) of Securitization and Reconstruction of the Financial Assets and Enforcement Security Interest Act and Rules, 2002 recalled the facility and issued Notices on dated 17.06.2021 and 06.07.2021 demanding the outstanding amount of Rs.23,22,395/-. The Respondent in its notice has stated that due to default in repayment, the account has classified as NPA. After receiving the notice U/s.13(2) of the Act from the Respondent Bank, the Applicants through his Lawyer has sent a representation on dated 06.07.2021 U/s.13(3A) of the Act in response to the said Demand Notice. However, the Respondent Bank has rejected the grievances of the Applicants without any reason and rhymes. Despite issuing notices U/s.13(2) of the Act, the Respondent Bank had been receiving the repayments made by the Applicants on different dates. The Applicants had paid a

¶21

¶22

sum of Rs.19,74,000/- as on 20.11.2021. Since, the Respondent Bank received the repayments after issuance of Demand Notices, the same tantamounts waiver of the action under the demand notices under the Act. Despite receipt of the amount after issuance of the demand under the Act, the respondent Bank did not refrain itself from taking any action rather the Respondents Bank in exercise of the power conferred under the SARFAESI Act issued Notice U/s.13(4) of the Act issued Possession Notice dated 05.10.2021 which has been communicated to the Applicant on 09.10.2021 by post. However, the Bank by notices dated 13.12.2021 and 04.01.2022 read with Rule-8(6) instructed the Applicants to pay the total outstanding dues within 15 days otherwise the Bank will sell out the secured asset. The Applicants contacted the Respondent Bank personally and approached the Bank not to take any coercive measures as they are willing to repay the pending installments. Though the Respondent Bank did not deny to the request of the Applicants but delayed the issues saying that they will take instruction from the higher authority and on the other hand proceeded against the mortgaged property. The conduct of the Respondent Bank in issuing the said notices is suspicious. The Bank is stating that the possession notice was issued on 05.10.2021 but the same is quite wrong and misconceived. The schedule property is the only residential property of the Applicants situated in the prime locality of Cuttack City. The Applicants are also original native of Cuttack city. Since the Respondent Bank has not replied anything to the response of the demand notice under Annexure-2 and further as the Respondent Bank was avoiding in regularizing the loan accounts deviating the RBI guidelines during the period of Covid-19, the Applicants finding no other efficacious remedy approached the Hon’ble High Court of Odisha in W.P.(C) No.406 of 2022 with a prayer to set aside proceeding under the SARFAESI Act and to settle the matter under One Time Settlement. During the pendency of the said Writ petition the Applicant received one letter from the Bank regarding publication of sale notice fixing the

¶23

¶24

date of auction sale on 15.02.2022. However, the Bank during the course of hearing submitted that the respondent Bank auctioned the mortgaged property successfully on 05.02.2022 for a sum of Rs.26.60 lakhs. The Hon’ble High Court has, therefore, permitted the applicant to withdraw the said writ petition giving liberty to seek their remedy in accordance with law. The alleged E-auction sale was conducted by the Respondent Bank behind back of the Applicants. Further, there is no such occasion on the part of the Applicant to know about the sale publication of the alleged E-auction Sale Notice by the Respondent Bank as they are subscribing any Newspapers. Though the Applicants sought for the details of the auction sale the Respondent Bank did not pay heed to the request of the applicants. The Respondent Bank vide its letter dated 23.02.2022 intimated the Applicants the date of sale dated 15.02.2022 after disposal of the said Writ petition. However, the disclosure of the date on which auction sale was conducted is highly suspicious. As the Applicants are all along interested to regularize the housing loan accounts to save their residence, they had approached the Court of Permanent Lok Adalat, Public Utility Services (PUS), Cuttack established under the legal Services Authorities Act, 1987 with a prayer to settle the loan accounts through mediation which was registered as PLA Case No.51 of 2022. The Respondent Bank although noticed but without participating in the Lok Adalat the Respondent Bank had proceeded against the residential house of the Applicants which is apparent the sole Moto of the Bank to take away the resident of the Applicants. Further, the Respondent Bank having its greedy eyes on the residential property has filed an Application U/s.14 of the SARFAESI Act, 2002 before the Learned District Magistrate & Collector, Cuttack in Bank Misc. Case No.27 of 2022 with a declaration that the Respondent Bank has issued Demand Notice U/s.13(2) of the Act on 17.06.2021 and the possession Notice U/s.13(4) of the Act on 05.10.2021 having its paper publication on 10.10.2021, whereas the Bank has issued the possession notice to the Applicants much later

¶25

¶26

than the date of its issue. The Applicants have not been provided with sufficient opportunity to save their residential house. Even the Applicants were ready and willing to settle the loan accounts by regularizing the same. Besides approaching the permanent Lok Adalat, the Applicants have requested the Respondent Bank frequently for settlement of loan accounts. However, from the date of statement of the accounts it cannot be construed that the Applicants are willful defaulter. Admittedly, during Covid-19 the financial condition of the Applicants was deteriorated for which the present situation has been arisen. But the Respondent Bank as a prudent banker has to follow and obey the statutory provisions of law properly and in true spirit to which the Bank has not done so. In compliance of the liberty granted by the Hon’ble High Court, the Applicants has taken recourse before the statutory authority for settlement of the loan accounts but the Respondent Bank did not extend its cooperation intentionally and clandestinely only to grab the residential property of the Applicants without disclosing the name and address of the so-called auction purchaser till date. There is also suspiciousness about the auction sale of the mortgaged property. Even the fact of auction sale of the mortgaged property by the Respondent is true, then the Respondent Bank has sold the same in a throwaway price of Rs.26.60 lakhs whereas the actual value of the mortgaged property in Mangalabag Location of the Cuttack City shall be more than One Crore. The conduct of the Respondent Bank is apparent suspicious and collusion with auction purchaser for which the Bank has suppressed the material facts of auction sale to the Applicants till date. The act of the Respondent Bank in conducting the auction sale, if so, is violation of the guidelines framed by the Hon’ble Supreme Court. The Applicants though sent a letter of request to the Respondent No.2 on 06.01.2023 but the same was unanswered. Though the Applicants have approached the Permanent Lok Adalat, Cuttack but the said authority has no power to pass an order restraining the Bank and the taking

¶27

¶28

such advantage the Respondent Bank has proceeded for an order from Learned D.M., Cuttack U/s.14 of the SARFAESI Act and on the other hand, though the Respondent Bank appeared but did not attend the Permanent Lok Adalat, Cuttack in spite of repeated dates and orders.

¶29

The Respondent by letter dated 07.08.2023 informed the Applicants that the property mortgaged by them has already been sold under SARFAESI Act for an amount of Rs.26.60 Lakhs and therefore, requested the Applicants to cooperate with the Bank and vacate the premises within seven days of receipts of the said letter and deliver the peaceful physical possession of the said property, the Applicants vide letter dated 14.08.2023 has approached the Respondent Bank not to take any coercive action as application pending before the Hon’ble Debts Recovery Tribunal in Diary No. 72 of 2023 (S.A), in Permanent Lok Adalat and also a suit for partition vide C.S. No.341 of 2022 in Learned C.J. Learned C.J. 1^st Court (Sr. Dvn.) Cuttack. The learned District Magistrate, Cuttack in exercising the power U/s.14 of the SARFAESI Act, 2002 has passed an order dated 05.08.2023 in Bank Misc. Case No.27 of 2022 for taking physical possession of the residential house of the Applicants and further the Learned District Magistrate in its order has directed the DCP to provide necessary police assistance to the secured creditor and depute a Magistrate at the time of taking over physical possession of the secure asset by the Respondent Bank.The Applicant No.1 is an old senior citizen and the Respondent Bank is threatening the Applicants for taking the physical possession of the property violating the provision of law and Principles of Natural Justice and without giving any opportunity to the Applicants. The applicant relied on the following decisions in support of its case:-

¶30

(i) WPC No.1572 of 2007 decided on 27.06.2008 between Stan Commodities Pvt. Ltd. Vrs. Punjab & Sind Bank & others

¶31

(ii) Mardia Chemicals Ltd. & others Vrs. Union of India & others (MANU/SC/0323/2004)

¶32

¶33

(iii) WPC No.11425 of 2021 between Bajaj Finance Ltd. Vrs. M/s Ali Agency & others(Orissa High Court)

¶34

(iv) In the Supreme Court of India Civil Appeal No.4429/2009(Authorised Officer, IOB Vs. Ashok Saw Mill)

¶35

(v) WP No.13936 of 2019 between Alphine Pharmaceuiticasl Pvt. Ltd. & others Vrs. Andhra Bank & others(High Court of State of Telengana)

¶36

(vi) Writ Petition No.12189 of 2018 between M/s Durga Bhavani Agro Tech. Industry Vrs.S. Canara Bank

¶37

Notices were issue to the Respondent No.1 and 2 and Respondent No.3 and 4 to show cause as to why the relief prayed for by the applicant be not granted. After receiving the notice, the Respondents No.1 and 2 and Respondent No.4 appeared and filed their counter affidavit. Respondent No.3 did not appear inspite of service of notice.

¶38

The Respondents No.1 and 2 filed their counter affidavit contending that the law is well settled that two numbers of Securitisation Application for the self-same property by the same owner/person is not permissible as per law but since in this matter, the Applicant No.1 has filed one S.A. which has been numbered as Diary No.72, which is pending before this Tribunal and during the pendency of the said S.A., the Applicants have filed the present S.A. before the Hon’ble Tribunal for which also the aforesaid Securitisation Application is not maintainable in the eye of law and the same is liable to be dismissed with cost. The present Applicants have filed the aforesaid Securitization Application U/s.17(1) of the Securitization and reconstruction of Financial Assets and Enforcement Security Interest Act, 2002. The said Section 17(1) clearly states that “Any person (including borrower), aggrieved by any of the measures referred to in sub-section(4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter to the Debts Recovery Tribunal having jurisdiction in the matter within forty five days from the date

¶39

¶40

of which the measures had been taken”. Since in this instant case, the Notice U/s.13(4) of Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 was issued to the Applicants on 05.10.2021 and the Notice published in the News Paper on 10.10.2021 but since the Applicant have neither filed the aforesaid Securitisation Application within 45 days from the date of issuance of Notice U/s.13(4) of the SARFAESI Act, 2002 nor from the date of Paper Publication and the said Applicants have also not filed the aforesaid Securitization Application within 45 days from the date of dismissal of the Writ Petition bearing W.P.(C) No.406 of 2022, the aforesaid Securitization Application is also liable to be dismissed with Cost. Both the Applicant No.1 and Applicant No.2 have availed the total loan of Rs.22,00,000/- (Rupees Twenty two Lakhs) only i.e. Rs.11,00,000/only on 27.03.2013 for Housing Loan +Rs.7,00,000/- only on 01.12.2015 for furnishing + Rs.4,00,000/- only on 30.04.2014 as Over Draft) respectively from the Respondent Bank. The Applicant No.1, in whose name the land is recorded had created Equitable Mortgage of his said landed property against the above loans in favour of the Respondent Bank. After execution of loan documents by both the Applicants and also after creation of Equitable Mortgage by the Applicant No.1 in favour of the Respondent Bank, the Respondent bank has disbursed the said loan amounts in favour of the said Applicants and they have also availed the said loan amounts. Though initially the said Applicants were in touch with the Respondent Bank and also made some transactions in the above loan accounts but later on they not only avoided but also neglected to repay the outstanding dues in respect of all the loan accounts as per the terms and conditions of the loan agreements as a result of which all the said loan accounts have been classified as NPA with effect from 31.03.2021. Inspite of the said loan accounts have been classified as NPA, both the Applicants did not take any effective steps to regularise the said loan accounts by depositing the overdue amounts, this Respondent Bank was

¶41

¶42

constrained to issue the Notice U/s.13(2) of SARFAESI Act, 2002 to both the Applicants on 17.06.2021 with a request to repay the total outstanding dues of Rs.23,22,395/-only along with interest and charges etc. from the Applicants within 60 days from the date of the said Notice. Since the said Applicants have failed to repay the outstanding dues with interest etc. as demanded by the Respondent Bank in the Notice issued to them U/s.13(2) of the SARFAESI Act, 2002 within the said stipulated period, the Respondent Bank was constrained to issue Notice to both the Applicants on 05.10.2021 and also took over the Symbolic Possession of the said Mortgaged property and also published the same in the Newspaper on 10.10.2021.Thereafter the Respondent Bank has published the E- auction Notice in the Newspaper namely “Statesman” and “Pragativadi” respectively on 14.01.2022 fixing the date of auction as on 15.02.2022. The Reserve Price of the said Mortgaged Property was fixed at Rs.26,50,000/- only and the said Auction was held on 15.02.2022. Mamata Maharana, D/o. Ankur Sahoo of Malha Sahi, Cuttack has been declared as the successful bidder. She has offered the highest bid amount of Rs.26,60,000/- only. After the said auction, being the successful bidder, the said Mamata Maharana has deposited the entire bid amount in the Respondent Bank on 23.02.2022 and on receipt of the said amount, the Respondent Bank has also issued the Sale Certificate in favour of the said Auction Purchaser namely Mamata Maharana on that date i.e. on 23.02.2022.Thereafter the Respondent Bank has filed a Bank Misc. Case No.27 of 2022 before the District Magistrate, Cuttack (who has also been arrayed as Respondent No.3 in this Securitization application) with a prayer to accord necessary permission to take over the physical possession of the said Mortgaged Property so as to enable to hand over the same to the Auction Purchaser. While the matter stood thus, the said Auction Purchaser namely Mamata Maharana has filed a Writ Petition bearing W.P.(C) No.391 of 2023 before the Hon’ble High Court of Orissa on 06.01.2023

¶43

¶44

with a prayer to hand over the Physical Possession of the said property to her. The said W.P.(C) No.391 OF 2023 was taken up by the Hon’ble High Court of Orissa on 20.03.2023. Since the said Bank Misc. Case No.27 of 2022 was heard but only the said order was not signed, after hearing the said submission, the Hon’ble High Court was pleased to dispose of the said Writ Petition with an observation that the possession of the said property will be handed over to the Auction Purchaser within a period of fifteen days. When the Respondent bank has failed to hand over the Physical Possession of the mortgaged Property to the Auction purchaser even if more than 15 days have been passed from the date of passing of the Order by the Hon’ble High Court of Orissa, the said Mamata Maharana has filed one Contempt petition bearing CONTC No.5059 of 2023 (Arising out of W.P.(C) No.391 OF 2023) before the said Hon’ble High Court of Orissa. The said CONTC No.5059 of 2023 was listed before the Hon’ble High Court on 04.08.2023. After hearing the submissions advanced by the Advocate for both the Parties at length, the Hon’ble High Court was pleased to pass the order to comply the order dtd. 20.03.2023 passed in W.P.(C) No.391 of 2023 by 09.08.2023.Though the order was passed by the Learned District Magistrate, Cuttack in bank Misc. Case No. 27 of 2022 on 05.08.2023 but since the same was Saturday, after coming to know about the same on 07.08.2023, the Respondent Bank has collected the said order and also immediately sent a letter to the Deputy Commissioner of Police, Cuttack on the same date i.e. on 07.08.2023 with a request to provide necessary police assistance for taking over the physical Possession of the said Property. Since the Applicants have filed the above Securitization Application during the pendency of the earlier Securitization Application, since the Applicant have not approached this Hon’ble Tribunal within 45 days either form the date of issuance of Notice u/s.13(4) of the SARFAESI Act, 2002 or from the date of dismissal of the Writ Petition bearing W.P.(C) No.406 of 2022. Since the Applicants have failed to repay the outstanding loan amount

¶45

¶46

with interest to the Respondent Bank in spite of all types of Cooperation extended towards them, the Respondent Bank was constrained to put the said Landed property into auction after observing all other formalities as required for the said purpose, since the Learned District Magistrate, Cuttack has rightly passed the order for taking over the Physical Possession of the Mortgaged property after observing all other formalities as required for the said purpose, since no illegality has been committed neither by the Respondent Bank nor by the learned District Magistrate, Cuttack in any manner whatsoever, the prayer made by the Applicants in this Securitization Application is liable to be dismissed for the interest of justice.

¶47

Respondent Bank relide on the following decisions in support its case:-

¶48

(i)(2024) 2SCC 1 (Celir LLP Vrs. Bafna Motors)

¶49

(ii) (2024) 6 SCC 579 (PHR Invent Education Socieity Vrs. UCO Bank & others)

¶50

(iii) (2023) 1 SCC 675 (R. D. Jain & Company Vrs. Capital First Limited & others)

¶51

(iv) (2023) 1 SCC 662(Balakrishna Rama Tarie Vrs. Phoenix ARC Private Limited)

¶52

Applicant filed rejoinder to the counter filed by the Respondent Bank and contended that the order dated 05.08.2023 being the challenge in the present SARFFAESI Application, which is presented before this Hon’ble Tribunal on 22.08.2023, the same is within the prescribed limitation of 45 days. The law is well settled that all the measures/actions under the SARFAESI Act and the Security Interest (Enforcement) Rule, 2002 are continuous in nature therefore challenging the order dated 05.08.2023, ipso-facto challenges the entire proceeding initiated under the Act, 2002 and Rule, 2002. Therefore, the respondent-Bank is wrong to raise objection that the

¶53

¶54

SARFAESI Application is defective for limitation for having not challenge the possession notice dated 05.10.2021 as published on 10.10.2021. The mortgage created under the provisions of 58 (f) of the Transfer of Property Act, is not conclusive for want of deposit of title deed in the name of the applicant No.1. The ingredients of 58 (f) of the Transfer of Property Act, so far includes three ingredients, firstly there is a debt, secondly there is deposit of title deed and thirdly there is an intention to deposit such title deed. In the present case the sale deed deposited with the bank is in the name of Late Bairagi Behera, the father of applicant No.1. However, the ROR submitted is in the name of Banshidhar Behera, the appellant No.1. If the mortgage is to be taken by deposit of title deed, then such mortgage is valid because the title holder of the title deed was not alive by the time of the mortgage. If the ROR to be taken as the basis of mortgage, then the ROR being not a title document could not have created equitable mortgage on that basis. The classification of NPA is not in consonance to the guideline of the RBI and the judicial ruling. The respondent-bank has not come up with the case that prior to classification of account as NPA on 31.03.2021, there was a prior communication to the applicants-borrowers, intimating then regarding the status as well as probability of sleeping the account to Non-Performing Asset, which is mandatory and its non-adherence vitiates the entire proceeding. The demand notice dated 17.06.2021 asking for payment of Rs.23,22,395/- is in non-compliance of section 13(3) of the Act for not furnishing the “details outstanding” in the said demand notice which is an essential requirement of a statutory demand notice. The sale notice published in 13.01.2022 was communicated to the applicants vide letter dated 14.01.2022. Since the auction notice was served upon the applicants on 17.01.2022. Besides, there having no evidence so far with regard to affixation of the sale notice, as per the requirement of Rule 8(7) of the Rules, 2002, the entire sale proceeding is vitiated. The fixation of reserve price is against the provision under Rule 8(5)

¶55

¶56

of the Rules, 2002. The applicant vide memo dated 19.12.2024 has submitted the bench mark valuation of the land of the locality under which the schedule property situates. The said bench mark valuation is issued by the competent authority i.e. the District Sub-Registrar, Cuttack, indicates the value of the land is Rs.8,00,00,000/- per acre w.e.f. 01.04.2024, which was admittedly Rs.7,00,00,000/- during 01.04.2024. Be that as it may the value of the land only as on the date of sale was Rs.1,61,00,000/-, leaving aside the cost of construction of three storied building. Hence, evidently there is non-compliance of Rule 8(5) of rules, 2002, for which the auction held on 15.02.2022 pursuance to the auction notice dated 14.02.2022, is illegal and liable to be set-aside.

¶57

The respondent-bank has nowhere stated that the auction was conducted being participated by numbers of bidders, which itself proof that the auction was conducted taking into consideration the bid of the respondent No.4 (auction purchaser). The admission itself an indication of collusion between the respondent No. 1, 2 & 4, maligned with vested interest. The requirement of law is that when a public auction is conducted by inviting bids from the public at large, the authority must have the concerned of a fair competitive price to sale the property at its highest value. By conducting auction, by accepting bid of one bidder has frustrated the doctrine of competitive price for which the entire sale process stands vitiated and is liable to be setaside.

¶58

After the auction was conducted on 15.02.2022, they approach the District Magistrate, Cuttack vide its Bank Misc. Case No. 27 of 2022. Such proceeding before the District Magistrate, Cuttack was an abuse of the process of law and Court. Section 14 authorizes a District Magistrate to pass an appropriate order of taking possession of the secured assets and to forward the same to the secured creditor, on the application by the secured creditor, when the secured asset is

¶59

¶60

required to be taken by the secured creditor. In the instant case there was no purpose for the respondent No.1 to approach the respondent No.3 (District Magistrate), since the cause of action to approach the District Magistrate has been ceased by virtue of a communication dated 23.02.2022, made between the respondent No.1 & 4. Vide declaration/communication dated 23.02.2022, the respondent No.4 has acknowledged the delivery of possession of the schedule property, being delivered by the respondent No.1. In that view of the matter since the secured creditor had already delivered the possession of the secured asset on 23.02.2022, the application U/s.14 before the respondent No.3 (District Magistrate) had already lost its sanctity. An order obtained by playing fraud or misleading Court with the manipulating facts lost its sanctity and enforceability, therefore the order dated 05.08.2023 passed by the District Magistrate, Cuttack in Bank Misc. Case No. 27 of 2022 is entitled to be set-aside.

¶61

Respondents No.1 and 2 filed reply to the rejoinder affidavit of the applicant and contended that the applicants have admitted that they have received the notice U/s. 13(2) of the SARFAESI Act dtd. 17.06.2021 for which they have given a reply through their advocate on 06.07.2021. In the said reply they have not stated relating to nonreceipt of any notice/intimation relating to the date of NPA. The applicants have every knowledge about the date of NPA and the action taken by the bank under the SARFAESI Act. It is further submitted that the defendant bank also considered the reply dtd. 06.07.2021. After that the possession notice was issued on 05.10.2021 which has been signed by the applicant No.2 and the same has been affixed in the mortgaged property on the same date. There after the said possession notice was published in both Odia and English Newspapers. It is further submitted that on 04.01.2022 the defendant bank has issued the notice as per law before putting the property in to auction. There after the auction notice was published in the Newspaper which was sent by

¶62

¶63

the bank on 14.01.2022. The same has not been challenged by the applicants in the present S.A. only the applicants have challenged the order passed by the Collector and District Magistrate U/s.14 of the SARFAESI Act. No irregularities have been committed by passing the order by the Collector and District Magistrate, Cuttack. The order has been passed in presence of the present applicants. Before putting the property into auction bank has also valued the mortgaged property through the registered valuer and the valuer has submitted the report on 12.01.2022 and the valuation report market value is stated as Rs.26,57,000/- and the releasable market value is fixed to Rs. 24,00,000/-. The auction price has been fixed as per the valuation report. No irregularities have been committed by the bank in taking action under the SARFAESI Act and putting the mortgaged property into auction. In the auction the auction purchaser namely Mamata Maharana was declared as successful bidder and the sale certificate has been issued in her favour on 23.02.2022 and the sale certificate is registered.

¶64

The valuation report as given by the applicants are not as per law and the same has been brought without having any details relating to the plots and house. The applicants have also not stated that, on which circumstances they have obtained the valuation report. So, the same is not acceptable. It is further submitted that bank has complied the provisions as prescribed in Rule. 8(5) of the Security Interest (Enforcement) Rules, 2002 by valuing the property through the registered valuer and thereafter put the property into auction. Bank has sold the property in public auction after following due procedure as per law. No irregularities have been committed by the bank. It is further submitted that the applicants have not vacated the premises and the Collector and District Magistrate has passed the order as per law in present of the applicants.

¶65

¶66

Respondent No.4 filed objection and contended that the Defendant No.4, is neither a borrower, nor mortgagor or guarantor to the loan availed by the Applicant No.1 & 2. The present Defendant No.4 is the bonafide Auction purchaser, having purchased the property, vide E- auction Sale conducted by the bank on 15.02.2022 and has paid the entire auction sale amount of Rs.26,60,000/- and accordingly the Sale Certificate has already been issued on 23.02.2022 by the Defendant No.1 in favour of the present Defendant No.4.

¶67

The defendant No.4 came to know about such E-auction Sale from the newspaper Publication dt. 13.01.2022, and being interested in the property paid the EMD amount and thereafter participated in the E-auction Sale dt. 15.02.2022.Thereafter, the bid of the present Defendant No.4 was declared as the Highest Bidder on 15.02.2022 and subsequently as per the statutory time the present Defendant No.4 has deposited the entire bid amount of Rs.26,60,000/- and consequently upon such deposit, the Defendant No.1 has issued the Sale Certificate on dt. 23.02.2022. But the fact remains inspite of such deposit of the entire bid amount of Rs.26,60,000/- and the Sale Certificate dt. 23.02.2022 having already been issued in favour of the Defendant No.4, the Defendant No.1 Bank did not take any steps to hand over the physical possession and register the Sale Certificate of the property in favour of the Defendant No.4. In such circumstances, the Defendant No.4 has communicated a letter dt. 28.11.2022 to the bank, stating her grievances regarding non-delivery of the physical possession and non-registration off the Sale Certificate.

¶68

¶69

In such circumstances, the Authorized officer without replying to such letter verbally informed to the Defendant No.4 that it is her duty to register the property, and the Bank is also trying to obtain the Order U/s.14 of the Act, 2002 for taking Physical Possession of the property old in E-auction dt. 15.02.2022 and that the bank has filed the Application U/s.14 of the SARFAESI Act, 2002 before the District Magistrate-cum-Collector, Cuttack. Thereafter, getting no remedy, the Defendant No.4 has approached the Hon’ble High Court of Orissa by filing the Writ Petition, vide W.P.(C) No.391/2023, wherein the Defendant No.4 has made the defaulting borrower, i.e. applicant No.1 as a party to the Writ Petition and in the said Writ petition, after hearing issued notice to all the parties. But, defaulting borrower, i.e. Bansidhar Behera chose not to appear in the Writ Petition. Finally, on dt. 20.03.2023, the Writ Petition was disposed of with a direction to the Bank to deliver the physical possession of the property within a period of 15 days. Inspite of the order dt.20.03.2023 the physical possession order was not passed by the District Magistrate Cuttack and the physical possession was not handed over to the present Defendant No.4. Hence, the Defendant No.4 preferred to file a Contempt petition before the Hon’ble High Court of Orissa vide CONTC No.5059/2023. Upon filing of the counter Affidavit by the Defendant No.1, the Contempt Petition was dropped. After going through contents of the Counter-Affidavit filed by the bank, it is found that, the learned Collector-cum-District Magistrate, Cuttack has already passed the Order for taking the physical Possession of the property on dt.05.08.2023 and furthermore on 07.08.2023, the bank has communicated a letter to the Deputy Commissioner of Police to provide the estimated cost for police assistance. The Applicant No.1, was sitting silently for more than a year, and was appearing before the District Magistrate, Cuttack, through its counsel even when there is no provision for appearing before the District Magistrate, in a matter under Section 14 of the SARFAESI Act, 2002 only to delay the passing

¶70

¶71

of the Order for taking over of physical possession order U/s.14 of the SARFAESI Act, 2002.When the Order for taking the Physical Possession was finally passed on 05.08.2023, all of a sudden, by suppressing material facts before this Hon’ble Tribunal somehow has got the S.A. registered and numbered without filing any delay condonation application only to harass the Defendant No.4 by creating litigation. Surprisingly, in the S.A. No.161/2023, before passing of the Interim order dt. 26.09.2023 by this Hon’ble Tribunal, the present Defendant No.4 was not even made a necessary party to the proceeding by the Applicant No.1, even though the fact regarding the Auction Sale of the property in favour of the Defendant No.4 was under the knowledge of the Applicant No.1. In the said S.A., the Applicant No.1 and 2 misrepresented facts before this Hon’ble Tribunal and have challenged the Order dt.05.08.2023 passed by the learned District Magistrate, Cuttack as well as the auction sale (if any) conducted by the Defendant No.1 bank, without mentioning the details regarding the date of the Auction Sale as well as without making the auction Purchaser necessary party, knowing fully well that if the date of the Auction sale is indicated, the S.A. would become barred by virtue of provision of Law of Limitation.

¶72

Furthermore, the fact that the Applicant No.1 and 2 know regarding the fate of Auction Sale dt. 15.02.2022 as well as the details of the Auction Purchaser becomes crystal clear as because, in the year 2022, the Applicant No.1 and 2 had filed a Writ Petition vide No. 406/2022 challenging the possession Notice issued U/s.13(4) Notice as well as the Auction Sale Notice under the SARFAESI Act, 2002 wherein they have admitted that they have received the Notices, i.e. 13(2) Notice, 13(4) Notice as well as the Auction Sale Notice under SARFAESI Act, 2002. On dt. 17.02.2022, the Applicant No.1 and 2 after getting aware about the fate of the Auction Sale dt. 15.02.2022

¶73

¶74

have prayed for a withdrawal of Writ Petition and as such the Writ Petition has been disposed of on dt. 17.02.2022.

¶75

However, the present SARFAESI Application has been filed challenging the order dt. 05.08.2023 passed by the learned District Magistrate, Cuttack. But, fact remains that as per the statute, i.e. Section 14(3) of the SARFAESI Act, 2002.Since the Defendant No.4 is the bonafide Auction Purchaser and the Auction sale has also become absolute and a conclude sale by virtue of the Sale Certificate dt. 23.02.2022 issued by the Defendant No.1 Bank.

¶76

The law is well settled that, the Right of Redemption gets extinguished on the date of publication of the Auction Sale Notice in the newspaper inviting for public auction. Since the Hon’ble High Court of Orissa has already directed the Defendant No.1 & 2 bank to hand over the Physical Possession of the property, then by filing this present S.A. the Applicant is trying to stop the operation of the Order dt. 20.03.2023 passed by the Hon’ble High Court of Orissa in W.P.(C) No.391/2023. Respondent No.4 relied on one decision in support of its case.

¶77

(i)WP No.12527 of 2020 between M/s Neelam Beverages through Proprietor Shesh Pratap Singh Vrs. State of Madhya Pradesh

¶78

On the perusal of the pleadings of the rival parties, the following issues arise for consideration.

¶79

¶80

(i) Whether the Respondent Bank has issued notice to the applicant before declaring the accounts as NPA?

¶81

(ii) Whether the Respondent Bank has served notice under Section 13(2) & 13(4) of SARFAESI Act to the borrower and guarantor as per provisions of law?

¶82

(iii) Whether the Bank has taken proper valuation of the property before putting the property into auction sale? (iv) Whether the bank has issued individual auction sale notice under Rule 8(6) of the Security Interest (Enforcement) Rules 2002 as per provisions of law?

¶83

(v) Whether the applicant is entitled to the reliefs as claimed?

¶84

Issue No.(i):- Whether the Respondent Bank has issued notice to the applicant before declaring the accounts as NPA?

¶85

The contention of the applicant is that the classification of NPA is not in consonance to the guideline of the RBI and the judicial ruling. The respondent-bank has not come up with the case that prior to classification of account as NPA on 31.03.2021, there was a prior communication to the applicants-borrowers, intimating then regarding the status as well as probability of sleeping the account to Non-Performing Asset, which is mandatory and its non-adherence vitiates the entire proceeding.

¶86

The contention of the Respondent Bank the applicants have admitted that they have received the notice U/s. 13(2) of the SARFAESI Act dtd. 17.06.2021 for which they have given a reply through their advocate on 06.07.2021. In the said reply they have not stated relating to non-receipt of any notice/intimation relating to the date of NPA. The applicants have every knowledge about the date of NPA and the action taken by the bank under the SARFAESI Act.

¶87

From the perusal of the record it is seen that the Respondent Bank has reminded several times to the applicants for payment of the

¶88

¶89

dues but the applicants remained silent for which the Respondent Bank had no other option but to declare the account NPA. The said fact was within the knowledge of the applicants as the applicant has not raised the said objection in their reply to 13(2). As such the said contention of the applicants that the Respondent Bank has not issued any notice to the applicants before declaring the account as NPA holds no good. Accordingly issue No.(i) is answered.

¶90

Issue No.(ii):- Whether the Respondent Bank has served notice under Section 13(2) & 13(4) of SARFAESI Act to the borrower and guarantor as per provisions of law?

¶91

The contention of the applicant is that the Respondent Bank in terms of Section-13(2) of Securitization and Reconstruction of the Financial Assets and Enforcement Security Interest Act and Rules, 2002 recalled the facility and issued Notices on dated 17.06.2021 and 06.07.2021 demanding the outstanding amount of Rs.23,22,395/-. The Respondent in its notice has stated that due to default in repayment, the account was classified as NPA. After receiving the notice U/s.13(2) of the Act from the Respondent Bank, the Applicants through his Lawyer has sent a representation on dated 06.07.2021 U/s.13(3A) of the Act in response to the said Demand Notice. However, the Respondent Bank has rejected the grievances of the Applicants without any reason and rhymes. Despite issuing notices U/s.13(2) of the Act, the Respondent Bank had been receiving the repayments made by the Applicants on different dates. The Applicants had paid a sum of Rs.19,74,000/- as on 20.11.2021. Since, the Respondent Bank received the repayments after issuance of Demand Notices, the same tantamounts waiver of the action under the demand notices under the Act. Despite receipt of the amount after issuance of the demand under the Act, the respondent Bank did not refrain itself from taking any action rather the Respondents Bank in exercise of the power conferred under the SARFAESI Act issued Notice U/s.13(4) of the Act issued

¶92

¶93

Possession Notice dated 05.10.2021 which has been communicated to the Applicant on 09.10.2021 by post.

¶94

The contention of the Respondent Bank is that the applicants have admitted that they have received the notice U/s. 13(2) of the SARFAESI Act dtd. 17.06.2021 for which they have given a reply through their advocate on 06.07.2021. In the said reply they have not stated relating to non-receipt of any notice/intimation relating to the date of NPA. The applicants have every knowledge about the date of NPA and the action taken by the bank under the SARFAESI Act. It is further submitted that the defendant bank also considered the reply dtd. 06.07.2021. After that the possession notice was issued on 05.10.2021 which has been signed by the applicant No.2 and the same has been affixed in the mortgaged property on the same date. Thereafter the said possession notice was published in both Odia and English Newspapers.

¶95

From the perusal of the record it is seen that the applicant has himself admitted with regard to receipt of the notice under Section 13(2) and 13(4) of SARFAESI Act, 2002 and also enclosed copy of the notice under Section 13(2) and 13(4) of the SARFAESI Act along with SA underAnnexure-1 & 3 series. Respondent Bank has mentioned the details in the notice under Section 13(2). As such there is no violation of 13(3). Hence the notices under Section 13(2) and 13(4) have been served on the applicant. Accordingly Issue No.(ii) is answered.

¶96

11. Issue No.(iii):- Whether the Bank has taken proper valuation of the property before putting the property into auction sale?

¶97

The contention of the applicant is that the fixation of reserve price is against the provision under Rule 8(5) of the Rules, 2002. The applicant vide memo dated 19.12.2024 has submitted the bench mark valuation of the land of the locality under which the schedule property situates. The said bench mark valuation is issued by the competent authority i.e. the District Sub-Registrar, Cuttack, indicates the value

¶98

¶99

of the land is Rs.8,00,00,000/- per acre w.e.f. 01.04.2024, which was admittedly Rs.7,00,00,000/- during 01.04.2024. Be that as it may the value of the land only as on the date of sale was Rs.1,61,00,000/-, leaving aside the cost of construction of three storied building. Hence, evidently there is non-compliance of Rule 8(5) of rules, 2002.

¶100

The contention of the Respondent Bank is that the valuation report as given by the applicants are not as per law and the same has been brought without having any details relating to the plots and house. The applicants have also not stated that, on which circumstances they have obtained the valuation report. So, the same is not acceptable. It is further submitted that the bank has complied the provisions as prescribed in Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 by valuing the property through the registered valuer and thereafter put the property into auction.

¶101

From the perusal of the record it is seen that the applicant has challenged the valuation of the property. The valuation report as given by the applicants has been brought without having any details relating to the plots and house. The bank has complied the provisions as prescribed in Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 by valuing the property through the registered valuer and thereafter put the property into auction.

¶102

Hence the contention of the applicant that the property has not been valued properly holds no good. As such it is proved that the Respondent Bank has taken proper valuation of the property before putting the property into auction sale. Accordingly issue No.(iii) is answered

¶103

12. Issue No.(iv) :-Whether the bank has issued individual auction sale notice under Rule 8(6) of the Security Interest (Enforcement), Rules 2002 as per provisions of law?

¶104

¶105

The contention of the applicant is that the sale notice published in 13.01.2022 was communicated to the applicants vide letter dated 14.01.2022. Since the auction notice was served upon the applicants on 17.01.2022. Besides, there having no evidence so far with regard to affixation of the sale notice, as per the requirement of Rule 8(7) of the Rules, 2002, the entire sale proceeding is vitiated.

¶106

The contention of the Respondent bank is that on 04.01.2022 the defendant bank has issued the notice as per law before putting the property in to auction. There after the auction notice was published in the Newspaper which was sent by the bank on 14.01.2022.

¶107

Rule-8(6) of SARFAESI Rules, 2002 stipulates that- The Authorized Officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under Sub- rule (5) “ Provided that if the sale of such secured assets is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the form given in Appendix IV-A to be published in two leading newspaper including one in vernacular language having wide circulation in the locality”

¶108

In view of the clear cut provisions of law as envisaged in the said rule, the notice under Rule 8(6) of Security Interest (Enforcement) Rules, 2002 provides that the Authorised Officer shall serve to the borrower a notice of 30 days for sale of the immovable secured assets, under sub-rule 5.

¶109

From the perusal of the record it is seen that the applicant has contended that he has received the notice under Rule 8(6) on 17.01.2022 and the auction is fixed on 15/02/2022 which is less than 30 days but has not filed any proof in this regard. As such the said contention of the applicant that clear 30 notice of days was not there before sale of the secured asset holds no good. Accordingly issue No.(iv) is answered.

¶110

13. Issue No.(v):- Whether the applicant is entitled to the reliefs as claimed?

¶111

From the perusal of the record it is seen that after availing the credit facilities from the bank, the applicants did not adhere to the terms and conditions of the sanction and did not clear the amount

¶112

¶113

despite several correspondences and request from the bank for which the said loan accounts of the applicant became NPA. Thereafter the Respondent Bank had initiated the actions against the applicant under the provisions of the SARFAESI Act and served the notices under Section 13(2) and 13(4) and also taken the valuation of the property as per law and 30 days notice under Rule 8(6) has been served on the applicant and the Collector/DM has passed the order dated 05.08.2023 in Bank Misc. Case No.27/2022 in presence of the applicants is as per law. Decisions cited by the applicants is not applicable to the facts of this case whereas the decisions cited by the Respondent Bank and the auction purchaser are applicable to the facts of this case.

¶114

In view of the aforesaid discussion made above, and the issues already answered in the preceding paragraphs and considering the facts and circumstances of the case and the material available on record, this Tribunal is of the view that the applicant failed to prove its case and the Respondent Bank has taken established its case. Therefore, the instant SA bearing SA No.161/2023 is hereby dismissed being devoid of any merit. Accordingly Issue No.(v) is answered.

¶115

O R D E R

¶116

In the result, S.A. No.161 of 2023 is hereby dismissed declaring the notices under Section 13(2), and 13(4) of the SARFAESI Act so also the auction sale notice and D.M. order are as per law and no violation has been made by the Respondents while initiating action under the SARFAESI Act.

¶117

Since the main SA is disposed of, hence all the IAs, pending, if any, stands disposed of and interim order, if any, stands vacated.

¶118