This Debt Recovery Tribunal application challenged a bank auction of mortgaged property under the SARFAESI Act. The court found the bank followed statutory procedures, noted the applicants failed to redeem or implead the purchaser, and dismissed the application.
The Security Application was dismissed; interlocutory applications disposed of.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL. I AT HYDERABAD
DATED THIS THE 5TH DAY OF FEBRUARY, 2.,25
PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER
SA.No.2 4612022
H.No.9- 109/A&9 -tog /8, RaghunadhaEstate , p&T Colony, Dilsukhn agar, Hyderabad.
.... Applicants
Versus
l.lndian Overseas Bank
ARM Branch, 3.d floor, IOB Pl atinum PIaza, Chikkadapally, Hyderabad.
Rep. byits Authorized officer
RaghunadhaEstate , p&T Colony, Dilsukhn agar, Hyderabad
*
0 5 FtB ?075
ents
Counsel for the Applicants
Counsel for the l"tRespond.ent Bank Resporudents No.2&3
Si T. Sridhar Reddg Sri GampaRangaiah Dxparte
.ORDER:
1' This application is filed by the Applicants u/s.17 of the sARFAESI Act, 2oo2, cha[enging the auction conducted by the 1st Respondent Bank on 18.08.2022 pursuant to the Sale Notice dt.25.o7.2o22 in respect of the schedule property and to set aside the same.
2' The averments made in the application, in brief, are that:
The Applicantsare the absolute owners of the schedule property and they stood as guarantors to the loan facilities sanctioned by the l"t Respondent Bank in favour of the 2.d Respondent who is none other than their father and the Appricants created mortgage in respect of the schedule property. on rs.og.2022, the Applicants came toknow that the 1st Respondent bank conductedauction against the schedule property on 18'08.2022. The Applicants have not received any notice from the lstRespondent Bank. Reserve price fixed by the 1st Respondent Bank is lower than the market value of the schedule property' The lst Respondent Bank failed to issue demand notice, possession notice and sale notice to the Applicants and hence, the sale conducted by the 1"t Respondent Bank on 1g.og .2022 is liable to be set aside' The impugned Sale Notice dt.25.0 7.2022 was not affixed on the schedule property nor published in two daily newspapers. Hence, the SA.
Respondent bank issued demand notice u/s 13(2) of the SARFAESI Act, 2oo2 on 27.os.2o13 to the Applicants and Respondent No.2 and they received the said notice. Thereafter, the 1"t Respondent Bank issued Possession notice dt.11.10.2013 and the said notice was received by the Applicants and the said notice was published in two daily newspapers on 16.10.2013 and also affixed on the schedure property. Thereafter the 1't Respondent bank issued notice prior to sale wlr 8(6) of Security Interest (Enforcement) Rules, 2oo2 on o2.o2.2o21 and the same was received by the Appricants. Thereafter, an attempt was made to conduct auction on 11 .og.2021 but the same was not materiarized. Thereafter, fresh SaleNotice dt.25.0 7.2022 was issued and the said sale notice was dury served on the Applicants and it was pubrished in two daily newspapers and also affixed on the schedule property. The reserve price is fixed at Rs. l,T2,73,oooland in the said auction conducted on 7g.og.2022, one Murtazalavawala became successful bidder for a saleconsideration of Rs'1,73,73,00o/- and he paid the entire bid amount and a sale certificate was issued in his favour and it was arso registered before the concerned sRo. Thus, the 1st Respondent Bank has fo,owed the procedure prescribed under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in conducting auction of the schedule property and so, there are no merits in the sA. Accordingly, 1.t Respondent Bank prayed to dismiss the SA.
- Heard Ld. Counsel for the Applicants, Ld. Counsel for 1"t Respondent Bank whereas Respondents No.2&3 were set exparte. perused the material brought on record.
respect of the schedure propertg on rg.og.2o22 pursuant to the Sale Notice dt. 2 5. 07. 2 022?
ii) To uhat relieJ?
Potnt No.(i):-
- During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the 1st Respondent Bank reiterated their respective versions as stated supra.
There is no dispute regarding the fact that Respondent No.2 availed credit facilities from thelstRespondent Bank and Applicants stood as guarantors and created mortgage against the schedule property towards security for the said loan facilities. Respondent No.2 is none other than the father of the Applicants.
8' The specific contention of the Applicants is that they have not received any notice from the l"t Respondent Bank and the Bank conducted auction in respect the schedule property without following the procedure prescribed under the provisions of sARFAESI Act, 2oo2 and Rules made thereunder. per contra, lstRespondent Bank contended that the Bank has scrupulously followed the procedure laid down under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in conducting auction of the schedule propert5r and there are no violations.
9 ' In support of their contentions, the l"t Respondent Bank liled relevant materiar documents arong with the Reply filed by them. As clear trratyffis$m\q, Bank issued demand notice to the 6 zzlo@oi ,:y' .;i:-' l3(2) of the SARFAESI Act, 2OO2 and the said "iloticelotice ,ffi r :':'--J? rroLrce \rcseccirffid\bvthe Appricants. Thereafter,on
11' 10;2Q13, o{ 1Ftts?0fP"0*:l""nk issued possession notice u/s : , 7 i! '., --:il arJ !' ', ''iid ?ti Ai
13(4) of the SARFAESI Act,2002 and, the said possession notice was received by the Applicants and the said notice was published in Andhra Jyoti and Indian Express daily newspapers on 16. to.2o13as evidenced from the copies of paper publication fired by the lstRespondent Bank and the copy of the said notice was affixed on the schedule propert5r as depicted in the photographs filed by the 1"t Respondent Bank. Before fixing the auction, the Bank issued pre Sale Notice dt.o2.o2.2o2l ulr g(6) of Security Interest (Enforcement) Rules, 2oo2 giving an opportunity to the Applicants to redeem the property and the Applicants received the said notice. But the Applicants have not taken any steps to redeem the schedule property. Even though, prior to the impugned auction conducted by the 1st Respondent Bank, an attempt was made to sell the schedule property in pursuance of the sale notice dL.rg.o7.2o2r but the said auction was not materialized. so finally, the lstRespondent Bank issued fresh sale Notice dt.25.07.2022 and the said sale notice was received by the Applicantsand as per the material documents filed by the Bank, it is clear that the said sale notice was published in two daily newspapers and the said sale notice was also affixed on the schedule property as depicted in the photographs filed by the r"tRespondent Bank. So, the contention of the Appricants that the lst Respondent Bank has not followed procedure prescribed under the provisions of sARFAESI Act,20o2 and Rules made thereunder in conducting auction of the schedule property is not tenable. In the auction conducted by the i"t Respondent Bank on lg.0g .2022 in respect of the schedule property, one MurtazaJavawala became the successful bidder for a sale consideration of Rs.1,73,73,o0o/- and he paid the entire bid amount and a sale certificate was issued in his favour. The said sale certificate was also registered before the concerned SRo as evidenced from the copy of th certificate filed by the 1"t Respondent Bank.
- at even though the details of the auction * the .lst Respondent Bank in the Reply filed B 5 rrs zrrtr
by them, the Applicants have not taken any steps for impleading the auction purchaser as a party to the proceedings. When the Applicants are challenging the auction conducted by the 1"t Respondent Bank in respect of the schedule property, the auction purchaser is a proper and necessary party to the proceedings. Moreover, the Applicants have failed to establish any valid ground for setting aside the auction conducted by the l"t Respondent Bank on 18.08.2022 in respect of the schedule property.
11' In a recent judgement of the Apex Court in Celir LIp Vs. Mr.Sumati Prasad Bafna in contempt Petition (c) Nos.15g-15912024 in civil Appeal Nos.5542-ss4312o23, the Hon,ble Supreme court held as follows:
218: "AnA sale by auction or other public procurement method.s once alreadg confirmed or conclud.ed- ought notto be sef asid.e or interfered uith lightlgexcept on ground.s that go the core of such sale process, such as either being collusiue, fraud.ulent or uitiated bg inadequate picing or und"erbid.ding. Mere irregularitg or deuiation from a rule which d.oes not haue any fundamental procedural error does not take awaA the found.ation of authority forsuchproceeding. In such cases, courts in particular should. be mindful to refrain entertaining anAground for challenging an auction which either could haue been taken earlier before the sale was conduced and confirmed or uhere no substantial injury has been caused on accotlnt of such irregulaitg".
t
Potnt No.(til:-
(Dictated to the P.S transcribed bg her, corrected, signed and pronounced bg me in the open coltrt on this the 5h dag ofFebruary,2025).
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sd/_ (G. GOPr CHANDI PRESIDING OFFICER ;q"{ ,{ REG'STRAR. B uN A L D EBrs[fgSiSS';Rr
2 issues framed by the court
Whether the applicants have established any valid ground to set aside the auction conducted by the bank in violation of the SARFAESI Act procedures.
Whether the applicants failed to implead the auction purchaser as a necessary party to the proceedings.
Colour shows how this judgement treated each authority
Celir LIp Vs. Mr.Sumati Prasad BafnaExplained¶41
Celir LIp Vs. Mr.Sumati Prasad Bafna
4 provisions across 2 enactments
S.T. Bharani kanth
S.T. UdayKanth
Indian Overseas Bank
T. Sudarshanachary
Smt. TG. Satyavathi
GUMMADI GOPICHAND
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
