Allowed

Smt Rizwana Begum v. Union Bank of India

DRT10 Jun 2025SA/297/2023

Case brief

AI extract

What is this about?

The Adjudicating Officer allowed a securitization application challenging an auction sale conducted by a bank. The Tribunal held that the bank failed to provide a 30-day redemption notice under Rule 8(6) before publishing the sale notice, violating Section 13(8) of the SARFAESI Act. Consequently, the auction was set aside, and the bank was directed to refund the bid amount with interest.

What did the court decide?

The application was allowed; the impugned auction was set aside; the Respondent Bank was directed to refund the bid amount with interest.

Smt Rizwana Begum versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL.IAT HYDERABAD

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DATED THIS THE 1OTH DAY OF JUNE, 2025

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PRESENT: GUMMADI GoPICHAND, PRESIDING oFFICER

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sA.No.297 /2C23

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Smt. Rizwan Begum, W/o Sri Ahmed^pasha, Aged 45 years, Occ:servicc, R/Oh.No.9-93, Sy.No.25 1, BD Colony, Gajewel Mandal, Siddipet District. ...Applicant

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Versus Union Bank of India Rep. by its Authorized oflicer Gajwel ... Respondent Bank

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Counsel for the Applicont Si Mukesh Sharma

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Counsel for Respondent bank Sri P. Balaji

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:ORDER:

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This Securitization application is fired by the Applicant u/s. 17 of the SARFAESI Act,2OO2 challenging theauction conducted by the Respondent Bank in respect of the schedule property otr24.Og.2O23 pursuant to the sale Notice dt.05.09.2o23 and to decrare the same as null and void.

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'lhe averments made in the applica are as under,-

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The Applicant availed ho ndent Bank to a tune of Rs.1O lakhs and s:m the loan dues due to Covicl-19. Thc R g demand notice aenl f{flgvffiut i* and possession notice, s taway, issued the .ii ugned sale notice dt.05.08.2023 by fixing e property on 'tqt^{.f tt.pflS;} sr$r4Q;llt woa-1:,^,-t)/

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SA.No.29Z/202j

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24 '08'2023 and the said sale notice was neither affixed on the schedule property nor published in two newspapers. Before issuing the said sare notice, the Respondent bank has not issued notice u/r g(6) of Security Interest (Enforcement) Rules, 2OO2 by giving 3O days time to redeem the schedule property. The impugned possession notice was also not published in two newspapers. Hence the SA.

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1 The Respondent Bank filedtheir Reply denying all the adverse allegations made in the SA and the contentions of the Respondent Bank, in brief, are as under-

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The Respondent Bank issued demand notice d,t.2g.06.2022 u/ s 13(2) of the SARFAESI Act, 2OO2 and sent the said notice to the Applicant through Regd.post. Thereafter, the 1sr Respondent Bank issued possession notice dt.02.03.2023 under the provisions of Section l3(4) of the SARFAESI Act, 2002 and took symbolic possession of the scheduie property. The said possession notice was published in two daily newspapers and affixed on the schedule property. Thereafter, the Bank issued sale notice dt.05.0g.2023 u/r 8(6) of Security Interest (Enforcement) Rules, 2oo2 by fixing the auction on 24.og.2o23 and the said notice was also served on the Applicant. Thus, the Respondent bank has duly fo'owed the procedure laid down under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder. Accordingly, the Respondent Bank prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant and ld. Counsel for the Respondent Bank.

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Now, the sideration are, - 4:,^. i) established any ualid groundsfor Notice dt.05.O8.2023 issued by tte auction of the schedule property ?

SA.No.297/202j

ii) To what reliej?

Polnt No.lllt

During the course of arguments, Ld. Counsel for the Applicant and Ld. Counsel for the Respondent Bank reiterated their respective versions as stated supra.

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7' There is no dispute regarding the fact that Applicant ava,ed housing loan from the Respondent bank and created mortgage in respect of the schedule property and thereafter, committed default in repayment of loan dues and so, the loan account was classified as NpA.

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9' The specific contention of the Applicant is that the Applicant has not received demand notice, possession notice and pre_sale notice and without issuing any such notices, the Respondent Bank straightaway issued the impugned Sare Notice dt.05.0g.2023 for conducting auction of the schedule property and so, the said sale notice is liable to be set aside.

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Per contra, the Respondent bank contended that the Bank has duly followed the prescribed procedure contemplated under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing all the relevant notices to the Applicant.

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When the Applicant she has not received any statutory notices the provisions of SARFAESI

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Act,20O2 and dl' -.,1"^:.,the reund e burden lies on the

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Respondent io espplisfr,.rhatrthey ve issued all the relevant

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notices to the tas per the ,'dure prescribed under the provisions of IAESI Act, !'2002 a1ia, ::-'"Rules made thereunder. Along f,., ''.i \rY

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SA.No.29z/2023

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with the Repry, the Respondent bank encrosed rerevant material documents. As per the said documents, it is clear that on 2g.06.2022., the Respondent Bank issued demand notice u/s l3(2) of the Act, 2OO2 and the said notice was sent to the Applicant through Regd. post and the said noticc was rclurned unscrvcd, so, thc Respondent bank published the said demand notice in Telugu and English newspapers as evidenced by the returned covers and copies of paper publication filed by the Bank. Thus, there is deemed service of demand notice on the Applicant. Thereafter, the Respondent Bank issued possession notice dt.O2.O3.2O23 and the said notice was sent through Regd. post to the correct address of the Applicant. The said possession notice was also published in Telugu and English daily newspapers as evidenced by the copies of paper publication fired by the Bank and the said possession notice was affixed on the schedule property as depicted in the photographs filed by rhc l3ank.

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12' After issuing possession notice, the Respondent Bank is expected to issue notice u/r g(6) of Security Interest (Enforcement) Rules, 2002 by giving thirty days time to the Applicant for redeeming the schedule property by paying the entire outstanding dues. But in the pre_sale notice u/r g(6) of Rules, 2002 arlegedly issued by the Respondent Bank on 79.O5.2023, it is mentioned that sale was proposed to be conducted on 27.06.2023. It is pertinenr to nore that on 26.05.2023, i.e. within a week from the date of issuance of said notice, the Respondent Bank published the said sale notice in Hans Indiaand Namaste Telangana daily newspapers. So, the moment, the sale notice was published in the newspapers, the borrower i.e. the Applicant-herein will loose her right of redemption. tsut i t no auction was conducted in pursuance of the sal ently, the Respondent Bank issued fresh sale d'at. 0s.oa.2 nducting auction of the schedule property and the notice was served on the Applicant as evi bl tfl.,:;;Ji;l ledgements and the said notice was also as depicted in the

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SA.No.297/2023

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photographs filed by the Bank and it was published in two daily newspapers as evidenced by the copies of paper publication filed by the Bank. However, it appears from the said sale notice dt.05.08.2023 that no opportunitlz was given to the Applicant to redeem the schedule property. Thereby, the Applicant lost her valuable right to redeem the secured asset.

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1e As per the provisions of Rule 8(6) of Security Interest (Enforcement) Rules, 2002, there is an obligation on the part of the secured creditor to issue notice u/r 8(6) of Security Interest (Enforcement) Rules, 2002 by giving an opportunity to the borrower/ mortgagor to redeem the secured asset within thirty days from the date of issuance of said notice. If the borrower fails to redeem the secured asset within 30 days from the date of receipt of said notice, the Respondent Bank will be at liberty to proceed with the auction of the secured asset by issuing separate sale notice. Thus the moment, the sale notice is published in two daily newspapers, the borrower will loose his valuable right of rcdemption. So thc publication has to bc made in the newspapers regarding the auction proposed to be conducted by the secured creditor only after the expiry of 30 days time given to the borrower to redeem the secured asset.

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The effect of non-issuance of redemption notice by the secured creditor is decided by the Hon'ble Debts Recouery Appellate Trlbunal, Kolkataln a recent Judgement tn Unlon Bank oJ Indla Vs,DilshadBla.hlln Misc.Appeal No.g4/2O23 wherein in para NO.31, il is held that:

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J], of lhe Bonower is a sacrosanct ight as prouided prouisions of Section 13 (8) of the Act bring

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chdnge, as the ight of the borower to redeem the ,,s{g4fs^{efriiguishedthereunderon the uery date of}

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6tn"^{liri".filiubticauction} under Rute^{g (1)} of the Rutes. !l

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SA.No.297/202j

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In effect, the ight of redemption auailable to the borrouer und.er the present statutory regime stands drasticallg cwrtaited and. ulould be auailable onlg till the date of publication of the notice und.er Rule 9 (1) of the Rules and not till completion of the sale or transfer of the seanred. asset in fauour of the Auction l\trchaser. Howeuer, it is significant to note that Rule 8 (6) of the Rules still continues to remain the same and. thereunder, the Authorized Officer of the secured creditor must necessailg serue upon the borrower a notice of 30 dags for sale of the immouable secured osset taking recourse to one of the options auailable under Rule 8 (5) thereof. Therefore, euen if the amendment of Section j3 (8) of the Act, Secured Creditor is bound to afford. to the Borrotaer a clear 30 d.ays notice period und.er Rule 8 (6) to enable him to exercise his right of redemption. In consequence, a notice under Rule 9 (1) cannot be published pior to expiry of 30 dags period. In the neut scenario post amendment of Section 13 (8) of the Act, such right of redemption would stand terminated immediatelg upon publication of the Sale Notice under Rule 9 (1)of the Rules. Prouiso attached to Rule 9 (1) simplg prouid.es that if the sale of immoueable propertA by one of the method.s specified bg Sub-rule (5) of Rule 8 faits, sale is required to be conducted. again. The Authorised Offi.cer shall serue, afftx and publish notice of sale on not less than 15 dags to the Borrower for ang subsequent sale. It means that in case of subsequent sale, the peiod of 3O dags, as reqtired. under Rtle 9 (1) is atrtailed to 15 dags. This proui.so of Rute 9 (l) in no manner curtailed the period of notice prouided under Rule g (6). Had_ it been the intention of the Legislature, thot penod prouided under Rule g (6) would olso haue to be amended by the Legislature. But intentionally Rule g (6) is not amended but the peiod in subsequent sale is curtailed to 15 d_ays. It means that euen in the cose of subsequent sale, prouisions of Rule g (6) haue to be follotued by the Authoised Offi.cer. Accordinglg, it is incumbent upon the Authorised Officer, euen in case of subsequent sale, . to complg the of Rule 8 (6) as uell as prouiso to Rule 9 (1). Lau nowhere redemption auailable to the Borrouter und.er a subsequent sale. Accordinglg, I am of ui€Lq that case of subsequent sale, Authoised required i n .'-': to.issug^-'?1 30 drl*^'li notice under Rule 8 (6) and thereafier nottdunder l+oiiso at|at*ed to Rule 9 (l )". 6 ' ').l .,,-

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SA.No.297/202i

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In view of the decision stated supra, the impugned Sale Notice dt.05.08.2023 issued by the Respondent Bank in respect of the schedule property without giving any notice to redeem the secured asset u/s 13(8) of SARFAESI Act, 2OO2 is not legal and liable to be set aside.

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As per the record, it is clear that in pursuance of sale notice, the Respondent bank conducted auction of the schedule property on 24.o8.2o23.on 15.09.2023, the Applicant fited r.A.2r43l2g seeking stay of all further proceedings and interim stay of all further proceedings was granted by this Tribunal including issuance of sale certificate in favour of the highest bidder. So, in view of the stay granted by this Tribunal, auction was not confirmed and so, the Applicant has not impleaded the auction purchaser as Respondent to the SA. Since the impugned sale notice dt.05.08.2023 itself is defective, the auction conducted by the Respondent Bank on 24.09.2023 in respect of the schedule property is liable to be set aside.

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So, in view of the above decisionand facts and circumstances of the case, I hold that the auction conducted by the Respondent Bank on 24.08.2023 in respect of the schedule property pursuant to the impugned e Auction sale Notice dt.05.o9.2o23 is not in accordance with the provisions of SARFAEST Act,2oo2 and Rules made thereunder and as such, the said auction is liable to be set aside. Accordingly, this point is answered in favour of the Applicant and against the Res

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SA.No,297/2023

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17 In the result, SA 297 l2O2:, is allowed by setting aside the impugned auction conducted by the Respondent Bank in respect of the schedule property ot 24.O8.2023 pursuant to theSale Notice dt.05.08.2023.The Respondent Bank is directed to refund the bid amount deposited by the auction purchaser with interest @ 7o/o p.a. simple from the date of deposit till the date of repayment, within one month from the date of receipt of this order. The Respondent Bank is at liberty to initiate fresh proceedings for conducting auction of the schedule property by scrupulously following the procedure in accordance with the provisions ol SARFAESI Act,2OO2 and Rules made thereunder.

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