National Consumer Disputes Redressal
Chief Manager/Authorized Officer, ... vs G. Mahimaiah on 30 October, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 483 OF 2014 (Against the Order dated 11/06/2014 in Complaint No. 194/2013 of the State Commission Karnataka) 1. CHIEF MANAGER/AUTHORIZED OFFICER, STATE BANK OF MYSORE (BRANCH OF THE BANK FOR FOLLOW UP AND RECOVERY OF NPAs OF THE BANK) NO. 2, LADY CURZON ROAD, SHIVAJI NAGAR, BANGALORE-560001 KARNATAKA ...........Appellant(s) Versus 1. G. MAHIMAIAH S/O. T. GARUDAPPA, NO. 529, 2ND STAGE, BANASHANKARI EXTENSION, BANGALORE-5760070 KARNATAKA ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE V.B. GUPTA, PRESIDING MEMBER HON'BLE MR. PREM NARAIN, MEMBER
For the Appellant : Mr. V.Shekhar, Sr. Advocate With
Mr. Pradeep Dubey, Advocate For the Respondent : Mr. Subramonium Prasad, Advocate with
Mr. Sanjeev Sharma, Advocate
Dated : 30 Oct 2015 ORDER
ORDER
PER MR. PREM NARAIN, MEMBER This appeal has been filed by the Chief Manager, State Bank of Mysore against the order dated 11.06.2014 of the State Commission.
2. In short, the case is that the appellant bank auctioned a property which was mortgaged against a loan and G. Mahimaiah the respondent was the highest bidder in the auction. The bid was confined by the competent officer on 04.08.2006. The total amount of Rs. 1,01,05,000/- was deposited by the purchaser on 17.11.2006 and the registry before the sub registrar was done on 17.11.2006. However, the possession of the said property could only be given on 07.03.2011. The Respondent filed a consumer complaint dated 5.4.2013 before the State Commission claiming that there was a deficiency in service as he was given the possession after roughly five years. The State Commission vide its order dated 11.06.2014 allowed the consumer complaint and ordered that;
"Complaint is allowed in part. OP is directed to pay interest at 15% p.a. on Rs. 1,01,05,000/- from 17.11.2006 to 05.03.2011 with compensation of Rs. 25,000/- and litigation expenses of Rs. 10,000/-. Further the OP is directed to comply with the above order within a period of 30 days from the date of receipt of this order. Failure to do so, the said amount carries interest at the rate of 18% p.a. from 07.03.2011 till realization"
Against this order of the State Commission, the present appeal has been preferred.
3. We heard the arguments of the Ld. Counsels for both the parties and carefully perused the records.
4. The Ld. Counsel for the petitioner argued that the Registry of the said property was done on 17.11.2006 and therefore the sale process was completed in 2006 itself. Possession was held up because of various stay orders granted in different cases which were filed by the mortgagor of the said property. The details are as follows:
In an application filed by the defaulted Guarantor Sh. B.C. Basavaraj to seek waiver of deposit as required under section 18 of SARFAESI Act, 2002, Debt Recovery Appellate Tribunal (DRAT) on 05.12.2006 at Chennai agreed to continue the interim stay of the physical possession till 08.01.2007 in favour of Guarantor Shri B.C. Basavaraj. Shri B.C. Basavaraj challenged the order dated 05.12.2006 in the High Court of Karnataka at Bangalore vide Writ Petition No. 167/2007 and Hon'ble High Court of Karnataka was pleased to continue stay until further orders on 10.01.2007. On 17.09.2008, Hon'ble High Court of Karnataka at Bangalore, disposed of the Writ Petition NO. 167/2007 with a direction to take up appeal and proceed the hearing on merit on condition that the final orders of the Appellate Tribunal shall be the subject of the result of SLP bearing no. 6324 of 2007.The Debt Recovery Appellate Tribunal at Chennai directed the Guarantor to deposit a sum of Rs.30 lakhs in two instalments on 23.01.2009 The Guarantor preferred a Writ Petition bearing no. 4778/2009 in Hon'ble High Court of Karanataka at Bangalore against the order dated 23.01.2009 passed by the Debt Recovery Appellate Tribunal at Chennai and Hon'ble High court vide order dated 28.06.2010 set aside the order dated 23.01.2009 with a direction to dispose of the matter on merits. Till 28.06.2010 interim stay of physical possession was in operation. The above said Shri B.S. Basavraj, aggrieved by the order of the DRT dated 02.08.2006, had preferred an appeal before DRAT Chennai and the said appeal was allowed vide order dated 20.09.2010 and the matter was remanded to DRT, Bangalore for fresh consideration. DRT Bangalore dismissed application filed by the mortgagor vide order dated 28.02.2011.
5. All the provisions of The Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 have been followed and finally when the petitioner got the undisputed possession from the mortgagor with the help of CMM and police, possession was given to the respondent on 07.03.2011. The petitioner was at no fault in delaying the possession and it was due to judicial process.
6. Moreover, in the advertisement that was issued on 28.06.2006 for the auction of the said property, it was clearly mentioned that auction would take place on "as is where is" basis. All the participants were free to inspect the property before taking part in the auction. It is least probable that the respondent could not have seen the property before making the bids in the auction. The Ld. Counsel for the petitioner also drew our attention to the information provided to all the participants in the auction that the auction will be subject to certain cases which were listed in this information circular and the result of the auction will be subject to final outcome of these cases and this information document was signed by all the participants including the Respondent. This means that the respondent also had the full knowledge of such litigation and he took part in the auction process knowing fully well the repercussion of these cases.
7. The State Commission has not considered properly the issue of limitation. The auction was held in 2006 and the Registry was executed in the year 2006 and even the possession was given in March, 2011. But the Consumer complaint was filed after two years of receiving the possession on 07.11.2013 which is clearly time-barred as per the Consumer Protection Act 1986. The Respondent fully knew the circumstances under which the possession was not given to the respondent and that is why he did not file any consumer complaint from 2006 till 2011. Once he was given the possession, he filed the consumer complaint with the mala-fide intention. The Ld. Counsel has stated that this is the settled law that any auction purchaser is not a consumer under the Consumer Protection Act 1986 because he purchases the auctioned property knowing fully well the strings attached to such auction and the auction is always held on "as it where is" basis. Therefore, no consumer complaint could be filed by the auction purchaser. It is always the case that people take part in the auction organized by the banks because they are hopeful to get costly property at cheap price and that is why they are ready to take the risk. In this case also, when the risk was fully reduced to zero and the possession was delivered, the consumer complaint has been filed. Based on these grounds, the order of the State Commission is illegal and is full of infirmity and is liable to be quashed.
8. In reply the Ld. Counsel for the Respondent stated that it cannot be straight away said that auction purchaser would not be the consumer in all the cases. He said that the respondent was not disputing the property because it has been taken on "as is where is" basis, but, the possession of the said property has been delayed by about five years which is the main deficiency in service as held by the State Commission. The Ld. Counsel cited various judgments viz. Madan Kumar Singh (Dead) Through LR vs. District Magistrate, Sultanpur and Others {(2009) 9 SCC 79} ; Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. & Anr { MANU/SC/3133/2008}.; Kishore Lal vs. Chairman State Insurance Corpn. {(2007) 4 SCC 59} and Chemstar Chemicals & Intermediates Pvt. Ltd. Vs. The Commercial Tax Officer & Ors {High Court of Judicature at Madras W.P. No. 6354/2010 & M.P. No.1/2010}.
9. The Ld. Counsel for Respondent emphasized that under section 13 & 14 of The Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002, it is the duty of the auctioner that the property is in the vacant condition at the time of auction. Section 14 clearly states that with the help of CMM or DM, the said property should first be vacated and possession taken and then it should be put to auction. In the present case, the complainant got the possession after five years of the actual auction. From the advertisement regarding the auction or even from the information provided at the time of auction, it could not have been imagined that the property in question was not vacant and that the possession would not be handed over after auction. Due to the delay in possession, the respondent was deprived of the fruits of property for five years. The respondent deposited all the bid money in the year 2006 but could not use the property and that is why the State Commission has allowed interest on the total amount from the date of Registry till the date of actual possession. Thus, the order of the State Commission is perfectly legal and requires no intervention from this Commission.
10. We have perused all the four judgments cited by the Ld. Counsel of the Respondent. No judgment is directly related to the facts and circumstances similar to those obtaining in the present case. The first case 'Madan Kumar Singh (Dead) Through LR vs. District Magistrate, Sultanpur and Others' relates to interpreting the definition of the Consumer in relation to section 2 (1) (d) of the Consumer Protection Act, 1986. The second case ' Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. & Anr' is in relation to the elaboration of various definitions of service and commercial purchase. The third judgment 'Kishore Lal vs. Chairman State Insurance Corporation' basically deals with the inclusion of medical negligence against the doctor under the Consumer Protection Act, 1986. The fourth case 'Chemstar Chemicals & Intermediates P Ltd. Vs. The Commercial Tax Officer & Ors' is a pronouncement of Hon'ble, High Court of Madras and has dealt with different aspects of The Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 and does not directly deal with the Consumer Protection. On the other hand, Hon'ble Supreme Court in The Union Territory of Chandigarh Administration and Another versus Amarjeet Singh and Others { (2009) 4 SCC 660} has held that in public auction of existing land sites, purchaser/lessee is not a consumer as defined in the Consumer Protection Act 1986. Relying on this judgment, we are inclined to conclude that the auction purchaser in the auction of an immovable property by a bank is not a consumer.
11. In the present case, the auction proceedings were held in the year 2006 and the Registry of auctioned property in favour of the purchaser was also completed in the year 2006. The possession of the said property could not be given to the purchaser on account of one or other stay being effective during this period. Possession was however, given on 07.03.2011. In the complaint filed by the petitioner, the delay in possession has been shown as the main deficiency in service. The cause of action for this deficiency actually arose when the Registry was done but the possession was not delivered. After the possession was delivered on 07.03.2011, the deficiency was actually rectified. Hence even if the respondent wanted to proceed under the Consumer Protection Act 1986, he would have been still within his right to file the Consumer complaint from November 2006 to March 2011 when the possession was not delivered. The consumer complaint has been filed on 07.11.2013, though the consumer complaint is dated 05.04.2013 (written in the ink). Thus the consumer complaint was highly time barred.
12. From the advertisement in respect of the auction of the said property and also from the information provided to the participants of auction, it was very clear that auction was on "as is where is" basis and that the legal cases pending in respect of the said property were also brought to the notice of all the participants including the respondent. Based on this information every participant would have taken part keeping the risks in mind. It is also very clear that there were litigations pending in DRT/DART, Hon'ble High Court of Karnataka, by reason of which, possession of the said property could not be handed over. It was not the wilful default on the part of the petitioner. Ld. Counsel for the respondent has argued that action under section 14 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 could have been taken earlier rather than the same being taken by the petitioner in the year 2010-2011. We are of the view that there is some fallacy in this argument. When the cases were pending in DRT/DART, Hon'ble High Court of Karnataka and most of the time stays were operative, it was not possible for the petitioner to take action under section 14 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 because getting the property vacated through police force could not have been possible when the various cases were in operation.
13. Based on the above discussion and examination, we are of the view that first of all, the Respondent auction purchaser was not a consumer under the Consumer Protection Act 1986 and the consumer complaint was not maintainable on this ground alone. Moreover, it was highly time barred also. We are convinced that the possession of the auctioned property could not be handed over to the respondent on account of various litigation cases.
14. Accordingly, the appeal is allowed. We find that the order of the State Commission dated 11.06.2014 suffers from illegality and is set aside. However, if the respondent feels that certain procedures under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 have not been followed by the petitioner, then he (respondent) is at liberty to move to competent court having jurisdiction.
15. No order as to cost.
......................J V.B. GUPTA PRESIDING MEMBER ...................... PREM NARAIN MEMBER