Madhya Pradesh High Court
Shri Vallabha Real Estate Pvt. Ltd. ... vs Bank Of India on 20 April, 2015
1
Writ Petition No.9021/2014
20.04.2015
Shri Raghvendra Singh Raghuvanshi, advocate for
the petitioner.
Heard on the question of admission.
2. By this writ petition under Article 226 / 227 of the
Constitution of India, the petitioner is praying for the
following relief:
"It is, therefore, most humbly prayed
that this Hon'ble Court be pleased to
issue:
(1) appropriate writ, direction or order
calling for entire records of the matter
from the Tribunals and the impugned
orders dated 24.07.2012 (Annexure P/1)
passed by the DRAT and judgment dated
09.11.2010 (Annexure P/10) passed by
the DRT, Jabalpur to kindly set aside /
quashed;
(2) appropriate writ, direction or order,
directing the respondent to refund the
forfeited amount of rupees thirty lacs with interest @ 18% per annum on the said amount since 06.10.2008 till the date of repayment to the petitioner. (3) appropriate writ, direction or order, restraining the respondent Bank from demanding any amount towards the 2 auction held on 06.10.2008 and further be restrained from taking any coercive action against the petitioner;
(4) costs of this petition be awarded in favour of the petitioner in addition to award of suitable compensation;
(5) any other relief which this Hon'ble Court deems fit be also passed in favour of the petitioner."
3. Brief facts of the case are that the petitioner being the highest bidder in the public auction held by the respondent for the sale of the secured asset as per auction notice published in the newspaper, the bid of the petitioner was accepted on 06.10.2008 and he had deposited 15% of the bid amount i.e. Rs.17.25 lakhs by way of demand draft on 07.10.2008. After acceptance of the bid, Rs.30.00 lakhs were deposited as decided by the respondent. The petitioner was also informed that though he was declared as successful bidder, the sale cannot be confirmed before 01.11.2008, because of the order of the Writ Court in Writ Petition No.6261/2008; thereafter, the petitioner came to know about Civil Suit No.50A/2008 in which saledeed in favour of Ashish 3 Verma relating to the property in question was challenged. The petitioner sought for clarification from the respondent - Bank and also made a request for refund of Rs.30.00 lakhs deposited by him. The respondent - Bank, instead of refunding the amount, directed the petitioner for the deposit of 75% of the bid amount.
4. It is this action, which was challenged by the petitioner before the Debts Recovery Tribunal, Jabalpur by filing Securitization Application No.07/2009 under Section 17 (1) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002, seeking direction for refund of the amount of Rs.30.00 lakhs deposited by him with interest from 06.10.2008.
5. The respondent - Bank by filing its reply submitted that demand notice under Section 13 (2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 was issued to the borrowers, demanding them to pay an amount of Rs.4,72,24,398/ along with future interest at the rate of 14.25% per annum with monthly rests. Since the dues 4 were not paid, the respondent - Bank approached the District Collector under Section 14 of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 for taking physical possession of the secured asset and as per order dated 25.04.2008, the District Collector had directed the Sub Divisional Magistrate to take physical possession of the secured asset and handover the same to the respondent - Bank. Consequently, physical possession of the secured asset was handed over to the respondent - Bank and possession notice was published on 31.08.2008. On 04.09.2008, auction notice was published as per Rules for the sale of the secured asset scheduled on 06.10.2008 and it was subsequently mentioned in the auction notice that the properties are to be sold on "as is where is basis".
6. On 26.09.2008, Writ Petition No.6261/2008 was disposed of with direction that the petitioner therein may themselves bring a higher bid or bring some persons with offer for higher bid on or before 31.10.2008 and the respondent - Bank was directed not to finalize the bids till 1st November, 2008.
57. From the record, it is not disputed that the respondent - Bank had conducted auction of the secured assets as per law on 06.10.2008, without concealing any material aspect known to the respondent on the date of the auction. The petitioner had participated in the bid with full knowledge of the disputed raised by M/s. Shreevardhan Construction Private Limited. Since no higher offer was submitted by the petitioner in the writ petition before the respondent - Bank, as ordered on 26.09.2008, there is no illegality on the part of the respondent - Bank in forfeiture of the deposit of Rs.30.00 lakhs made by the petitioner, on his failure to pay 75% of the purchase price, as directed.
8. For these reasons, Securitization Application No.07/2009 was dismissed by the Debts Recovery Tribunal, Jabalpur by order dated 09.11.2010 (Annexure P/6).
9. The petitioner challenged the said order by filing an appeal before the Debts Recovery Appellate Tribunal, Allahabad along with an application for condonation of delay dated 02.08.2011.
10. As per Section 18 of the Securitization & 6 Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002, an appeal was not filed within thirty days. The Debts Recovery Appellate Tribunal, Allahabad, considering the law laid down by the High Court of Madhya Pradesh, Principal Seat at Jabalpur in Writ Petition No.2393/2011 (M/s. Seth Bashidhar Kedia Rice Mills Pvt. Ltd. & others v. State Bank of India & another) by order dated 05.09.2011, and held that there is no power vested with this Appellate Tribunal to condone the delay in filing the appeal under Section 18 of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 by observing that the present petitioner has played fraud with this Tribunal by projecting the facts that the free copy was received on 05.08.2011 and dismissed the appeal as barred by time by holding that the Tribunal has no power to condone the delay. The relevant part of the order dated 24.07.2012 passed in Appeal No.222/2011 reads, as under: "The Tribunal in Appeal Sr. No.97/2010 (M/s. Seth Banshidhar Kedia Rice Mills Pvt. Ltd. & Ors. V. State Bank of India & Another) 7 decided on 21.01.2011 has taken the view that there is no power to condone the delay in filing the appeal under Section 18 of the SARFAESI Act, 2002, which has been upheld by the Hon'ble High Court of Madhya Pradesh Principal Seat at Jabalpur by its order dated 05.09.2011 passed in Writ Petition No.2393/2011 (M/s. Seth Bashidhar Dedia Rice Mills Pvt. Ltd. & Ors. V. State Bank of India & Another) that there is no power vested with this Appellate Tribunal to condone the delay in filing the appeal under Section 18 of the SARFAESI Act, 2002. The relevant paragraphs of the said judgment are reproduced as under: "16. When I compare Section 18 of the SARFAESI Act with Section 20 of the RDDBFI Act, I find that in Section 18 not only the period of limitation for filing an appeal has been reduced to 30 days from 45 days as provided in Section 20 but the power of the Appellate Tribunal to condone the delay has also been excluded which is provided in Section 20 of the RDDBFI Act. This itself leaves no iota of doubt that the legislature has consciously intended not to confer the power of condonation of delay with the Appellate Tribunal under Section 18 of the SARFAESI Act, because, it is a well settled principle of law that just as use of same language in a later statute as was used in an earlier one in pari material is suggestive of the intention of the Legislature that the language so 8 used in the later statute is used in the same sense as in the earlier one, change the language in a later statute in pari material is suggestive that change of interpretation is intended (See Principles of Statutory Interpretation by Justice G.P. Singh 12th Edition 2010 Page
310).
17. There is also an identical provision in subsection (7) of section 17 of the SARFAESI Act which states that the Tribunal shall as far as may be disposed of the application in accordance with provisions of RDDBFI Act. Under the RDDBFI Act, the Tribunal and the Appellate Tribunal are separately established and its section 24, which deals with limitation, states that the provisions of Limitation Act, 1963 shall as far as may be, apply to an application made to a Tribunal. As already mentioned above, application under Section 17 can be made by any aggrieved person to the Tribunal within 45 days from the date on which he has suffered an action under any of the measures referred to in subsection (4) of section 13 of the SARFAESI Act.
Thereafter, any person aggrieved by any order made by the Tribunal under Section 17 can prefer an appeal to the Appellate Tribunal under section within 30 days from the date of receipt of the order of the Tribunal. Section 24 of the RDDBFI Act has not made the provisions of the Limitation Act applicable to an Appellate Tribunal. This being the 9 position, it is apparent that though the Tribunal can give the benefit of Section 5 of the Limitation Act, while dealing with an application under section 17 of the SARFAESI Act, the Appellate Tribunal cannot do so while considering the appeal under Section 18. This view also finds support from the decision of the Supreme Court in Gopal Sardar v. Karuna Sardar (2004) 4 SCC 252 wherein it is held that when in the same statute in respect of various other provisions relating to filing of appeals and revisions specific provisions are made so as to give benefit of Section 5 of the Limitation Act and such provision is not made to an application to be made under a particular section of that statute, it obviously and necessarily follows that the legislature consciously excluded the application of Section 5 of the Limitation Act. This view was also followed by the Supreme Court in Fair growth Investments Limited (supra).
18. Having regard to the object of the SARFAESI Act that it intends to ensure speedy recovery of dues of Banks and also for quick resolution of dispute arising out of the action taken for recovery of such dues, I have no hesitation in holding that the legislature has consciously excluded the applicability of the provisions of section 4 to section 24 of the Limitation Act in so far as they relate to section 18 of the SARFAESI Act. The decisions of UCO Bank v. Kanji Manji Kothari and Punnu 10 Swami v. The Debts Recovery Tribunal of Bombay and Madras High Court relied upon by the learned counsel for petitioner are with regard to the applicability of section 5 of the Limitation Act only to section 17 of the SARFAESI Act and not section 18. In both these decisions, section 18 has not been referred. The decisions are, therefore, not applicable in the present case."
On the basis of the aforesaid facts, this is to be seen that the appellant has played fraud with this Tribunal by projecting the facts that the free copy was received on 05.08.2011, though after perusal of the record it is apparent that the certified copy was received on 28.07.2011. If the limitation is counted from the date then the appeal is barred by time. If the limitation is counted from 16.11.2010 i.e. the date when free copy was received by the learned counsel for the appellant, then moving of the application on 26.07.2011 for supply of the certified copy of the order would not confer a right to claim the limitation because the free copy was already received."
11. On merits, learned Appellate Tribunal dismissed the appeal on the following ground: "Learned counsel appearing for the appellate is heard on the question of admission of the appeal. The Tribunal by this order by which the earnest money has been directed to be 11 forfeited, the appellant deposited a sum of Rs.30.00 lakhs for participating in the auction of the property. He was the highest bidder and finally his bid was accepted on 06.10.2008 i.e. on the date of auction for a sum of Rs.1.16 crore. The reserve price of the property was fixed for a sum of Rs.1.15 crores.
It was the grievance of the appellant that the property in question was under the limitation as a Civil Suit was pending and therefore, in view of the said litigation, the appellant submitted an application to withdraw his bid, as he never intended to purchase the property which was under the litigation. In this reference, this is to be seen that the Securitization Application preferred by the appellant under Section 17 of the SARFAESI Act, 2002 does not show that on the date when the appellant participated in the auction i.e. on 06.10.2008, he was not aware of the litigation and with open eyes he participated in the auction and prior to the auction, earnest money was deposited by him. After when the bid was finally knocked down being highest bid of the appellant, the appellant was not prepared to purchase the property and intended to withdraw his offer. As per Rule 9 (5) of the Security Interest (Enforcement) Rules, 2002, earnest money was required to be forfeited. The appellant cannot be permitted to say that he was not aware of the fact that the property was under the litigation before the Civil Court and no valid title would have been conferred on him, even though he 12 participated in the auction. The Securitization Application so preferred under Section 17 of the SARFAESI Act, 2002 does not state such fact. This was an important fact when ought to have been pleaded being in the personal knowledge of the appellant that he was not aware of about the litigation of the property, but in spite of it, nothing was stated by him in the Securitization Application. Therefore, after when the bid was knocked down in favour of the appellant, then the same was withdrawn by the appellant. Under the circumstances, the action on forfeiture of the earnest money i.e. 10% of the bid amount cannot be said to be against the Rule 9 (5) of the Security Interest (Enforcement) Rules, 2002.
In view of the aforesaid, the present appeal is dismissed subject to the cost of Rs.1.00 lac, which will be paid by the appellant to the respondent Bank within thirty days from today. Since the appellant has committed the fraud and the facts as stated in the application for condonation of delay by the appellant are contrary to the record, therefore, this is a fit case where the cost of Rs.1.00 lac has to be imposed on the appellant. If the cost is not paid within the stipulated period, then the Bank shall recover the same while recovering the dues as per law."
12. Learned counsel for the petitioner submits that the petitioner submitted his bid on 06.10.2008 whereas civil 13 suit was filed on 16.10.2008, and therefore, offer of the petitioner could not have been accepted by the respondent - Bank. The respondent - Bank committed legal error in forfeiting the amount of Rs.30.00 lakhs deposited by the petitioner.
13. As per the facts narrated herein above, highest bid of the petitioner was accepted on 06.10.2008 i.e. on the date of the auction for a sum of Rs.1.16 crores. The reserve priced of the property was fixed for a sum of Rs.1.15 crores. Securitization application preferred by the petitioner under Section 17 of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 does not show that on the date when the petitioner participated in the auction, he was not aware of the litigation and with open eyes, he participated in the auction and prior to the auction, earnest money was deposited by him. After when the bid was finally knocked down being the highest bid of the petitioner, he was not prepared to purchase the property and intended to withdraw his offer. As per Rule 9 (5) of the Security Interest (Enforcement) Rules, 2002, earnest money was required to be forfeited. The petitioner 14 cannot be permitted to say he was not aware of the fact that property was under the litigation before the Civil Court and no valid title would have been conferred on him, even though he participated in the auction. Under the circumstances, the action on forfeiture of the earnest money i.e. 10% of the bid amount cannot be said to be against Rule 9 (5) of the Security Interest (Enforcement) Rules, 2002.
14. In view of the aforesaid, we are of the view that the learned Debts Recovery Appellate Tribunal, Allahabad has rightly dismissed the appeal on limitation as well as on merits.
15. Writ Petition No.9021/2014 has no merit and is accordingly dismissed, without any order as to costs.
(P.K. Jaiswal) (Tarun Kumar Kaushal)
Judge Judge
Pithawe RC