Allahabad High Court
Bank Of Maharashtra And Another vs Debt Recovery Appellate Tribunal And ... on 2 March, 2023
Author: Saurabh Shyam Shamshery
Bench: Saurabh Shyam Shamshery
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on : 21.02.2023 Delivered on : 02.03.2023 Court No. - 34 Case :- WRIT - C No. - 1595 of 2021 Petitioner :- Bank Of Maharashtra And Another Respondent :- Debt Recovery Appellate Tribunal And Another Counsel for Petitioner :- Shruti Malviya Counsel for Respondent :- Kumar Kartikeya, Jai Shanker Audichya Hon'ble Saurabh Shyam Shamshery,J.
1. Heard Ms. Shruti Malviya, learned counsel for petitioners, Sri Gaurav Singh, learned counsel for respondent No.3 and Sri Kumar Kartikeya, learned counsel appearing on behalf of respondent No.2.
2. Petitioner, a bank, is aggrieved by impugned order dated 15.12.2020 passed by Debts Recovery Appellate Tribunal, Allahabad whereby appeal filed by borrower was allowed and auction held by bank of the property of borrower was set aside with direction that auction money to be returned to auction purchaser and possession of moveable and immoveable property be restored back to borrower with liberty to petitioner to proceed afresh from stage of issuance of sale notice in accordance with law, since, petitioner bank was not able to prove that an auction notice of 15 days was served upon the borrower.
3. Ms. Shruti Malviya, learned counsel for petitioner has submitted that undisputedly borrower (respondent No.2) made default, therefore, huge outstanding was created against said respondent. Proceedings were initiated under SARFAESI Act. The first attempt of auction was not successful and after a fresh valuation of report of properties in question, bank issued a sale notice on 16.08.2018 to borrower/respondent No.2 through speed post as well as said notice was published into national daily newspaper i.e. Financial Express and Jan Satta on 19.08.2018. Notice was also published on government website i.e. E-tenders.gov.in and it was also circulated on Bank of Maharashtra website as well as circulated to its all branches.
4. Ms. Shruti Malviya, learned counsel for petitioners further submitted that a single bid of Rs.95.69 lacs was received in E-auction and auction purchaser (respondent No.3) deposited entire sale price with bank and sale certificate dated 18.09.2018 was issued in his favour.
5. At this stage borrower (respondent No.2) moved an application for quashing of auction proceeding before Debt Recovery Tribunal, Dehradun, however, it was rejected on 31.01.2019 and feeling aggrieved respondent No.2 approached to Debts Recovery Appellate Tribunal, Allahabad by way of filing a regular appeal which was erroneously allowed by impugned order.
6. Learned counsel for petitioner has referred documents in order to show that borrower (respondent No.2) was well aware that his properties were put for auction on 10.09.2018 and that he wrote an e-mail dated 05.09.2018 to bank that auction proceeding be differed till 28.02.2019 as he was under process of arranging money and specifically referred to stop auction which was scheduled on 10.09.2018.
7. Lastly, learned counsel has submitted that D.R.A.T. has rejected all the contentions of auction borrower (respondent No.2) except that he had no prior knowledge of auction and rejected the above referred e-mail to consider it to be a knowledge on ground that no date of auction was mentioned in certificate. Learned counsel further submitted that it was a perverse finding as in the said e-mail the date of auction was also mentioned to be 10.09.2018 and she pointed out following part of said e-mail "I request you again please stop legal action/auction of my Co. M/s Sharp Industries, plot No.255 sector 7 Sidcul, Haridwar otherwise my co will be auction on 10th september 2018."
8. The above submissions are adopted by Sri Gaurav Singh appearing on behalf of respondent No.3 (auction purchaser).
9. Sri Kumar Kartikeya, learned counsel appearing on behalf of respondent No.2 supported the impugned order and submitted that procedure for service of notice has been prescribed under Rules 85, 86, 91 and 92 of The Security Interest (Enforcement) Rules, 2002, however, it was violated and no notice was served upon the said respondent, therefore, entire auction proceeding got vitiated. Learned counsel also submitted that an information, in regard to change of address was submitted to bank, however, no notice was sent on changed address as well as the contents of e-mail referred above does not indicate that auction date was in his knowledge.
10. Heard counsel for parties and perused the record.
11. In order to consider the rival submissions, I have carefully perused the impugned order. The D.R.A.T. has rejected the contentions of respondent No.2/borrower and held that properties were properly valued, there was no illegality if property was sold at lesser price than reserve price, auction notice was properly published in newspaper as per the requirements of Rules. However, D.R.A.T. after considering the Rules of 2002 held that reasonable opportunity was not provided to borrower(respondent No.2) and since notice was not served upon borrower(respondent No.2), auction proceedings were defective and that above referred e-mail does not indicates that borrower has prior knowledge of date of auction.
12. The issue before this Court is whether service of auction notice was complete and borrower has reasonable time to repay entire loan as well as contents of e-mail would indicate that borrower has prior knowledge of auction notice.
13. The Supreme Court in Bank of Baroda vs. M/s Karwa Trading Company & Another, (2022) 5 SCC 168 has held that bank could be restrained from selling mortgage property only where borrower has deposited the entire dues and unless the borrower was ready to deposit/pay entire amount before together all over cost and expenses with bank. The borrower cannot be discharged from entire liability outstanding.
14. Supreme Court in L&T Housing Finance vs. Trishul Developers (2020) 10 SCC 659 has held that "in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions."
15. In the present case, borrower/respondent No.2 has not come up with any proposal to repay entire outstanding amount as on date, even after four years of impugned auction proceedings, therefore, even it is deemed that procedure for prior notice is not substantially complied with, still respondent borrower has failed to make out a case of prejudice.
16. The borrower/respondent No.2 has not brought on any legal sustainable material that he had no knowledge of auction notice despite it being circulated through different procedure i.e. in two daily newspapers, on website of bank and other related websites also.
17. I have carefully perused contents of e-mail wherein borrower has mentioned that " we are arranging the funds for closure the account under one time settlement. we hope that we will arrange the money by February. so this is our humble request to you that kindly do not make any legal action/auction of our property till 28th feb 2019 and give us some time to make payment. we will clear all the dues by February 2019 under one time settlement scheme. I request you again please stop legal action/auction of my Co. M/s Sharp Industries, plot No.255 sector 7 Sidcul, Haridwar otherwise my co. will be auction on 10th september 2018." Petitioner has not explained any reason for mentioning ''date 10.09.2018' for auction and there was no reason to mention date 10.09.2018 in e-mail except that he was well aware that on 10.09.2018 auction was fixed. Only inference could be drawn that auction purchaser was well aware about date of auction and for that he has requested bank to defer it as well as till date he had not come with any proposal of repayment.
18. Impugned order is accordingly set aside.
19. Writ petition is allowed.
Order Date : 02.03.2023 P.Pandey