Madhya Pradesh High Court
Smt. Urmila vs Bank Of India on 2 August, 2022
Author: Vivek Rusia
Bench: Vivek Rusia, Amar Nath Kesharwani
- : 1 :-
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE AMAR NATH (KESHARWANI)
MISC. PETITION No. 2590 of 2018
Between:-
SMT. URMILA W/O SHRI CHANDRA SHEKHAR JAIN R/O JAWAHAR
1.
MARG, NAGDA, UJJAIN (MADHYA PRADESH)
SUDHIR KUMAR S/O SHRI PARASMAL JAIN BUS STAND, NEAR
2.
RAILWAY GATE, PIPLIYA MANDI, MANDSAUR (MADHYA PRADESH)
KESHAV S/O SHRI KAMAL SINGH RAGHUVANSHI 195, RAM SAHAY
3.
MARG, NAGDA, UJJAIN (MADHYA PRADESH)
.....PETITIONER
(SHRI RAGHVENDRA SINGH RAGHUVANSHI, LEARNED COUNSEL FOR
THE PETITIONER .)
AND
BANK OF INDIA AUTHORIZED OFFICER ZONAL OFFICE, 18 SANKU
1.
MARG, FREEGANJ UJJAIN (MADHYA PRADESH)
BRANCH MANAGER BANK OF INDIA JAWAHAR MARG, NAGDA, UJJAIN
2.
(MADHYA PRADESH)
DIRECTOR KRISHNAKANT JAISWAL M/S MUKTESHWAR FERTILIZER
3. LTD. JAISWAL BHAWAN, M.G. ROAD, NAGDA, UJJAIN (MADHYA
PRADESH)
BALESHWAR DAYAL JAISWAL S/O SHRI BL JAISWAL 31, JAISWAL
4.
BHAWAN, M.G. ROAD, NAGDA UJJAIN (MADHYA PRADESH)
SUB REGISTRAR THE STATE OF MADHYA PRADESH DISTRICT
5.
HEADQUARTER , TEHSIL NAGDA, UJJAIN (MADHYA PRADESH)
TEHSILDAR THE STATE OF MADHYA PRADESH TEHSIL NAGDA, UJJAIN
6.
(MADHYA PRADESH)
.....RESPONDENTS
(SHRI BHASKAR AGRAWAL, GOVT. ADVOCATE FOR RESPONDENT/STATE.)
(SHRI AKSHAT AGRAWAL, LEARNED COUNSEL FOR THE RESPONDENT
NO.4.)
(SHRI ROHIT KUMAR MANGAL, LEARNED COUNSEL FOR THE
RESPONDENT NO.3.)
(SHRI DHEERAJ SINGH PANWAR, LEARNED COUNSEL FOR THE
RESPONDENT NO.1.)
Reserved on : 13.07.2022
Delivered on : 02.08.2022
.....................................................................................................................
Signature Not Verified
Signed by: AJIT
KAMALASANAN
Signing time: 04-08-2022
11:00:46
- : 2 :-
This petition coming on for hearing on this day, JUSTICE VIVEK
RUSIA passed the following:
ORDER
The petitioners hereinafter referred as auction purchasers have filed this present writ petition being aggrieved by order dated 09.03.2018 Annexure-P/1 and order dated 17.04.2018 Annexure-P/16 passed by Debt Recovery Appellate Tribunal, Allahabad in Appeal No.17/2010.
2. Facts of the case in short are as under:-
i. Respondent no.3 availed cash credit hypothecation limit of rupees one crore for business requirement by mortgaging its immovable property being land bearing survey no.1,2,3,4 and 5 total total area 16.75 hectares at village Narayankhedi, Tehsil Maheedpur District Ujjain and also the land, plant, building and machinery of the company. The respondent no.4 stood as a guarantor in the said loan by mortgaging his immovable property constructed over land Khasra No.1415/1 rakba 3 bigha (commonly known as Deepika Talkies) and 1415/3 rakba 8 Bigha 1 biswas situated at Padiyakala, Nagarpalika , Nagda, District-Ujjain. Since the respondent no.3 failed to become irregular in repayment of the loan therefore, account was classified as NPA by the bank. The bank issued notice dated 10.09.2005 under section 13(2) of the SARFAESI Act followed by possession notice dated 16.10.2008 under section 13(4) of the SARFAESI Act. The part of mortgage property was put to auction by inviting tender. The auction was scheduled on 14.02.2009. The respondent no.3 and 4 challenge the auction by filing the writ petition no.951/2009 before this court. Vide order dated 13.02.2009 respondent no.3 was ordered to deposit Rs. 30 lacs with the bank and to present a purchaser for the property to be auctioned on or before 20.03.2009. On the basis of the aforesaid order the auction date was postponed. Since the respondent no.3 failed to bring any prospective buyer on or before 20.03.2009 the respondent bank conducted an auction on 23.03.2009 in which the petitioners purchase the Deepika Talkies and its land being a highest bidder. The sale certificate dated 09.04.2009 was issued in favour of Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46
- : 3 :-
auction purchaser. The respondent no.4 challenged the said auction and sale certificate before DRT, Jabalpur in SA No.67/2009 which was dismissed vide order dated 14.12.2009. Thereafter, respondent no.4 preferred an appeal before DRAT, Allahabad under section 18 of the SARFAESI Act without depositing the 50% of the total outstanding dues. According to the petitioner the aforesaid appeal was time barred but the respondent no.4 did not file any application for condonation of delay. Later on the application was filed under section 5 of the Limitation Act without any affidavit. DRAT has dismissed the appeal vide order dated 18.05.2011 by holding that the tribunal has no power to condoned the delay under the SARFAESI Act. The respondent no.4 has challenged the said order dated 18.05.2011 before the High Court by way of writ petition no.8864/2011 which was dismissed vide order dated 05.09.2011.
Thereafter, the respondent no.4 approached the Apex Court by way of civil appeal no.5924/2015 and vide order dated 05.09.2011 the Apex Court has allowed the civil appeal holding that the DRT has power to condone the delay entertaining the appeal filed under the SARFAESI Act and the matter was remanded back to the High Court for deciding afresh on merits.
ii. In compliance of the order passed by the Apex Court the writ petition no.8854/2011 was restored and vide order dated 25.02.2016 the High Court has directed the DRAT to decide all question along with an application for condonation of delay.
iii. The petitioner/ auction purchaser appeared before the DRT filed a reply to the condonation of delay. On 09.03.2018 the respondent no.4 filed an affidavit on 04.03.2018 in support all the application for condonation of delay which was filed in the year 2010. Vide order dated 09.03.2018 DRAT has condoned the delay in filing the appeal as there was a delay of only 15 day Annexure-P/1. The respondent no.4 has also filed an application seeking waiver of deposit of 50% of the total debt. Vide order dated 02.04.2018 the DRAT has allowed the application by waiving the pre-deposit of 50% of the amount. It is important to mention here that petitioners has not challenged the said order in this petition.
Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46- : 4 :-
Thereafter, the DRAT decided the appeal on merit and vide order dated 17.04.2018 set aside the auction sale dated 21.03.2009 and sale certificate dated 09.04.2009 and remanded back the matter to the DRT. The petitioner/auction purchaser has filed this petition challenging order dated 09.03.2018 and final order dated 17.04.2018 interalia on the ground that DRAT has committed grave error of law in deciding the appeal under section 18 of the SARFAESI Act without there being any pre-deposit of 50% of the total debt by the respondent no.4. The petitioner has also assailed the order dated 09.03.2018 on the ground that affidavit in support of the application has filed only on 09.03.2018 and the DRT has wrongly held that there was a delay of 15 days whereas the delay of condonation is counted from the date of filing of the affidavit not from the date of filing of the application for condonation of delay without affidavit.
iv. Vide order dated 20.06.2018 this court issued notice to the respondent thereafter vide order dated 12.10.2018 by way of interim relief this court has directed that any order passed by the DRAT shall be subject to the final outcome of the present petition. Application for interim relief i.e. I.A. No.2191/2018 and I.A. No.1129/2019 were taken up and vide order dated 17.06.2019 this court has declined to stay the proceedings pending before the DRT. This court has also declined to direct bank to hand over the physical possession of the property to the petitioners. It is also observed that the DRAT shall be free to decide the matter on merit in accordance with law. After the aforesaid order now the DRAT has finally decide the appeal and set aside the auction in favour of the petitioner. Vide order dated 17.08.2019 DRT has allowed S.A. No.67/2009 and quashed auction held on 21.03.2009 and sale certificate dated 09.04.2009 with the further directions to the petitioner with a prevailing fixed deposit rate within one month. Being aggrieved by the aforesaid order the petitioner has preferred an appeal before DRAT. In view of the subsequent developments the respondents have filed an application for dismissal of the petition as having rendered infructuous and the petitioner has suppressed the material facts and the subsequent matter. The petitioner filed a reply to the aforesaid application but all the parties are agreed to Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46
- : 5 :-
argue this writ petition finally instead of arguing on aforesaid application.
3. Shri Akshat Agrawal, learned counsel for the respondent no.3 and 4 submit that present writ petition is filed against the order dated 09.03.2018 whereby the delay was condoned and final order dated 17.04.2018 whereby the DRAT has remanded the matter to the DRT mainly on the ground that DRAT has wrongly entertained the appeal by waiving the condition of depositing 50% of the total debts by specific order dated 02.04.2018 the application for waiver was allowed but the petitioners have not challenged the aforesaid order. Now, after remand DRT has allowed the second appeal filed by the respondent no.4 and set aside the auction sale and sale certificate. Therefore, the petition has rendered infructuous.
4. The petitioners have filed an appeal before the DRAT hence, this petition is liable to be dismissed as having rendered infructuous.
5. Shri Raghuvanshi, learned counsel for the petitioners has argued that when the appeal filed before the DRAT was not entertained for want of deposit of 50% of the total outstanding debt then any order passed in the said appeal is void ab initio and all the subsequent proceedings are no nest He has placed reliance over the judgment passed by the Apex court in case of Union of India Vs. Rajat Infrastructure Pvt. Ltd. & Others reported in the year 2020 (3) SCC 770 in which the Apex Court has held that High Court has no power akin to the powers vested in the Apex Court to hold that pre-deposit is not required before entertaining the appeal by the DRAT. He has also placed reliance over the judgment passed by the Apex Court in case of Hetchin Haokip Vs. State of Manipur and others reported in the year 2018 (9) SCC 562 and in case of Authorised Officer, Indian Oversees Bank and another Vs. Ashok Saw Mill reported in the year 2009 (8) SCC 366 and in case of Godavari Laxmi Cooperative Bank Ltd. Vs. Union of India and another reported in the year 2012 (2) Mh. L.J. 472.
6. So far, the main contention of the counsel for the petitioner is that the DRAT has wrongly entertained the appeal without fulfilling the fee condition of depositing 50% of the total debt. In the present case, the bank Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46
- : 6 :-
has auctioned the mortgaged property and recovered the entire loan and issued a no due certificate to the respondent no.3 and 4. The respondent no.4 has filed a second appeal challenging the auction sale which was dismissed by the DRT thereafter, he preferred an appeal before DRT and at that time there was no debt outstanding in the bank. The similar issue came up before this court in case of W.P. No.5494/2021 and this court has held as under:-
"10. Section 2(ha) of the SARFAESI Act defines the word "debt" and according to which, the debt shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act of 1993" for short) and also includes an unpaid portion of the purchase price of any tangible asset and any other contract, any right, title or interest on any intangible asset or licence or assignment of such intangible asset. According to Section 2(g) of the Act of 1993, "debt" means any liability inclusive of interest that is claimed as due from any pe son by a bank or a financial institution. According to aforesaid both the definitions "debt" means any liability inclusive interest which is claimed as to any due from the person by the bank or financial institution.
11. Section 19 of the Act of 1993 provides that where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits. Section 13(2) of the SARFAESI Act provides that where any borrower, who is under a liability to a secured creditor under a security agreement,makes any default in repayment of secured debt or any installment thereof, the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4) of Section 13. Sub-section (8) of Section 13 provides that where any amount of dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date of publication of notice for public auction, the secured assets shall not be transferred by way of assignment, lease or sale by the secured creditor. Sub-section (10) of Section 13 provides that where the dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the DRT having jurisdiction or a competent court for recovery of the balance amount from the borrower. Therefore, the bank or the secured creditor is entitled to file an application before the DRT or a competent court to recover the balance amount when the dues are not fully satisfied with the sale and if the dues of the secured creditor are fully satisfied, then the secured creditor or the bank cannot proceed further for any recovery.
Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46- : 7 :-
12. In the present case, now the bank cannot proceed against the borrower for recovery of any amount of the debt because the entire amount of dues has been received by way of an auction sale. As on today, there are no dues or debt against the borrower. U/s. 13 of the SARFAESI Act and Section 17 of the Act of 1993, the bank can take steps for the recovery of any debt.
13. The word "debt" means total outstanding against the borrower at the time of taking measures by the bank or financial institute against the borrower, and under the second proviso of Section 18(1) of the SARFAESI Act the word is used is "amount of debt due", which means, the borrower is liable to deposit 50% of the amount of debt due and not the entire debt. For example in a situation where during the pendency of any proceeding and before the filing of appeal before DART, the borrower deposits some amount of debt under the order of the Tribunal or suo motu and that amount so deposited is liable to be adjusted in the amount due or debt, then the amount of debt get reduces, hence the borrower is only liable to deposit as precondition 50% of the amount of debt due.
14. In a given case where while deciding on a securitization application the learned Tribunal determines any amount of debt or dues payable to the bank by the borrower which is less than the actual amount of debt or due at the time of filing of securitization application, therefore, the second proviso of second 18 clarifies that 50% of the amount of debt due from him as claimed by the secured creditor or determined by the Tribunal whichever is less. Hence, the borrower is not liable to deposit 50% of the amount of the debt as initially claimed by the secured creditor. The amount payable at the time of appeal is called debt due or determined by the Tribunal and whichever is less, is to be considered for depositing 50%. In the present case, while dismissing the SA the learned DRT has held that the bank has recovered the entire amount, even more than the amount of debt i.e. Rs. 24,28,064/- by way of an auction sale. Therefore, at the time of filing an appeal, there is no amount determined by the learned DRT as a debt against the respondent/borrower and there was no debt due against the borrower because the bank had received it from the petitioner/ auction purchaser. Now the bank cannot initiate the proceedings for recovery of debt against the borrower as there is no debt.
15. Section 20 of the Act of 1993 provides an appeal to the DRAT against the order of DRT. Section 21 of the Act of 1993 provides the pre-condition of deposit of 75% of the amount of debt so due from him as determined by the DRT u/s. 19. Here in the Act of 1993 also, there is no precondition of deposit of 75% of the entire debt amount, but 75% of the amount determined by the DRT under section 19."
7. So far, the validity of order dated 09.03.2018 is concerned whereby Signature Not Verified Signed by: AJIT KAMALASANAN Signing time: 04-08-2022 11:00:46
- : 8 :-
the learned DRAT has condoned the delay and the tribunal has held that as the appeal was filed against order dated 14.12.2009 which was initially challenged before the High Court by way of writ petition which came to be decided on 18.01.2010. Thereafter, appeal was filed before the DRAT immediately after dismissal of the writ petition, the High Court has extended interim stay for the period of three weeks. The appeal was filed along with the application for condonation of delay. Although affidavit in respect of the application was filed after the judgment passed by the Apex Court, the tribunal has rightly held that delay of 15 days is liable to be condoned.
8. We are not incline to interfere with the aforesaid order as much water has flowed and the DRT has fixed the case for hearing on application seeking waiver of deposit of 50% of the total outstanding debt. The said application came to be allowed on 02.04.2018 but reasons best known to the petitioners they have not challenged the said order and contested the appeal on merits. Vide order dated 17.04.2018 the appeal has been finally decided by setting aside the order by remitting back the matter to the DRT. This court has initially observed that the proceeding of the DRAT is subject to the final outcome but thereafter, even said ex-parte order has been withdrawn vide dismissing the application for stay with a specific directions to DRT to decide the S.A. No.67/2009 on merits in accordance with law. The order passed by the DRAT was not made subject to the final out come of the writ petition and thereafter, the DRT has passed the final order dated 09.03.2018 setting aside the auction sale. Against the said order the petitioner has preferred appeal before the DRAT. Therefore, nothing remains in this petition to be decided. Now the DRAT will decide all the issues raised by the petitioner in accordance with law in the appeal. Accordingly, the Misc. petition is dismissed.
( VIVEK RUSIA ) (AMAR NATH (KESHARWANI))
JUDGE JUDGE
Ajit/-
Signature Not Verified
Signed by: AJIT
KAMALASANAN
Signing time: 04-08-2022
11:00:46