Atul Gupta vs Andhra Bank And Ors

The appellant had guaranteed re-payment of loan granted to a Company by the name of M/s Reema Papers Pvt. Ltd. by Andhra Bank, respondent no.1 herein. He had also created equitable mortgage of his land in Uttaranchal to further secure the re-payment of the loan by the said borrower Company. Since there was default in re-payment of the loan by the said borrower Company the respondent no.1 Bank initiated proceedings under SARFAESI Act in order to recover its outstanding dues. Firstly the account of the borrower Company was declared as NPA and then upon failure of the borrower Company and guarantors to clear the Bank's dues despite issuance of demand notice under Section 13(2) further steps were initiated under Section 13(4). In order to challenge the measures initiated by the respondent Bank under SARFAESI Act the borrower Company and the guarantors, including the appellant, filed a joint Securitisation Application(S.A.) under Section 17(1) of SARFAESI Act before the Debt Recovery Tribunal(DRT). During the pendency of the S.A.the land mortgaged by the appellant was auctioned on 21.07.2015 for a sum of Rs. 4,85crores in favour of respondents 2 and 3 herein.

The appellant/mortgagor challenged the auction of his property before the DRT and sought setting aside of the auction sale conducted on 21.07.2015 and also sought to exercise his right of redemption. In that direction he filed four applications before the DRT. The Bank and auction purchasers had opposed those applications primarily on the ground that auction sale had been legally conducted on 21.07.2015 after due notice to the appellant. They had not disputed that the DRT could entertain the applications moved by bringing on record the subsequent event of sale after the filing of the S.A. which DRT could entertain in view of the judgment of Hon'ble Punjab and Haryana High Court in the case of "Vishu Steels vs Union Bank of India", IV(2017) Banking Cases 598. However, all the four applications were rejected by a common order dated 08.05.2018 by the learned Presiding Officer of DRT-III, Delhi. Feeling aggrieved, the present appeal came to be filed by the appellant/mortgagor wherein the main prayer made was for the setting aside of the auction sale of his property on 21.07.2015.

"I.A. No.1846 of 2015

The present application has been filed by the applicant Shri Atul Gupta praying therein to direct the respondent bank to release the said property for a sum of Rs.5.00 crores o the applicant and allow the applicant to redeem the part property of the applicant and also prayed to restrain the alleged auction purchaser from creating any third party interest in the Land admeasuring 16671 sq.mtrs. out of khasra no.56 (half portion) situated at Village Raipur, Pargana Bhagwalpur Tehsil Roorkee, District Haridwar, Uttaranchal.

It has been submitted by the applicant that the respondent bank has illegally conducted the auction sale on 21.07.2015 qua the said property with a reserve price of Rs.4.80 crores and the respondent bank has received only single bid of Rs.4.85 crores. The applicant has also raised certain objections such as that the respondent bank has violated the provisions of Rule 8(2), 8(5), 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002 while conducting the alleged auction sale, the respondent bank has sold the property in question on a peanut price whereas the value of the same is more than three times, the respondent did not try and possibility whatsoever for selling / disposing of the said property in part as the alleged outstanding dues could have been recovered by the sale of part property itself and the securities available in the other account of Siddha Neelkanth were sufficient to settle the alleged dues in the present account which was the stand of the respondent bank since July, 2013.

It has, further, been submitted by the applicant that the said property consists of 16671 sq.mtrs. (25 bighas) and is situated on the National Highway wherein the proposal of the expansion of the National Highway has been passed. It has also been submitted that demarcation of the said area has also been done and the place Bhagwanpur, where the said property is situated had become Tehsil thus, leading to a tremendous increase in the market value of the said property and the adjacent property has also been sold at Rs.18,000/- per sq. mtrs.

Further, it is submitted that the applicant has arranged a buyer to purchase the 6875 sq.mtrs (10 bighas) of the said property at Village Raipur, Pargana now Tehsil Bhagwanpur, District Haridwar, Uttaranchal for a sum of Rs.5.00 crores and therefore, the applicant seeks permission of this Tribunal to redeem the said property. It has also been contended by the applicant that wrongly alleged NPA amount in the present account is Rs.5.06 crores, in which Rs.25.00 lacs had already been deposited on 21.02.204, thereby the sale of only the part property i.e. 6875 sq.mtrs., the alleged total outstanding amount of the respondent bank would be realized. The applicant, further, submitted that the market value of the said part property is more than Rs.8.00 crores, but the applicant is constrained to sell at such reduced prices to save his hard-earned property, because of the illegal dongs and actions of the respondent bank.

It has, further, been submitted by the applicant that this Tribunal, vide order dated 17.09.2015, observed that if the applicant wants to redeem the said property, he shall bring a better buyer and pursuant to the said order the applicant proposes to redeem the said property for a sum of Rs.5.00 crores through the prospective buyer and in view of the same the applicant would be able to protect the remaining portion of the property i.e. 9796 sq.mtrs (15 bighas) while settling the alleged dues of the respondent bank.

The applicant also submitted that in order to show his bonafide the applicant is willing to deposit a cheque of Rs.50.00 lacs and no prejudice would be caused to the respondent bank in case the present application is allowed by this Tribunal and the right to retain the property is a constitutional right and the applicant seeks to enforce its constitutional rights. Accordingly, it has been prayed to direct the respondent bank to release the said property for a sum of Rs.5.00 crores to the applicant and allow the applicant to redeem the property of the applicant.

The reply to this I.A. has been filed on behalf of the respondent bank stating that the property in question has been put to auction 3 times and the auction has been successful 4th time only for a sum of Rs.4.85 crores and the applicant/mortgagor was duly informed as per the procedure laid down under the SARFAESI Act, but the applicant chose to create misunderstanding amongst the people living in the localities in the vicinity of mortgaged property. It has further, been submitted by the respondent bank that the sale certificate has already been and the possession of the property in question has also been handed over to the auction purchaser and as such nothing survives in this application.

The respondent bank, further, submitted that the borrower / mortgagor has converted the land use from agricultural, but after the SARFAESI action, the borrower / mortgagor trying the CLU again to agricultural so as to stall the recovery proceeding and a letter to this effect was written to the concerned SDM by the bank.

In its para-wise reply, the respondent bank has denied all the averments as stated in this application. It has been submitted by the respondent bank that the applicant himself could have brought the buyer in public auction, however, he failed to do so and the respondent bank has sold the property in question as per the valuation done by the authorized valuer in a transparent manner. The borrower could have utilized the part 2 years, after the becoming of account as NPA, to sell the property himself.

It has also been submitted on behalf of the respondent bank that the present liabilities are only more than Rs.25.00 crores and securities available are not sufficient to clear the liability of even Siddha Neelkanth and the property is available for the liabilities o the present account only. The respondent bank, further, submitted that sale certificate has already been issued as well as registered with the concerned Sub-Registrar and the possession of the property in question has already been given to the auction purchaser and under these circumstances, the credibility of public auctions by the Government departments may not be disturbed lest the confidence of the participating public is lost in such Government auctions.

Further, it has been submitted on behalf of the respondent bank that applicant / mortgagor had neither brought any buyer no he has deposited any amount with the respondent bank and the respondent bank shall definitely suffer on account of loss of credibility and further delay in the auction of other properties shall suffer mis- match in asset-liability and the respondent bank should have taken all the steps before the auction and not now when the sale has already been concluded. Accordingly, it has been prayed for dismissal of the present application.

I.A. No.1736 of 2015, I.A. No.1759 of 2015 and I.A. No.806 of 2016

These three applications have been filed on behalf of the applicants no.1 and 3 wherein similar grounds have been raised in these applications.

It has been prayed on behalf of the applicants to restrain the respondent bank from taking any further action qua the property in question i.e. Land admeasuring 166671 sq.mtrs. out of khasra no.56 (half port9ion) situated at Village Raipur, ParganaBhagwanpur, Tehsil Roorkee, District Haridwar, Uttaranchal till the disposal of this S.A., restrain the alleged auction purchaser to trespass the property of the applicant, no order for the taking of the physical possession of the property be passed till the disposal of the S.A., declare the auction conducted by the bank being contrary to the provision of Rule 8(2), 8(5), 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002 as null and void and also prayed to set aside the alleged sale proceedings dated 21.07.2015.

It has been submitted by the applicant that the respondent bank has illegally and arbitrarily declared the account of the borrower as Non-Performing Assets violating the rules laid down by the RBI. It has, further, been submitted by the applicant that this Tribunal vide order dated 18.02.2014, directed the applicant to deposit a sum of Rs.25.00 lacs with the respondent bank by 21.02.2014 and remaining amount of 25% of demanded amount by 25.03.204 and it was also directed that the respondent bank shall not confirm the sale by the next date of hearing. It has also been submitted by the applicant that in compliance of the direction of this tribunal, the applicant has deposited a sum of Rs.25.00 lacs with the respondent bank on 21.02.2014 and thereafter, the applicant started to arrange the funds by taking loan from private finance to comply with the second direction of this Tribunal, but the applicant was shocked and stunned to see the fresh sale notice dated 03.03.2014 issued by the respondent bank.

The applicant, further, submitted that the issuance of notice dated 03.03.2014 thereby calling upon the applicants to clear the entire dues within 30 days; failing which the bank will proceed against the property situated at Roorkee, Haridwar, clearly and beyond any doubt, established that the authorized officer of the respondent bank does not have faith and confidence upon this Tribunal and could not wait even till the next date of hearing, which was also not too far. The applicant also submitted that the authorized officer of the bank is in contempt of the judicial order dated 18.02.2014 passed by this Tribunal.

It has been submitted by the applicant that the respondent bank has filed the reply to the S.A. stating therein that the respondent bank has to recover a sum of Rs.22.00 crores from the applicant and its other company M/s Siddha Neelkanth Paper Industries Ltd. and the securities available with the respondent bank in the account of M/s Siddha Neelkanth Paper Industries Pvt. Ltd. are much more than sufficient to liquidate the entire dues not only in the account of M/s Sidha Neelkanth Paper Industries Pvt. Ltd., but also in the account of the applicant company. The respondent bank has already voluntarily clubbed the account of the applicant no.1 with the other account of M/s Sidha Neelkanth Paper Industries and also the respondent in order dated 25.07.2013 of this Tribunal had itself stated that the account of M/s Reema Papers Pvt. Ltd. will be adjusted by the properties of Sidha Neelkanth paper i.e. 170, Deepali Pitampura, Delhi.

It has also been submitted by the applicant that the borrower in the present account filed a transfer petition in Hon'ble Supreme Court to transfer the S.A. pending before the DRT, Lucknow to DRT-III, Delhi, which was duly allowed by the Hon'ble Supreme Court vide order dated 12.12.2014.

The applicant, further, submitted that before transfer of the S.A., the respondent bank again released an auction for the said property on 03.03.2015 without complying with the provisions of Rule 8(5) and Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 for a reserved price of Rs.5.25 crores, whereas on 02.03.2015 the respondent bank had submitted before this Tribunal that the valuation of the property is Rs.10.00 crores and despite this fact the respondent bank still proceeded with the sale of the property at Rs.5.25 crores. The applicant also submitted that the market value of the property is more than Rs.20.00 crores and the valuation of the property done by the approved valuer is also Rs.12.153 crores as on 17.02.2014, which justifies the market value of Rs.20.00 as the valuer values the property around 30% less its market value and also there is more than 25% increase in the market price.

Thereafter, the respondent bank again in utter dismay has issued another notification for the sale of the said property again at the same reserved price of Rs.5.25 crores vide sale notice dated 21.03.2015 to be held on 27.04.2015, which shows malafide intention of the bank and its officials that they want to sell the property at throw away price to their friends. The respondent bank has also not filed the valuation report to justify their act of putting the property for sale at such a low and throw away price and the property prices in the said area have jumped at least by 50% to the valuation done 12 months ago as the adjacent land to the said property has been developed as a residential colony, which as further increased the property value tremendously.

The applicant, further, submitted that the aforesaid auction also got failed and no bids were received by the bank, but the respondent bank with their malafide and dolus intention has again put the property on auction at a much lesser price of Rs.4.80 crores, even after knowing the mind of this Tribunal, wherein this Tribunal has observed that the sale shall be subject to the final outcome of the S.A. It has been submitted by the applicant that on 17.07.2015 the respondent bank has illegally received the bids in the auction and the bank hurriedly in total dismay to the orders of this Tribunal unauthorizedly confirmed the auction process without following the due process of law and also issued the Sale Certificate whereby favoured the auctionpurchaser by proposing to handover the physicalpossession of the property to the alleged auction purchaser; the physical possession of the said property has always been with the guarantor - ShriAtul Gupta and he has been continuously doing the agriculturist activities thereon.

Further, it is submitted that without following due process of law of issuance of 30 days sale notice to the applicant herein, and further without publishing the same in two leading newspapers to the applicant under Rule 8(6) of the Rules, 2002 the respondent bank has allegedly put the property of the applicant on auction. It is also submitted by the applicant that the respondent bank did not obtain any valuation report as prescribed under rule 8(5) of the Rules, 2002 and despite the correct valuation report provided by the applicant, the respondent bank disregarded the same and continued the sale at the fraudulent price.

The applicant also submitted that the property in question is an agricultural land thereby the securitization proceedings as per the Section 31(i) of the SARFAESI Act, 2002 cannot be initiated. It has also been contended on behalf of the applicant that no notice under Rule 8(7) was ever affixed on the said property, accordingly, the same may be declared as null and void. The applicant, further, submitted that the respondent bank has never shown any interest in receiving the amount from the borrower or the guarantor and has always declined to accept the offer as put forth on several occasions. It has also been submitted on behalf of the applicant that even, before the date of auction dated 21.07.2015, it was clear in the market that the said property has been purchased by Lalit Mohan Aggarwal and Ajay Bansal with the conspiracy of bank officials and the officials of the bank were in personal touch with the auction purchaser with their personal benefits in delivering the applicants property to him with ulterior motives. Accordingly, it has been prayed for restraining the respondent bank from taking any further measures under the SARFAESI Act, 2002 qua the property in question.

The reply on behalf of the respondent bank has been filed seeking dismissal of the present application. It has been submitted by the respondent bank that the order dated 12.05.2016 was passed by this Tribunal in the presence of the counsel for the applicant and this Tribunal opined that no case has been made out in view of the applicant filed to pay the dues as well as the respondent bank having sold the property in public auction for a sum of Rs.4.80 crores.

It has, further, been submitted by the respondent bank that the property bearing Khasra no.36, Village Raipur, Tehsil Bhagwanpur is not agricultural and change of land use has been affected in this regard. The respondent bank also submitted that the 30 days sale notice under Rule 8(6) of Security Interest (Enforcement) Rules, 2002 was issued on 05.03.2015, which was published, on 19.06.2015, in the newspapers Hindustan Times and Amar Ujala and the auction was conducted on 21.07.2015. The valuation has been done by the approved valuer M/s Goel & Associets at Rs.7,00,18,000/- and the distress value of Rs.5,25,13,500/- and there previous auctions had failed and hence, the reserve price was reduced to Rs.4.80 crores.

In its para-wise reply, the respondent bank has denied all the averments as stated in the application and stating that the applicant- Shri Atul Gupta is the mortgagor of the aforesaid land as well as guarantor and the account of M/s Sidha Neelkanth Paper Industries Pvt. Ltd., wherein the property no.170, Deepali, Pitampura, Delhi and 392, Deepali, Pitampura, Delhi were mortgaged, has been assigned and the recovery in this account has to be made from the borrower i.e. company/guarantor/mortgagor. It is also stated that the liability of M/s Reema Papers Pvt. Ltd. has to be realized from the sale of the properties mortgaged in this account and there is no malafide intention of the bank or its officers in auctioning the property for recovery of the public dues and all the notices were duly issued by the respondent bank to the borrowers as well as published in the newspapers.

The respondent bank also submitted that the intention of the applicant to take further loan from third party was designed to defeat the recovery of the loan by creating third party interest in the mortgage property and the account has been declared as NPA as per the RBI guidelines, rather the applicants are guilty of not complying with the order dated 25.07.2013 passed by this Tribunal in S.A. No.264/2013 and also did not deposit the ordered amount of Rs.1.00 core. Further, it has been submitted on behalf of the respondent bank that the valuation done by the valuer of the applicant would have helped the applicants in the three auctions, even otherwise, they were free at that to bring their buyer who could have given more money for their so called property, but the applicants were more interested and active in successive failures of the auctions and desired to self acquire the property for Rs.2.30 crores. However, the auction was materialized fourth time for Rs.4.80 crores.

The respondent bank has also stated that 30 day sale notice as well as publication in two newspapers, obtaining valuation, affixation on available on post in the open land were duly done, hence the auction has been conducted in a lawful manner. Accordingly, it has been prayed for dismissal of these applications.

In all the three applications i.e. I.A. No.1736 of 2015, I.A. no.1759 of 2015 and I.A. no.806 of 2016 the prayer is almost similar in nature and the moot question for determination before this Tribunal is (i) whether the auction conducted with respect to the property situated at Village Raipur, ParganaBhagwanpur, Tehsil Roorkee, DisrictHaridwar, Uttaranchal was in contravention of SARFAESI Act or not, (ii) whether the valuation of the property in question was wrongly assessed by the respondent bank or not and (iii) whether the due notice was served upon the applicant/borrower/ guarantor/mortgagor or not.

Ld. Counsel for the applicant vehemently argued that the auction sale was conducted in violation of mandatory provision of Rule 8(2), 8(5), 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002. He, further, argued that the value of the property in question was worth more than Rs.20.00 crores and it is abutting to the highway and the said area comes into the boundary of Tehsil Bhagwanpur and as such the value of the property in question was wrongly assessed to lower side by the respondent bank in order to give benefit to the auction purchaser. Therefore, he submitted that the sale is not sustainable in the eyes of law and accordingly, it has been prayed for setting aside the sale / auction conducted by the respondent bank qua the property in question.

Ld. Counsels for the respondent bank and the auction purchaser vehemently argued that the proper notice under Rule 8(6) of Rules 2002 was duly served and the publication was also affected in the newspapers and clear-cut notice of 30 days was given and the auction was conducted after following due process laid down under the provision of SARFAESI Act and Security Interest (Enforcement) rules, 2002 and there was no violation thereof. Further, it is argued that the valuation of the property in question was rightly assessed and this was third time, the property was put on auction, which ultimately fortifies, where two earlier auctions failed for Rs.5.25 crores and hence, it could not be said that valuation or the property in question was got wrongly assessed on lower side. Accordingly, it has been prayed for dismissal of these applications of the applicant.

Heard and the arguments have been heard on behalf of all the respective counsels of the parties at length and the record has been perused thoroughly. So far as, the issue of notice is concerned, it is admitted fact that the auction / sale was conducted on 21.07.2015 and 30 days' notice under Rule 8(6) of Rules, 2002 was duly served on 05.03.2015 by the respondent bank and publication was also affected on 19.06.2016 in the newspapers Hindustan Times and Amar Ujala. The notice dated 15.05.2015 was also duly addressed to the applicant/director / borrower/ guarantor / mortgagor as apparently seen from the letter as well as registered postal receipt placed on record.

In this context, it is worthwhile to be mentioned that the purpose of giving 30 days' notice under Rule 8(6) of Rules, 2002 is to get aware the borrower / guarantor / mortgagor about conducting the sale to enable them to clear the dues of the secured creditors and also acknowledge the proposed bidder to verify the status of the property during this period. Apparently, the due notice was given to the applicant / borrower / guarantor / mortgagor / director and even otherwise, the applicants were well aware of the facts that the sale of the property in question was being conducted by the respondent bank, which stands fortified from the application being I.A. no.506 of 2015 moved by Ms. Ritesh Gupta - one of the director the applicant company on 02.03.2015 for restraining the respondent bank from taking measures in terms of sale notice dated 24.01.2015 and another application moved in the month of April, 2015 for quashing the sale notice dated 21.03.2015. Accordingly, the Ld. Predecessor of this Tribunal, vide order dated 24.04.2015, clearly held that the sale will be subject to outcome of this S.A. and in the said order, it was also mentioned that it was fourth time, they were putting the property on auction. Hence, the present applicants were continuously observing and knew about the auction proceedings, which was being held from time to time by the respondent bank.

Though, Ld. Counsels for the respective parties have relied upon the citation of Mathew Varghese Vs. M. Amritha Kumar &Ors.- MANU/SC/ 0114/2014 and the said citation clearly laid down that "...Sub-rule (6) of Rule 8 and Sub-rule(1) of Rule 9 together, the service of individual notice to the borrower, specifying clear 30 days time gap for effecting any sale of immovable secured asset is a statutory mandate....". In this matter, the said provisions were duly followed by the respondent bank and the applicants were having got more than 30 days prior notice with respect to the auction conducted on 21.07.2015. Accordingly, the said issued stands decided against the applicant.

Now, it has to be seen whether the valuation of the property in question was wrongly got assessed or not. In this context, it is contended on behalf of the applicant that the valuation of the property n question was more than that of valuation fixed by the respondent bank. The valuation report earlier submitted qua the property in question was stated to be Rs.12.53,72,700/- having distress value of Rs.11 crores approximately and the said report dated 17.02.2014 was got prepared on behalf of the applicant, whereas another valuation report sub mitted on behalf of the respondent bank disclosed the market value was calculated at Rs.5,25,13,500/- and the said valuation report was obtained on 08.04.2013.

Further, it is a matter of fact that the first auction was held on 03.03.2015 for Rs.5.25 crores, thereafter, the second auction was conducted on 27.04.2015 for the same reserved price of Rs.5.25 crores, but no bidder turned up for the said auctions. Ultimately, the third auction was to be conducted on 21.07.2015 and the reserve price was reduced from Rs.5.25 crores to Rs.4.80 crores. The said auction stands succeeded and the auction purchaser herein was declared as highest bidder.Therefore, the property in question, even, could not be sold at Rs.5.25 crores, which is also admitted by the applicant herein and hence, it could not be said that the valuation of the property in question was got assessed on lower side by the respondent bank. In this context, it is to be mentioned that the applicant was time and again interfering in the auction proceedings and even making effort to get the property CLU (change of land use) to agricultural land, therefore, this may fact that no one was turned up to purchase the property.

Apparently, there was malafide intention on the part of the applicants themselves and conduct of the petitioner should not go unnoticed regarding huge amount, which is more than Rs.5.00 crores and the same is pending since 29.04.2013 and there was clear cut intention of the applicant to stall the auction sale of the property in question by hook and crook. In view of the aforesaid discussion, this Tribunal is of the view that the applicant failed to prove on record that the valuation of the property in question was much more than that of Rs.4.80 crores and the valuation of the property in question was wrongly assessed by the respondent bank.

Accordingly, finding no merits, these three applications being I.A. no.1736 of 2015, I.A. no.1759 of 2015 and I.A. no.806 of 2016 stand dismissed.

Now, it has to be seen whether the applicant is entitled to redeem the property in question or not. In this context, it is to be mentioned that the applicant has filed an application dated 01.10.2015 alongwith a cheque for an amount of Rs.50.00 lacs and shown his willingness to purchase the property in question for a sum of Rs.5.00 crores, but the said right has already been lost by the applicant to redeem the property in question from the very beginning because of the reasons that vide order dated 18.02.2014 the applicant shown his willingness to settle the matter and accordingly, they were directed to deposit the 25% of the amount due by 21.02.2014 and amount of Rs.25% by 25.03.2014, but the order dated 11.04.2014 clearly reflected that the applicant failed to comply with the direction of this Tribunal and did not deposit the remaining amount of 25% by 25.03.2014, accordingly, the respondent bank issued e-auction on 26.03.2014.

The present applicants have been contesting the present S.A. since 18.02.2014 and apparently the applicants failed to comply with the direction of this Tribunal for depositing the remaining amount of 25%, what to speak of making the payment of Rs.5.00 crores. Even, in this application, it is only stated by the applicant that he wants to bring the better buyer, who is already to purchase the property for Rs.5.00 crores, therefore the said conduct also reflects that the applicant himself does not want to redeem the property. Rather, the applicant wants to come through the proposed buyer and even, the name of the said proposed buyer has not been disclosed till date. The aforesaid acts and conduct of the applicants themselves lost the right to deem the property in question and accordingly, the applicants have no right to redeem the property. Accordingly, finding no merit, the present application being I.A. no.1846 of 2015 stands dismissed.

Consequently, all the four applications being I.A. no.1846 of 2015, I.A. no.1736 of 2015, I.A. no.1759 of 2015 and I.A. no.806 of 2016 stand dismissed.

Inn the present matter, evidences and document have been filed / exhibited on behalf of the parties since 18.02.2014. However, in the interest of justice, one more opportunity is hereby granted to the parties to file their respective evidence and exhibit the documents before the Registrar on the next date; failing which, the right to file the evidence and exhibiting the documents shall stand closed automatically.

List this case on 11.07.2018 before the Registrar for filing evidence and exhibiting the documents by the parties.

The impugned order has been challenged by the appellant inter- alia on the grounds that no notice of the auction conducted on 21.07.2015 was given to the appellant and however, that the mortgage property in question has been auction at a very low price. The learned counsel for the appellant had submitted that before the DRT the Bank have sought to justify his auction sale on the ground that sale notice dated 05.03.2015 was issued but that notice was for the auction to be held on 27.04.2015 when no bidder had come forward to buy the property in question and in any case that notice could not have been considered to be legal sale notice for the auction held on 21.07.2015. The learned counsel also submitted that after arguments on the misc. applications disposed of by the impugned order had been heard Bank had sought to place on record the communication dated 15.5.2015 allegedly given to the appellant though he has denied its receipt.

The learned counsel also submitted that even the said letter dated 05.03.2015 purporting to have been issued was no sale notice in the eyes of the law since by that communication, the Bank had simply informed the borrower/guarantors that the date and time of auction shall be informed separately by way of sale notice. In any case pursuant to the said information no bidder came forward, even as noticed above, the property in question was auctioned on 21.07.2015 and for that date also no notice to the appellant/mortgagor was given and consequently the auction sale held on 21.07.2015 was illegal. The learned counsel also pointed that before the DRT, the respondent Bank itself had in an application, being I.A No. 578/2018, had accepted that a statutory lapse in the auction of the property had been made. By way of that application, permission was sought from the DRT to place on record 30 days sale notice dated 15.05.2015. However, even that notice was not a sale notice in the eyes of the law as it was also simply an intimation to the borrower/guarantors that the mortgaged property was to be auctioned date and time whereof was to be informed through a sale notice to be issued separately but no notice to that effect was given.

Opposing this appeal and supporting each other's case, the learned counsel representing the respondent Bank and the learned counsel representing two auction purchasers made submissions that there was no illegality in the sale conducted on 21.07.2015 in as much as a public notice had been published in the newspapers on 19.06.2015 for auction to be conducted on 21.07.2015 and that was sufficient compliance of law. It was contended by the two counsels that the appellant was all along aware of the fact that his property was being attempted to be auctioned but could not be sold as no bidders came forward and therefore, he could not complain that letter dated 15.05.2015 was not a legal notice to him for the auction of the property and he cannot derive any benefit on this technical ground.

The learned counsel for the auction purchasers in his brief written submissions, which were filed on behalf of the Bank also, had taken an additional plea regarding the identity of the appellant herein, which was claimed to doubtful and that could be gathered from a comparison of the signatures of the appellant in the appeal papers and with the papers having signatures before the DRT as both were materially different and, therefore, it was clear that somebody behind the scenes was interested to see that the litigation does not came to an end and auction purchasers do not enjoy the fruits of their investment of almost Rs. 5 crores. It was also contended on behalf of the auction purchasers that sale in their favour having already been confirmed and sale certificate also have been issued in their favour the prayer of the appellant before the DRT now before this Tribunal for setting aside of auction sale cannot be accepted for any reason and no fraud is shown to have been committed in the auction process.

After giving my thoughtful consideration to the entire facts and circumstances of the case, submissions made at the bar and perusing the records of the DRT, this Tribunal is of the view that there is a patent illegality committed by the Bank in auctioning the property in question, as described in the impugned order of the DRT, on 21.7.2015, inasmuch as undisputedly the appellant-mortgagor-guarantor was not informed of the exact date of auction. The letter dated 15.5.2015, which was being pressed into service by the Bank, can in no way be considered to be a notice since by this letter the borrower/guarantors were simply told that they will be informed about the date of auction by a separate notice. The Bank, therefore, having not served upon the appellant- mortgagor-guarantor a statutory notice of sale of his property informing him of the date of auction, the action of the bank in auctioning the property in question on 21.7.2015 gets vitiated. The learned DRT was not justified in rejecting the appellant's grievance that his property had been auctioned without following due process of law when illegality in the conduct of auction was writ large. This illegality committed by the Bank could not be ignored for the reason put forth by the learned counsel for the Bank that there is a public notice issued for the auction dated 21.7.2015. The law mandates that individual notice of sale has to be served upon the mortgagor whose property is being sought to be auctioned. This law was laid down by the Hon'ble Supreme Court in the case of Mathew Varghese vs. M. Amritha Kumar & Ors.¸ reported in 2014 (5) SCC 610, reliance upon which was rightly placed by the learned counsel or the appellant. The aforesaid patent illegality in the conduct of sale on 21.7.2015, therefore, is sufficient to set aside the sale.

As far as the submission advanced by the learned counsel for the auction purchasers that the sale in their favour having been confirmed cannot be set aside since there is no fraud shown in the conduct of the auction is concerned, I find the same to be meritless. Since the Bank admittedly had sold the property of the appellant on 21.7.2015 without serving upon him an individual notice of sale despite the Bank having written to him that he would be duly informed of the date and time of auction by a separate notice, there cannot be a better case of fraud than the present one. The illegality and fraud are so patent which ought not to have been ignored by the DRT and this Appellate Tribunal certainly cannot turn a blind eye to the same.

This Tribunal is, therefore, of the view that without going to any other ground of challenge raised by the appellant for setting aside the auction sale of his property, the impugned order is liable to be set aside only for the reason that the appellant's property had been sold without any notice of auction to him. Consequently, the auction of the property in question conducted on 21.7.2015 stands set aside. If, as a result of this conclusion, the appellant becomes entitled to any consequential benefit, he will be entitled to claim the same in accordance with law.