Authoised Officer, State Bank of India vs R. Raja

S. Ravi Kumar, Chairperson

This Appeal is against the Order dated 06.02.2017of DRT-III, Chennai in SA 329/2016.

First Respondent herein filed Securitisation Application before DRT-III, Chennai, challenging the SARFAESI measures initiated by Appellant Bank herein mainly on the ground that third Sale Notice is dated 23.02.2016 and sale took place on 26.02.2016 and as there is no clear 30 days notice, the sale conducted on 26.02.2016 has to be set aside, and that was accepted by Tribunal below, allowed the Securitisation Application by directing Appellant Bank to refund the amount to the Auction Purchaser in accordance with the Rules and procedure. Aggrieved by the said Order, present Appeal is preferred.

Heard Learned Advocates of both parties.

Advocate for Appellant Bank submitted that Notice dated 23.02.2016 is a third Sale Notice and prior to that Authorised Officer of Appellant Bank issued Sale Notice dated 19.10.2015 which was served on 1st Respondent on 08.11.2015; as sale was not concluded in pursuance of said Notice, Appellant Bank issued second Sale Notice dated 04.01.2016 and that sale was also deferred, therefore, in view of said circumstance, the sale conducted on 26.02.2016 in pursuance of Sale Notice dated 23.02.2016 is quite legal and Tribunal below is wrong in setting aside such sale. He submitted that Hon’ble Supreme Court recently on 23.09.2021, in S. KARTHIK & ORS. VS. N. SUBHASH CHAND JAIN & ORS., reported in 2021 0 AIR (SC) 4559, upheld the sale conducted through second Sale Notice with a time gap of less than 30 days, and therefore, in view of said decision, the Appeal is to be allowed.

On the other hand, Advocate for 1st Respondent submitted that as per statutory provisions, 30 days clear notice is mandatory in respect of first Sale Notice and 15 days Notice is mandatory in respect of subsequent sales, and as there is no gap of 15 days in between Sale Notice and date of sale, Tribunal below is right in setting aside the sale. He further submitted that decision of Hon’ble Supreme Court relied on by Advocate for Appellant Bank has no application to the facts of this case, and that there are no grounds to interfere with Order of Tribunal below.

It is not in dispute that sale conducted on 26.02.2016 was in pursuance of Sale Notice dated 23.02.2016. As per Rule 9 of the Security Interest (Enforcement) Rules, 2002, (hereinafter referred to as the Rules, 2002), no sale of immovable property shall take place in the first instance before expiry of 30 days from the date of public notice of sale and according to proviso, if sale fails for any reason and it has to be conducted again, Authorised Officer shall serve, affix and publish Notice of Sale of not less than 15 days. So, in respect of subsequent Sale Notices, time gap of 15 days is mandatory. Admittedly, in this case, that mandatory requirement is not followed. Now, the only contention of Advocate for Appellant Bank is that in view of the decision of Hon’ble Supreme Court referred to above, there is no need of 15 days clear Notice.

I have perused above referred Hon’ble Supreme Court decision. In that case, first Sale Notice was issued on 21.01.2012 which was challenged by borrower therein by filing Securitisation Application. After dismissal of Securitisation Application, Bank issued second Sale Notice on 09.07.2012 for sale to be conducted on 20.07.2012 and that was also challenged by filing Securitisation Application. Second Securitisation Application was allowed and Bank therein preferred Appeal to DRAT and DRAT allowed the Appeal by setting aside the Order of DRT. Order of DRAT was challenged before Hon’ble High Court in Writ Petitions by borrower and Auction Purchaser and those Writ Petitions were disposed of upholding the Order of DRAT. Orders of Hon’ble High Court were challenged before Hon’ble Supreme Court and Hon’ble Supreme Court dismissed the Appeal by taking into consideration the plea of Bank and also conduct of the borrower therein. In that case, Bank specifically pleaded that second Sale Notice dated 09.07.2012 is only a continuation of earlier Notice dated 21.01.2012 and it is not a separate Notice, therefore, there is no necessity of 30 days clear Notice, which plea was accepted by this Tribunal (DRAT, Chennai) and that is confirmed by Hon’ble High Court and Hon’ble Supreme Court.

Now, it is necessary to examine what is the plea of Appellant Bank in this case with regard to Sale Notice dated 23.02.2016. First Respondent herein in Securitisation Application, specifically pleaded that sale dated 26.02.2016 took place without 30 days Notice, without following the procedure. In para XI of grounds in Securitisation Application, it is stated that Notice dated 23.02.2016, for sale to take place on 26.02.2016, is prima facie defective and Authorised Officer has failed to comply with Rule, 8(5), 8(6) and 8(7) of the Security Interest (Enforcement) Rules, 2002. The Bank in its Counter, except making a general denial, did not state specifically anything about not observing 30 days period or 15 days period. Except saying Sale Notice was issued on 08.11.2015 fixing auction on 10.12.2015, as there was no successful bidder, another Sale Notice was issued on 04.01.2016 fixing sale on 08.02.2016, and as no bidder turned up on that date, again Sale Notice was issued on 23.02.2016 for sale on 26.02.2016, for which the 2nd Respondent herein is declared as a successful bidder. Nowhere it is pleaded that Sale Notice dated 23.02.2016 is a continuation of earlier Sale Notices. From facts, it is clear that Appellant Bank on the earlier two occasions followed a gap of 30 days in between Sale Notice and date of sale, for the disputed Notice, the time gap is only three days. As rightly pointed out by Advocate for Respondent No.1, the facts of this case are entirely different to the facts in the case decided by Hon’ble Supreme Court. On that reported decision, plea of Bank was that second Sale Notice was not a separate Notice, it was a continuation of earlier Sale Notice which was accepted on facts of that case. Further, considering the conduct of borrower therein, namely number of cases filed obstructing the sale, Hon’ble Supreme Court upheld the order of DRAT which accepted plea of Bank that subsequent Notice is only continuation of earlier Sale Notice, and that there is no separate Notice like second Sale Notice, therefore, that decision has no application to the facts of this case. Since there is no gap of 15 days for subsequent sale as required under Rule 9 of the Rules, 2002, Tribunal below was right in setting aside the sale and there are no grounds to interfere with Order of Tribunal below.

For these reasons, Appeal RA (SA) 71/2017 is dismissed with costs. All pending IAs, if any, stand closed.