Canara Bank And Anr. vs Uttpal Mandal And Ors.

The abovementioned appeals have been preferred against the order dated 28.03.2019 passed by the DRT, Ranchi, whereby the S.A. filed by the borrower was allowed by the common order. Since the issue involved in both the appeals is same, therefore, these are being decided by this common order.

The appellant-Bank granted certain credit facilities to the respondent no. 1, proprietor of D.C. Mandal and Sons. The loan was secured by the equitable mortgage of the immovable property. Since the borrower did not adhere to the terms of the repayment, therefore, the Bank issued demand notice dated 10.12.2013 under section 13(2) of the SARFAESI Act followed by the possession notice dated 2.6.2014 under section 13(4) of the said Act. The borrower did not pay any heed to the notices, hence the property was put for auction. The first sale notice was not materialized, therefore, the another sale notice dated 22.04.2015 was issued fixing the date of auction on 12.06.2015. The property was auctioned in favour of the respondent no. 2 being highest bidder and after deposit of sale price, the sale certificate was issued on 27.06.2015 and the sale deed was executed on 26.05.2016.

The borrower filed the S.A. before the Tribunal below praying for setting aside the sale of the property. The Tribunal below vide impugned order observed that upto the stage of possession, the Bank has followed the mandatory procedures and the sale price was also deposited in time, but a 30 days' sale notice has not been served upon the borrower, thus set aside the sale directing the Bank to return the sale price to the auction purchaser with interest and to restore the possession of the property to the borrower. Being aggrieved by the said order, the appeal No. 30/2019 has been filed by the Bank and the Appeal No. 26/2019 by the auction purchaser.

Learned counsel for the Bank submitted that the S.A.- applicant has never pleaded in the S.A. that the sale notice was not served to him and instead admitted at para (K) "that a 30 days' sale notice has also been issued to the applicant in terms of letter dated 22.04.2015". The photocopy of the sale notice was also filed with the S.A. Thus, the Bank was not required to adduce any evidence to prove that the sale notice was served. The Tribunal has wrongly interpreted the pleading and admission of the borrower, therefore, the appeal be allowed.

Learned counsel for the auction purchaser adopted the arguments as advanced on behalf of the Bank and further submitted that the auction was conducted after following due process and the possession of the property has been handed over to the auction purchaser after execution of sale deed. Therefore, the sale cannot be disturbed at this stage.

On the contrary, the learned counsel for the borrower submitted that the S.A.-applicant has alleged that the Bank has not conducted the sale in accordance with law, therefore, it was bounden duty on the part of the Bank to produce every documents in support of their case. The Tribunal is required to scrutinize all the steps taken by the Bank as provided under section 17(2) of the SARFAESI Act. Since no proof with regard to sending the sale notice has been placed on record, therefore, the Tribunal below has rightly observed that the sale notice was not served, as such there is no infirmity in the impugned order.

Having heard the learned counsels for the parties and considering the material available on record, it is apparent that the Tribunal below has categorically observed that there was no infirmity in the service of demand notice, possession notice, as also in valuation of the property and deposit of sale price. However, the sale was set aside on the basis that 30 days' sale notice was not served. The finding recorded by the Tribunal below is not sustainable on the following grounds:-

i) At para 15 of the judgment, the Tribunal has specifically stated that upto the stage of possession, the respondent-Bank has followed the mandatory procedures. The sequence of service of demand notice and the possession notice and its publication etc. had also been dealt with. Once it was found that there was no infirmity upto the stage of taking possession, then there was no reason to direct the Bank for restoration of the possession to the borrower. Thus, this part of the order is apparently erroneous on the face of record and reveals strange paradox in the order itself.

ii) The finding recorded with regard to service of sale notice is also equally fallacious. There is no dispute on the point that the Tribunal is expected to scrutinize the measures taken by the Bank, but the S.A. applicant is simultaneously required to plead its case before the DRT. No issue can be decided, which has not been pleaded. After exhaustive perusal of the S.A., there appears to be no pleading on behalf of the borrower to the effect that the sale notice was not served to him or it was not received by him. On the contrary, it has been mentioned at para (J) "that without getting fresh valuation report, the reserve price of the property was reduced and a second sale notice was issued". Further, at para (K), the borrower had stated that "therefore, a 30 days' notice was also issued to the applicant in terms of letter dated 22.04.2015". Thus, a conjoint reading of both these paragraphs goes to show that a clear 30 days' sale notice was issued by the Bank, which was received by the applicant, on the basis of which he has pleaded and admitted the contention at paras 'J' & 'K'.

iii) Apart from this, the borrower has annexed the photocopy of sale notice dated 22.04.2015 (para(K) with his S.A. No explanation has been given that if the notice was not received by him, then from where and how he had obtained the same and on what date. Further, it was also stated at Para (L) that after publication of sale notice dated 22.04.2015, the applicant approached the Bank for making payment of the amount, but his request was not entertained. This contention also supports the fact that he was well aware about the sale on the basis of sale notice and publication thereof. In view of this pleading and specific admission and also in absence of any denial of service, it is proved that 30 days' sale notice was duly served to the borrower and the Tribunal below has failed to appreciate the pleading and evidence in right perspective.

In view of the above, both the appeals are allowed. The impugned order dated 28.03.2019 is set aside. No order as to costs.

A copy of this judgment be sent to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.