Dhananjay Kumar Singh vs State Bank Of India & Ors.

JUSTICE R. D. KHARE, CHAIRPERSON

The present appeal has been preferred by the appellant under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short "The SARFAESI Act") against the order dated 07.12.2015, whereby the S.A. No. 185/2014 filed by the appellant has been dismissed being barred by time.

Brief facts of the matter are that the appellant was granted a housing loan of Rs. 4.20 lacs by the respondent-Bank, to which the property in question was mortgaged by him by depositing original title deed with the respondent-Bank. Since the borrower did not maintain financial discipline, therefore, the account was classified as NPA and a demand notice dated 23.02.2011 under section 13(2) of the SARFAESI Act was issued for a sum of Rs. 3,86,300/- along with interest. Since the appellant did not pay any heed to the said demand, therefore, the respondent-bank issued possession notice dated 21.09.2011 under section 13(4) of the said Act and the same was published in the newspapers as stated by the Bank. Thereafter, an auction sale notice dated 02.06.2013 was published in the newspapers on 02.06.2013 scheduling the auction of the property in question on 10.07.2013. The property was sold for a sum of Rs. 11.10 lacs, sale certificate was issued on 28.10.2013, subsequently sale deed was executed on 26.11.2013 in favour of the respondent no. 3-Auction Purchaser and accordingly, the name of the auction purchaser was mutated in the revenue record on 06.02.2014, as the possession of the house was also delivered to the auction purchaser on 23.01.2014.

It further appears that the appellant challenged the proceedings of the Bank before the Hon'ble High Court by filing a writ petition no. 6393 of 2014, which was subsequently dismissed as withdrawn on the ground of alternative remedy on 31.03.2014. Thereafter, the appellant filed the present S.A. on 16.05.2014 along with application for condonation of delay challenging the entire proceedings of the bank before the Tribunal below. The Tribunal below vide order impugned has dismissed the S.A. on the ground of delay. Being aggrieved by the said order, the present appeal has been filed by the appellant.

Learned counsel for the appellant submitted that the appellant came to know about the proceedings of the Bank on 23.01.2014, when some antisocial elements and Bank officials came to the house of the appellant and tried to take forceful possession of the same, but they could not get any success due to intervention of some of the brother lawyer friends. It was further contended that thereafter, the appellant enquired the matter from the Bank with regard to the said action of the Bank. It was also contended that the demand notice and the possession notice were neither served upon the borrower nor published in the newspapers one in vernacular language. It was thus contended that there is clear cut violation of Rule 8(1) and 8(2) of the Rules, 2002. Learned counsel further submitted that the Bank has also not got the property valued from the approved valuer before proceeding for the sale of the property in question

It was further contended that the auction sale notice was never served upon the appellant nor affixed at the outer door or at the conspicuous part of the property in question, thus there is also non-compliance of Rule 8(6) and 8(7) of the Rules, 2002 and there is also non-compliance of the Rule 9(3) and 9(4) of the said Rules.

Learned counsel further submitted that the finding of the Tribunal below that day to day delay has not been explained by the S.A.-applicant is too hyper technical and is liable to be set aside. It was further contended that since the respondent-Bank has not served any notice upon the borrower, therefore, the S.A. could not be filed within the time, as prescribed under the Act and when the appellant came to know about the proceedings of the bank on 23.01.2014, the aforesaid petition was filed before the Tribunal below on 29.01.2014, which was well within the time as prescribed under the Act. It was further contended that thereafter, when the appellant came to know about the alternative remedy, an application was moved before the Hon'ble High Court for withdrawal of the same and accordingly, the said writ petition was dismissed as withdrawn vide order 31.03.2014 of the Hon'ble High Court and certified copy of the same was received on 09.04.2014. It was also contended that thereafter, the appellant consulted his counsel for filing the present S.A. and ultimately, the same was filed on 16.05.2014 before the Tribunal below. It was thus contended that the S.A. was filed well within the time from the date of receipt of the order of the Hon'ble High Court, but the Tribunal below without considering these facts has dismissed the S.A. of the appellant being barred by time vide order impugned, which is not sustainable. It was, therefore, prayed that the order impugned may be set aside and the present appeal may be allowed.

Learned counsel for the respondent-bank submitted that the appellant has failed to point out any illegality or irregularity in the order impugned passed by the Tribunal below, by which the application for condonation of delay of the appellant has been rejected. It was further contended that the possession notice was published in two newspapers within 7 days from the date of symbolic possession, which was taken on 21.09.2011. It was also contended that in the present case, the property has been sold, sale certificate has been issued on 28.10.2013, subsequently, sale deed has been executed on 26.11.2023 and also the name of the auction purchaser has been mutated in the revenue record on 06.02.2014, hence it was contended the right of the appellant to redeem the property in question has come to an end. It was further contended that once the excess auction sale amount has been received by the borrower, then he has no right to dispute the same sale. It was further contended that if it is presumed that no notice was served upon the appellant, then on the date of dispossession i.e. 23.01.2014, the appellant must have filed the S.A., but he did not do so. It was further contended that the SA filed by the appellant was highly barred by limitation against the possession notice, auction sale, issuance of sale certificate and execution of sale deed, therefore, the appellant has no right to challenge the proceedings of the Bank at this belated stage without any explanation of the inordinate delay. It was thus contended that the Tribunal below has rightly dismissed the S.A. of the appellant being barred by time. It was, therefore, prayed that the present appeal may be dismissed with costs.

Learned counsel for the respondent-Auction Purchaser has adopted the arguments as advanced by the learned counsel for the respondent-Bank adding further that he is bonafide purchaser of the property in question and after deposition of entire sale consideration, the sale certificate was issued and the sale deed has also been executed in his favour and is also in the possession of the same. It was, therefore, prayed that the appeal may be dismissed with heavy costs.

I have considered the rival contentions of the learned counsels for the parties and perused the record.

In order to decide the limitation, the date of knowledge of the appellant about the proceedings of the bank is relevant. While going through the contents of the reply of the bank, the respondent-bank has not stated anywhere in its reply that on which date, the possession notice and the sale notice were served upon the appellant, as with regard to the possession notice, it is only stated that the symbolic possession was taken on 21.09.2011 and possession notice was published within seven days, but has not disclosed that on which date, possession notice was delivered/served to the appellant. With regard to the sale notice, the Bank has only stated that the sale notice was published on 02.06.2013 for sale of secured asset on 10.07.2013 and the Bank issued sale certificate on 28.10.2013 and subsequently a sale deed was executed on 26.11.2013 and the name of the Auction Purchaser was mutated on 06.02.2014 in the revenue record, as the possession was delivered to the Auction Purchaser on 23.02.2014, but the Bank has not disclosed, on which date, the information about any of these proceedings was furnished to the appellant. However, the physical possession of the property in question was taken by the Bank on 23.01.2014 and the writ petition was filed on 29.01.2014 and if the date of knowledge is considered to be 23.01.2014, on which the possession was taken, the said petition was filed on 5^th day, which is well within time as stipulated in the Act.

Admittedly, the aforesaid writ petition was withdrawn on 31.03.2014 on the ground of alternative remedy and thereafter, the present S.A. was filed on 16.05.2014. If the contention of the appellant that the certified copy of the order of the Hon'ble High Court was received on 09.04.2014 is not taken into consideration, even then the said S.A. was filed on 46^th day. Section 17 of the SARFAESI Act provides the limitation of 45 days for filing the S.A. under the said Act. Thus there was only one day delay in filing the present S.A. by the appellant, but the Tribunal below has not considered the fact pertaining to the service of notice upon the borrower, whereas the same is main essence for condoning the delay. However, for the purpose of condonation of delay, this Tribunal is of the view that the appellant for the first time came to know about the present proceedings of the bank on 23.01.2014, when the possession of the property in question was taken by the Bank. However, the case should not be thrown out on the very technical ground. It appears that there was only one day delay in filing the present S.A. from the date of order of the Hon'ble High Court, by which the writ petition was dismissed as withdrawn on the ground of alternative remedy, but this aspect of the matter has not been considered by the Tribunal below. Thus it is a fit case to be remanded back.

The contention of the respondent-bank that after adjusting the dues of the Bank, the excess amount was refunded back to the mortgagor through banker's cheque no. 050444 vide letter dated 25.01.2014, is not tenable, because the respondent-Bank itself in para no. 7 of its reply has stated "the appellant had not accepted the same and it was returned back", meaning thereby, the excess amount, which was realized from the auction sale of the property in question, is still lying with the Bank.

In view of the discussions as held above, the order impugned is set aside and the appeal is allowed and the case is remanded back to the Tribunal below for deciding it afresh in accordance with law without being influenced by the observations made hereinabove after affording proper opportunity of hearing to the parties concerned most expeditiously.

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