Essix Biosciences Ltd. vs Uco Bank And Ors.

S.N.H. Zaidi, J

These appeals have been directed against the order dated 15.12.2011 passed by the Presiding Officer of DRT-I, Chandigarh in S.A. No. 31/2000 - M/s. Morian Chemicals Ltd. and Ors. v. UCO Bank and Ors., whereby the demand notice dated 19.8.2006, sale notice dated 20.9.2007 and the auction sale of property bearing No. B-4 and 5, Industrial Focal Point, Dera Bassi, Mohali in favour of M/s. Essix Biosciences Ltd. have been set aside and the auction purchaser has been directed to hand over the possession of the said property to the applicants and the Bank has been directed to refund the sale consideration amounting to Rs. 485.42 lacs to the auction purchaser with interest @ 10% per annum from the date of payment and a Court Receiver has been appointed to take possession of the properties from the auction purchaser. The facts giving rise to these appeals, in brief, are that on 22.8.2005, UCO Bank had granted certain credit facilities to M/s. Morian Chemicals of which Sunil Dutt Bansal, Jai Bhaghwan Bansal and Sanjay Bansal were the Directors. The factory premises of the borrower company situated at B-4 and 5, Industrial Focal Point, Dera Bassi, Mohali (for short, the Dera Bassi property) was equitably mortgaged with the Bank by Jai Bhagwan Bansal and Sanjay Bansal and they also stood as guarantors whereas Achal Bansal and Yogesh Bansal also standing as guarantors provided collateral security by creating equitable mortgage of their property bearing No. SCO 44, Sector 30-C, Chandigarh in favour of the Bank. When the loan account became irregular and Sunil Dutt Bansal opened current accounts in the name of the company with State Bank of Patiala and Vijaya Bank and the guarantors Achal and Yogesh Bansal revoked their guarantee, the account in question was classified by the Bank as Non Performing Asset (NPA) on 30.6.2006 and a demand notice dated 19.8.2006, under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act) was issued claiming an amount of Rs. 3,52,62,965.60 within 60 days to which the borrower/mortgagors filed representations/objections, which were also replied to by the Bank.

When the borrowers failed to repay the claimed amount within the stipulated period, the Bank issued possession notice on 29.11.2006 find took the symbolic possession of the secured assets under Section 13(4) of the Act. The guarantors Achal and Yogesh Bansal thereupon filed an application under Section 17 of the Act (SA No. 3/2007) challenging the action of the Bank taken qua their Chandigarh property. However, on refusal of the interim relief claimed by them in the SA, a Writ Petition (CWP No. 5356/2007) was filed by the said guarantors before the Punjab and Haryana High Court, wherein an interim stay was granted in respect of their property.

The borrower company and its Directors, namely, Jai Bhagwan and Sanjay Bansal, respondent Nos. 2 to 4 of the SA No. 3/2007. thereafter, filed an application (I.A. No. 140/2007) in the said SA seeking directions qua the action of the Bank taken in respect of the Dera Bassi property and for quashing the possession notice. When the DRT declined the interim relief as sought for in that application, the applicants approached the Punjab and Haryana High Court by filing Writ Petition (CWP No. 7618/2007) but failed to get any interim relief, The DRT, thereafter, vide order dated 23.5.2007, dismissed application (I.A. No. 140/2007) as not maintainable on the grounds that it was barred by time and filed without payment of requisite Court fee. Thereafter the said Writ Petition was also dismissed by the High Court on 29.5.2007. The borrower company also filed an appeal (Appeal No. 98/2007) against the dismissal of application (I.A. No. 140/2007) before this Tribunal, which was dismissed by this Tribunal on 19.9.2007 The aforesaid order of this Tribunal was assailed by the borrower company in a Writ Petition (CWP No. 15851/2007) before the Punjab and Haryana High Court, but it had also been dismissed on 11.10.2007. The writ petitioner then filed a review petition ( No. 247/2007) of the order dated 11.10.2007 before the High Court, which had also met with the same fate on 19.10.2007.

The Bank, in the meantime, had taken the physical possession over the Dera Bassi property on 24.8.2007 and after due publication of the sale notice dated 20.9.2007 in the newspapers put that property to auction sale with a reserve price of Rs. 405.42 lacs for 22.10.2007. The auction took place as per schedule and the property was purchased by M/s. Essix Biosciences Ltd. for a sale price of Rs. 486 lacs and on deposit of the entire sale consideration on that very day, the sale was confirmed in its favour and possession thereof was handed over to it on 22.10.2007 itself.

The borrower company and its Directors/mortgagors, namely, Jai Bhagwan and Sanjay Bansal, thereafter filed an application under Section 17 of the Act (SA No. 31/2008) on 20.12.2007 challenging the actions of the Bank with the averments that on 22.8.2005 when the loan and security documents were executed, it was specifically intimated to the Bank, through a letter dated 22.8.2005, that the account of the company would be operated under the joint signatures of Sanjay Bansal and Sunil Dutt Bansal, but the statement of Account No. LN 9408 of the company showed that from 22.8.2005 to 31.10.2005 an amount of Rs. 1,05,09,705/- was withdrawn under the single signature of Sunil Dutt Bansal without any authorization from the company and he had embezzled that amount that this illegal withdrawal had led to the account becoming NPA; that withdrawal of such a huge amount was not possible without the active connivance of V.K. Gupta and P.K. Gupta, the then Branch Officers of the Bank, and as such the Bank could not take the benefit of its own wrong; that a complaint was sent to the Senior Superintendent of Police. Chandigarh on 23.9.2006 and the police, after making inquiry into the matter for about a year, registered the FIR under Sections 406, 420, 467, 468, 120B, IPC against Sunil Dutt Bansal and the said Bank officers; that in the meanwhile it also came to their knowledge that Sunil Dutt Bansal had opened two current accounts in the name of the company with State Bank of Patiala, Dera Bassi Branch and Vijaya Bank, Mani Majra Branch, Chandigarh without the knowledge or consent of the other Directors and the receipts of the company were directed to the accounts of those Banks wherefrom he had withdrawn Rs. 1,93,25,221/- that Sunil Dutt Bansal had forged the documents showing that an extraordinary meeting of the Board of Directors was held at SCO 272, 1st Floor, Motor Market, Mani Majra, Chandigarh whereas a single Director could not hold the Board meeting and on coming to know of those facts, Jai Bhagwan Bansal had informed about them to the Zonal Head of the Bank which, however, did not yield any result, that the Bank had hired M/s. EM BEE Financial Services, a recovery agency run by a retired AGM of the UCO Bank, for taking the measures on behalf of the authorized officer of the Bank which was against the provisions of the Security Interest (Enforcement) Rules, 2002 (for short, the Enforcement Rules) and the possession of the secured asset was taken by the Bank in violation of Rule 8 of the said Rules, that the applicants had negotiated with M/s. Ind Swift Laboratories Ltd. a company of Mr. Nav Ratan Munjal for the sale of the Dera Bassi property in Rs. 7.65 crores but the Bank had sold that property to M/s. Essix Biosciences Ltd., another company of Mr. Munjal, for Rs. 486 lacs only and as such Mr. Munjal had gained an undue advantage of about Rs. 280 lacs; that in order to pre-empt the challenge to the said sale, which was void ab initio, the auction purchaser had made full payment of the sale consideration on the very date of sale and possession of the property was also delivered to him on the same day.

The SA applicants also disputed the calculation of the interest and charging of certain costs and prayed that the actions taken by the Bank right from the declaration of the account as NPA, issue of demand notice under Section 13(2) of the Act. issue of possession notice and the alleged sale of the property on 22.10.2007 be declared as null and void and the respondent Bank be directed to restore the possession of the property and reverse the amount of Rs. 2,98,34,926/- which was allowed to be withdrawn from the accounts of the company along with pendente lite and future interest at the contractual rate. The applicants also claimed compensation and damages qua the actions of the Bank, as detailed in the application.

Respondent Nos. 1 to 3 to the SA, viz., the UCO Bank and its officers, in their joint written statement and respondent Nos. 5 to 7. viz., Ind Swift Laboratories Ltd., Essix Biosciences Ltd. and Nav Ratan Munjal respectively in their separate written statements opposed the SA. Respondent No. 4, Sunil Dutt Bansal and respondent No. 8, M/s. EM BEE Financial Services Ltd. did not file any written statement to the SA.

The learned Presiding Officer, after hearing the contesting parties, allowed the SA by the judgment and order impugned dated 15.12.2011 with certain directions, as stated above.

Feeling aggrieved with the cancellation of the auction sale of the property in question and the direction for the restoration of its possession to the SA applicants, the auction purchaser has filed Appeal No. 437/2011 whereas the Bank and its officers, being aggrieved with the setting aside of the demand notice, sale notice and the sale of the property in question as well an with the direction of refund of the sale consideration along with interest to the auction purchaser, have filed Appeal No. 438/2011 and the SA applicants, being aggrieved that the Tribunal below did not determine and grant cost and compensation to them under Section 19 of the said Act, have filed Appeal No. 33/2012.

Mr. Rajeev Mehra, the learned Senior Advocate appearing for the auction purchaser, had contended that the SA was hopelessly time barred and the order impugned was liable to be set aside on this ground only. He pointed out that the Bank after duly classifying the loan account as NPA had claimed the amount of debt due, vide demand notice dated 19.8.2006. but when the payment was not received within the stipulated time, the Bank took symbolic possession of the secured assets after due publication of the possession notice dated 29.11.2006 in the newspapers. According to him, that was the first measure which was taken by the Bank qua the Dera Bassi property under Section 13(4) of the Act and had given a cause of action to the borrowers to challenge that measure, if aggrieved, within 45 days from 29.11.2006 by filing an application under Section 17 of the Act, as was filed by Achal and Yogesh Bansal qua their Chandigarh property. He further contended that the borrowers, however, did not file the SA and allowed the limitation period to expire and thereby acquiesced to the correctness of the classification of account as NPA as well as to the demand notice and as such the challenge to the aforesaid measures had become time barred and the Tribunal had committed grave error by setting aside the classification of account as NPA as well as the demand notice dated 19.8.2006 by the order impugned, which is bad in law and not sustainable.

He also contended that since the borrowers, knowing that symbolic possession of the Dera Bassi property had been taken, had filed an application (I A. No. 140/2007) after the expiry of the period of limitation in the S.A. filed by Achal and Yogesh Bansal seeking direction/order against the Bank qua the said property, therefore, it was rightly dismissed by the Tribunal below on 23.5.2007 as barred by time and the appeal ( No. 98/2007) filed against the said order was also dismissed by this Tribunal on 19.9.2007 with the observation that the I.A. in question was suffering with multiple defects as the relief was time barred and the Court fee was also not paid. According to Mr. Mehra, in view of these circumstances, challenge to the declaration of the account as NPA as well as to the issuance of demand and possession notices was also barred by the principle of res judicata.

He also pointed out that the Bank, in the absence of any restraint order, had taken the actual physical possession of the Dera Bassi properly on 24.8.2007 and subsequent to the dismissal of the appeal ( No. 98/2007) on 19.9.2007, had issued the sale notice on 20.9.2007, which was published in four leading daily newspapers of the locality, viz., 'The Tribune' and 'The Economic Times' in English, 'Amar Ujala' in Hindi and 'Jagbani' in Punjabi and a copy of the notice was also affixed on the outer wall of the said property. He argued that those were the further measures taken under Section 13(4) of the Act and if the borrowers were aggrieved, they again had an opportunity to assail them by filing an application under Section 17 of the Act but they did not file any SA within the period of limitation and thus the SA filed by them on 20.12.2007 challenging those measures was not maintainable as having been barred by limitation. Mr. Mehra, pointing out that the borrower company had challenged the classification of the loan account as NPA as well as all the subsequent measures taken by the Bank in the Writ Petition (CWP No. 15851/2007) filed qua the order of dismissal of appeal by this Tribunal on 19.9.2007, laid much emphasis on the circumstance that the High Court, while dismissing the said writ petition on 11.10.2007, had categorically recorded in the order that, "it had been stated that after the declaration of NPA on 30.6.2006, the petitioner company had no remedy because the remedy before the Debts Recovery Tribunal has become time-barred as the same could have been availed within 45 days from the date of publication of notice for possession which was published on 29.11.2006" and contended that in view of the above observation, the borrowers could not challenge the aforesaid measures of the Bank in the SA filed after the expiry of the limitation period. He also contended that since the petitioner company had sought the review of the aforesaid order dated 11.10.2007 of the High Court in the application ( No. 247/2007) on the ground, inter alia, that on account of inadvertent omission the sale-cum-auction notice published by the Bank in the 'The Tribune' on 20.9.2007 could not be placed on record, which evidenced that it was fully aware about the measure taken by the Bank, but despite that it did not file any SA within time and allowed the period of limitation to expire and thus the SA filed on 20.12.2007 in respect of those measures was not maintainable and liable to be dismissed.

Mr. Mehra next contended that pursuant to the publication of the sale notice dated 20.9.2007, the Dera Bassi property was put to auction sale on 22.10.2007 and was sold for Rs. 486 lacs to M/s. Essix Biosciences Ltd. and if the borrowers were aggrieved with those measures, they could have filed the SA within the prescribed period of limitation, but the S.A. was filed on 20.12.2007, i.e., beyond the expiry of the limitation period of 45 days and the Tribunal below had committed manifest error in holding that it was filed within the period of limitation and setting aside the sale notice dated 20.9.2007 as well as the sale dated 22.10.2007 by the order impugned.

It was further pointed out by him that the borrower company, taking note of the sale of the Dera Bassi property, had passed a resolution in its Board meeting on 25.10.2007 and authorized one of its Directors. Jai Bhagwan Bansal, to take steps to challenge the auction proceeding conducted by the Bank, but even thereafter no SA was made within 45 days thereof. He further contended that the Tribunal below had committed grave error in holding that the SA was filed within the period of limitation by computing the period of limitation from 15.11.2007 when the Bank's letter dated 5.11.2007 informing about the sale of the property on 22.10.2007 was received by the borrower company as the said letter was not the measure envisaged under Section 13(4) of the Act but was only an intimation about the measure of sale having been taken. According to him, all the challenges to the sale, including the plea qua the due compliance of Rule 8 of the Enforcement Rules could have been entertained/considered only if the SA would have been filed within the period of limitation.

Mr. Mehra also pointed out that the Tribunal below, while stating about the interim applications filed during the pendency of SA, had said in Paragraph 5(xii) of the judgment that I.A. No. 660/2011 filed by the respondent Bank for dismissal of the SA being barred by time was disposed of vide order dated 29.4.2011 with the observation that the issue of limitation would be decided along with the main case, but the Tribunal below while dealing with the question of limitation in Paragraphs 8 to 13 of the judgment did not consider the pleas raised in the said I.A. According to him, the issue of limitation being a jurisdictional one, should have been taken up and considered as a preliminary issue and not along with other issues.

It was further submitted by him that by executing the memorandum of understanding (MOU) dated 16.7.2007, M/s. Ind Swift Laboratories had agreed to acquire the assets of the borrower company for Rs. 5.65 crores and not for Rs. 7.65 crores, as stated by the Tribunal below, and the borrower company had agreed to clear its liabilities within two months and M/s. Ind Swift Laboratories had paid Rs. 10 lacs as a token of advance for the deal, for which the borrower company was to transfer its shares of equal face value to it and a formal agreement was to be entered into between the parties within the agreed period but the said deal could not get through as the borrower company failed to discharge its liability and as such no formal agreement was executed and M/s. Ind Swift Laboratories had to file a suit for the recovery of Rs. 10 lacs, which is still pending and in view of these circumstances the said MOU could not be any indicator for the valuation of the reserve price of the property in question. According to Mr. Mehra, the Tribunal below had erroneously stated in Paragraph 20 of the judgment that the MOU was executed for a sale consideration of Rs. 7.65 crores and on the basis of such wrong assumption had committed error in taking the view that since there was a big gap between the sale price of Rs. 485.42 lacs (which too was incorrect as the sale price was Rs. 486 lacs) paid by respondent No. 7 (Mr. Nav Ratan Munjal) as against the agreed sale consideration of Rs. 7.65 crores, it raised doubt about the genuineness of the reserve price fixed by the Bank in the sale notice dated 20.9.2007 and as such it was not acceptable.

Mr. Mehra also submitted that after the purchase of the property in question on 22.10.2007, the Punjab Small Industries and Export Corporation Ltd. (PSIECL) had leased out 11.002 sq. yds., thereof to the auction purchaser for 99 years vide lease deed dated 15.5.2008 and thereafter the auction purchaser had created a charge on that property in favour of the Industrial Development Bank of India (IDBI) for a loan of Rs. 10.5 crores and had also invested an amount of Rs. 5 crores in the plant and as such the balance of convenience qua that property lies in favour of the auction purchaser.

He also contended that the underlying object of the service of 30 days advance notice of sale upon the borrower under Rule 8(6) of the Enforcement Rules is to provide an opportunity to the borrower/mortgagor to redeem the mortgage under Section 13(8) of the Act, which, inter alia provides that if the dues of the secured creditor together with all costs, etc. are tendered to it at any time before the date fixed for sale, the secured asset shall not be sold, whereas in the instant matter, the borrowers despite having knowledge that the property in question was going to be sold on 22.10.2007 vide publication of the sale notice in the newspapers on 20.9.2007, as admitted in the review application ( No. 247/2007), did neither deposit any amount nor move the DRT for the redemption of the mortgage, therefore, they could not complain about the non-compliance of the said rule. It was also contended by him that failure on the part of the Bank in serving the sale notice upon the borrowers was only an irregularity and since there was nothing on record to show that the borrowers has sustained any substantial injury due to such failure, the validity of sale would not be affected due to such lapse. He had relied upon the judgment of the Delhi High Court in State Bank of India and Ors. v. Debts Recovery Appellate Tribunal and Ors., III (2010) BC 38 (DB) : AIR 2010 Delhi 83 (DB), in support of his contention, wherein it has been held that before the sale could be set aside, mere establishing a material irregularity or fraud would not do and the appellant/applicant must go further and establish to the satisfaction of the Court that the material irregularity or fraud had resulted in substantial injury to the applicant.

Mr. S.S. Malik, the learned Counsel for the UCO Bank, supporting the arguments of Mr. Mehra qua the non-maintainability of the SA on the ground of limitation, had contended that the borrowers had taken the pleas qua the validity of the classification of account as NPA as well as the issuance of demand notice and possession notices in the application (I.A. No. 140/2007) filed in SA No. 3/2007, but since that application was dismissed by the Tribunal below mainly on the ground of being barred by time and since the appeal filed against the said order before this Tribunal as well as the writ petition before the High Court had also met with the same fate, therefore, the challenge to those measures was barred by the principle of res judicata and as such the impugned order setting aside the above measures is not sustainable in law.

He further contended that though the borrowers were fully aware of the impending auction sale of the Dera Bassi property on 22.10.2007 through the sale notice dated 20.9.2007 published in the newspapers, as admitted in the review application ( No. 247/2007) filed before the High Court, yet the SA was neither filed within the period of limitation from the publication of sale notice nor from the date of actual sale. He also reiterated the contention of Mr. Mehra that the Tribunal below had committed grave error by holding in Paragraph 13 of the judgment that the S.A. was filed within the period of limitation by wrongfully computing the period of limitation from 15.11.2007, when the Bank's letter dated 5.11.2007 informing about the conduct of sale on 22.10.2007 was received by the borrower company.

It had also been contended by Mr. Malik that even prior to the receipt of the Bank's letter by the borrower company on 15.11.2007, the factum of sale of the property in question was well within its knowledge as is evident from its Board's resolution dated 25.10.2007. According to him the said letter was sent after the sale of the immovable secured asset had taken on 22.10.2007, which was a measure contemplated under Section 13(4) of the Act, and the act of sending a letter to the borrower informing about the sale was not a measure in itself and the knowledge about the sale could not be shifted from 25.10.2007 to any subsequent date. He also submitted that even computing the period of limitation from the said date, the S.A. was time-barred by 10 days. He placed reliance upon the decision of the DRAT, Mumbai in M/s. Raj Rajeswary Builders v. Akol Oil Industries Ltd. and Ors., 2008(3) Bank's Journal 118, wherein the Appellate Tribunal has taken the view that the prescribed period of limitation commences from the date the measures are taken by the secured creditors and not from the date of knowledge of the party who wants to challenge those measures. Mr. Malik, pointing out that this Tribunal had also held in Dena Bank v. M/s. Vinedale Distilleries Ltd. (Appeal 290/2011, decided on 4.10.2011) that the period of limitation would commence from the date the measure is taken by the secured creditor, contended that since in this matter the measure of sale of the Dera Bassi property was taken on 22.10.2007, which was well within the knowledge of the borrower/S.A. applicants, therefore, the S.A. should have been filed within 45 days from the said date and as such the S.A filed on 20.12.2007 was clearly beyond the period of limitation. He also contended that the Tribunal below had committed grave mistake by setting aside the classification of the account as NPA by taking a novel view that since FIR dated 16.8.2007 lodged against defendant Nos. 2 to 4 (V.K Gupta, P.K Gupta and Sunil Dutt Bansal, respectively) under Sections 406, 420, 467, 468 and 120B, IPC, was pending before the CJM Chandigarh and since the investigation of serious allegations of fraud was to be carried out it would be in the interest of justice that after the final outcome of those proceedings the respondent Bank should take fresh action of declaring the account as NPA.

Mr. Malik, pointing out to a letter dated 26.12.2006 sent by the borrower company to the Bank stating that the dispute among the Directors of the company had been settled and they would soon deposit the amount and all cases filed by its Director against the Bank and its staff would be taken back, contended that this clearly showed that there was no truth in those cases and the filing of the FIR was a tail-twisting exercise only to blackmail the Bank staff.

Mr. Rajesh Mahajan, appearing for the Bank officers, had submitted that mere registration of an FIR or even framing of the charges was not sufficient to hold the Bank officers liable for the alleged criminal offences. According to him, the failure of service of prior notice of sale upon the borrowers was only an irregularity and unless any substantial injury on account thereof is proved, the sale was not affected and it could not have been set aside.

Mr. Rakesh Kumar Sharma, the learned Counsel for Sunil Dutt Bansal had submitted that the Tribunal below had allowed the S.A. only on the ground that the Bank could not prove the advance service of sale notice upon the borrower under Rule 8(6) of the Enforcement Rules and though the word 'shall' has been used in the said rule, yet the law is well settled that when the word 'shall' is used, it would not always be mandatory. According to him whether it is mandatory or directory depends upon the facts and circumstances of each case and since in the instant case the borrower company had the knowledge of the proposed sale through publication in the newspaper, therefore, the failure of service of notice upon it was only an irregularity which had not caused any substantial injury to the S.A. applicants and as such there was no circumstance warranting for the setting aside of sale.

Mr. K.D. Aggarwal, the learned Counsel for the borrower company and its Directors, had contended that the question of limitation was not the only issue before the Tribunal below which had considered the S.A. on other grounds as well. According to him, though a resolution dated 25.10.2007 was passed by the Board of Directors of the company taking note of the sale of the property in question but no cause of action had accrued to the borrowers on that date, which had in fact accrued on 15.11.2007 when the Bank's letter dated 5.11.2007, informing about the conduct of sale on 22.10.2007, was received by the borrower company. It was pointed out by him that the learned Tribunal below had discussed the issue of limitation at length in Paragraphs 8 to 13 of the judgment and had rightly observed that an independent cause of action had accrued on 15.11.2007, the date of receipt of notice of sale, which was required to be served upon the borrower under Rule 8(6) of the Enforcement Rules, hut was not served prior to the intimation of sale dated 5.11.2007 was received on 15.11.2007 and had also rightly held that the resolution dated 25.10.2007 could not be taken for determining the period of limitation.

He further contended that though the symbolic possession of the property in question was taken pursuant to the notice dated 29.11.2006 and after the publication of the sale notice on 20.9.2007 the sale had taken place on 22.10.2007, yet the letter intimating about the conduct of sale was received on 15.11.2007 and since the SA was filed on 19.12.2007, the same was well within the period of limitation and the learned Tribunal had considered all the necessary circumstances in this regard and had rightly held that the SA was filed within the period of limitation. He had relied upon the judgment of the Supreme Court in Indian Overseas Bank and Anr. v. Ashok Saw Mill, III (2009) BC 640 (SC) : VI (2009) SLT 10 : (2009) 8 SCC 366, in this regard. According to him, the Bank had to issue a notice to the borrower after the sale was conducted which was accordingly issued by it vide letter dated 5.11.2007 and as such the cause of action for filing the application under Section 17 of the Act had accrued to the borrowers on receipt of the said notice on 15.11.2007 and thus the S.A. filed on 20.12.2007 was well within the period of limitation.

Mr. Aggarwal also contended that the MOU dated 16.7.2007 entered into between the borrower company and M/s. Ind Swift Laboratories of Mr. Nav Ratan Munjal would reveal that the assets of the borrower company were to be acquired for Rs. 5.65 crores minus liabilities, but since the property in question was sold for Rs. 4.86 crores to another company of Mr. Munjal, it clearly showed that the property was not sold at its proper price but at a much lesser price only to benefit the auction purchaser. It was also pointed out by him that one lac shares of the borrower company, at the face value of Rs. 10 per share, were duly transferred, as per the MOU, to M/s. Ind Swift Laboratories, vide transfer deed dated 19.7.2007 and such it was incorrect to say that the deal could not be matured due to the failure on the part of the borrower company.

It had also been contended on behalf of the borrowers that when the loan documents were executed on 22.8.2005, a letter was served upon the Bank instructing it that the account of the company would be operated with the joint signatures of Sunil Dutt Bansal and Sanjay Bansal, but the then branch officers of the Bank allowed the withdrawals of about Rs. 1.05 crores requested by Sunil Dutt Bansal with his single signature ignoring the given instructions, in respect of which the borrower company had also sent a letter to the Bank on 17.4.2006, and due to the said unauthorized withdrawals the account was wrongly classified as NPA on 30.6.2006 and since the demand notice under Section 13(2) of the Act dated 19.8.2006 was issued on the basis of such classification, it was not tenable as the Bank could not take the benefit of its own wrong. Mr. Aggarwal pointed out that reply to the demand notice was duly given on 20.9.2006 wherein it was specifically stated that the company was running in profit but due to siphoning of huge funds and heavy withdrawals of more than Rs. 1.05 crores by Sunil Dutt Bansal in connivance with the Bank's officers, heavy financial losses were suffered due to which the account became NPA. He also pointed out that a complaint was made to the police in respect of these illegal withdrawals which, after inquiry, had registered the FIR and filed the charge sheet before the CJM, who had ordered for the framing of charges against them. He also submitted that Mr. Sanjive Walia, the Assistant Chief Officer (Recovery) of the Bank had admitted in his statement, recorded under Section 202, Cr.P.C., that several letters with the single signature of Sunil Dutt Bansal requesting for issuance of DD/Banker's Cheque were allowed by the Bank and in view of these circumstances the learned Tribunal below had rightly observed that the seriousness of the allegations could not be ignored and it would be in the interest of justice that after the final outcome of the criminal proceedings, the Bank should take fresh action of declaration of the account as NPA and had rightly set aside the demand notice dated 19.8.2006.

It was also argued by Mr. Aggarwal that Sunil Dutt Bansal had sent several letters with his single signature requesting the Bank to issue DDs/Banker's cheques in favour of various parties and the Senior Manager, without obtaining the depositor's instructions qua the disposal of fund on the reverse of the withdrawal slips and ignoring instruction No. 11.8(e) of the Manual of Instructions of UCO Bank, filed by Mr. S. Kakkar, the General Manager of the Bank, with his affidavit dated 17.10.2011, issued the DDs/Banker's cheques without any authorization of the company as a consequence thereof the account of the company became NPA, as such the Bank could not take the benefit of its own wrong.

Mr. Manish Kumar, also appearing for Jai Bhagwan Bansal and Sanjay Bansal, contended that the service of 30 days' prior notice qua the sale of the secured asset upon the borrower is mandatory as per Rule 8(6) of the Enforcement Rules and the learned Tribunal below had rightly held in Paragraph 13 of the judgment that the sale had been vitiated in the absence of service of the said notice. He had relied upon the judgments of the High Courts in Indi Shoppe Pvt. Ltd. v. Union Bank of India, and State Bank of India v. R. Krishnasamy and Ors. K.R.S. Latex India Pvt. Ltd. and Anr. v. Federal Bank and Ors., Mono] D. Kaposi & Anr. v. Union of India & Ors,. 2005 Company Cases Vols. 1 to 5 Page 676, in this regard, wherein the Hon'ble Courts have held that in terms of Sub-rule (6) of Rule 8, it is mandatory on the part of the authorized officer to serve a notice of 30 days upon the borrower qua the sale of the immovable secured asset.

Mr. Kumar further contended that the Tribunal below was right in its observation that apart from the causes of action that had accrued on the issue of possession notice dated 29.11.2006, an independent cause of action had accrued on 15.11.2007 when the notice dated 5.11.2007 qua the sale of the property was received and both the causes of action were independent in the sequence of various causes of action under Section 13(4) of the act and, the issuance of the said sale notice had given a fresh cause of action to challenge the same and the period of limitation would not commence from the date of possession notice, sale notice or the sale. He had placed reliance upon the judgments of the Calcutta High Court in Oasis Dealcomm Pvt. Ltd. v. Khazana Dealcomm Pvt. Ltd. and Ors., as well as of the Supreme Court in Indian Overseas Bank and Anr. v. Ashok Saw Mill (supra), in support of his contention.

It had also been contended by him that the conduct of the authorized officer of the Bank was not proper as he had conducted the sale proceedings on 22.10.2007 in a most hurried manner and after receiving the entire sale price and confirming the sale in favour of the highest bidder he had handed over the possession of the property in question to the auction purchaser on that date itself only to pre-empt the borrowers from taking the legal recourse qua the sale. Mr. Kumar pointed out that the MOU between the borrower company and Nav Ratan Munjal, one of the Directors of M/s. Ind Swift Laboratories, was executed for the acquisition of the company's assets for a sum of Rs. 5.65 crores but the said amount had wrongly been mentioned in the judgment as Rs. 7.65 due to an inadvertent mistake in the rejoinder filed by the SA applicants. According to him, the property in question was sold in connivance with the Bank officers for Rs. 4.86 crores only, which was much below its potential price. It had also been contended that as the address of M/s. Essix Biosciences Ltd., the auction purchaser, in whose favour the lease deed had allegedly been executed by PSIECL on 15.5.2008 is the same as that of M/s. Ind Swift Laboratories with whom the MOU was executed, this clearly showed that the Bank had concluded the sale in favour of the auction purchaser only to benefit Mr. Nav Ratan Munjal.

In rejoinder to the submissions of the respondents' Counsel, Mr. Chib, submitted that the proviso to Rule 8(6) of the Enforcement Rules, is an exception to the requirement of service of individual notice upon the borrower and if the property is to be sold either by inviting tenders from the public or by holding public auction as per Clauses (b) or (c) of Rule 8(5), the 30 days notice is not required to be served upon the borrower, which is to be served only if the property is to be sold by any of the methods specified in Clauses (a) or (d) of the said Sub-rule (5). In this regard, reliance was placed by him upon a Division Bench order dated 7.5.2010 of the Gujarat High Court passed on S.C.A. No. 14629 of 2007, Pankaj Bhai Babu Lal Dave v. State Bank of India and Anr., where in Paragraph 18 of order, it has been observed that:

It can thus be seen that though ordinary mode of serving a notice to the borrower of auction of 30 days of individual notice, however, where under four modes envisaged for disposal of the property, the Bank proposes to sell the property either by way of tender or by way of a public auction, it is sufficient if the notice is published in two newspapers as provided under the proviso to Sub-rule (6) of Rule 8 of the Rules. To our mind, the proviso provides for exception to the main requirement of the individual notice to a borrower in case of where the Bank proposes to sell the property either by auction or by a tender. The purpose appears to be quite simple. If through tender of through public auction, members of public are required to be invited to bid for the property, additional individual notice to the borrower in such a case would not be necessary since the secured creditor in any case would no required to issue a public notice for the same. Significantly, in the proviso the words having used 'shall cause a public notice' and does not use the words 'shall also cause a public notice' This, to our mind is one of the communications that the proviso to be made an exception to the main requirement contained in the main Rule 6.

It was also pointed out by him that this Tribunal had also taken a similar view in Phoenix Arc Pvt. Ltd. v. Ishan Systems Pvt. Ltd. and Anr., II (2012) BC 98 (DRAT), where in Paragraph 24 it has been observed that:

Sub-rule (5) of Rule 8 of the Enforcement Rules provides that the immovable secured asset can be sold by any of the four methods enumerated therein and under Sub-rule (6), thirty days notice for safe of immovable secured asset is required to be served upon the borrower only if the said asset is to be sold by methods other than by inviting tenders from the public or by holding public auction, because, according to the proviso to Sub-rule (6), if the sale is to be effected by inviting tenders or by holding public auction, a public notice is required to be published in two leading newspapers, including one in vernacular language, having sufficient circulation in the area, by setting out the terms of sale, etc. The purpose of the publication of the public notice for the sale of the immovable property by inviting tenders from the public or by holding public auction in the leading newspapers of the area is that the residents of the locality at large, including the borrower, may know about the sale of the property and they may participate in the sale and the property may fetch a better price. Therefore, there is no requirement of service of notice for sale upon the borrower when the property is to be sold by inviting tenders from the public or by public auction.....

He had pointed out that the borrower company had sought the relief qua the sale of Dera Bassi property in Writ Petition No. 15851/2007 filed on 8.10.2007, i.e., after the publication of the sale notice on 20.9.2007, and after the dismissal of the said writ petition on 11.10.2007, the review of the order was sought on the ground that the sale-cum-auction notice published in the newspaper on 20.9.2007 was omitted to be placed on record, had contended that this clearly showed that the borrowers were fully aware about the intending sale of the property on 22.10.2007 and as such they could not take the plea that the cause of action had accrued to them when the letter dated 5.11.2007 was received by them on 15.11.2007.

Mr. Malik reiterated his earlier submissions in his rejoinder to the arguments of the borrowers' Counsel and submitted that as only one bid of M/s. Essix Biosciences Ltd. was received pursuant to the sale notice published on 20.9.2007 in four leading newspapers of the locality, including two in vernacular languages, which was more than its reserve price, it was duly accepted and since the highest bidder had deposited the entire sale consideration with the Bank on the same day, therefore, the sale was duly confirmed and the possession of the property was handed over to it. He further pointed out that the borrowers were claiming the limitation for the S.A. from the date of receipt of the Bank's letter on 15.11.2007, whereas the S.A. was filed on 20.12.2007, i.e., on 59th day of the sale held on 22.10.2007 and if they had allegedly come to know about the sale on 15.11.2007, i.e., on 24th day thereof, then they should have shown sufficient reasons as to why the S.A. could not be filed within the limitation period of 45 days which they had utterly failed to do and those circumstances clearly showed that the S.A. was barred by limitation.

I have given my anxious thoughts to the submissions of the parties' Counsel and gone through the record. The order impugned has been challenged by the Bank and the auction purchaser mainly on the ground that the S.A. filed by the borrower company and its Directors under Section 17(1) of the Act was barred by limitation. It would be appropriate to quote the said sub-section, which reads as under:

Right to appeal--(1) Any person (including borrower), aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter, may make an application along with such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:

Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower:

Explanation--For the removal of doubt it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under Sub-section (1) of Section 17.

In Authorized Officer, Indian Overseas Bank v. Ashok Saw Mill (supra), the Hon'ble Supreme Court, while interpreting Section 17 of the Act, has held in Paragraph 35 of the judgment that:

In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the Banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in Sub-section (3) thereof.

Thus, any person, including the borrower, if aggrieved by any of the measures taken by the Bank or the financial institution under Section 13(4) of the Act, can assail the same by making an application to the DRT concerned within 45 days from the date of taking of such measure. Indisputably, the act of taking the possession of the secured assets by the secured creditor, either symbolical or actual, is a measure envisaged under Section 13(4) of the Act. The Bank, in the instant matter, had issued the possession notice dated 29.11.2006 qua both the secured assets, viz. the properties situated at Dera Bassi Mohali as well as at Chandigarh, and had taken the symbolic possession thereof. I agree with Mr. Mehra that if the borrowers were aggrieved with the measure of taking the symbolic possession of Dera Bassi property they could have made an application under Section 17 of the Act to the DRT within 45 days from the said date. Though Achal and Yogesh Bansal bad assailed that measure by filing S.A. No. 3/2007 qua their Chandigarh property, yet the borrowers did not make any such application qua their Dera Bassi property and allowed the period of limitation to pass. In view of this the argument of the Bank and the auction purchaser has sufficient force that the borrowers had acquiesced to the correctness of the classification of the account as NPA as well to the demand notice issued under Section 13(2) of the Act on the basis of such classification and the remedy to assail the measure of taking the symbolic possession over Dera Bassi property had become time-barred. The Tribunal below has thus committed error in setting aside the demand notice dated 19.8.2006 in an S.A. which has been filed after more then a year thereof in December 2007.

The filing of application (I.A. No. 140/2007) by the respondent/borrowers in S.A. No. 3/2007 seeking direction/order qua the Bank's action taken in respect of their Dera Bassi property not only indicates that they were fully aware about the measure taken by the Bank, but it appears to be a strategic move to circumvent the issue of limitation and thus the dismissal of that application by the Tribunal below on the ground of limitation was fully justified. It is pertinent to note that this Tribunal, while dismissing the appeal ( No. 98/2007) preferred against that order of the DRT, had rightly observed in the order dated 19.9.2007 that:

....The Tribunal below was perfectly justified in holding the application was not maintainable. The IA in question was suffered with multiple defects. Really speaking it was not maintainable at all. The relief was time-barred and the Court fee has also not been paid. The appellant herein, attempted a miracle in legal science. The ingenuity employed by them failed and it was bound to...

The record shows that actual physical possession of Dera Bassi property was taken by the Bank on 24.8.2007. It is not believable that the borrowers, who were in possession thereof, could not know about that action, which was said to have been taken in the presence of the Naib Tehsildar. The Bank had thereafter issued the sale notice on 20.9.2007, which was indisputably published in four leading newspapers, including two in the vernacular languages. It is also undisputed that the said newspapers had wide circulation in Punjab and Haryana, including Dera Bassi area, where the property in question is situated. Though the publication of the sale notice dated 20.9.2007 was indicative of the intending measure of sale, yet if the borrowers were aggrieved with the measures of either taking the actual physical possession of the properly on 24.8.2007 or of putting it for sale, they could have filed the SA under Section 17 of the Act within 45 days either from 24.8.2007 or 20.9.2007, as the case may be, but no such step was taken by them within that period. The record further shows that the borrower company, instead of seeking the remedy qua those measures under the Act, had filed a Writ Petition No. 15851/2007 before the Hon'ble Punjab and Haryana High Court against the dismissal of appeal ( No. 98/2007) by this Tribunal on 19.9.2007 and in that petition the classification of the account as NPA as well as all the subsequent actions taken by the Bank, including the publication of the possession notice, were assailed but that writ petition was dismissed by the High Court, vide order dated 11.10.2007. The record also shows that the petitioner in its Review Application ( No. 247/2007) filed on 18.10.2007 had sought the review of that order on the ground that the sale-cum-auction notice published in the newspaper 'The Tribune' on 20.9.2007 could not be brought on record. Though the review application was also dismissed on 19.10.2007, yet the said circumstances clearly show that the borrower company and its Directors were fully aware about all the measures taken by the Bank qua the Dera Bassi property but surprisingly instead of seeking the remedy under the Act within the period of limitation, they opted to file the review application and again allowed the period of limitation to expire. I find myself in full agreement with the contention of Mr. Mehra that since the borrowers had not assailed the actions of the Bank in accordance with the provisions of the Act, as such the challenge to the measures of taking of the actual physical possession on 24.8.2007 as well as publication of the sale notice on 20.9.2007 had become time-barred and the S.A. filed in December 2007 qua those measures was also not maintainable. This contention of Mr. Malik has also sufficient force that challenge to the actions of the Bank qua the classification of the account as NPA, issuance of demand notice dated 19.8.2006 and possession notice dated 29.11.2006, taking of symbolic on 29.11.2006, and actual physical possession on 24.8.2007 and issuance of sale notice dated 20.9.2007 was barred by the principle of res judicata after the dismissal of proceeding instituted by the borrowers either before the Tribunal below, this Tribunal or the Hon'ble High Court and as such the order impugned setting aside the above actions/measures is not sustainable in law on this ground as well.

So far as the challenge to the auction sale of Dera Bassi property held on 22.10.2007 is concerned, it is not in dispute that against the reserve price of Rs. 485.42 lacs of that property a single bid for Rs. 486 lacs of M/s. Essix Biosciences Ltd. was received, which was accepted and on deposit of the entire sale price on the same day the sale was confirmed in its favour and the possession of the property was handed over to it. The contention of the borrowers in this regard that the conduct of the authorized officer of the Bank in conducting the sale proceedings had not been above board as he had completed the entire proceedings in a most hurried manner only to pre-empt any possibility of challenge to the sale in order to benefit Mr. Munjal, does not appear to have any force as the relevant provisions of the Act or the Enforcement Rules neither prohibit the completion of the sale proceedings nor bar the acceptance of the entire sale consideration on the date of sale and as such the fact that all the proceedings qua the sale were completed on the date of sale and the possession of the property was also given to the auction purchaser on that date does not make the sale invalid. Sub-rules (3) and (4) of Rule 9 of the said Rules provide that the purchaser shall deposit 25% of the amount of sale price immediately to the authorized officer and the balance amount shall be paid on or before the 15th day of the confirmation of sale. In the instant case, the authorized officer of the Bank does not appear to have committed any illegality in accepting the entire amount of the sale price on the day of confirmation of sale and as such there is also no illegality in delivering the possession of the property to the auction purchaser, as Sub-rule (9) provides for the delivery of property to the purchaser free from all encumbrances. The authorized officer, therefore, cannot be held to have acted in contravention of any rule. It is also not acceptable that the completion of the sale proceedings and delivery of possession of the property to the auction purchaser on the date of sale were done by the Bank only to pre-empt any possibility of challenge to the sale in order to benefit Mr. Munjal, because if the borrowers were aggrieved with that action there was no restriction for them to assail the same in accordance with law within the limitation period.

The argument of Mr. Aggarwal that the borrowers had come to know about the conduct of sale on 22.10.2007 only when the Bank's letter dated 5.11.2007 was received by the borrower company on 15.11.2007 and thus the cause of action for filing the SA had accrued to them on 15.11.2007 has no force as there is no dispute in respect of the fact that the Board of Directors of the borrower company, taking notice of the sale of the property in Rs. 486 lacs to Nav Ratan Munjal, had authorized one of its Directors, vide resolution dated 25.10.2007, to take steps for challenging the sale proceedings conducted by the Bank under the Act and they were also fully aware about the proposed sale on 22.10.2007 vide the auction-cum-sale notice produced by them on 18.10.2007 before the High Court while seeking the review of its order. The Tribunal below has thus committed error in holding that the period of limitation for filing the SA would not commence from the said date of sale but from 15.11.2007 when the borrowers had received the letter from the Bank intimating about the sale, because Section 17(1) of the Act unequivocally provides that the application to the DRT shall be made within 45 days from the date on which the measure had been taken and not from the date on which the information about the measure had been received. The Tribunal below has utterly failed to appreciate that the Bank's letter dated 5.11.2007 was only an intimation to the fact that the measure of sale had been taken and not the measure in itself. Since the sale of Dera Bassi property was held on 22.10.2007, therefore, the period of limitation for making the application under Section 17 of the Act qua the said measure would commence from that date and not from 15.11.2007 when the intimation about the sale was received. It is pertinent to note that the Director of the borrower company, despite having been specifically authorized to challenge the sale conducted by the Bank under the Act, did not take the requisite step within the period of limitation and the S.A. was filed much after the expiry of the limitation period on 20.12.2007. Mr. Aggarwal could not show any cogent reason for failure in taking the required steps qua the measure of sale within the period of limitation.

It is noteworthy that it has already been observed in the foregoing discussion that the cause of action in respect of various measures taken by the secured creditor had accrued to the borrowers on various occasions, the last being on 22.10.2007 when the property in question was sold, and if the borrowers were aggrieved with any or more of those measures the SA assailing those measures could have been made within 45 days from the date when such measure had been taken. The Supreme Court in Indian Overseas Bank v. Ashok Saw Mill (supra), which has been relied upon by the borrowers, has held that the DRT has jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. Thus, in view of the ratio of the Apex Court, the borrower has an independent cause of action for every measure taken by the secured creditor under the said section. In Paragraph 22 of the judgment, the Apex Court has held that if the borrower is aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor it can make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measure having been taken, for the reliefs indicated in Sub-section (3) thereof thus the proposition of law laid down by the Supreme Court does not support the contention of the borrowers that the DRT can adjudicate qua the measures taken by the Bank oven where the application under Section 17(1) of the Act has been made after the prescribed period of limitation.

This finding of the learned Tribunal below is without any legal force and untenable that though the applicants were having the knowledge of the sale when the Board's resolution dated 25.10.2007 was passed, but this aspect was not material for determining the period of limitation as the Bank had not complied with the mandatory requirement of service of 30 days advance notice of sale upon the borrowers as per Rule 8(6) of the Enforcement Rules. The Tribunal below has also erred in taking the view that the cause of action for filing the S.A. had accrued on 15.11.2007 when the Bank's letter was received by the applicants and the period of limitation would commence from the date of information of sale and the same is not sustainable as the cause of action for assailing the measure of sale, if aggrieved, had accrued to the borrowers on 22.10.2007 when the property was sold and they came to know of it, which is evident from the aforesaid Board's resolution. Failure of service of advance notice of sale upon the borrower, if mandatory, could be a ground for the borrower to assail the measure of sale on such ground but it could never be relevant for determining the period of limitation.

The plea raised by the borrowers qua the validity of the sale on the ground of failure of service of 30 days advance notice upon the borrows, as per Rule 8(6) of the Enforcement Rules could have been considered by the Tribunal below in the light of the judgments [Indi Shoppe Pvt. Ltd. v. Union Bank of India, (supra), State Bank of India v. R. Krishnasamy and Ors. (supra), K.R.S. Latex India Pvt. Ltd. and Anr. v. Federal Bank and Ors. (supra) and Manoj D. Kaposi and Anr. v. Union of India and Ors. (supra)] only if the S.A, would have been filed within the period of limitation. It is, however, pertinent to note that the view taken by this Tribunal in Phoenix ARC Ltd. v. Ishan Systems Pvt. Ltd. (supra) that in view of the proviso to Rule 8(6) of the Enforcement Rules, service of notice upon the borrower is required to be made only if the immovable secured asset is to be sold by methods other than by inviting tenders or by holding public auction, i.e., by adopting the mode of sale specified in Clauses (a) and (d) of Rule 8(5), is fortified by a Division Bench judgment of the Gujarat High Court in Pankajbhai Babulal Dave v. State Bank of India and Anr. (supra) wherein it has been held that the proviso to Rule 8(6) provides for exception to the main requirement of service of individual notice to a borrower in a case where the Bank proposes to sell the property either by auction or by tender, because if the members of the public are required to be invited to bid for the property either through tender or by public auction, additional individual notice to the borrower in such a case would not be necessary. The proviso to Rule 8(6) provides that if the sale of the seemed asset is being effected by either inviting the tenders from the public or by holding public auction, the secured creditor shall cause a public notice to be published in two newspapers, including one in a vernacular language having sufficient circulation in the locality by setting out the terms of sale as enumerated in the said proviso, is thus an exception to the requirement of individual service of notice upon the borrower. In my opinion, failure of individual service of the advance notice of sale upon the borrower company would, therefore, not render the sale of the property, in question invalid because the property in question, in the instant case, was sold through a public auction. Even assuming that service of 30 days individual notice of sale was mandatory upon the borrower company, the failure thereof can only be termed as an irregularity. The Delhi High Court in State Bank of India and Ors. v. Debts Recovery Appellate Tribunal and Ors. (supra) has held that mere establishing a material irregularity would not be sufficient and the borrower must establish that such material irregularity had also resulted in substantial injury to him. It is also noteworthy that the borrower's have neither pleaded nor proved to have suffered any substantial injury due to such failure. Thus in the absence of any substantial injury to the borrowers on account of failure of service of advance notice upon them, the sale of the property in question would not be vitiated.

The period of limitation for making an application under Section 17(1) of the Act is governed by the section itself which provides that if any person, including the borrower, is aggrieved by any of the measures taken by the secured creditor under Section 13(4) of the Act, then he may makes an application to the DRT within 45 days from the date on which such measure had been taken (Emphasis supplied). Thus, it is the act of taking the measure which forms the basis for accrual of the cause of action for any person, including the borrower, to assail the same, if aggrieved, by making an application to the DRT within 45 days from the date of such measure. If the borrowers were aggrieved with the action of the sale of Dera Bassi property on 22.10.2007 on account of failure of service of advance notice upon them, then the application under Section 17 of the Act should have been made to the DRT within 45 days from the date on which such sale was conducted. Since the borrowers were fully aware from before the sale of the property in question by the publication of the sale notice in 'The Tribune' on 20.9.2007 and they also later knew that the sale had been conducted on 22.10.2007 vide Board's resolution dated 25.10.2007, therefore, service of Bank's letter on 15.11.2007 intimating about the conduct of sale can neither be treated as a 'sale notice' nor a measure for the purposes of determining the period of limitation for making the application before the DRT. The Tribunal below has thus committed manifest error in holding that the period of limitation for filing the S.A. would commence from 15.11.2007.

In view of above, I have come to the definite conclusion that the S.A. was not filed by the borrowers within the period of limitation and it was time barred in respect of all the measures taken by the Bank qua the Dera Bassi property and the contrary view taken by the Tribunal below is not sustainable and the order impugned is liable to be set aside on this count alone.

I find force in the contention of Mr. Mehra that the order impugned also suffers with the infirmity of failure to consider all the pleas raised by the auction purchaser qua the issue of limitation in its application I.A. No. 660/2001 while dealing with that issue in it. The learned Tribunal below while disposing of that application on 29.4.2011 had observed that the issue of limitation would be decided along with the main case, but while dealing with that issue in the order impugned it has failed to deal with all the pleas raised qua the limitation in that application. The order impugned is not sustainable on this count as well.

There is no dispute in respect of the fact that though an MOU was executed on 16.7.2007 between the borrower company and M/s. Ind. Swift Laboratories for acquisition of the assets of the borrower company for Rs. 565 lacs, but the deal could not get through and the formal agreement in pursuance of the said MOU was not executed. The consideration of reasons or the circumstances for the failure of the said MOU is not relevant for the purposes of these appeals. However, it does appear that the value of the assets of the company was assessed for Rs. 5.65 crores, which under some wrong impression has been stated in the order impugned as Rs. 7.65 crores and the Tribunal below has accordingly found a 'big gap' of about Rs. 2.80 crores between the said value and the actual sale price, which has again been wrongly stated as Rs. 485.42 lacs instead of Rs. 486 lacs. The difference between the proposed value as per MOU and the actual sale price paid by the auction purchaser was only Rs. 79 lacs, which looking to the valuation of the property cannot be said to be big. The finding of the Tribunal below qua the correctness/genuineness of the reserve price of the property on the ground of alleged difference of Rs. 2 crorer is, therefore, not sustainable as based on wrong appreciation of facts and also that the S.A. applicants have not assailed the sale on the ground of incorrect fixation of reserve price and the same is beyond the pleadings. Nonetheless, the plea of challenge to the sale on the ground of alleged connivance of the Bank with Mr. Munjal in selling the property in question at a lower price to one of his companies (M/s. Essix Bioscience Ltd.) in order to give him undue benefit could have been considered had the S.A. been filed within the period of limitation but since it has been filed beyond the period of limitation, therefore, the said plea is not acceptable.

I am in full agreement with the contention of Mr. Malik that the Tribunal below has committed grave error in setting aside the demand notice dated 19.8.2006 issued under Section 13(2) of the Act on the ground that since an FIR lodged against defendant Nos. 2 to 4 (P.K. Gupta, V.K. Gupta and Sunil Dutt Bansal respectively) was pending before the C.J.M. Chandigarh and seriousness of the allegations made in it could not be ignored and proper investigation of the allegation of fraud had to be carried out, therefore, the Bank should take fresh action of declaring the account as NPA only after the final outcome of those criminal proceedings. The effect of this direction would be that the recovery of the public money would be put on hold for an uncertain period as nobody knows when the final outcome of those criminal proceedings would be known. A loan account is classified as NPA as per the guidelines issued by RBI and such classification can be assailed only if it is in violation of those guidelines. In the instant case, the facts relating to the sanctioning of credit facility to the borrower company, availment of such facility by the borrowers and default on the part of the borrowers in repayment of the loan amount are not in dispute. The question relating to the correctness of the classification of the account as NPA could have been considered under Section 17(1) of the Act had the borrowers would have assailed the same by making an application under the said section within the limitation period of 45 days from the date of issue of possession notice dated 29.11.2006 on the basis of which measure of symbolic possession of Dera Bassi property was taken by the secured creditor under Section 13(4) of the Act, but as repeatedly stated above, the borrowers did not assail the said measure in time and allowed the limitation period to pass. In view of this, the order of setting aside the demand notice dated 19.8.2006 issued pursuant to the classification of the account as NPA is not sustainable and the direction to the Bank to issue fresh demand notice after declaring the account as NPA after the final outcome of the criminal proceedings is liable to be set aside, being bad in law.

The contention of Mr. Rakesh Mahajan, appearing for the Bank officers, appears tenable that as the Tribunal below has not given any finding qua the alleged conspiracy between Sunil Dutt Bansal and the Bank officers and there is also no evidence to that effect on record, therefore, mere registration of an FIR or oven framing of charges against them is not sufficient to hold them liable for the alleged criminal offences unless the said charges are proved.

Though Mr. Aggarwal has also contended that the Tribunal below has dealt with other issues besides the question of limitation, but those other issues could be considered only if the S.A., would have been filled within the period of limitation which, in my considered view, was not filed within such period as prescribed under Section 17 of the Act and was time-barred, therefore, the findings of the Tribunal below qua other issues even if upheld would be of no help to the borrowers.

The contention of Mr. Aggarwal that Sunil Dutt Bansal was hand in glove with the then branch officers of the Bank because despite giving the written instructions about the operation of the company's account with the joint signatures of Sunil Dutt Bansal and Sanjay Bansal, such officers ignoring that instruction, had allowed the withdrawals of amounts on the single signature of Sunil Dutt Bansal due to which the account became NPA as Mr. Sanjeev Walia the Assistant Chief Officer (Recovery) of the Bank had stated before the criminal Court that several letters of request for the issuance of DD/Banker's cheque with the single signature of Sunil Dutt Bansal were received and allowed on the same day by the Bank officers does not appeal to have force, firstly, because the Tribunal below has not returned any finding qua the said circumstances on the ground that the matter is pending disposal before the criminal Court and, secondly, it could have been seen had the S.A. been filed within the period of limitation. The contention qua the issuance of DD/Banker's cheque against the Banking norms and manual of instructions, as urged by Mr. Aggarwal, is neither relevant for the purposes of these appeals no tenable in view of the S.A. having been filed beyond the period of limitation.

In view of the aforesaid discussion, I am of the considered view that S.A. No. 31/2008 was filed beyond the period of limitation prescribed under Section 17(1) of the Act and the same being barred by time was not maintainable and as such the judgment and order is not sustainable and is liable to be set aside. Accordingly, Appeal No. 437/2011 filed by the auction purchaser and Appeal No. 438/2011 filed by the secured creditor Bank are entitled to be allowed whereas Appeal No. 33/2012 filed by the borrower company and its Directors is liable to be dismissed.

Appeal No. 437/2011--M/s. Essix Biosciences Ltd. v. UCO Bank and Others and Appeal No. 430/2011--UCO Bank v. Morian Chemicals Ltd. and Ors. are accordingly allowed and the judgment and order dated 15.12.2011 passed in S.A. No. 31/2008 is hereby set aside and the said S.A. and Appeal No. 33/2012-- Morian Chemicals Ltd. and Others v. UCO Bank and Ors. are hereby dismissed. Parties shall bear their own cost of litigation.

Copies of this order be furnished to the parties as per law and be also sent to the DRT concerned forthwith.