Impact Enterprises vs Union Bank Of India

Ranjit Singh, J

The present appeals are apparently jinxed. These appeals were initially dismissed for non-prosecution on 13.4.2015. Applications for recall of this order were filed on 24.4.2015. On 6.5.2015, notices on the said applications were issued for 1.7.2015. On the said date, neither the Counsel for the appellants nor the Counsel for the respondent Bank appeared. The obvious reason for the non-appearance was the call for illegal strike given by DRAT Bar Association which is stated to be a defunct body. Still, in the interest of justice, these applications were adjourned to 10.7.2015. When the Counsel appeared before this Tribunal on 10.7.2015, they were asked reasons for their non appearance on 1.7.2015. The Counsel for the appellant stated that he had to attend matters in different Courts and by the time he reached at around 11.25 approx. the cases had already been adjourned. However, the manager of the respondent Bank made a statement before this Tribunal that he had come to appear in these cases, but the main entrance of the Courtroom was bolted by certain lawyers standing at the entrance, who did not permit anyone to enter the Courtroom. The case was adjourned to deal with the serious interference in the administration of justice as was revealed from the statement of the manager of the Bank.

On the next date, the case was again adjourned as the Counsel for the appellant was stately busy in the High Court. On 19.8.2015, which was the next date fixed, none again appeared on behalf of the appellant. After taking note of the background and the request made on behalf of the appellant who had not put in appearance on two occasions, the applications were dismissed for non-prosecution.

The appellant again filed miscellaneous applications for recall of the order dismissing the applications in all these appeals. After considering the said applications and the reasons contained therein, this Tribunal did not feel inclined to recall the order vide which the applications were dismissed for non-prosecution and those applications were accordingly dismissed.

Aggrieved against this order, the appellant filed a writ petition before the Hon'ble High Court. The Hon'ble High Court while allowing the writ petition has set aside/quashed the impugned order and has directed that the cases be listed before this Tribunal for direction on 15.1.2016. The Appellate Tribunal was then required to fix a date of hearing. The High Court has further observed that the petitioner/would not be granted any adjournment in these matters, All legal questions sought to be raised were kept open and both the parties were given liberty to place written submissions on record before the next date of hearing for which purpose no adjournment was to be granted to the petitioner.

Since the order passed by the High Court had not been received by this Tribunal, these appeals were not listed for hearing on 15.1.2016. However, the Counsel for the respondent appeared before this Tribunal on 15.1.2016 and made an oral mention about the order passed by the Hon'ble High Court with a request to list the appeals on the said date. Since the appeal files were not available in the Court for passing any order, the Counsel for the respondent was directed to move a formal application so that the appeals could be heard strictly in terms of the order passed by the High Court.

Applications have now been filed by the respondent Union Bank of India placing on record the copy of the judgment passed by the High Court and for listing and hearing of the appeals. The copies of these applications have been served in advance to the Counsel for the appellants who has also been intimated the date of hearing the appeals for today. Despite this position, none has chosen to appear on behalf of the appellant. The Counsel for the Bank points out that the appellant has obtained the copy of the order passed by the High Court.

Complying with the direction issued by the Hon'ble High Court, the appeals are taken up for hearing. The appellant has neither appeared on 15.1.2016 nor has filed its written submissions as per the direction issued by the High Court. The Counsel for the respondent Bank, however, has handed over the written submissions in the Court today.

The appellant could be expected to appear on 15.1.2016 being aware of the date fixed. The Counsel for the respondent had appeared on 15.1.2016 before this Tribunal. The Counsel for the respondent would point out that the appellant is the borrower and mortgagor of the property bearing No. A-313, measuring 190 sq.yds., Pocket A, Shivalik, Malviya Nagar, New Delhi and had challenged the action initiated by the Bank under the SARFAESI Act. The prayer in the S.A. was for quashing/setting aside the e-auction notice dated 10.11.2013 for the sale of the property and also for setting aside/quashing any action/measure thereto taken and/or caused to be taken under the SARFAESI Act. While deciding the S.A., the Tribunal has taken note of the fact that earlier S.A. Nos. 317/2011 and 69/2013 filed by the appellant were disposed permitting the Bank to proceed against the mortgaged property. The orders passed in the said S.As. were appealed against, but this Tribunal refused to interfere against the action taken by the respondent Bank. Even when the present S.A. was instituted, the Tribunal had observed that auction shall be subject to the final outcome of the S.A., giving liberty to the appellant to participate in the auction or to bring any better buyer.

Aggrieved against the above order, the respondent Bank had filed a miscellaneous appeal before this Tribunal praying for setting aside of that part of the order whereby the sale was made subject to the final outcome of the S.A. In this background, the property was sold on 10.3.2014 for a sum of Rs. 7.22 crores. The sale certificate was issued on 26.3.2014 and the sale certificate was registered on 1.4.2014. The possession of the property has also been delivered to the successful auction purchaser. The sale proceeds have been appropriated towards the dues on 29.3.2014.

In the meanwhile, one of the creditors approached the Tribunal below seeking direction for the Bank to deposit the surplus amount with the Tribunal so as to adjust the same in the debt due from them. The Tribunal, accordingly, directed the Bank to deposit the surplus amount, which direction has been complied with. The Tribunal has noticed that the action under Section 13(4) of the SARFAESI Act is complete. The borrower had only made a request before the Tribunal below to grant maximum concession in the rate of interest in T.A. 1/2013 and 4/2013 etc. T.A. 4/2013 was decided on 12.11.2013 granting interest @ 9% p.a. whereas T.A. 1/2013 was allowed granting interest @10% p.a. Both these rates are less than the contractual rate of interest. The Tribunal has observed that the appellant cannot challenge the procedure in regard to declaration of NPA once the O.As. have been allowed.

The primary grievance by the appellant, as can be noticed from the impugned order, is that the sale of immovable property by e-auction was not the prescribed mode of auction under the rules. The Tribunal has considered this aspect and has rejected the plea by observing that there is nothing wrong for the Bank to make use of the improved technology and technological development. The Tribunal has also observed that no such ground of challenge was raised in the appeal filed by the appellant while challenging the order passed for auction sale and thus it cannot now be permitted to rake up these issues.

The Counsel for the respondent would also refer to the order whereby various applications filed by the appellant have been rejected. In all, appellant had filed six applications (I.As.), i.e., I.A. No. 276/2014, I.A. No. 277/2014, I.A. No. 278/2014, I.A. No. 279/2014, I.A. No. 283/2014 and I.A. No. 673/2014.

The prayer in I.A. No. 276/2014 was to give direction to the Bank to issue letter of comfort to the appellant. Since the sale proceeds had already been appropriated, the Tribunal has held that no order would be needed on this application and the same was accordingly disposed of. Nothing much can be urged in regard to the view expressed by the Tribunal.

Prayer in I.A. No. 277/2014 was to remove the name of the applicant from the list of CIBIL. This application was rightly dismissed on merit, finding that the appellant was a chronic defaulter and the Bank had to wait for years to recover the dues.

I.A. No. 278/2014 was for directing auction purchaser to maintain the status quo in regard to the property in question. This application was rejected as no challenge was made to the sale and so the order prayed for could not reasonably be passed. View expressed is just and proper.

Similarly, I.A. No. 279/2014 was again seeking direction to the respondent and/or the auction purchaser to maintain status quo. Since the sale was complete, the Tribunal declined the prayer made in the said application as well.

I.A. No. 283/2014 was filed to seek direction for the Bank to give complete statement of account. Since the claim of the Bank had been allowed and the appellant had a right to defend the same, no case for clarification on the recovery amount was needed. No exception can be taken to this view expressed by the Tribunal below.

Finally, I.A. No. 673/2014 was filed to take on record evidence filed by the appellant and for listing the case for exhibiting the documents. The Tribunal had taken on record the evidence and had also observed that the documents referred to would be read in evidence and accordingly did not think it appropriate to list the case for the said purpose. This I.A. was disposed of in this manner. This approach by the Tribunal is just and fair.

In his written submissions, the Counsel for the respondent has made reference to the detailed background of this case. Notice under Section 13(2) was issued on 4.5.2011. When S.A. No. 317/2011 was filed, the Tribunal had restrained the Bank from proceeding further subject to deposit of Rs. 1 crore by the appellant. Instead of complying with this direction, the appellant moved an application for modification of the said order. This application was disposed of as infructuous when the Counsel appearing for the appellant undertook to pay the entire overdue amount of Rs. 69.69 lacs plus other outstanding overdue installments, S.A. No. 317/2011 was disposed of on 7.9.2012 directing the appellant to approach the respondent Bank for settlement failing which liberty was given to the Bank to take possession of the mortgaged property.

It is then that the appellant filed the second S.A. No. 69/2013 on the same ground. The DRT-I, Delhi was pleased to pass an order for maintaining status quo till 10.9.2013, against which the Bank had filed an appeal before this Tribunal. The operation of the order dated 12.8.2013 was stayed. The appellant then filed a writ petition before the High Court, which was disposed of on 9.10.2013 directing the appellant to deposit Rs. 50 lacs as interim measure. The S.A. was to be dismissed in the event of not complying with the direction to deposit Rs. 50 lacs. Due to non-deposit of this amount, the appeal pending before this Tribunal was disposed of as infructuous.

The appellant then filed its third S.A. No. 118/2013 challenging the e-auction proceedings when the order was passed making the auction subject to the final outcome of the S.A., as already noticed.

The Bank had also filed two O.As. Thus the Bank has resorted to the sale of the mortgaged property. As already noticed, the amount already recovered has been appropriated and the sale has attained finality. The Counsel accordingly would contend that nothing is left in these appeals to consider and decide. As per the Counsel, this may be a reason behind the appellant to deal with these appeals in this casual and perfunctory manner. More than one time the appeals/applications have been dismissed for non-prosecution. In order to avoid any further lis, the appeals have been considered on merits. I have not been able to find any reason to interfere with the impugned order. There is no merit in these appeals and these are accordingly dismissed.