Indian Bank vs Mrs Vasantha Srinivasan And Anr

S. Ravi Kumar, Chairperson

This Appeal is against Order dated 14. 03.2013 of DRT-III, Chennai in SA 152/2008.

Brief facts leading to this Appeal are as follows:-

First Respondent herein filed SA 152/2008 contending that she is the owner of property referred in Possession Notice dated 20.09.2008 and Sale Notice dated 30.09.2008 issued by Appellant herein and that the description of property mentioned in 13(2) Notice and 13(4) Notice are different; that no security interest is created in the property referred in the Notice and that she purchased plot No.49 in Survey No.384, Haritha Enclave, Tambaram from 2nd Respondent herein in the year 1999 and she has been in possession and enjoyment of said property till filing of Securitisation Application.

Appellant herein disputed the contentions raised by first Respondent herein mainly contending that Borrower filed SA 221/2007 was dismissed on 09.06.2008, and measures taken by Bank are in accordance with the provisions of Securitisation Act and Rules made there under, and prayed for dismissal of Application.

On a consideration of contentions and rival contentions of both parties, Tribunal below held that the properties referred in 13(2) Notice and 13(4) Notice are one and the same, and that the contention of first Respondent herein on that point, is not correct, but, however, held that Bank did not follow Sub-rules (1) and (2) of Rule 8 of Security Interest (Enforcement) Rules, 2002 [hereinafter referred to as Enforcement Rules, 2002] in issuing Possession Notice, thereby said Notice is not legal. Tribunal below also held that Sale Notice dated 30.09.2008 is bad for non-disclosure of encumbrance over property which is within the knowledge of Bank, and on these two grounds, allowed Securitisation Application. Aggrieved by the same, Bank preferred present Appeal.

All the parties filed their Written Arguments supporting respective contentions of their clients.

According to Appellant Bank, it strictly followed the provisions of SARFAESI Act and Rules made there under and findings of Tribunal below are not correct. On the other hand, Advocate for first Respondent submitted that the Tribunal below is perfectly right in setting aside Possession Notice and Sale Notice, and that there are no grounds to interfere with. It is further submitted that Bank filed OA 1098/1998 before DRT-I, Chennai, and said OA has been settled out of court as per proceedings dated 01.04.2016, as such, nothing is due to Bank and it cannot proceed against the property of first Respondent.

I have perused the material papers and impugned Order dated 14.03.2013.

In Securitisation Application, first Respondent herein specifically contended that Sub-rules (1) and (2) of Rule 8 of Enforcement Rules, 2002, are not followed while issuing 13(4) Notice under SARFAESI Act, 2002. Though Counter is filed on behalf of Bank, except denying the allegation, nothing is stated as to how Rule 8 of Enforcement Rules, 2002, is complied. It is mandatory on the part of Bank to issue Notice in Appendix IV and also by affixing on the outer door or at such conspicuous place of the property, and shall also publish the same in two leading newspapers one in vernacular language as soon as possible, but not later than seven days from the date of taking possession. As first Respondent herein specifically complained that these two Sub-rules are not followed, it is for the Bank to show the compliance of these two Sub-rules.

Admittedly, no material is produced before Tribunal below showing compliance of these two Sub-rules, but, at this appellate stage, Bank tried to show that these two Sub-rules are complied with. Appeal is not to cure the defects that are pointed out by Tribunal below, but, it is the right of a party to show how Tribunal below erred while arriving on certain findings. So, having not pleaded anything in the Counter as to compliance of Sub-rules (1) and (2) of Rule 8 of Enforcement Rules, 2002, it is not open to Bank now to argue about the compliance of those Rules. Tribunal below is right in holding that Bank failed to show that it followed Sub-rules(1) and (2) of Rule 8 of Enforcement Rules, 2002.

Other finding of Tribunal below is that encumbrance known to Bank is not reflected in Sale Notice. Rule 8 (6) of Enforcement Rules, 2002, contemplates issuance of Sale Notice for sale of immovable properties and Appendix IV-A shows the Format in which Sale Notice is to be issued in which Authorised Officer is expected to disclose encumbrances known to Secured Creditor. It is not in dispute that first Respondent herein purchased the Plot No.49 in the year 1999 from Borrower through a registered document. When such is the case, minimum expected from Bank is to obtain necessary encumbrance from concerned authority before issuing Sale Notice, so that intended purchaser may not purchase the property with encumbrance. As Bank failed in disclosing the same, Tribunal below recorded that Sale Notice dated 30.09.2008 is bad, and set aside the same. I do not find any wrong in the Order of Tribunal below, particularly, when Rule mandates disclosure of known encumbrance and certain steps after taking possession of property. Further, when it is specifically contended that OA filed by Bank ended in compromise and dismissed as settled out of court, Bank, instead of challenging the Order of Tribunal below, ought to have issued a fresh Notice, if still Bank can proceed against the property in dispute after settlement of OA claim.

For these reasons, I am of the view that Appeal is devoid of merits and there are no grounds to interfere with Order of Tribunal below.

In the result; the Appeal RA (SA) 93 /2018 is dismissed with costs. All pending IAs, if any stand closed.