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Judgment
Raj Mani Chauhan, J
This Appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) has been directed by the original Intervener (hereinafter referred to as the appellant) in the Securitisation Application (S.A.) No. 16/2011 against common order dated 10th September, 2013 passed by Shri A. Vijay Kumar, the learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT) No. 1, Mumbai, in Interim Application (I.A.) No. 279/2013 and I.A. 282/2013 in S.A. No. 16/2011 (Nikunj K. Kanakai v. State Bank of Mysore) whereby the learned Presiding Officer has dismissed the aforesaid interim applications. The relevant facts giving rise to the present Appeal may be briefly stated as under:
The respondent No. 2, Nikunj K. Kanakai, availed certain credit facilities sanctioned by the respondent No. 1. The amount of credit facility was secured by creation of equitable mortgage of the immovable property. Undisputedly, the respondent No. 2 committed default in repayment of the installments of the credit facility availed by him. Consequently the respondent No. 1 classified his account as Non-Performing Asset (N.P.A.) and proceeded under the SARFAESI Act. The authorised officer of the respondent No. 1 served demand notice under Section 13(2) of the SARFAESI Act to the borrower calling upon him to pay the outstanding dues within 60 days from the date of issuance of the demand notice but the respondent No. 2 failed to pay the amount demanded by the authorised officer. The authorised officer, thereafter proceeded under Section 13(4) of the SARFAESI Act.
The respondent No. 2 being aggrieved by the measures taken by the authorised officer of respondent No. 1 under Section 13(4) filed Appeal/Securitisation Application (S.A.) No. 16/2011 under Section 17 of the SARFAESI Act before the DRT. Since no ad interim order was passed by the learned Presiding Officer, DRT in the pending S.A., the Authorized Officer of the respondent No. 1, therefore, proceeded to sell the secured asset.
The Authorized Officer on 20th February, 2012 published auction notice in newspapers fixing 31st March, 2012 for auction sale. Since the S.A. was pending before the learned Presiding Officer, therefore, the Authorized Officer sought permission from the learned Presiding Officer to proceed with the sale. The learned Presiding Officer vide order dated 27th March, 2012 permitted the Authorized Officer to proceed with the sale with a rider that the sale will not be confirmed.
The Authorized Officer on the scheduled date of auction i.e. 31st March, 2012 conducted the auction sale. The appellant participated in the auction sale. The offer of the appellant to purchase the secured asset was found to be the higher by the Authorized Officer, therefore, the Authorized Officer declared it as successful purchaser. The learned Presiding Officer vide order dated 16th August, 2012 permitted the Authorized Officer to confirm the sale, subject to the rider that the auction purchaser shall not transfer or alienate the sold property until disposal of the S.A. The Authorized Officer accordingly, confirmed the sale.
The appellant had already deposited an amount of Rs. 3.25 crores which was 25% of the sale consideration within the time allowed by the Authorized Officer. The Authorized Officer allowed him to deposit rest of the amount of sale consideration within 15 days, but the appellant could not deposit 75% of the balance sale consideration within time allowed by the Authorized Officer. The respondent No. 1 therefore, vide order dated 6th April, 2013, forfeited the amount deposited by the appellant in view of the terms and conditions of the sale and informed the appellant accordingly. The appellant thereafter filed I.A. No. 279/2013 for directing the respondent No. 2 (original appellant) to implead him as party as well as to set aside the letter dated 6th April, 2013 issued by the respondent No. 1 Bank to him. The appellant thereafter filed another I.A. No. 282/2013 with prayer to set aside letter dated 6th April, 2013 issued by the respondent No. 1 Bank.
The aforesaid M.As. filed by the appellant were resisted by respondent No. 1 Bank.
The learned Presiding Officer after hearing the learned Counsel for the parties, dismissed aforesaid I.As., vide impugned common order dated 10th September, 2013 with the observation that the appellant is not aggrieved by the measures taken by the Authorized Officer of respondent No. 1 under Section 13(4) of the SARFAESI Act. The letter dated 6th April, 2013 issued by respondent No. 1 Bank to the appellant, informing the appellant about forfeiture of the amount deposited by it is an independent action of the Bank. The appellant can challenge the action of the Bank by filing independent S.A. under Section 17 of the SARFAESI Act in view of the law laid down by the Hon'ble Apex Court in case of Authorized Officer, Indian Overseas Bank v. Ashoka Saw Mills Ltd., III (2009) BC 640 (SC) : VI (2009) SLT 10 : AIR 2009 SC 2420.
The appellant being aggrieved by the aforesaid order has filed the present Appeal.
Heard the rival submissions advanced by the learned Counsel for the parties and perused by materials available on record.
The learned Counsel for the appellant contended that the appellant in pursuant to the sale notice dated 20th February, 2012 participated in the auction sale of the secured asset which was conducted by the Authorized Officer on 31st March, 2012. The offer of the appellant to purchase the secured assets was found to be the highest. Consequently, the Authorized Officer declared it, as successful purchaser. The appellant as directed by the Authorized Officer deposited 25% of the sale consideration minus Earnest Money (EMD) within time allowed by the authorized officer. Since the sale conducted by the Authorized Officer was not to be confirmed in view of the order dated 27th March, 2012 passed by the learned Presiding Officer, therefore, the appellant was not required to deposit balance 75% of the sale consideration. It could deposit the balance 75% of the sale consideration after confirmation of the sale. The learned Presiding Officer vide order dated 16th August, 2012 has permitted the Authorized Officer to confirm the sale, but it was provided by the learned Presiding Officer that the auction purchaser shall not sell the secured assets till final disposal of the S.A. On account of the aforesaid condition, the appellant could not pay the balance amount of sale consideration within 15 days from the date of confirmation of the auction sale. The respondent Bank therefore, forfeited the amount of Rs. 3.25 crores which was 25% of the sale consideration deposited by the appellant.
The learned Counsel contended that the entire sale process directly related to the proceedings of the S.A. The learned Presiding Officer while permitting the Authorized Officer to confirm the sale had put a rider that the auction purchaser shall not transfer the purchased property during pending S.A. Such condition imposed by the learned Presiding Officer was hurdle to the appellant to purchase the sold property. Moreover, the learned Presiding Officer could not impose such condition in view of Sections 10 and 21 of the Transfer of Property Act. The appellant was therefore, necessary party to be heard in the S.A.
The learned Counsel further contended that the appellant after being declared as successful purchaser of the secured assets had acquired interest in the secured assets. The amount deposited by it has been wrongly forfeited by the Authorized Officer of respondent No. 1 Bank. Therefore, the appellant is aggrieved by the action of the Bank and it is therefore, necessary party to the S.A. The learned Counsel in support of his argument, has placed reliance on cases, Jagdish Singh v. Heeralal, IV (2013) BC 744 (SC) : IX (2013) SLT 253 : (MANU/SC/1126/2013) decided Dy. Hon'ble Apex Court; Unreported judgment in case, Suresh Chandra Biswas v. State Bank of India, I (2010) BC 401 : (Order dated 22nd July, 2009 in C.O. No. 2404 of 2008 decided by Hon'ble Calcutta High Court (Appellate Side); and Unreported judgment in case, State Bank of India v. Suresh Kumar, (Order dated 6th April, 2010 in LPA No. 389 of 2009) decided by the Hon'ble High Court of Punjab and Haryana.
On the contrary, the learned Counsel for the respondent No. 1 supporting the impugned order passed by the learned Presiding Officer contended that the SARFAESI Act empowers the Banks and Financial Institutions to recover its dues front the secured assets without intervention of the DRT. The DRT can only see legality of the measures taken by the Bank under Section 13(4) of the SARFAESI Act The proceeding of the S.A. and the action of the Bank under the SARFAESI Act are two independent actions. The respondent No. 2, the borrower, had challenged the measures taken by the Authorized Officer of the respondent No. 1 under Section 13(4) of the SARFAESI Act, which was a matter between the respondent No. 2 and respondent No. 1. The learned Counsel contended that any person can be impleaded as party when he is proper and necessary party to the proceeding as provided under the Order 1 Rule 10 of the Code of Civil Procedure (CPC). The appellant is neither a necessary party nor a proper party to the S.A. The learned Presiding Officer has, therefore, rightly dismissed the application by the impugned order. The learned Presiding Officer has observed in the impugned order that appellant has got separate cause of action, which can file a separate proceeding against the respondent No. 1 for redressal of its grievance. The impugned order passed by the learned Presiding Officer, DRT does not suffer from any error which does not call for any interference.
Considered the rival submissions advanced by the learned Counsel for the parties.
It is not in dispute that the respondent No. 2, the borrower, has filed S.A. under Section 17 of the SARFAESI Act before the DRT challenging the measures taken by the Authorized Officer of respondent No. 1 under Section 13(4) of the SARFAESI Act. The legality of the measures taken by the Authorized Officer is to be determined between the Authorized Officer and the borrower. The presence of the appellant will not in any way enable the learned Presiding Officer to decide the question involved in the S.A. effectively. The appellant in the aforesaid I.As. has sought for relief too which cannot be granted by the Tribunal, even if the appellant is impleaded as respondent in the S.A. It being respondent, either can support the action of the Authorized Officer or oppose the action.
From a perusal of the impugned order, it appears that the learned Presiding Officer has observed that the appellant, intervener is not aggrieved by the aforesaid measures taken by the Authorized Officer of respondent No. 1 Bank against the respondent No. 2. The learned Presiding Officer has further observed that letter dated 6th April, 2013 issued by the Bank to the appellant, informing it about the forfeiture of 25% of the sale consideration deposited by it is an independent action of the Bank which can be challenged by the appellant by filing a separate proceeding i.e. S.A. under Section 17 of the SARFAESI Act. The impugned order passed by the learned Presiding Officer, in my opinion, does not suffer from any error of law which does not call any interference. As regards the case laws cited by the appellant, they do not apply to the facts of the present case. As observed above, the Appeal is devoid of any merit and is liable to be dismissed.
ORDER
The Appeal is dismissed with no order to costs.
The learned Counsel for the appellant requests to stay the operation of this order for four weeks, as the appellant wants to approach the Hon'ble High Court. Heard, if the impugned order is not stayed, the appellant will neither be benefited nor he will be a looser. Therefore, this order is not required to be stayed. The request of the learned Counsel for the appellant is therefore disallowed.