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Judgment
P.K. Bhasin, J
The appellants herein had filed a Securitisation Application (S.A.) under Section 17(1) of SARFAESI Act when the respondent Bank had proceeded under this Act to take over the possession of their land and building somewhere in District Pathankot which property they after filing of the S.A. started claiming to be 'agricultural land' and which they had equitably mortgaged in favour of the respondent Bank to secure the repayment of loan obtained by them from it sometime in the year 2009. The appellants had committed default in repayment which had led to the declaration of their account as a Non Performing Asset (NPA). In the S.A. the appellants had while challenging the legality of measures taken by the Bank under Section 13(4) of SARFAESI Act also pleaded that they never wanted to avoid the repayment of the unpaid loan money and had been assuring the Bank to clear its dues. However, when the Bank put their mortgaged property to auction on the year 2012 to recover its dues they had approached the DRT by filing the S.A. which was registered as S.A. No. 172/2012 in DRT-II, Chandigarh. They had also sought some interim relief in the S.A. Though initially the DRT did grant stay of confirmation of the auction sale conditional upon their making payment of Rs. eight lacs of rupees hut finally the interim stay was vacated vide order dated 12.5.2016 when the Bank had moved an application of vacation of the stay against confirmation of auction sale.
Though in the S.A. it was not pleaded that the mortgaged property was agricultural and so SARFAESI Act was not attracted as provided under Section 31 of SARFAESI Act but during the pendency of the S.A. the appellants had sought permission of the DRT to place on record documents in support of their said plea of mortgaged property being agricultural. The I.A. moved was allowed. As far as the challenge to sale notice issued at that time is concerned though auction did take place on 12.4.2012 pursuant to sale notice dated 10.3.2012 but no bidder had come forward to buy the mortgaged property. It is not the case of the Bank that thereafter any fresh auction was conducted.
The DRT then passed the following final order dismissing the S.A itself also on 12.5.2016, when interim relief was withdrawn:
"The Counsel for the applicant states that the title has been mentioned wrongly in the order dated 3.5.2016 as HR Rice Ind. v. PNB. It should be read as Kamal Kumar v. PSB.
I.A. 680/16
This is an I.A. placing on record the additional documents.
I.A. is allowed. Documents are taken on record.
I.A. No. 763 of 2016
This is an I.A. for vacation of stay filed by the Bank. Vide detailed order I.A. was going to be allowed on 3.5.2016. However at last minute the applicant who was present in the Court on 3.5.2016 stated that he would like to consult his family regarding repayment as per notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 along with Interest. As such the matter was refortified for yesterday i.e. on 11.5.2016. On 11.5.2016 the applicant did not appear so it was listed for today.
On 11.5.2016 an I.A. was filed by the applicant bearing I.A. No. 680 of 2016 for placing on record additional documents. Some have been taken on record. Documents produced in I.A. No. 680 of 2016 do not change the nature of order that was passed on 3.5.2016. Where in it was clearly mentioned that when the applicant approached the Court he had sought to make payment but need some breathing time. He even sought extension of time to make payment. But today the Counsel for the applicant has again raised the same points.
The Counsel for the applicant has placed before the judgment of the Hon'ble Madras High Court passed in WP No. 19903 of 2011 in NP No. 1 of 2011 dated 5.7.2012. Wherein the Hon'ble Court held that the security interest created by the Bank in agricultural land, proceedings against the applicant under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 cannot be resorted to. I am in agreement with the Hon'ble Madras High Court. But in the instant case, the applicant, while taking interim protection did not raise any of these grounds instead he sought time to make payment. As such this judgment is of no help to the applicant.
It is clear that the applicant is not interested in repaying the dues. As such I.A. No. 763 of 2016 is allowed and the interim order granted on 11.4.2012 is vacated.
S.A. No. 172 of 2012
The prayer made in this SA is to set aside the notice of sale dated 10.3.2012 Annexure A-7. The Counsel for the respondent Bank states that no bids were received pursuant to the sale notice.
Since no sale was effected pursuant to the sale notice challenged in this SA, is dismissed having become infructuous.
Copy of the order be supplied to the parties as per Rule and after due compliance the record be consigned to record room."
The appellants felt aggrieved by the rejection of their S.A. and so filed the present appeal.
The main grievance of the appellants in this appeal and which grievance is well justified and is sufficient enough to set aside the impugned order of dismissal of their S.A. as infructuous and to remand the matter to DRT for fresh disposal is that the DRT ought not to have rejected their S.A. as infructuous simply because no bidder had come forwarded to bid for the property in question in the auction conducted in response to the sale notice which was under challenge in the S.A.
The learned Counsel for the respondent Bank though supported the impugned order of the learned DRT but really could not justify the manner in which the learned Presiding Officer of DRT dealt with the S.A. and rejected it as infructuous.
In the opinion of this Tribunal the short cut route adopted by the learned Presiding Officer of the Tribunal below in disposing of the S.A. of the appellants in which they had raised their grievances that the respondent Bank had not followed the mandatory provisions of Rules 8 and 9 of the Security Interest (Enforcement) Rules. The learned Presiding Officer had not even narrated the basic facts pleaded by the security applicants in the S.A. which ought to have been done. The appellants' challenge to the steps taken by the Bank under Rules 8 and 9 of the Rules of 2002 ought to have been considered. Since it was their grievance that their property could not be auctioned at all under SARFAESI Act it did not matter if no bidder had come forwarded to buy the same and the S.A. could not be said to have become infructuous for that reason. If the property had actually been sold it would have been for the appellants to have taken necessary steps to impugn the sale if they had considered the sale to be vitiated for any reasons but the basic grievance that the property in question could not be sold at all particularly pursuant to the sale notice issued by the Bank which had necessitated filing of the S.A. had to be examined and decided, one way of the other, in accordance with the law and could not have been left to be decided only when some purchaser will come forward to buy the property in question. And, if the learned Presiding Officer was of the view that based on the claim of the security applicants that the mortgaged property was agricultural and so could not be taken over and sold under SARFAESI Act no interim relief could still be granted to them since while praying for interim relief they had come forward to pay the dues of the Bank the same plea could be considered while finally disposing of the S.A., in accordance with law, but that ground of challenge ought not to have been left unanswered. While offering to clear the Bank's dues during the pendency of the S.A. the appellants had not abandoned their challenge to the legality of the measures taken by the Bank under the SARFAESI Act to recover its dues from the appellants-borrowers.
This appeal, therefore, succeeds. Impugned order of DRT rejecting the S.A. of the appellants as having infructuous is set aside. The matter is remanded back to the Tribunal below with a direction to pass a fresh order of disposal of the S. A., albeit in accordance with law after taking note of the pleadings of the parties and evidence of the parties. This order has been passed without going into the rival cases of the appellants and the Bank and the same will be examined by the DRT uninfluenced by the observations made in the impugned order. Considering the fact that the matter is quite old, the DRT should make endeavour to pass fresh final order in the S.A. as far as possible with a period of three months from the date of receipt of copy of this order. The S.A shall now be taken up by the DRT on 18.9.2018 at 2 p.m. DRT record be sent back.