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Judgment
JUSTICE R. D. KHARE, CHAIRPERSON
The present appeal has been filed under section 18 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act") against the Order dated 06.06.2022, whereby the Securitization Application No. 246/2021 filed by the appellants has been dismissed.
Brief facts of the matter are that the appellant no. 1 is a proprietorship firm, and appellant no. 2 is the proprietor of the appellant no. 1-firm, which was granted a cash credit facility by the respondent-Bank for a sum of Rs.20.00 lacs. In order to secure the said facility, the appellant stood as guarantor and created equitable mortgage over his property by depositing original title deed with the respondent-Bank. Since the borrower did not maintain the financial discipline, therefore, the account was classified as NPA on 27.01.2020 and demand notice dated 23.06.2021 u/s 13(2) of the SARFAESI Act was issued for a sum of Rs.22,53,808/- as on 21.06.2021. Since the borrower did not pay any heed to the said demand, therefore, the respondent-Bank issued possession notice u/s 13(4) of the SARFAESI Act on 08.09.2021 and the same was published in the newspapers. Thereafter, sale notice was issued on 17.11.2021 fixing the date of auction of the property in question on 23.12.2021.
The appellants challenged the possession notice and sale notice before the Tribunal below by filing the S.A. No. 246/2021, which has been dismissed vide order impugned. Being aggrieved by the said order, the present appeal has been filed by the appellants.
Learned counsel for the appellant submitted that there is violation of Section 26-D of the SARFAESI Act, as the mortgage of the property in question was not registered with the Central Registry. It was further contended that no clear 30 days' sale notice was served upon the appellant, which violates Rule 8(6) of the Rules, 2002. It was further contended that the construction was raised on the mortgaged land much after the creation of mortgage over the property in question and as such, the Bank has sold the property more than the mortgaged property. It was further contended that the Tribunal below itself had observed vide order dated 22.12.2021 that no 30 days' sale notice was served before the date of sale dated 23.12.2021. It was thus contended that the Tribunal below has erred in holding that the process adopted by the Bank for selling the property in question under the SARFAESI Act was in accordance with the Act and Rules made thereunder. It was, therefore, prayed that the order impugned may be set aside and the appeal may be allowed.
Learned counsel for the respondent-Bank submitted that the registration of the mortgage in Central Registry is not mandatory. It was contended that the appellant has already accepted the surplus sale proceeds arising from the auction sale and has duly acknowledged the receipt of Demand Draft issued by the respondent-Bank. It was further contended that it is a settled principle of law that a party cannot approbate and reprobate at the same time having derived monetary advantage from the auction proceedings, hence the principle of estoppels squarely applies and the appellant cannot be permitted to blow hot and cold at the same time or to question the very process from which it has already benefitted. It was further contended that the appellants have deliberately concealed this fact from this Tribunal, which disentitle them from seeking any relief.
Learned counsel further submitted that the auction conducted by the respondent-Bank has been confirmed, sale certificate has also been issued and physical possession has been given to the respondent no. 3 and as such, the sale has attained finality and has become absolute. It was further contended that once the sale has been confirmed and has attained finality, the sale cannot be disturbed. It was thus contended that the appellant has failed to point out any illegality or infirmity in the order impugned, therefore, it was prayed that the appeal is liable to be dismissed with heavy costs.
Learned counsel for the respondent-Auction Purchaser submitted that there is no illegality in the auction and she is a poor lady, who has purchased the property in question after taking loan from the market. It was further contended that the auction sale was confirmed and possession was handed over to her, it was, therefore, prayed that the sale may not be disturbed and the appeal filed by the appellants may be dismissed with heavy costs.
I have considered the rival contentions of the learned counsels for the parties and perused the material available on record.
The contention of the respondent-Bank that the excess amount of sale proceeds has already been acknowledged and accepted by the appellant, which was sent through demand draft no. 54433 dated 09.06.2022 and 624443 dated 10.06.2022 is not tenable as the appellant in para 10 of its rejoinder has clearly stated "the appellant has not encashed the demand drafts till date." As such the respondent-Bank was required to contradict the said denial of the appellant by filing statement of accounts, but the Bank did not do so.
With regard to compliance of Section 26-D of the SARFAESI Act, it is stated that the purpose of registration of mortgage in the Central Registry is for the benefit of the public and not for the mortgagor/borrower, because sometimes after mortgage, the borrower creates third party right over the mortgaged property and the purchaser of the mortgaged property suffers, when the loan account of the sellers/mortgagors becomes NPA and auction proceedings of the Bank are initiated for its recovery by putting the said property in sale. Suppose, in the present case, if the said mortgage was not registered in the Central Registry by the Bank, then what harm/loss has occurred to the appellants, as the appellant himself had created the mortgage over his property in favour of the respondent-Bank, therefore, the said plea of the appellant with regard to mortgage is rejected.
So far as the OTS submitted by the appellant with the Bank is concerned, it is stated that as per record, the same was rejected by the Bank and the Tribunal or Court cannot compel the Bank to settle the matter as it can only be done mutually by the parties.
It is to be seen that after issuance of demand notice, the possession notice was issued on 08.09.2021 and the same was challenged before the Tribunal below by filing the S.A. on 20.12.2021, thus the said relief sought by the appellant was clearly barred by time, therefore, the Tribunal below has rightly held the possession notice to be barred by time vide order impugned. The said finding of the Tribunal below has not been controverted by the appellant before this Tribunal, therefore, the same has attained finality.
So far as the auction sale of the property in question is concerned, it is to be seen that the sale notice was issued on 17.11.2021, which was served upon the appellant on 26.11.2021 and the auction sale was conducted on 23.12.2021. In this regard, the Tribunal below in para 8 of the order impugned has held "The sale notice was served to the applicants on 26.11.2021. It is clear that the Bank had violated the legal provisions of Rule 8(6) i.e. clear 30 days' notice has not been given to the appellants." Further in para 9 of the said order states "It is not disputed that the sale notice was submitted before the post office on 20.11.2021 and the same has reached its destination (Purnea) on 23.11.2021 and it was put on hold for insufficient address by the postal department up to 24.11.2021 and no action was taken on 25.11.2021 and lastly, it was delivered on 26.11.2021 at the same address. This argument does not hold any ground as the applicants were aware with regard to sale notice as same was pasted on conspicuous part of the secured assets on 17.11.2021 in presence of the applicants, which is evident from the annexure-R1." Thus the contention of the appellant that the appellant was not served with the sale notice of 30 days prior to the scheduled date of the sale is not tenable, as the appellant has not controverted the finding of the Tribunal below anywhere in his appeal filed before this Tribunal that the sale notice was submitted before the post office on 20.11.2021 and the same had reached its destination (Purnea) on 23.11.2021 and it was put on hold for insufficient address and no action was taken on 25.11.2021. If once the postman has put his remark on the envelop of the sale notice "insufficient address", then how it was delivered on the same address of the appellant on 26.11.2021, which is admitted by the appellant, meaning thereby reaching of the said consignment was well within the knowledge of the appellant and for the period from 20.11.2021 to 25.11.2021 the consignment was on hold by the postman with the connivance of the appellant. Therefore, the Tribunal below has rightly held that the appellant was well within the knowledge of the auction sale notice prior to 30 days of the auction sale dated 23.12.2021. Thus the order impugned passed by the Tribunal below does not call for any interference by this Appellate Tribunal and consequently, the appeal filed by the appellant deserves dismissal. Accordingly, the same is dismissed with no order as to costs.
A copy of this judgment be forwarded to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.