Manju Shree Mandal vs Authorized Officer, United Bank Of India And Ors.

R.S. Kulhari, J

This appeal has been preferred by the appellant under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act") against the order dated 18.09.2019 passed by the Debts Recovery Tribunal, Ranchi, whereby the securitization application filed by the appellant was dismissed.

The brief facts of the matter are that the respondent-Bank granted a cash credit limit of Rs. 40.00 lacs to M/s. Moto Glaxy Automobiles through its proprietor Mrs. Manju Shree Mandal. Shri Dilip Kumar, who is husband of the appellant, stood as guarantor and created mortgage over his property by depositing the title deed with the Bank.

Since the loan was not repaid in terms of the loan agreement, the Bank issued demand notice dated 04.10.2016 under section 13(2) of the SARFAESI Act, 2002 demanding a sum of Rs. 43,31,488.06. Since the borrower did not pay any heed to the demand raised by the Bank, so the possession notice dated 21.12.2016 under section 13(4) of the said Act was issued. Thereafter, the respondent-Bank issued the e- auction sale notice dated 07.06.2019 and published the same in the newspapers on 14.06.2019 scheduling the auction of the property on 15.07.2019 and the property was sold in favour of the respondent no. 2 for a sum of Rs. 67.80 lacs.

The appellant challenged the possession notice dated 21.12.2016 and e-auction sale notice dated 07.06.2019 by filing the S.A. No. 65 of 2019 alleging that the Bank had not followed the procedure as laid down under the SARFAESI Act. The Tribunal below vide order dated 20.07.2019 granted interim relief to the appellant on deposit of Rs. 43,31,500/-, however, vide impugned order dismissed the securitization application holding that the demand notice, possession notice and the sale notice have been duly served and affixed and also that the S.A.-applicant has lost its right to redeem the property. Being aggrieved by the said order the appellant has filed the present appeal.

Learned counsel for the appellant submitted that the borrower has deposited a sum of Rs. 43,31,500/- as against the demand notice of Rs. 43,31,488.06 with the Bank in compliance of the interim order dated 20.07.2019 passed by the Tribunal below. The Bank had not informed the borrower about the remaining part of the interest and expenses, therefore, the appellant could not deposit the remaining dues. However, the appellant is ready to deposit all the outstanding amount due to him, therefore, an opportunity be granted to the appellant to save the property in question.

The learned counsel has also submitted that the shop in question is the only source of livelihood of the appellant and the auction purchaser may purchase any other property, therefore, the equity is also in favour of the appellant. The Tribunal below has erred in not allowing the redemption of the property, therefore, the appeal be allowed.

However, the learned counsel for the appellant has not raised any infirmity with regard to service of demand notice, possession notice and the sale notice issued by the Bank or any other irregularity committed by the Bank in the process of the auction.

On the contrary, the learned counsel for the Bank contended that the appellant was never inclined to repay the loan after issuance of demand notice dated 04.10.2016. She has never approached the Bank and has waited till the auction of the property on 15.07.2019. Even thereafter, the appellant has tendered a demand draft of Rs. 43,31,500/- at its own volition, on the basis of which, the Tribunal below granted the interim relief, but thereafter, the appellant has not shown any interest to liquidate the dues. Even otherwise, the right of redemption survives till the issuance of auction notice and that too, after deposit of all outstanding dues including interest and expenses as provided under section 13(8) of the SARFAESI Act. Since the sale notice was published on 14.06.2019 and the auction was conducted on 15.07.2019 and till then no amount was deposited by the borrower, therefore, the interim order passed by the Tribunal below does not give rise any right of redemption to the borrower, which was rightly declined by the Tribunal below while deciding the S.A. on merit vide the impugned order. It was also submitted that after judgment, the Bank has sent the demand draft through registered post on 30.09.2019, but the appellant has refused to receive the same and it was further sent on 08.07.2020, but the delivery was not taken. However, the appellant is free to receive the draft from the Bank at any time.

Learned counsel for the respondent-auction purchaser, while supporting the arguments of the learned counsel for the Bank, further added that the auction purchaser has deposited the sale price in time and in compliance of the order of the Tribunal below, the sale certificate has been issued, sale deed has been executed in favour of the auction purchaser and the possession of the property has also been handed over on 22.06.2020. Thus, the right of the borrower with regard to the redemption of the property has been extinguished in view of the judgment passed by the Hon'ble Supreme Court in Dwarika Prasad Vs. State of Uttar Pradesh, AIR 2018, Supreme Court 1286.

Having heard the learned counsels for the parties and considering the material available on record, it is apparent that the Tribunal below has recorded the categorical finding with regard to service of demand notice, possession notice and the sale notice on the borrower/guarantor. The appellant has not made any averment that there is any irregularity in service of these notices, rather, the service has been admitted by the borrower in its pleading of the S.A. Further, the appellant has failed to point out any irregularity in conducting the auction with regard to the valuation of the property or the deposit of sale price or any other infirmity in the auction. It has not been denied that the sale price has been deposited in time and it is undisputed that the sale certificate has been issued on 21.09.2019 and the sale deed has been executed on 21.11.2019 in favour of the auction purchaser and the possession has also been given to the auction purchaser on 22.06.2020, who is enjoying the same as on today. Thus, the point for consideration is, as to whether the appellant is entitled for redemption of the property or not at this stage?

The statutory provision under section 13(8) of the SARFAESI Act provides that the borrower may redeem the property by tendering the outstanding dues including interest and expenses before publication of the sale notice for auction of the property. Thus, the deadline for such action is the date of publication of the sale notice and the precondition is to liquidate all the dues including interest and expenses at that time. In the instant case, the sale notice was published on 14.06.2019 and the auction was held on 15.07.2019. By that time, neither the amount was tendered nor any effort was made by the appellant to get the information for remaining dues in order to liquidate the same. Thus, she has lost her right to redeem the property.

Secondly, no right has been accrued in favour of the appellant on the basis of interim relief given by the Tribunal below on 20.07.2019. The proceedings of that day indicate that the appellant has submitted a demand draft to the tune of Rs. 43,31,500/-, which was handed over to the Bank, but it was opposed by the counsel for the respondent-Bank. Further, the Bank has never encashed the draft and kept the same intact till the final decision of the S.A. Moreover, borrower has failed to produce any evidence that she has ever approached before the Bank for seeking information about the remaining dues including interest and expenses, whereas the Bank has submitted in its reply before the DRT that the outstanding at that time was Rs. 63,54,786/-. Therefore, even if, the appellant was interested in liquidating the dues, she ought to have offered the remaining amount to the Bank, so that the Bank might have declined the receipt of the sale price from the auction purchaser. The borrower cannot take the plea that it was the duty of the Bank to inform her about the remaining dues at that point of time.

Thirdly, now the sale deed has been executed after sale certificate and the possession of the property has been handed over to the auction purchaser, therefore, right of redemption has been extinguished. This view is fortified by the judgment passed by the Hon'ble Supreme Court in Dwarika Prasad Vs. State of Uttar Pradesh (Supra).

So far as the argument with regard to the equity is concerned, when the law is silent, then the equity may be considered, but when the statute provides a specific provision, then the law always prevails over the equity. Since section 13(8) of the SARFAESI Act specifies the stage of redemption, therefore, the principle of equity cannot be exercised in favour of the appellant at this belated stage, as a valuable right has been created in favour of the auction purchaser after registration of the sale deed and handing over the possession of the property. In view of the above, there is no infirmity in the impugned order, hence no interference is called for and the appeal is liable to be dismissed.

Accordingly, the appeal is dismissed with no order as costs. All pending I.As. also stand disposed off.

A copy of this judgment be uploaded on the e-DRT postal.