Mrs R. Mythili vs State Bank Of India & Anr.

MA 67/2018 is filed against the order passed in MA 18/2016 in Appeal SR No.8367/2015 in OA 126/2011 by Learned Presiding Officer, DRT-III, Chennai.

MA 43/2019 is filed to set aside the order passed by Learned Presiding Officer, DRT-III, Chennai, in Appeal SR No.8367/2015 in DRC No.118/2012 in OA 126/2011.

MA 18/2016 was filed to condone the delay of 378 days in filing the Application challenging the order of forfeiture of Rs.34,40,987/- deposited by the Appellant. Learned Presiding Officer, on hearing Learned Counsel for Appellant and Respondents, found that the reasons stated for condoning the delay of 378 days in filing the Appeal against the order passed by Recovery Officer on 19.09.2014 is not supported by any reasons, and therefore, dismissed the Application in MA 18/2016. Consequently, the Appeal in SR No.8367/2015 was also dismissed.

The background on which the Recovery Officer passed the order of forfeiture on 19.09.2015 was that in the sale held on 01.09.2014, the Appellant was declared as the successful bidder. The Appellant was given 15 days from 01.09.2014 for paying the balance 75% plus 1% poundage fee plus Rs.10/-. It was made clear that failing to pay the balance amount would result in cancellation of the sale. Thereafter, at the request of the Appellant to adjust 10% of the EMD amount already deposited towards the sale consideration, the Recovery Officer passed an order on 10.09.2014, directing adjustment of 10% of EMD amount along with expenditure of Rs.9,013/- spent towards the paper publication charges, and thus, a sum of Rs.9,40,987/- was ordered to be adjusted towards 75% of the sale consideration for the sale held on 01.09.2014. Despite this concession given, the Appellant had not paid the balance sale consideration of Rs.61,59,013/- plus poundage till date. In the said circumstances, the Recovery Officer passed order of forfeiture of the amount. As already stated, against this order an Appeal was filed along with an Application to condone the delay of 378 days in filing the Appeal. On dismissal of the condone delay Application and the Appeal by Learned Presiding Officer, these Appeals are filed.

Learned Counsel for Appellant brought to my notice the terms and conditions of the auction sale notice dated 22.07.2014 wherein there is a clause provided that the balance sale consideration can be paid within such period as extended by the Recovery Officer. The Recovery Officer permitted the adjustment of EMD amount deposited during the earlier sale attempt. Thereafter, the Appellant filed MA 165/2014 on 28.10.2014 for staying the sale fixed on 12.11.2014 and with a prayer to receive the balance 75% of the sale price in two equal instalments on or before 01.12.2014 and 01.01.2015.

The Recovery Officer dismissed the MA 165/2014 on 05.11.2014. Against the said order, the Appellant filed an Appeal in Appeal No.10/2014 before DRT-III, Chennai and that was also dismissed giving liberty to all the three parties to prosecute their remedies. Thereafter, the Appellant filed an Appeal in AIR 674/2015 before this Tribunal against the order passed in Appeal No. 10/2014 and the said Appeal was dismissed for non-payment of court fee as ordered by the Tribunal.

He further pressed into service, the decision of Hon’ble High Court of Madras in WP No.20225/2009 dated 12.07.2011 with regard to the powers of Recovery Officer for extension of time for balance payment. So saying, Learned Counsel for Appellant prayed for setting aside the order passed by Recovery Officer and allowing both the Appeals and Application filed before the Tribunal.

In reply, Learned Counsel for Respondent Bank submitted that the first sale was held on 04.07.2011 for Rs.95.50 Lakhs. The Appellant paid only 10% and has not paid the balance sale consideration. Therefore, the first sale was cancelled on 07.07.2014. The second sale was fixed on 01.09.2014. The Appellant was the successful bidder for Rs.96 Lakhs. The earlier EMD amount was adjusted towards the balance sale consideration. Since the balance amount was not paid, the sale was cancelled and the amount paid by the Appellant was ordered to be forfeited. Therefore, prayed for dismissal of the Appeals.

Considered the rival submissions and perused the records.

The reading of the order dated 19.09.2014 forfeiting the amount paid by the Appellant shows that the Appellant was the successful bidder for the sale held on 04.07.2014 for a sum of Rs.95.50 Lakhs. The Appellant deposited only 10% of the bid amount and failed to deposit 25% of the sale consideration on the date of sale. Therefore, the sale held on 04.07.2014 was cancelled on 07.07.2014 and the amount paid by the Appellant towards EMD amount was withheld by the Bank. Thereafter, the property was resold on 01.09.2014, the Appellant participated in the auction and the property was sold for Rs.96 Lakhs. The Appellant complied with by paying 25% of sale consideration and was given 15 days time for paying the balance sale consideration. As per the order passed by the Recovery Officer on 10.09.2014, 10% of EMD amount was paid during previous sale attempt was given credit to the balance sale consideration and the Appellant was directed to pay the balance sale consideration of Rs.61,59,013/- plus poundage fee. It is an admitted position that the Appellant has not paid the amount, and therefore, the amount paid by the Appellant was ordered to be forfeited.

True it is that as per clause 11 of the sale notice dated 22.07.2014, there is a stipulation that the balance sale amount should be paid on or before 15^th day from the date of sale or within such period as may be extended, for the reason to be recorded by the Recovery Officer. There is also a condition in clause 12 that if default in paying either 25% of the bid amount on the same day or 75% balance bid amount within the stipulated time, shall render automatic cancellation of sale without notice, and the EMD amount will be forfeited at the discretion of the Recovery Officer either in full or part.

Here in this case, the Recovery Officer chose to exercise his discretion in forfeiting the amount paid by the Appellant. If at all any request for time for payment, that request in writing must be given by the Appellant within 15 days of sale to the Recovery Officer. No such request, it appears, has been given to the Recovery Officer in this case. Only on 28.10.2014, MA 165/2014 was filed for staying the sale fixed on 12.11.2014 with a request to permit the Appellant to pay the balance amount in two instalments, and on dismissal of the said Application by the Recovery Officer, an Appeal was filed, and on the dismissal of the Appeal by Learned Presiding Officer, an Appeal was filed before this Appellate Tribunal and that was also ended in dismissal for non-payment of requisite court fee. Thus, this Tribunal finds that the Appellant having participated twice in sale proceedings and succeeded in both the attempts, failed to pay the balance sale price in time, therefore, the Recovery Officer chose to forfeit the amount paid by the Appellant as EMD amount.

In the decision relied on by Learned Counsel for Appellant reported in WP No. 20225/2009, the question arose for consideration was that whether the Recovery Officer is empowered to extend timeline of purchase price in terms of Rule 57 of the II Schedule to the Income Tax Act, 1961. That was a case where the Recovery Officer extended the time for paying the purchase price, and when challenged, the sale was set aside. Answering this question, Hon’ble High Court found that Recovery Officer has no jurisdiction to extend time for payment of the balance 75% of the amount in the absence any clause in the conditions of Sale Notice. Though there is a condition in the sale notice concerned in this case, the Appellant has not taken any steps within the period of 15 days seeking extension of time. Therefore, this decision cannot be made applicable to the facts of this case.

On considering the materials and submissions made, this Tribunal finds that the Recovery Officer rightly passed order forfeiting the amount of Rs.34,40,987/- paid by the Appellant. Challenging this order, the Appeal before DRT was not filed in time. There was a delay of 378 days. Delay is not satisfactorily explained. When there is no application filed within 15 days for extension of time, this Tribunal is of the view that there is no ground made out on merits to challenge the order of forfeiture.

For these reasons, this Tribunal finds no merits in these Appeals and confirms the orders passed by Learned Presiding Officer, DRT-III, Chennai and dismisses the Appeals in M.A:67/2018 and M.A:43/2019. Both the parties shall bear their own costs. All pending IAs, if any, stand closed.