M/s Ansari Enterprises vs Allahabad Bank and Anr

R. D. Khare, Chairperson

The present 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 judgment dated 18.02.2020 passed by the DRT, Allahabad, whereby the securitization application (for short "S.A.") filed by the applicant was dismissed.

The factual matrix of the matter in brief is that the applicant-Firm was granted some financial assistance by the respondent-Bank. In order to secure the said loan, the mother of the proprietor of the said firm stood as guarantor and created mortgage over her property with the respondent-Bank. The borrower did not maintain the financial discipline, therefore, the account became non performing asset (NPA). The respondent-Bank issued a demand notice dated 02.05.2018 under section 13(2) of the SARFAESI Act for Rs. 17,83,246/-. Since the borrower did not pay any heed to repay the amount as demanded, therefore, the respondent-Bank initiated the recovery proceeding by issuing possession notice dated 09.08.2018 of the said Act. The said notice was affixed on the outer door of the property of the borrower, guarantor and mortgagor and was published in two newspapers on 15.08.2018. Thereafter, the Bank issued sale notice dated 15.11.2018 and published in newspapers on 18.11.2018 scheduling the auction for 12.12.2018 and the property was sold for a sum of Rs. 24.00 lacs. The sale was confirmed by the respondent-Bank vide confirmation letter dated 12.12.2018 in favour of the respondent no. 2 being highest bidder and sale certificate dated 25.02.2020 was also issued in his favour.

The appellant-borrower challenged the entire actions of the respondent-Bank by filing the S.A. No. 766/2018 before the Tribunal below on the ground that the respondent-Bank did not comply the statutory provisions of Act and Rules. The Tribunal below vide impugned order dismissed the said S.A. holding that all the actions taken by the Bank are as per the Act and Rules and moreover, the appellant has no locus to challenge the validity and legality of the actions initiated by the respondent-Bank. Being aggrieved by the said order, the present appeal has been filed by the applicant-Firm.

Learned counsel for the appellant has drawn attention of this Tribunal towards clause (f) of section 2-Difinitions, which defines the borrower that even a person, who has given any guarantee or created any mortgage or pledge or any security for the financial assistance granted by the Bank or financial institution including a person, who becomes borrower. Therefore, the status of the borrower and guarantor/mortgagor are the same.

Learned counsel further contends that the appellant-M/s Ansari Enterprises is a proprietorship firm and proprietor of the said firm is Mohd. Irfan Ansari. The property of his mother namely Smt. Ummatun Nisha has been sold by the Bank, therefore, the impugned order is not sustainable. It is further argued that even in the auction notice, which has been published by the Bank, at item No. 7 the name of the mortgagor has been mentioned as Smt. Ummatun Nisha, therefore, it is contended that status of Smt. Ummatun Nisha is that of borrower. Hence, the S.A. filed by the appellant against the proceedings drawn by the Bank is maintainable. As such the impugned order passed by the Tribunal below is not sustainable. Therefore, the same may be quashed.

Learned counsel for the respondent-bank has drawn attention of this Court towards the impugned order and has argued that the grounds taken by the appellant before the Tribunal below were regarding various procedural irregularities, which have been committed by the Bank, but the same were duly considered by the Tribunal below and the Tribunal below finally came to the conclusion that the respondent-Bank has committed no infirmity in initiating the proceedings against the secured asset in question and the Tribunal below has further held that the S.A. was not filed by the mortgagor/owner of the property in question relying upon a judgment passed by the Hon’ble Supreme Court in Civil Appeal No. 4379/2016-Axis Bank Vs. SBS Organic Pvt. Ltd. and another. Since all the contentions raised by the appellant have been considered and decided, therefore, the finding given by the Tribunal below that the appellant has no locus to challenge the validity and legality of the proceedings initiated by the Bank has no significance. As such the impugned order passed by the Tribunal below does not suffer from any irregularity or illegality, hence the appeal may be dismissed with heavy cost.

After hearing the learned counsels for the parties and perusal of the pleadings, it is noticed that the challenge before the Tribunal below was with regard to various irregularities committed by the Bank in the recovery proceedings, which were considered by the Tribunal below and came to the conclusion that the respondent-bank did not commit any such infirmity or irregularity in following the procedures as prescribed in the Act and Rules and the Tribunal below has passed the order accordingly. The point of locus was not agitated before the Tribunal below. However, the Tribunal below placing its reliance upon law laid down by the Hon’ble Apex Court observed that the appellant has no locus. Since the grievance as raised by the appellant was fully considered and there was no pleading with regard to the locus, therefore, the impugned order does not suffer from any irregularity or illegality in the eye of law. Therefore, the appeal is liable to be dismissed.

Accordingly, the appeal 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.