M/s Sagar Enterprises And Ors. vs Prathama Bank And Ors.

The challenge in this appeal preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act") is the order dated 25.11.2017 passed by the Presiding Officer, DRT, Dehradun, whereby the securitization application (S.A.) filed by the borrowers was dismissed.

The essential facts in brief are, that the appellant no. 1 was granted financial assistance by the respondent-Bank. The appellants no. 2, 3 & 4 stood as mortgagors/guarantors of the loan and created equitable mortgage over the immovable property. Since the loan was not repaid in terms of the loan agreement, hence the Bank issued demand notice dated 11.05.2015 under section 13(2) of the SARFAESI Act demanding a sum of Rs. 26,04,995/-. Thereafter, the possession notice dated 14.01.2016 was issued under section 13(4) of the SARFAESI Act. An application under section 14 of the SARFAESI Act was filed before the District Magistrate, where the appellants had also appeared. Thereafter, the physical possession of the property was taken on 20.03.2017 and the sale notice dated 27.06.2017 was issued fixing the date of auction on 10.08.2017. The property was auctioned in favour of the respondents no. 2 & 3. After deposit of sale price, the sale certificate was issued on 19.08.2017.

The borrowers/guarantors challenged the proceedings of the Bank by filing S.A. before the DRT alleging amongst others that their representation filed under section 13(3-A) was not decided, the demand notice, the possession notice and sale notice were not properly served and affixed. The Tribunal below vide impugned order observed that there was no infirmity in the proceedings of the Bank and accordingly dismissed the S.A. Hence, the appellants filed the present appeal.

The Bank has filed its reply and counter objections were also filed on behalf of the auction purchasers.

Learned counsel for the appellants submitted that the copy of the demand notice was published in the newspapers, but it was not affixed on the residential house of the S.A.- applicants, therefore, there was no proper service of demand notice. The next argument was that the appellant no. 2 submitted representation before the Bank on 27.05.2015 under section 13(3-A) of the SARFAESI Act showing some infirmities in the demand notice, but the same has not been decided before taking symbolic possession. The receipt of representation was also not given by the Bank, but the same was admitted by the Bank in the application filed under section 14 before the D.M. The details of the deposit made by the auction purchaser have also not been furnished and the reserve price was not fixed by the secured creditor, rather it was fixed by the chief Manager, who cannot be said to be secured creditor. A feeble argument was also advanced to the effect that the possession notice was not served.

On the other hand, the learned counsel for the Bank contended that the demand notice and the possession notice were duly served. The borrowers have not filed any representation under section 13(3-A) of the SARFAESI Act. This contention was held to be forged and concocted by the DRT, but the finding to this effect was not challenged in this appeal. However, the contention with regard to submission of representation before the DM was due to routine preparation and typing of similar affidavit, which was clarified by the supplementary affidavit filed before the DRT. The property was auctioned on 10.08.2017, against which 25% of the amount was deposited on the same day and the remaining 75% was deposited within 9 days i.e. 19.08.2017. Thereafter, the sale certificate was issued on 19.08.2017. The Tribunal below has recorded proper findings on all these aspects.

Learned counsel for the auction purchaser submitted that the Bank has not delivered the physical possession of the property despite execution of the sale deed. Hence, the sale of the property is still incomplete. The appellants are enjoining the secured asset, therefore, the Bank/appellant be directed to handover the possession to the respondents no. 2 & 3.

I have considered the rival contentions of the learned counsels for the parties and perused the record.

The contention that the demand notice was not affixed, is not tenable. At para 5.7, the appellants have stated that the demand notice dated 11.05.2015 was published in the newspapers. At paragraph no. 5.33, it was stated that the Bank had sold the property without affixing any demand, possession and sale notices at the property in question. Thus, the pleading was only to the extent that the notices were not affixed at the property, whereas only the possession and the sale notices are required to be affixed on the property in question, which have duly been affixed. With regard to fixation of the demand notice, it is required to be affixed on the outer door of the house of the borrower, where he resides and not on the mortgaged property. Thus, there was no pleading that the demand notice was not affixed on the house of the S.A.-applicants, nor there is any evidence that the property mortgaged and the residential house are the same. Since the objection of affixation on the house has not been raised, therefore, the Bank was not required to submit any proof in this regard.

The contention qua the alleged representation under section 13(3-A) is also not convincing. The appellants have not submitted any proof that any such representation was filed before the Bank. Even it was not stated, whether it was sent by the post or delivered to any particular officer by hand. Thus, it cannot be believed that any representation was sent to the Bank. Secondly, at paragraph no. 5.8, the date of representation was stated to be 27.05.2017. If the year 2017 is treated to be wrongly typed instead of 2015, yet in paragraph no. 5.9, the date of objection is stated to be 29.06.2015. Thus, even the S.A.-applicants are not certain that on which date the representation was submitted. Thirdly, though it is true that at para 5 of the application filed before the DM, there is a mention that "the objection received from the borrowers has been considered and communicated". But in that paragraph, the date of representation or the date of communication has been narrated. Thus, it was a routinely prepared affidavit on a prescribed proforma, which cannot be treated as admission on the part of the Bank. Otherwise also, such type of admission or typing mistake may be clarified or shown to be wrong as laid down by the Hon'ble Supreme Court in the judgment of Chhaganlal Keshav Lal Mehta Vs. Patel Narandas Haribhai, 1982 AIR 121 and the Hon'ble Madhya Pradesh High Court in Chetak Constructions Ltd. Vs. Om Prakash and others, AIR 2003 MP 145. The Bank has clarified its mistake of typing by filing affidavit of Shri Narendra Singh on 28.10.2017 before the DRT. Hence, the appellants cannot take benefit of such averment made in the application filed before the DM. However, the appellants have not raised this issue before the DM despite contesting the application, to say that their representation was not decided.

The reserve price was fixed by the recovery department of the head office of the Bank and the same was conveyed to the Chief Manager of the branch i.e. authorized officer. Although, the intimation letter dated 15.06.2017 was signed by the Chief Manager of the Head Office, but it was a mere intimation, which is to be conveyed through any officer, but it cannot be said that the reserve price was fixed by the Chief Manager, rather it was fixed by the secured creditor at the competent level.

So far as the details of deposit of sale price is concerned, the Bank has given the details in its reply (at page no. 143 of the memo), which indicates that 25% of the sale price was deposited on the same day and the remaining 75% was deposited on 19.08.2017. The sale certificate was also issued on 19.08.2017. Thus, it is apparent that the sale certificate was issued after realization of all the cheques submitted by the auction purchasers. Since the sale certificate was issued after 9 days, thus, it is proved that the sale price was deposited within 15 days as required under the statute. As such, there is no infirmity in the impugned order.

The contention that the possession notice was not served, is against the pleading. At para 5.11 of the appeal, the appellants have admitted that the possession notice dated 14.01.2016 issued by the Bank was served. Again at para 5.15, they have admitted that the physical possession of the property was taken on 20.03.2017. Thus, it cannot be said that the symbolic possession notice was not served or they were not aware about the physical possession taken in compliance of the order of the DM.

With regard to the contention of the respondents no. 2 & 3- auction purchasers, there is no dispute that the respondent may raise the issue by way of cross objection as laid down by the Hon'ble Supreme Court in Mahant Dhangir and Anr. Vs. Shri Madan Mohan and others, AIR 1988 Supreme Court 54 and the Hon'ble Karnataka High Court in Annasaheb Balesha Waghe & Ors. Vs. Shri Appasaheb Dada Pommai, 2007 (5) KarLJ 424, but such objection can be entertained only when the finding is recorded against the respondents. Prior to that, it is necessary that the issue being raised before the appellate authority was pleaded and argued before the DRT in the proceedings. In the instant case, the auction purchasers filed reply before the DRT, wherein it has been stated at para 27(page 305 of the memo) that the sale certificate was issued in favour of the respondents no. 2 & 3 on 19.08.2017 and gave physical possession on 22.08.2017. Thus, the pleading before the DRT was that the auction purchasers had obtained the possession, whereas before this Tribunal the auction purchasers have taken U-turn stating that the possession has not been delivered. This changed stand cannot be entertained directly at the appellate stage. There may be a dispute between the Bank and the auction purchasers or the borrowers that with whom the actual possession of the property is there. However, the auction purchasers are free to take their legal recourse in accordance with law, even if there is any dispute with regard to possession of the property. But they are not entitled for any relief in this appeal.

In view of the above, the appeal is dismissed with no order as to costs.

A copy of this judgment be sent to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.