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Judgment
R. S. Kulhari, Chairperson
This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act") challenging the order dated 16.02.2019 passed by the Tribunal below, whereby the securitization application (S.A.) filed by the appellants for redemption of the property was dismissed.
The essential facts leading to this appeal are, that the appellant-firm was granted credit facility through its partners-appellants no. 2 & 3. The loan was secured by the collateral security belonging to the guarantors-appellants no. 4 & 5. The borrowers committed default in repayment of the loan, hence the demand notice was issued on 10.09.2007 under section 13(2) of the SARFAESI Act followed by the possession notice dated 23.11.2007 under section 13(4) of the said Act. Since no amount was paid, hence the sale notice was published on 29.03.2008 and the property was auctioned on 08.05.2008. After deposit of sale price, the sale certificate was issued on 26.05.2008 in favour of the respondent no. 2. Thereafter, the order of the CMM was also obtained on 25.10.2010 under section 14 of the SARFAESI Act.
The borrowers had challenged the proceedings of the Bank after about 8 years despite service of notices issued for every step. However, the S.A. No. 97/2016 was filed in the month of February, 2016 challenging all steps of the Bank. The Tribunal below vide order dated 30.04.2016 dismissed the S.A. on account of the reliefs being barred by limitation.
The appellants challenged the order of the Tribuanl below by filing the Appeal Sr. No. 124/2016, which was dismissed vide order dated 23.07.2018. The review petition filed by the appellants against the said order was also dismissed on 31.08.2018. The appellants challenged the order of this Tribuanl by filing Writ Petition No. 36518/2018 before the Hon'ble Allahabad High Court, which was dismissed on 27.11.2018 and the order of the DRT as well as the DRAT were affirmed. The SLP filed against the order of the Hon'ble High Court was also dismissed by the Hon'ble Supreme Court vide order dated 25.01.2019.
The appellants again approached before the DRT by filing the present S.A. being No. 84/2019 stating that the physical possession of the property was taken on 4.1.2019 in compliance of the order dated 25.10.2010 of the CMM, Kanpur and the appellants were ready to pay the amount of loan as well as the costs and interest to redeem the property, therefore, prayed for redemption of the mortgaged property. The Tribuanl below vide impugned order dismissed the S.A. observing that the property had already been sold long back and the physical possession of the property had already been given. Hence the present appeal.
Learned counsel for the appellants submits that the physical possession of the property was taken on 4.1.2019, therefore, fresh cause of action has arisen in favour of the appellants. Thus they are entitled to be heard on merits on each and every aspect from the stage of issuance of demand notice dated 10.09.2007 to the possession notice, auction of the property and physical possession of the same. The Tribuanl below has not considered these aspects on merits. The next contention is that the order dated 25.10.2010 of the CMM, Kanpur was passed without affording opportunity of hearing, therefore, the same is liable to be set aside and as a consequence, the possession taken in compliance of the said order requires to be restored.
The last contention is that the Hon'ble High Court has observed that the plea of redemption may be considered by the appropriate authority. The appellants were ready to deposit the amount in order to save the property, therefore, the Tribunal below should have allowed the redemption.
On the contrary, the learned counsel for the respondents vehemently opposes the contention of the appellants stating that all the issues right from challenging the demand notice till issuance of sale certificate were already raised in the earlier S.A., that had been dismissed, so it cannot be raised by filing the fresh S.A.
It is further submitted that the appellants have extinguished their rights of redemption as the sale certificate was issued way back in the year, 2008 and the possession of the property has also been handed over, therefore, they are not entitled for redemption. Hence, the appeal be dismissed with heavy costs.
Having heard the learned counsels for the parties and considering the material available on record, it is undisputed that the issue of service of demand notice, possession notice, sale notice and the proceedings of the auction were already challenged by the appellants in earlier S.A., which was dismissed on the ground of limitation and the matter had attained finality, as the SLP filed by the appellant has been dismissed by the Hon'ble Supreme Court. Thus, the appellants are estopped from raising any question on merits with regard to the demand notice, possession notice and the sale notice in the present S.A. on the principle of res-judicata.
The argument that the fresh cause of action has arisen on taking physical possession on 04.01.2019, is also devoid of merits. The factum of physical possession is the execution of the order of the CMM, Kanpur, which was passed way back in the year 2010. If the appellants were having any grievance against the order of the CMM, Kanpur, it was to be challenged within 45 days from the date of the order or from the date of knowledge. This is not the case of the appellants that they were having no knowledge of the order of the CMM. Instead, the record reveals that the appellants filed some objection before the CMM, Kanpur on 25.05.2017 (page 58 to 61) praying that the implementation of the order dated 25.10.2010 should not be made. Thus, at least on 25.05.2017, the appellants were well aware about the order of the CMM, but it was never challenged within time and was challenged after about 2 years. Hence, the issue of challenging the order of the CMM is time barred. Moreover, in relief clause of the S.A., no prayer has been made for quashing the CMM's order dated 25.10.2010. Therefore, otherwise also, no relief can be granted without any prayer.
Coming to the core issue involved in this appeal with regard to the redemption, the following relief was sought in the S.A.:-
"To issue an order or direction for redemption of the property of the applicant in compliance of the order of the Hon'ble High Court of Judicature at Allahabad dated 27.11.2008."
The prayer as stated above indicates that the ground for redemption was only the order passed by the Hon'ble High Court and no other specific reasons were assigned. While deciding the writ petition, the Hon'ble High Court has observed as under:-
"Insofar as the plea of the petitioners that they seek to redeem the mortgaged property by paying the entire amount is concerned, that can also not be a ground to condone the delay. That plea, if available may be setup and considered by the appropriate authority, strictly in accordance with law."
The observation of the Hon'ble High Court directs that the issue of redemption was to be considered strictly in accordance with law, if it was available to the appellants as stated above. The property was auctioned on 08.05.2008 and the sale certificate was issued on 26.05.2008. As per the prevailing provision of redemption under section 13(8) of the SARFAESI Act, the mortgagor was required to deposit the outstanding, costs and expenses etc. before sale or transfer of the property. Admittedly, no redemption was sought before the auction sale on 08.05.2008 or before the sale certificate issued on 26.05.2008. Thus, the sale has become absolute after issuance of the sale certificate. The physical possession of the property has also been handed over to the auction purchaser. As such no right to redeem the property survives in favour of the appellants, because it would adversely affect the legal rights accrued in favour of the Auction Purchaser.
The above is fortified by the judgments passed by the Hon'ble Supreme Court in Civil Appeal No. 000148/2018-Dwarika Prasad Vs. State of Uttar Pradesh and others, decided on 06.03.2018 and in H.S. Goutham Vs. Ram Murthy and Another, (2021) 5 Supreme Court Cases 241. Thus, there is no infirmity in the order passed by the Tribuanl below and the appellants are not entitled for any relief.
Accordingly, 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.