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Judgment
P.K. Bhasin, J
The appellant as a Home Finance Company and subsidiary of Punjab National Bank had given loan of Rs. 13,00,000 to respondent Nos. 2 and 3 on 12.5.2007 and to secure its re-payment they had created equitable mortgage of one property which was registered in the name of respondent No. 3. Since these borrowers failed to re-pay the loan in time their account was declared as a Non Performing Asset (NPA) by the appellant and thereafter it initiated proceedings against them under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' in short) and the mortgaged property came to be sold in auction for a sum of Rs. 25,41,000/- on 29.5.2012 and sale certificate was issued in favour of the auction purchaser on 18.6.2012. The respondent No. 1 Bank had also given a loan of Rs. 10,00,000/- to respondents 2 and 3 in March, 2008 and to secure that loan respondent No. 3 had created equitable mortgage of the same property, which she had done earlier in favour of appellant Bank in separate loan transaction, in favour of respondent No. 1 Bank. It appears that since these respondents failed to repay that loan also the said Bank also initiated proceedings under SARFAESI Act and it also filed a petition under Section 17 of the said Act not only against the two borrowers but the appellant Bank was also impleaded in that petition as a defendant (being SA No. 563/2011) before the Debt Recovery Tribunal-Ill, Delhi apprehending that appellant Bank may not sell the mortgaged property. In that SA respondent No. 1 Bank had sought the relief of stay against appellant Bank also against sale of mortgaged property. Though an ex parte order of status quo was passed in that case on 21.11.2011, but before the appellant herein could be served with that order the SA came to be dismissed in default on 5.12.2011. It was restored on 15.12.2011 but appellant was served in that case only for 21.9.2012. However, before that the property in question was auctioned by appellant herein. The said SA of respondent No. 1 Bank is still stated to be pending before the DRT. It appears that respondent No. 1 Bank had also filed recovery case against the borrowers/guarantors/mortgagor under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (RDDBFI Act of 1993) before the DRT concerned (being O.A. No. 87/2011) but there the appellant Bank was not impleaded and its claim for the outstanding loan amount appears to have been allowed against respondents 2 and 3 herein and other defendants. Recovery Certificate was issued and forwarded to the Recovery Officer for execution and in the proceedings before the Recovery Officer he was informed that the mortgaged property had been sold by the appellant Bank and accordingly it directed the appellant Bank for depositing the sale proceeds with interest from the date of the sale with him. The order to that effect passed by the Recovery Officer on 6.5.2016 in R.C. No. 73/2014 reads as under:
"Learned Counsel for CH Bank states that PNB Housing finance has stated in his affidavit that they have sold the plot No. 151, Ground Floor, Pocket -13, Sector-20, Rohini-110085 measuring 40 sq. yrds. under SARFAESI to one Mr. Sachin Gupta, S/o. Shri Pawan Kumar Gupta R/o 21/42, Shakti Nagar, Delhi-110007 on 29.5.2012 and sale certificate has been issued on 18.6.2012."
It is pertinent to mention here that Honourable Presiding Officer in SA No. 563/2011 titled as UBI v. PNB Housing Finance, vide order dated 21.11.2011 directed to both the parties i.e., UBI and PNB HSG Fin. to maintain status quo qua the said property. However, vide order dated 5.12.2011 the said SA was wrongly dismissed in default which order was set aside on 15.12.2011 and original SA bearing No. 563 of 2011 was restored on its original number. Thus, the status quo order passed by Hon'ble Presiding Officer automatically became effective. Thus, the sale made by PNB HSG. Fin. under SARFAESI on 29.5.2012 is directly hit by the order doted 21.11.2012 (Counsel for both parties had submitted that date 21.11.2012 appears to have been wrongly typed instead of 21.11.2011) and is illegal.
Learned Counsel for objector affirms the above facts. In view of the above, PNB HSG Finance is directed to deposit the sale price of Rs. 25.41 lacs with interest from the date of sale with this Tribunal by the next date positively. Thereafter, priority of change shall be considered. Order Dasti.
List the case on 7.7.2016.
Sd/-
(S.S. Chauhan)
Recovery Officer-I"
The appellant then filed an appeal under Section 30 of the RDDBFI Act of 1993 before the DRT against this order of the Recovery Officer which is stated to be pending. When the appellant sought stay of the operation of the said direction of the Recovery Officer the learned Presiding Officer of DRT- III passed the following order on 5.7.2016:
"5.7.2016
Present: Mr. Sanjeev Singh, learned Counsel appears for appellant FI.
Mr. Hari Kishan, learned Counsel appears for respondent Bank.
The appellant FI shall deposit the sale proceed but distribution of the same shall be subject to the outcome of the appeal.
In the meantime, the parties are directed to file their respective reply/rejoinder and evidence before the next date of hearing.
The matter be listed before Registrar on 8.9.2016 for completion of pleadings.
Sd/-
(Ashish Kalia)
Presiding Officer
DRT-III, Delhi"
The appellant felt aggrieved by this order also of the DRT-III and accordingly it preferred the present appeal under Section 20 of the RDDBFI Act, 1993 and has sought quashing of the order dated 6.5.2016 passed by the Recovery Officer and also the order dated 5.7.2016 of the DRT-III.
Learned Counsel for the appellant had submitted that the DRT has simply maintained the direction of the Recovery Officer for deposit of the auction money without deciding the appeal finally and without discussing any facts and even without forming any prima facie opinion as to why the appellant should at an interim stage part with the money which it had legally received by auctioning the property which had been mortgaged with it by respondent No. 3 herein. It was also submitted that even though the DRT has made the deposit to be subject to the outcome of the appeal but that could have been done only after giving some minimum possible reasons. The Recovery Officer had, submitted Counsel, erroneously observed that the sale of the mortgaged property was in violation of the status quo order passed by the DRT in the S.A. of respondent No. 1 Bank without verifying from the record of the DRT in the S.A. as to whether the appellant Bank was served or not with the status quo order of the DRT and further that the Recovery Officer in any case had no authority to say that the S.A. of the respondent No. 1 Bank had been dismissed in default wrongly. Only the DRT itself could say so and in any case it is the case of the appellant that it was not served with the notice of S.A. before the auction of the mortgaged property. Counsel drew my attention to the copies of proceedings of different dates before the DRT to show that the appellant was not even served with the notice of the S.A. before 21.9.2012 by which time the mortgaged property had already been sold and so even if the S.A. which in the meanwhile had been dismissed in default on 5.12.2011 was restored on 15.12.2011 and status quo order earlier passed in the matter by DRT also was revived the appellant could not be attributed with any knowledge of status quo order till the time it was served with the notice of S.A. and, therefore, the direction given to the appellant to deposit the auction money with Recovery Officer and that too with interest is on the face of it not sustainable and also considering the fact that the auction sale leading to the issuance of sale certificate in favour of the successful bidder Sachin Gupta has not been challenged either by the borrower/mortgagor or by the respondent No. 1 Bank.
Learned Counsel for respondent No. 1 had simply submitted that no prejudice is going to be caused to the appellant in case it deposits the auction money with the Recovery Officer even at an interim stage and there is no illegality committed by the DRT which needs to be set aside in appeal. It was also submitted that since the auction money has to remain with the Recovery Officer the same is quite safe and in case the respondent No. 1 Bank is unable to succeed in getting a favourable relief in its S.A. the same will be returned back to the appellant with interest if FDR is also allowed to be made of that money during the pendency of the controversy whether the appellant as well as respondent No. 1 Bank have to share the sale proceeds and in what proportion. Learned Counsel thus prayed for dismissal of this appeal.
From the foregoing narration of the background facts it is clear that the main grievance of the appellant is that the Recovery Officer could not have held that the auction of the property in question conducted by the appellant herein was in violation of the status quo order passed by the DRT on 21.11.2011 since the appellant was never served with the status quo order dated 21.11.2011 or the subsequent order dated 15.12.2011 whereby the dismissed S.A. was restored and the status quo order was also revived. However, the Recovery Officer does not appear to have bothered to go through the record of the S.A. to find out the correct position and without doing that has directed the appellant to deposit the sale proceeds with him with interest. Even the learned DRT has not so far gone into that factual position and has directed the appellant to comply with the direction of the Recovery Officer. Prima facie, it was a fit case where the direction of the Recovery Officer under challenge should have been kept in abeyance till the appellant's case that it was never served with the status quo order of the DRT had been examined after going through the record of the S.A. and particularly when the appellant has placed on record all the relevant proceedings of different dates in the S.A. which show that the appellant was not served with the notice of the S.A. prior to 21.9.2012. In these circumstances, I am of the view that the impugned direction of the Recovery Officer for deposit of the auction money by the appellant with him with interest needs to be stayed during the pendency of the appeal against his said direction filed by the appellant. This appeal is accordingly allowed and consequently the impugned direction of the Recovery Officer given to the appellant, vide his order dated 6.5.2016, shall remain stayed till disposal of the appeal under Section 30 of the RDDBFI Act filed by the appellant herein.
Copy of this order be sent to the DRT forthwith.