Punjab National Bank vs Sri Avijit Mukherjee

Anil Kumar Srivastava, Chairperson

THE APPELLATE TRIBUNAL :

Instant  appeal  has  been  filed  against  the  impugned  order  dated 12.08.2021 passed by the learned DRT-3, Kolkata in I.A. 1333 of 2020 arising out of S.A. No. 274 of 2019 whereby learned DRT has allowed the interim application.

As per pleadings of the party Term Loan of Rs.14.11 lakh was availed by the respondent (who is SARFAESI applicant before the DRT) from the appellant bank. The loan account became NPA on 31.12.2015. SARFAESI proceedings were initiated by issuing demand notice dated 01.01.2016 claiming dues of Rs.10,51,768/-. Possession notice was issued on 05.03.2018. Sale notice was issued on 18.06.2019. E-auction was conducted successful and sale certificate was issued on 19.11.2019 in favour of highest bidder, Joydeep Roy Chowdhury. Interim application was filed by the SARFAESI applicant with the prayer for quashing the sale notice dated 18.06.2019 and further prayer for direction to disclose the details of e-auction held on 26.07.2019. After hearing the learned counsel for theparties learned DRT issued flowing directions :

(i) Respondent bank is directed to serve details of auction purchaser once again to the applicant within seven days from the date of receipt of this order.

(ii) Respondent bank is also directed to furnish details of auction sale process by way of affidavit within seven days from the date of receipt of this order.

(iii) Applicant is directed to impleade the auction purchaser as party respondent within seven days from the date of receipt of details of auction purchaser. Registry is directed to assist the applicant in impleading auction purchaser as soon as he filed petition for amendment.

(iv) Respondent bank is further directed to intimate upto date outstanding dues including other charges which are required u/s 13(8) for redemption of the property.

(v) Auction purchaser, if impleaded by the applicant, is directed to file affidavit in opposition, if he so like, within seven days from the date of receipt of the S.A.

Feeling aggrieved appellant bank has preferred this appeal.

It appears from record that learned counsel for the appellants has duly served notice of appeal upon the respondent, however, none has appeared on behalf of the respondent.

Learned counsel for the appellant submits that main grievance of the appellant bank is regarding right to redemption of the respondent as provided u/s 13(8) of the SARFAESI Act. It is submitted that the direction issued by the learned DRT regarding intimation of upto date outstanding dues including other charges for the purpose of granting redemption of secured asset u/s 13(8) of the Act is against the law.

Section 13(8) of the SARFAESI Act as amended with effect from 01.09.2016 is reproduced as under :

“If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.”

Aforesaid provision of the Act specifically states that the borrower has to tender an amount of dues together with all costs, charges and expenses incurred by the secured creditor before the date of publication of notice for public auction or inviting quotation or tender or public or private treaty for transfer by way of lease, assignment or sale of the secured asset.

In Shakeena Vs Bank Of India And Ors. reported in 2019 SCC OnLine SC 1059 it was held by the Hon’ble Supreme Court that :

“Further, the amended Section 13(8) of the 2002 Act which has come into force w.e.f. 1st September, 2016, will now stare at the face of the appellants. As per the amended provision, stringent condition has been stipulated that the tender of dues to the secured creditor together with all costs, charges and expenses incurred by him shall be at any time before the “date of publication of notice” for public auction or inviting quotations or tender from public or private deed for transfer by way of lease assessment or sale of the secured assets. That event happened before the institution of the subject writ petitions by the appellants.”

It appears that learned DRT was pursuaded to pass the impugned order on the ground that another order was passed on 30.09.2019 to the effect that auction sale is subject to outcome of the SARFAESI application. In the order dated 30.09.2019 nowhere any embargo was imposed upon the appellant bank either not to confirm the auction sale or not to issue sale certificate. As far as issue of validity of sale is concerned there is no doubt that it would be subject to the final outcome of the SARFAESI application, but at the same time, as far as right to redemption of the borrower is concerned, it is to be governed in accordance with the amended provision of Section 13(8) of the Act. Hence, law laid down by the Hon’ble Supreme Court in the Shakeena case (supra) is applicable since there is nothing on record to show that the SARFAESI applicant had tendered total dues along with cost, charges and expenses incurred by the secured creditor before the date of publication of notice of public auction. Hence, the right available u/s 13(8) has already extinguished. Accordingly, there was no requirement for directing the bank to intimate the upto date outstanding dues for redemption of secured asset. The direction given by learned DRT is against the law and is liable to be set aside.

However, as far as details of auction purchaser to implead him as necessary party in the SARFAESI application are concerned since right has been accrued in favour of the auction purchaser, he is a necessary party and he should be impleaded in the SARFAESI application. Auction purchaser also have right to contest the proceeding before the concerned DRT.

Accordingly, I am of the view that appeal is liable to be partly allowed.

ORDER

Appeal is partly allowed. Direction issued by the learned DRT to the appellant bank to intimate the outstanding dues including other charges for redemption of secured asset u/s 13(8) is hereby set aside. However, SARFAESI applicant should take necessary step for impleadment of auction purchaser as opposite party in the SARFAESI application who shall have right to contest the proceeding before the DRT.

No order as to costs.

File be consigned to record room.

Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

Order dictated, signed and pronounced by me in the open Court on this the 23rd day of September, 2022.