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Judgment
R.S. Kulhari, J
This 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 order dated 23.06.2020 passed by the Debts Recovery Tribunal, Dehradun, whereby the securitization application filed by the appellant was dismissed with cost of Rs. 25000/-.
The brief facts of the matter are that the respondent- Bank granted housing loans and other financial assistance to the appellant and the other co- borrowers. In order to secure the loans, two properties, one situated at Kaulagarh and the second at Lachhiwala were equitably mortgaged by the appellant and his brother Ashu Srivastava by depositing the title deeds with the Bank. Since the borrowers did not adhere to the terms of the loan agreement, therefore, the accounts were classified as NPA on 03.05.2019 and the demand notice dated 01.10.2019 was issued under section 13(2) of the SARFAESI Act, 2002 demanding a sum of Rs. 37,92,161/- for the account of housing loans. As the borrowers did not pay any heed to the demand raised by the Bank, the respondent-Bank took the symbolic possession of the properties on 10.12.2019 by taking recourse to section 13(4) of the said Act. Thereafter, the respondent-Bank issued an e-auction sale notice dated 21.03.2020 scheduling the auction of the property in question on 28.04.2020, which was dispatched through post on 09.04.2020 and published in the newspapers on 03.04.2020. The property was sold in favour of the respondent no. 2-auction purchaser for a sum of Rs. 42.39 lacs.
The appellant had challenged the e-auction sale notice dated 21.03.2020 by filing the S.A. No. 49 of 2020 alleging that the respondent-Bank has not followed the procedures as laid down under the SARFAESI Act. The Tribunal below vide impugned order dated 23.06.2020 dismissed the S.A. with cost of Rs. 25000/- holding that "the applicant has already sold both the secured assets without prior consent of respondent-Bank in violation of loan/security documents. Therefore, he has left no right or title in either of the secured assets to challenge the legality of the auction sale of respondent Bank. Further, the applicant has not approached with clean hands as the applicant does not disclose full facts and suppressed relevant material facts from this Tribunal and is otherwise guilty of misleading the court."
Thereafter, the appellant had filed an application to review the impugned order dated 23.06.2020 stating that the applicant is seriously interested to settle the loan under OTS and in this regard, he had also given the proposal on 17.03.2020, which is still pending consideration. The Tribunal below disposed off the review application filed by the appellant vide order dated 09.07.2020 with the direction to the applicant to pay the entire remaining dues of the respondent- Bank by 20.07.2020 i.e. before the date of the scheduled auction of the second mortgaged property of Lachhiwala and if the same is deposited, respondent-Bank shall drop all the proceedings initiated against the second mortgaged property of Lachhiwala.
Being aggrieved by the order dated 23.06.2020 passed in the S.A. and the order dated 09.07.2020 passed in the review application, the appellant filed a writ petition no. 1158 of 2020 before the Hon'ble High Court of Uttrakhand, which was dismissed vide order dated 28.07.2020 on the ground of alternative remedy directing the parties to maintain status quo qua the mortgaged property for a period of two weeks from the date of order. Accordingly, the present appeal has been filed by the appellant praying for setting aside the impugned order and the auction sale dated 28.04.2020 as well as the proceedings of the Bank.
Heard the learned counsels for the parties.
At the outset, the learned counsel for the respondent- Bank pointed out that the appeal is barred by limitation, therefore, the same be dismissed on this ground alone.
Learned counsel for the appellant submitted that earlier the order dated 23.06.2020 passed by the Tribunal below was challenged before the Hon'ble High Court of Uttrakhand. The writ petition was dismissed on 28.07.2020. Thereafter, it was filed within two weeks, therefore, the delay caused in filing the appeal be condoned, for which separate application has already been filed.
Having regard to the fact that the impugned order was passed on 23.06.2020, against which the review application was filed on 8.7.2020, which was dismissed on 9.7.2020 and the writ petition filed by the appellant was dismissed by the Hon'ble High Court on 28.07.2020, this Tribunal finds that the delay caused in filing the appeal is not deliberate and is properly explained, hence the same is condoned.
On merit of the case, the learned counsel for the appellant confined his argument only to the extent of service of sale notice and the requirement of 30 days' period as per Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (in short " the Rules, 2002). In this regard, it was argued that the sale notice was issued on 21.03.2020, which was dispatched on 9.4.2020 and was received by the appellant on 15.04.2020, whereas the Bank has sold the property on 28.04.2020. Further, the sale notice was published in the newspapers on 3.4.2020. Thus, a clear 30 days' notice was not given before auction on 28.04.2020 nor 30 days' notice was published before auction for the purpose of information to the public at large. As such the Bank has violated the provisions of Rules 8(6) and 9(1) of the Rules, 2002, hence the sale conducted by the Bank is liable to be set aside as laid down by the Hon'ble Supreme Court in Mathew Varghese Vs. M. Amritha Kumar and others, (2014) 5 Supreme Court Cases 610.
The learned counsel has further elaborated that though, the property was sold by the appellant and his brother to a third party, but the same has been re-purchased by the appellant in his wife's name, therefore, the appellant is having right and title in the property and is entitled for redemption of the same.
On the contrary, the learned counsel for the respondent-Bank submitted that some delay was caused in dispatching the sale notice, because during those days, there was a complete lockdown declared by the Government of India, hence the notice could not be dispatched and published during the relevant period, but the appellant is not entitled for any adjudication of his cause nor he can be given the benefit of the judgment passed by the Hon'ble Supreme Court in Mathew Varghese Vs. M. Amritha Kumar(Supra), because he has defrauded the Bank by selling the property to Ayush Arora without any information and consent of the Bank. The said sale was made in order to frustrate the recovery of the Bank during the currency of the mortgage. Further, this fact was concealed by the appellant while filing the S.A. Thus, the Tribunal below has rightly rejected the S.A. on the grounds of misrepresentation and concealment of the fact.
It was also argued that the appellant was never interested in repayment of the loan and redemption of his property. Earlier, the Tribunal below had granted time to deposit the amount. Thereafter, the Hon'ble High Court of Uttrakhand had also granted the time to deposit Rs. 1.00 crore on the basis of the undertaking given by the appellant, yet he has not deposited any amount. Now the sale deed has been executed in favour of the auction purchaser and the possession has also been handed over, therefore, right to redeem the property has been extinguished. In support of the contentions, the learned has relied upon the following judgments:-
A. Dwarika Prasad Vs. State of Uttar Pradesh, AIR 2018 Supreme Court 1286.
B. Shakeena Vs. Bank of India, 2019 BC 562 (Hon'ble Supreme Court)
C. Rafeeq Ahmad Vs. Sate of U.P. and others, AIR 1999 Allahabad 272 (Hon'ble Allahabad High Court)
Learned counsel for the auction purchaser, while adopting the arguments advanced by the learned counsel for the Bank, has further added that after getting the possession of the property, the appellant has incurred more than Rs. 1.00 lacs in renovation of the property and a sum of more than Rs. 2.00 lacs towards charges of registration of the property. All the proceedings were within the knowledge of the appellant, who had failed to get any relief from any court. Now, the sale has become absolute, 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 apparent that the sale notice was issued on 21.03.2020 and was dispatched on 9.4.2020. The same was published on 3.4.2020 and the auction was held on 28.04.2020. Thus, a clear 30 days' notice was not sent and published as required under Rule 8(6) of the Rules, 2002 and as has also been laid down by the Hon'ble Supreme Court in Mathew Varghese Vs. M. Amritha Kumar (Supra).
However, it is also not in dispute that the property in question was mortgaged by the appellant and his bother, co-owner Ashu Srivastava on 2.8.2011 by depositing the title deeds with the Bank. The appellant and his brother sold the same property for Rs. 21.46 lacs during the currency of the mortgage to Ayush Arora by registered sale deed on 25.02.2016 with a recital that the property was free from any encumbrances and also that they have received the complete sale price and handed over the possession. The appellant has failed to produce any evidence that any prior consent was obtained from the Bank and rather, the Bank has categorically mentioned that no consent was obtained or even no information was given to the Bank. This fact was concealed by the SA- applicant before the Tribunal below. It is submitted by the appellant that the same property has again been purchased by his wife from Shri Ayush Arora on 11.09.2017. It is also a matter of record that the appellant and or other co-borrowers have never shown any inclination for repayment of the loan nor have complied with the directions given by the DRT and the undertaking given before the Hon'ble High Court. It is also to be noted that the appellant has not shown any interest before this Tribunal to pay the amount and redeem the property nor such any interest was shown during the course of argument by the counsel on behalf of the appellant.
In the above backdrop, it is to be seen, as to whether the appellant is entitled for any relief?
This Tribunal is of the considered view that no interference is required to be called-for in the impugned order for the following reasons:-
A. The appellant and his brother have sold the mortgaged property to Ayush Arora in a clandestine manner with a view to defraud the Bank and to defeat the recovery of the Bank by auction of the mortgaged property. No prior consent was obtained from the Bank, which goes to show that the intention of the appellant was to grab the public money. If any person, who have obtained the loan from the Bank, is allowed to sell the property to any other person during the charged period, it will create a chaos and will be very difficult to the Secured Creditor to recover the loan from such borrowers on the basis of the mortgaged property. Such person is required to be dealt with heavy hands. Moreover, the appellant has delibratly suppressed this fact in the pleading of the S.A. filed before the DRT. Thus, it has clearly misrepresented the facts. It does not make any difference by admitting the fact in the rejoinder because the rejoinder cannot take place of the original pleadings. Thus, it is a clear case of playing fraud with the Tribunal below, as also that the appellant has not come with clean hands before the DRT.
The concealment of the material fact was made with a view to deceive the Tribunal below in order to get the interim relief and ultimately, he succeeded in getting the interim relief on the basis of the facts mentioned in the S.A. However, the same relief was declined by the Tribunal below, when the true facts were brought on record by the Bank. Thus, the appellant is guilty of concealment of the facts. Resultantly, by his conduct, he has lost his right to get the matter adjudicated on merit. This view is fortified by the judgment passed by the Hon'ble Supreme Court in Civil Appeal No. 4270/08 - K. D. Sharma Vs. Steel Authority of India and Others, decided on 09.07.2008, wherein the Hon'ble Supreme Court, while discussing the various earlier judgments, has held that the person, who misrepresents the Court or suppresses the material fact, is not entitled to be heard on merits. (Para 24, 26 and onwards). Thus, the Tribunal below has rightly thrown out the case of the appellant by imposing cost of Rs. 25000/-.
B. The borrower/mortgagor is entitled for redemption of the property, if he offers to pay the dues of the secured creditor at appropriate stage of the proceedings. In the instant case, the appellant has never paid any amount and instead sold the property to a third person during the currency of the mortgage. It was stated before the Tribunal below that the borrowers are willing to pay the amount, but not even a single penny was paid. It is a matter of record that three cheques given to the Bank during the pendency of the S.A. before the Tribunal below were returned unpaid with the remark "insufficient fund". While dismissing the review petition, the Tribunal below had granted one more opportunity to repay the loan upto 20.07.2020 to save the second property situated at Lachchiwal (which was also sold during the period of mortgage to Shri Harjeet Singh Bagga and Shri Rajesh Tyagi on 16.05.2015 without consent of the Bank), but no effort was made for deposit of amount, hence the second property was also auctioned on 21.07.2020. Besides, the appellant had given an undertaking before the Hon'ble High Court of Uttrakhand to deposit Rs. 1.00 crore, but the said undertaking was also not honoured. Thus, it is obvious that the appellant is not interested in repayment of the loan and is interested to prolong the litigation under one pretext or the other by adopting various tactics and abusing the process of law. Such person is not entitled for any relief as laid down by the Hon'ble Allahabad High Court in Rafeeq Ahmad Vs. Sate of U.P.(Supra). In the said judgment, it has been held that "the persons, who are not interested in repayment of the loan, must not be permitted to play with the procedures of law".
C. Admittedly, the property was in the joint names of the appellant and his brother Ashu Srivastava and the loan was sanctioned to the appellant, his wife Neetu Srivastava and the bother Ashu Srivastava, but neither the co-borrowers nor the co-owners were arrayed as party in the S.A. or in the appeal before this Tribunal, whereas, those were necessary parties. The appellant had sold the property to Ayush Arora, thus, he has no right, title and interest in the property as of today. As such he cannot lay any claim over the property in question. The fact that the property has again been purchased by the wife of the appellant namely Neetu Srivastava, does not render any assistance to the appellant because Neetu Srivastava is not party in the present proceedings nor she is claiming any right over the property.
D. Lastly, the possession of the property has been handed over to the auction purchaser on 22.07.2020 after execution of sale deed. No fault can be attributed on the part of the auction purchaser. The appellant himself has allowed the subsequent steps being taken by the Bank during the intervening period, as the appellant had failed to deposit any amount in the loan account as per direction of the Tribunal below and also in getting any interim relief from any competent court. In the meantime, the Bank has issued the sale certificate on 29.06.2020 after decision of the S.A. on 23.06.2020 and executed the sale deed on 22.07.2020. Now the sale has become absolute and after execution of sale deed, the right to redeem the property has already been extinguished as held by the Hon'ble Supreme Court in Dwarika Prasad Vs. State of Uttar Pradesh and Shakeena Vs. Bank of India (Supra). The principle laid down in these judgments is squarely applicable in the present matter.
In view of the above, the appeal is liable to be dismissed and accordingly, the same is dismissed with no order as to costs.
A copy of this judgment be uploaded on the e-DRT postal and be also sent to the DRT concerned.