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Judgment
Anil Kumar Srivastava, Chairperson
THE APPELLATE TRIBUNAL :
Instant appeal has been preferred by the Rajnish Infrastructure Private Limited, (hereinafter referred to as RIPL) intervener/intending purchaser against the order passed by learned DRT-1, Kolkata on 16.01.2017 in S.A. No. 09 of 2017 (Dassanagar Precision Engineering Private Limited Vs. State Bank of India) whereby application being I.A. No. 1000 of 2015 filed by the appellant was dismissed.
Facts of the case in brief are that the applicant in S.A. Dassanagar Precision Engineering Private Limited (respondent no.3 in appeal) was established for manufacturing steel material, machine and equipment. Applicant Dassanagar Precision Engineering Private Limited availed various financial assistances from the State Bank of India from time to time. Initially the loan account was maintained with State Bank of India, Howrah Branch which was subsequently shifted to Axis Bank. Subsequently, the loan account was taken by the State Bank of India from the Axis Bank. The loan account became irregular and was declared as N.P.A. Demand notice under Section 13(2) of the SARFAESI Act was issued on 29.11.2010. This notice was subsequently withdrawn by the bank on 07.01.2011. A fresh notice was issued on 08.01.2011 claiming a sum of Rs.21,98,89,834.78.
Physical possession of the secured asset was taken on 25.04.2011. Sale noticed dated 16.12.2014 was issued by the Authorized Officer of the bank for sale of the Kossipore and Prasasta Unit of the borrower. Applicant no.1 fixed reserve price of 287.00 lakh for the lands, factory shed of the building of the Kossipore unit which stands in the name of the applicant no. 2 and 5 and plant and machinery and factory shed at reserve price of Rs. 39.00 lakh and stock and raw material of said unit for Rs.51.00 lakh. Similarly, reserve price in the Prasasta Unit, plant and machinery and building at Rs.780.00 lakh and other movable and immovable asset at reserve price of Rs.1950.00 lakh was fixed. The auction sale notice was published in the newspapers intimating that sale would be on “as is where is” and “as is whatever is” basis and date of inspection of the properties was fixed on 7th and 8th January, 2015 from 10am to 04pm and auction sale would be held on 21.01.2015 between 11am to 12pm with extension of 5 minutes for each paid increment of Rs.1.00 lakh. It was further intimated in the sale notice that terms and conditions of the auction in detail would be available in the website of the bank and in the Govt. of India tender file.
In the said auction sale held on 21.01.2015 appellant Rajnish Infrastructure Private Limited (herein after referred to RIPL) was declared as highest bidder. Bank vide letter dated 21.01.2015 requested RIPL to deposit on or before 04.02.2015 the balance 75 per cent of the bid amount excluding EMD amount which was already deposited. A sum of Rs.1,95,25,000.00 was deposited by RIPL. Bank further requested RIPL to deposit remaining 75 per cent of the bid amount by 04.02.2015. However, RIPL failed to deposit remaining 75% of the bid amount by 04.02.2015.
On 05.02.2015 RIPL wrote a letter to the bank seeking certain documents which includes extracts of particular of property including RS and LR Dag number and Khatian number, Municipality/Panchayat holding number, RS records of right, LR record of right, Khazana receipt, Google earth map, site plan etc. Again on 17.03.2015 said RIPL requested to furnish aforesaid information. Subsequently, by a letter dated 23.03.2015 RIPL intimated bank that they have not been provided with necessary documents, but while searching documents related to the property from their own source several discrepancies and inconsistencies were found in the chain of title description of the property. RIPL requested the bank that balance bid amount would be deposited after completion of searching and verification of the property. However, bank vide letter dated 18.08.2015 forfeited the money deposited by the RIPL and proceeded with fresh auction sale of the property.
Feeling aggrieved RIPL filed an application for impleadment in the proceeding with the prayer for a direction upon the bank not to forfeit the deposit and refund the money with interest at the rate of 18 per cent per annum.
Bank filed objection stating that in the sale notice auction sale date was fixed on 21.01.2015 wherein it was stated that sale would he held on “as is where is” and “as is whatever is” basis and that the inspection of the property may be made between 11am and 04pm on 7th and 8th January, 2015. RIPL physically inspected the property and on being satisfied RIPL took part in the auction sale and offered bid in the auction sale. Prior to the date of inspection, RIPL never requested bank to inform about the aforesaid queries, such as RS number, Khatian number etc. Such request was made for the first time on 05.02.2015 and thereafter on 17.03.2015. RIPL was already declared as successful highest bidder and time for payment of sale consideration was fixed as such. On 23.03.2015 RIPL requested bank that they would deposit balance sale consideration after completion of searching of the documents related to title of the property. Extension of time was sought for searching, even at that time no objection was raised regarding any defect to the title of the said property. Application moved by RIPL was an afterthought with intention to avoid forfeiture of the amount deposited. Rule 9(5) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as Rules of 2002) empowers the authorized officer to forfeit the amount deposited in the event of non-payment of balance 75% of the bid amount.
Learned DRT-1 recorded a finding that in the sale notice it is mentioned that sale is “as is where is” and “as is whatever is” basis. As per Clause 2 and 7 of the sale notice it was mentioned that to the best of knowledge of the authorized officer, there is no encumbrance over the property and it was the responsibility of the interested bidder to inspect and satisfy themselves about the property before participating in the process of bid. Learned DRT held that RIPL did not seek any information regarding the property before they took part in the bid process. According to Rule 9(5) of the Rule of 2002 authorized officer is competent to forfeit the amount if highest bidder failed to deposit remaining 75% of the bid amount. It was further held that RIPL should have filed separate application for protecting their right against the bank. Accordingly, learned DRT dismissed the application filed by RIPL.
I have heard learned counsel for the appellant as well as respondent no. 1 and 2 and perused the record. Borrower as well as guarantors respondent no. 3 to 5 and 7 were served, but did not put in appearance.
As far as factual aspects are concerned, there is no dispute on the point that loan was disbursed by the bank to the borrower respondent no.3. Payment of installment of the loan was irregular and loan amount was declared N.P.A. Subsequently, property was put to auction sale. It is also not in dispute that auction sale was fixed on 21.01.2015. Appellant took part in the auction sale and they were declared as highest bidder and they deposited 25% of the bid amount.
At this stage controversy arose between the parties. Appellant failed to deposit remaining 75% of the bid amount due. On 04.02.2015, an application was moved demanding certain documents and information from the bank. Subsequently, another application was moved on 17.03.2015 requiring certain information and further on 23.03.2015 an application was moved intimating that appellant came to know from their own source that there are several discrepancies and inconsistencies in the chain of title of the property. Bank vide letter dated 18.08.2015 forfeited the amount deposited by RIPL and proceeded to fresh auction sale of the property.
Main question to be looked into in this appeal are -
(i) As to whether the applicant was entitled to claim information and documents after lapse of the period of 15 days from the date fixed for depositing remaining 75% of the bid amount?
(ii) Whether the terms and conditions of the sale notice are fulfilled by the bank?
(iii) Whether right of inspection of the property was given to the appellant prior to auction sale, as the date and time for inspection was fixed on 7th and 8th January, 2015 between 10am and 04pm, whether appellant inspected the property?
(iv) Whether there were any encumbrances over the property in dispute?
(viii) Whether bank was entitled to forfeit the deposit of 25% deposited by RIPL and its effect? If so, whether authorized officer was under an obligation to disclose the same?
Learned counsel appearing for the appellant submits that in the sale notice there was no mention of any encumbrance over the property which was in violation of Rule 8(6)(a) and 8(6)(f) of the Rules of 2002. Details of the property were mentioned in the sale notice. However, title deeds of the property was not made available for inspection.
Learned counsel for the appellant vehemently argued that the property in dispute, after forfeiture, was re-sold by the bank for an amount higher than the bid amount of the appellant. It is further submitted that principle of unjust enrichment could not be applied as bank could not enrich itself by forfeiting amount and also by auction of the property in dispute for an amount higher than the bid amount submitted by the appellant.
Learned counsel further submitted that principle of “Caveat Venditor” would apply in this case as the bank was under an obligation to disclose all important facts at the time of auction sale so that a clear title of the property is transferred to the auction purchaser. Learned counsel further placed reliance upon Rule 8(6)(a) and Rule 8(6)(f) of the Rules of 2002. Learned counsel also submitted that appellant was ready and willing to purchase the property. RIPL was having sufficient money in his account but in spite of repeated request queries raised by the appellant were not replied. The amount was forfeited. It is further submitted that letter dated 21.04.2015 sent to the authorized officer of the bank discrepancies and inconsistencies in the chain of the title of the property were described, which was not replied by the bank. It is further submitted that respondent no. 1 and 2 Bank vide letter dated 26.03.2015 asked the appellant to deposit the amount as early as possible. It means that Bank has waived its right to forfeit the amount of 25 per cent.
Learned counsel for the respondent bank submits that the bank has forfeited the amount under Rule 9(5) of the rule of 2002. It is submitted that terms and conditions of auction sale were duly furnished in the sale notice which was binding upon the appellant. There was no provision for extension of time for deposit of remaining 75% of the bid amount. Amount of 75% was to be deposited by 04.02.2015, but request for additional information was made on 05.02.2015 which was beyond the mandatory period of 15 days.
It is further submitted that there was no encumbrance over the property in dispute. Appellant could not establish any encumbrance over the property in dispute. As per the notice authorized officer was obliged to inform the known encumbrances only. No request was made for cancellation of sale rather request was made for extension of time whereby appellant waived its right seeking cancellation of sale accordingly. Appellant is estopped from challenging the auction sale. It is further submitted that no illegality or fraud was ever alleged which could make the auction sale illegal.
Learned senior counsel further submitted that forfeiture was made under Rule 9(5) of the Rules of 2002 which is a mandatory provision. Hence, there was no unjust enrichment of the bank in forfeiting the amount. It was further submitted that all the due precautions were taken at the time of publication of sale notice. It was further submitted that in the letter dated 05.02.2015 and 17.03.2015 appellant has nowhere stated that they were not given opportunity of inspection of the property or documents in question. Even in the letter dated 17.03.2015 no such submission was made. Hence, it is an afterthought. Had it not been so the appellant should have mentioned this thing at the first available stage.
Learned counsel for the appellant has placed reliance upon the judgement of Division Bench of the Hon’ble Allahabad High Court in the case of Rekha Sahu Vs. UCO Bank [2013 SCC OnLine All 13203].
Auction sale notice is the basis of auction sale, the terms and conditions of the notice are reproduced below :
”1. E-auction is being held on “as is where is” and “as is what is” basis. Auction will be conducted through the Bank’s approved service provider M/s. E-procurement Technologies Limited. E-auction tender document containing e-auction bid form, declaration, general terms and conditions of online auction sale are available in the website, https.tenders.gov.in of Tenders India of Indian Government.
To the best of knowledge and information of the Authorized Officer, there is no encumbrance on the properties. However, the intending bidder should make their own independent enquiries regarding the encumbrances, title of properties put on auction and claims/right/dues/affecting the property, prior to submitting their bid. The e-auction advertisement does not constitute and will not be deemed to constitute any commitment or any representation of the bank. The property is being sold with all the existing and future encumbrances whether known or unknown to the bank. The authorized officer/secured creditor shall not be responsible in any way for any third-party claims/rights/dues.
The intending purchasers/bidders are required to deposit EMD amount earlier through NEFT/RTGS in the account no., name of the account : Authorized Officer, SBI, SAM Branch, name of the beneficiary : State Bank of India A/s. Dassanagar Precision Engg. Pvt Ltd / National Molding Co. Ltd.,/Anima Show House, SAM Branch, Kolkata drawn on any nationalized or scheduled bank.
Bidder shall hold a valid digital signature certificate issued by competent authority and valid email ID is absolutely necessary for the intending bidder as all the relevant information and allotment of ID and password by M/s. E-procurement Technologies Ltd may be conveyed through e-mail.
The intending bidder should submit the EMD evidence for EMD deposit like UTR no. along with the request letter for participation in the e-auction, self-attested copies of (i)proof of identification KYC / voter ID card / driving license / passport etc. (ii) current address / proof for communication, (iii) PAN card of the bidder; (iv) valid email ID (v) contact no. of the bidder etc. to the authorized officer of the SBI to participate in online e-auction by 14.01.2015
Name of the eligible bidders will be identified by the SB name to participate in e-auction on the portal will provide user ID and password after verification of PAN of bidders.
It shall be the responsibility of the interested bidder to inspect and satisfy themselves before submission of the bid. Property can be inspected on 07.01.2015 and 08.01.2015 from 11.00am to 04.00pm.
auction bidding of above property will be conducted on conducted on exact as mentioned against each property by way of inter se bidding amongst the bidders. The bidder shall improve their offer in multiple of the amount mentioned under the column ‘Bid increment amount against each property. In case bid is placed in the last 5 minutes of the closing time will automatically get extended for l5 minutes. The bidder who submits the highest bid amount, not below the reserve price, on closure of e-auction process shall be declared as successful bidder and a communication to that effect will be issued throough electronic mode which shall be subject to approval by the authorized officer / secured creditor.
The Earnest Money Deposit (EMD) of the successful bidder shall be retained towards part sale consideration and the EMD of unsuccessful bidder shall be refunded. The EMD shall not bear any interest. The successful bidder shall have to deposit 25% of the sale price, immediately on acceptance of the bid price by the authorized officer and the balance of the sale price on or before 15th day of sale or within such extended period as agreed upon in writing and solely at the discretion of the authorized officer. Default in deposit of amount by the successful bidder would entail forfeiture of whole money already deposited and property shall be put to re-auction and the defaulting bidder shall have no claim/right in respect of the property / amount.
The prospective qualified bidder may avail online training on e-auction from M/s. Procurement Technologies Ltd. prior to the date of e-auction. Neither the authorized officer bnor M/s. Procurement Technologies wilk be held responsible for any network problem/power failure/any other technical laps or failure etc. in order to word-off such contingent situation the interest bidder are requested to ensure that they are technically well equipped with adequate power backup etc. for successful participation in the e-auction event.
The purchaser shall bear the applicable stamp duties / additional stamp duties/ transfer charges, fee etc. and also all the statutory / non-statutory dues taxes, rates, assessment charges, fees etc. owing to anybody.
The authorized officer is not bound to accept the highest offer and has the absolute right to accept or reject any or all offers or adjourn postpone cancel the e-auction or withdraw any property or portion thereof from the auction proceeding at any stage without assigning any reason therefor.
The sale certificate will be issued in the name of the purchaser / applicant only and will not be issued in any other names.
The sale shall be subject to rules conditions prescribed under the SARFAESI Act, 2002,”
Rule 8(5) and Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 are reproduced below :
Rule 8(5) - Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:—
(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or
(d) by private treaty.
Rule 8(6) - The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,—
(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall be completed;
(e) depositing earnest money as may be stipulated by the secured creditor;
(f) any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property.
Rule 9(3) of the Rule of 2002 provides deposit of 25% of the sale bid amount while Rule 9(4) provides that deposit of payment of remaining 75% shall be made on or before 15th day of confirmation of sale while Rule 9(5) specifically deals with forfeiture of deposit in the case of non-payment of remaining 75% of the bid amount. These sub-rules coupled with the sale notice holds the field for the decision of the appeal.
In the case of Rekha Sahu (supra) it was held by the Hon’ble Allahabad High Court that duty is cast upon the authorized officer to disclose to the auction purchaser any material defect in the title failing which it would constitute that auction purchaser was misled. Section 35 of the SARFAESI Act provides that the Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. It clearly shows that it is a special enactment having overriding effect over the general law.
Learned counsel for the appellant vehemently argued that rule of “Caveat Venditor” would apply as it was the duty of the bank to show that there is a clear title in the property. In order to support the submission learned counsel has placed reliance in Rekha Sahu case (supra) wherein it was held that plain reading of the SARFAESI Act and rules made thereunder a duty cast upon the bank to furnish those encumbrances which are known to them over the property which was sold by them. However, Rule 8(6) mandates additional duty on the authorized officer to make known to the bidder before auction any other thing which the authorized officer considered material for the purchaser to know in order to judge the nature and value of the property. It was further held that bank has to be more careful before auction and take all such necessary steps to ascertain and furnish the information relating to encumbrances / attachment of the property to the intending purchaser. It was further held in the judgement :
“Section 55(1) of Transfer of Property Act, 1882 stipulates as under :
"Rights and liabilities of buyer and seller.-In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold :
(1) The seller is bound-
(a) to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;
(b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power;
(c) ...............................".
A bare perusal of the above provision would show that duty is cast upon the Authorised Officer to disclose to the auction purchaser any material defect in the title, failing which it could be construed that purchaser was misled.
For the reasons aforesaid, it is clear that the secured creditor does not enjoy the immunity in respect of his action if it is not bona fide. Chief Manager level officer is chosen because with rich experience and maturity of mind he will be able to take action with due care and caution in view of stringent nature of the provisions of the Act. But in the instant case, the Authorized Officer, who was the Chief Manager level Officer of the reputed bank of our country, prior to publishing the auction notice, did not take care of the encumbrances occurred in the property in question and not mentioned the said encumbrances in the property in the public notice. Furthermore, when the petitioner being bona fide auction purchaser raised the voice rather informed the Authorized Officer about the said facts did not adhere its request and flatly refused to his responsibility. In these backgrounds, the petitioner filed the instant writ petition in the year 2010 and since then, he fought for his legitimate right. Even otherwise, petitioner after paying the entire bid amount did not enjoy the property in question on the ground that electricity dues and municipality tax dues have not been paid by the previous owner. Therefore, we think it appropriate to impose cost upon the officers, who have participated in the auction proceedings.”
In the sale notice it is specifically mentioned in Condition No.2 that to the best of knowledge and information of the authorized officer there was no encumbrances over the property, however, the intending bidder should make independent inquiries regarding encumbrances with regard to the property in question put on auction and claim/rights/dues/affecting the property prior to submitting their bid. The property is being sold with all the existing and future encumbrances whether known or unknown to the bank. This condition is to be looked into with Rule 8(6)(a) of the Rules of 2002 which prescribed that in the sale notice description of immovable property to be sold including the details of encumbrances known to the secured creditor should be mentioned. Further, Rule 8(6)(f) provides that other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property.
There is a specific mention in the Condition no.2 of the notice for sale that the intending bidder should have their own independent enquiries regarding the encumbrances, title of the property put on auction and claim/right/dues/affecting the property prior to submitting their bid. It is further mentioned that the property is being sold with the existing and future encumbrances whether known or unknown to the bank. In Jai Logistics Vs. Authorized Officer, Syndicate Bank reported in 2010 SCC ONLINE MADRAS 3830 the Division Bench of the Hon’ble High Court at Madras held that “it will be a different issue in the event the auction notice indicated that it is the duty of the intending purchaser to verify not only the encumbrance by way of alienation of the property but also the other statutory liability and in that case, the intending purchaser cannot later on turn around and seek for either refund of earnest money deposited or insist the bank to clear the encumbrances”.
As has been discussed earlier although appellant has not mentioned any of the encumbrances in his letter dated 17.03.2015 and 24.03.2015, but he sought information regarding secured asset. For the first time on 21.04.2015 the letter was sent detailing the alleged discrepancies in the tile of the property. This letter was issued after the notice of the bank dated 26.03.2015 wherein the appellant was directed to pay the balance amount “as early as possible” failing which the amount already deposited will be forfeited and the property will be put to re-auction. In the application for permitting seeking leave to intervention and for refund of earnest money as stated in Para 12 that the authorized officer reported the appellant that title deeds of the said properties comprised of 17 several documents and it was not physical possible to grant inspection or copies of said 17 title deeds to each prospective bidder. At the time of obtaining security of the said property, the bank had duly scrutinized the title deed of the property and had duly satisfied itself about the entitlement in case the appellant is declared as successful bidder and deposited of 25% of the bid amount, he would be granted inspect and copies of all title deeds, however, during the period of 15 days the remaining 75% has to be deposited. It is further assured that if there is any defect in the title, the appellant would not be required to make balance 75% and 25% already deposited would be refunded. The allegations were denied by the respondents in their reply filed before learned DRT. If any inspection was made by the appellant, then it should have been recorded by the Bank. Bank could have filed those documents but no such material is filed which can prove that inspection was made by the appellant prior to auction.
In Para 14 and 15 of the application it is stated that in the sale notice dated 16.12.2014 there is no clause regarding forfeiture of earnest money deposited. Hence, the amount of earnest money cannot be forfeited. It is against the terms and conditions of the auction notice. Condition no.9 of the sale notice specifically provides that the successful bidder shall have to deposit 25% of the sale price, immediately on acceptance of the bid price by the authorized officer and the balance of the sale price on or before 15th day of sale or within such extended period as agreed upon in writing and solely at the discretion of the authorized officer. Default in deposit of amount by the successful bidder would entail forfeiture of whole money already deposited and property shall be put to re-auction and the defaulting bidder shall have no claim/right in respect of the property / amount. Sale notice is a document which is binding upon the authorized officer as well as the appellant. Appellant entered into the process of auction after accepting the terms and conditions of the sale notice. Condition no.9 is explicitly clear and specifically provides about the forfeiture of earnest money in case of default. There is provision for extension of time, but that too with the consent of the party at the sole discretion of the authorized officer. It is not the case of the appellant that authorized officer had ever granted for extension for depositing remaining 75% of the amount. In the letter dated 26.03.2015 the appellant was asked to make payment as early as possible. The amount was never paid. Accordingly, the property was re-auctioned and sale certified was also issued.
Learned counsel for the appellant submits that the words ‘as early as possible’ means the appellant has been given option to deposit the amount as per his own convenience. Learned counsel in this regard has placed reliance upon the various judgement wherein the word ‘immediately’ has been interpreted. Reliance was placed upon the case of Rosali Vs. Taico Bank (2007 SCC OnLine 115); New India Assurance Co. Ltd. Vs. Trilochan Jane (2009 CSS Online NCDRC 201). The facts of aforesaid case are not applicable in the present case as the appellant has deposited the earnest money and remaining amount of 75% he failed to deposit. The appellant could not have any binding condition on it. Learned counsel for the appellant has placed reliance upon the judgement of the Hon’ble Apex Court in Alisha Khan Vs. Indian Bank (Civil Appeal No. SLP 15959-15960 of 2021). It is submitted that the Hon’ble Apex Court in the above matter has held that when the appellant deposited 25% of sale consideration, but could not deposit 75% of the balance amount due to COVID 2019 pandemic and fresh auction took place and property was re-sold, no loss causes to the respondent. Accordingly, bank directed to refund 25% of the earnest money. Learned counsel for the appellant vehemently argued that in the present case also 25% of EMD was deposited while 75% of the bid amount could not be deposited and thereafter property was re-auctioned and sold for an amount in excess of the earlier amount. Hence, appellant would be entitled to refund of 25% of the bid amount.
Another plea was taken in the application before learned DRT that in SA No. 9 of 2015 sale notice dated 16.12.2014 was under challenged. It means that the property was under litigation and it is not disclosed in the sale notice. The plea itself is misconceived. When the sale notice was under challenge in the S.A. then how this fact can be incorporated in the sale notice.
As far as question of any encumbrances are concerned it is admitted fact that property was re-auctioned and sale certificate was issued. Although subsequent auction purchaser is not a party to the proceeding, but the property was re-auctioned and sold on a price which is higher than that of the earlier bid amount offered by the appellant.
In the case of Smt. Rekha Sahu (supra) the Division Bench of Hon’ble High Court at Allahabad held that during the intervening period between the depositing of earnest money and till the balance sale consideration is paid, the auction bidder/purchaser after making part payment or full payment, may either demand to refund the amount from the authorized officer or request to cancel the sale if sale certificate is already issued on the ground that there exists encumbrance on the property or on the apprehension that title may not be proper and that the bank may not be competent to deliver possession of the auction property without encumbrance and free from any future litigation. The appellant made the request on 05.02.2015 that is on the next day when the 15 days’ time for depositing remaining 75% of the bid amount expired. Further he made a request on 17.03.2015. He also made request for extension of time which was extended. Lastly, on 26.03.2015 Bank asked the appellant to make payment as early as possible. Now the question arises as to whether the Bank has waived its right to forfeit the amount as per provision of Rule 9(5) of the Rules of 2002. In General Manager Sri Siddeshwara Cooperative Bank Limited Vs. Ikbal [(2013) 10 SCC 83] it was held in Para 19 that there is no doubt that Rule 9(1) is mandatory but this provision is definitely for the benefit of the borrower. Similarly, Rule 9(3) and Rule 9(4) are for the benefit of the secured creditor (or in any case for the benefit of the borrower). It is settled position in law that even if a provision is mandatory, it can always be waived by a party for whose benefit such provision has been made. The provision in Rule 9(1) being for the benefit of the borrower and the provisions contained in Rule 9(3) and Rule 9(4) being for the benefit of the secured creditor (or for that matter for the benefit of the borrower), the secured creditor and the borrower can lawfully waive their right. These provisions neither expressly nor contextually indicate otherwise. Obviously, the question whether there is waiver or not depends on the facts of each case and no hard and fast rule can be laid down in this regard.
Following the decision of Ikbal case (supra) in Vasu P. Shetty Vs. Hotel Vandana Palance [(2014) 5 SCC 660] Hon’ble Apex Court held that :
“This Court in Ikbal case, after interpreting the provision of Rule 9, returned a categorically opinion that the said provision is mandatory in nature. It was further held that even though this Rule is mandatory, that provision is for the benefit of the borrower. The Court held that it is a settled position in law that even if a provision is mandatory, it can always be waived by a party for whose benefit such provision has been made. The provision in Rule 9(1) being for the benefit of the borrower and the provisions contained in Rule 9(3) and Rule 9(4) being for the benefit of the secured creditor (or for the benefit of the borrower), the secured creditor and the borrower can lawfully waive their rights. These provisions neither expressly nor contextually indicate otherwise. Obviously, the question whether there is waiver or not depends on the facts of each case and no hard and fast rule can be laid down in this regard.”
Letter dated 23.06.2015 was issued by the Bank asking the appellant to make the payment “as early as possible”. In the case of Rosali V. Vs. Taico Bank [2007 SCC OnLine SC 115] Hon’ble Apex Court has interpreted the word “immediately”. It was held that in the given situation the term “immediately” may mean “without reasonable time”. Where an act is to be done without reasonable time, it must be done immediately.Reliance was placed upon the case of Gangavishan Heeralal Vs. Gopal Digambar Jain [AIR 1980 MP 119] and Ramnarayan Triyoginarayan Trivedi Vs. State of M.P. [AIR 1962 MP 93 (Full Bench)] it was held in Para 30 and 31 that while applying the principles of interpretation, the courts are also required to keep in mind the following two well-settled principles of law :
(i) an act of court shall prejudice no man, and
(ii) the law does not compel a man to do that what he cannot possibly perform.
The term “immediately”, therefore, must be construed having regard to the aforementioned principles. The term has two meanings. One, indicating the relation of cause and effect and the other, the absence of time between two events. In the former sense, it means proximately, without intervention of anything, as opposed to “immediately”. In the latter sense, it means instantaneously. The term “immediately”, is, thus, required to be construed as meaning with all reasonable speed, considering the circumstances of the case.
As far as the question of waiver is concerned when the Bank itself has written letter dated 23.06.2015 to the appellant to make payment as early as possible, it may waive its right to forfeit the amount after expiry of the period of 15 days as initially provided. Since the matter of 15 days governed under the old rules whereas Rule 9(5) provided that in default of payment within the period mentioned in Rule 9(4) deposit shall be forfeited. Under Rule 9(4) it is provided that balance amount of purchase shall be paid by the auction purchaser to the authorized officer on or before 15th day of confirmation of sale of the immovable property or such extended period as may be agreed upon between the parties. It shows that auction purchaser is liable to pay the balance amount either within 15 days or within the extended period as agreed upon between the parties. It further shows that right was given to the secured creditor to forfeit the amount under Rule 9(5) in case of breach of the condition contemplated in Rule 9(4), but at the same time it has been held by the Hon’ble Allahabad High Court in Rekha Sahu case (supra) and Vasu P Sehtty case (supra) that once the right which was available to the secured creditor is waived then the auction purchaser’s amount could not be forfeited. It would be relevant that after issuance of letter dated 26.03.2015 the forfeiture was made on 18.08.2015. Hence, it is clear that secured creditor has waived its right of forfeiture after the period of 15 days as provided under Rule 9(4) of the Rules of 2002.
Now it is to be looked into as to whether the auction purchaser was within his right to sought for information regarding title of the property. In Mandava Krishna Chaitanya Vs. UCO Bank [2018 SCC OnLine Hyderabad 196] Hon’ble Andhra Pradesh High Court has noticed in Para 18 of the judgment in the case of Haryana Financial Corporation Vs. Rajesh Gupta [(2010) 1 SCC 675] and held that in the case of Harayana Financial Corporation (supra) Hon’ble Supreme Court has distinguished the powers of a secured creditor as opposed to those of an official liquidator while selling property and held that reliance placed on the United Bank of India case was wholly misconceived. Hon’ble Supreme Court further negatived the contention that when a secured asset is sold on an ‘as is where is’ basis the purchaser cannot thereafter be permitted to wriggle out of a confirmed bid on the ground that there is a material defect in the title. In Para 22 and 23 of the case of Mandava Krishna Chaitanya (supra) it was held that :
“22. In terms of the statutory scheme of the SARFAESI Act and the Rules of 2002 and given the weighty preponderance of judicial wisdom, as set out supra, a secured creditor who is empowered under the SARFAESI Act to enforce any secured interest created in its favour, without the intervention of a Court or a Tribunal, but in accordance with the procedure prescribed therefor, cannot take the responsibility resting upon it lightly. Such a secured creditor not only owes a duty to protect the interest of the borrower by raising the best possible price while selling his mortgaged properties, but also owes a duty to the auction purchaser to verify the encumbrances that attach to the mortgaged property proposed to be sold, so as to inform all intending bidders of the same. Clauses (a) and (f) in the proviso to Rule 8(6) of the Rules of 2002 bear out this responsibility explicitly, as the secured creditor is mandated thereunder to include the details of the encumbrances known to it and also any other thing which may be considered material for a purchaser to know in order to judge the nature and value of the property. These clauses therefore visit a duty upon the secured creditor to undertake due diligence at least at the stage of putting the secured asset to sale, if not at the time of taking the said property as security while granting loans, so that the bidders in the auction can rest assured that the bank has taken necessary measures in this regard and proceed to participate in the auction sale. Ignorance of the secured creditor as to the encumbrances on the property sold by it is no longer an acceptable argument in the light of the decisions of various Courts rejecting the plea that a sale on as is where is basis constitutes a shield of protection.
Further, the concept of as is where is and as is what is basis has lost its significance in the current commercial milieu and the principle of caveat venditor is more on the rise as compared to the outdated principle of caveat emptor. The Transfer of Property Act, 1882, requires the seller to own up to certain duties and it is not open to a responsible bank to take an innocent auction purchaser for a ride by selling to him a tainted property and thereafter claim protection under the principles of buyer beware. The counter- affidavit filed by the bank clearly demonstrates that the bank undertook no exercise whatsoever to verify and ascertain as to what encumbrances attached to the subject property at any stage. No details are forthcoming of any efforts having been made by the bank, be it before the registration authorities or any other authority at any stage. Now, it has come to light that the property in question is tainted on grounds more than one. It falls within the full tank level of a lake and, surprisingly, it is also treated as a ceiling surplus land. That apart, the possession of the property cannot even be handed over by the bank to the petitioner as the sale was effected without the bank securing actual physical possession thereof and the bank does not deny the factum of a lease having been created by the borrower in relation thereto. The bank therefore cannot comply with the statutory mandate of delivering actual possession of the property sold under the sale certificate. The decisions of various Courts referred to supra would come to the aid of the petitioner in this regard. That apart, the registration authorities already indicated to the petitioner that the subject land is noted as a ceiling surplus land. Therefore, even if they do entertain the sale certificate issued by the bank for registration, it would be subject to this cloud and would not amount to clear conveyance of title. It is therefore manifest that the bank made the innocent petitioner a victim by failing to exercise due diligence, not only in terms of the statutory scheme of the SARFAESI Act and the Rules of 2002, but also in its own commercial interest, let alone public interest, when it accepted this property as security for the loan sanctioned by it. This utter carelessness on the part of the bank in sanctioning loans, by use of public monies, on the strength of secured assets which are not even worthy of being mortgaged, requires to be deprecated in the strongest terms. Banks necessarily have to exercise more care and caution while using public monies available with them, be it through deposits by customers or otherwise, when sanctioning loans without caution or worse and cannot be permitted to claim protection under outdated legal principles so as to victimize innocent auction purchasers, such as the petitioner. This Court therefore has no hesitation in holding that the auction sale held by the bank, without even exercising minimum care to ascertain the encumbrances attaching to the subject property and without informing the petitioner or other bidders of the same, vitiates the sale proceedings, culminating in issuance of the sale certificate which is yet to be registered.”
Hence, the Division Bench of the Hon’ble Allahabad High Court in the case of Rekha Sahu (supra) in Para 20 held :
“Section 55(1) of the Transfer of Property Act, 1882 stipulates as under :
Rights and liabilities of buyer and seller.-In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold :
(1) The seller is bound-
(a) to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;
(b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power;
(c) ................................
A bare perusal of the above provision would show that duty is cast upon the Authorised Officer to disclose to the auction purchaser any material defect in the title, failing which it could be construed that purchaser was misled. On the contrary, when the rule of caveat emptor (buyer beware) prevails, it is for the purchaser to either verify the title before purchasing the property or invite complication through litigation. However, now the rule of caveat emptor is replaced by caveat venditor (seller beware) and when the Bank/Financial Institution put the property on sale, they must show clear title to the said property.”
It was further held that in case of public auction, the purchasers are put on notice that sale of properties in question was "as is where is" and "as is what is” condition. Before commencement of the auction, the original documents pertaining to the property as well as copies of other parent documents and the relevant file are made available for all the participants for inspection. The Bank/Financial Institution has to exercise due diligence on the security before the same is put on sale for the reason to rule out fraud, if any perpetrated by borrower and to rule out that the property is free from any encumbrance. Rule 9(10) of the Security Interest (Enforcement) Rule states that the certificate of sale to be issued by the Authorised Officer shall specifically mention that whether purchaser has purchased the immovable secured asset free from any encumbrance known to the secured creditor or not. It casts a duty upon the Bank/Financial Institution to furnish those encumbrances which are known to them on the property which are sold by them. However, Rule 8(6)(f) mandates additional duty on the Authorised Officer to make known to the bidders before auction any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property. It was further held that immunity claimed by the Bank/Financial Institution on the pretext "as is where is" and "as is what is basis" is dying a slow death and the Bank/Financial Institution being secured creditor, have to make due diligence / make thorough search of the property before proposing for sale. The borrowers are creating multiple registration of the same property subsequent to execution of mortgage with the Bank/Financial Institution and these frauds are rampant in the market. These frauds may not be known to the secured creditor in the normal course and if the property is sold "as is where is” basis without the knowledge of the subsequent encumbrances, there is apprehension that the auction proceedings could be stalled by the purchaser through the judicial intervention on the ground of non-furnishing of the material information relating to encumbrance. Hence, the Bank/Financial Institution have to tread very carefully before holding public auction and take all necessary steps to ascertain and furnish the information relating to encumbrance/attachment on the property to the intending purchaser.
In the present case appellant auction purchaser sent a letter to the Bank on 05.02.2015 to the effect that he had asked for certain information and documents which includes extracts of particular of property including RS and LR Dag number and Khatian number, Municipality/Panchayat holding number, RS records of right, LR record of right, Khazana receipt, Google earth map, site plan etc. Again some requests was made by the appellant on 17.03.2015 and 23.03.2015, but no information was given, neither any document was provided. Further as per letter dated 26.03.2015 notice was given by the Bank to the effect that appellant should deposit the remaining amount as early as possible failing which EMD amount shall be forfeited.
Forfeiture was made on 18.08.2015. If we go through the Rule 9(4) of the Rules of 2002, which provides for payment of 25% of the bid amount on or before 15th day of confirmation of sale. Rule 9(5) empowers the secured creditor to forfeiture of the deposit in default payment of balance 75% amount within the period as mentioned in sub-section (4) of Rule 9. Admittedly, the balance amount was not paid by the appellant on or before 15th day of the confirmation of sale. 15th day was completed on 04.02.2015. Secured creditor i.e. Bank did not forfeit the amount on the expiry of the mandatory period 15 days. Thereafter, on 05.02.2015 a request was made by the appellant for extension of time coupled with demand of certain documents regarding secured asset. At that stage secured creditor was having two options, either to reject the request of the auction purchaser and forfeit the amount deposited by the auction purchaser, if it was not done, then the request for demand of the documents made by the auction purchaser should have been allowed and the documents asked for should have been provided to the auction purchaser. If the secured creditor was of the opinion that either the documents are not available or they are not relevant or appropriate to provide those documents to the auction purchaser then the secured creditor should have rejected the request for providing the documents to the auction purchaser. Nothing prevented the secured creditor to act accordingly, rather the secured creditor opted to keep mum, even reply was not given. Consequently, the auction purchaser appellant made another request on 17.03.2015 and 23.03.2015 but even then no reply was given and ultimately a notice was given on 26.03.2015 to make payment as early as possible failing which the amount deposited shall be forfeited. Again the appellant auction purchaser sent detailed letter to the secured creditor Bank requesting to provide required information along with documents, but it would not acted upon by the secured creditor.
As far as question of making prior inspection of record or the property on the date mentioned in the auction sale notice is concerned there is a controversy. Appellant auction purchaser submits that documents were not made available for inspection by the secured creditor Bank, whereas respondent’s contention was appellant had made required inspection. Burden lies upon the respondent to show that the inspection was made by the appellant on the date fixed in the sale notice. Nothing is brought on record to show that any inspection was made by the appellant or the documents were made available for inspection by the appellant. Further, when specific documents were demanded by the appellant before forfeiture, Bank was under obligation to provide those documents to the auction purchaser. Once queries were raised by the appellant, auction purchaser, on the property in dispute, secured creditor should have made those documents available for inspection, which has not been done. It shows that secured creditor has not acted fairly rather the encumbrances were known to the authorised officer were concealed by him or were not disclosed to the auction purchaser. It would be relevant to mention here that all those correspondences were made prior to the forfeiture of the EMD amount. As has been held by the Division Bench of Hon’ble Allahabad High Court in Rekha Sahu case (supra) that auction purchaser is at liberty to demand refund of the amount from the authorised officer or request to cancel the sale if sale certificate is already issued on the ground that there exists encumbrance on the property or on the apprehension that title may not be proper and that the bank may not be competent to deliver possession of the auction property without encumbrance and free from any future litigation. The present situation is little different, here auction purchaser is not demanding refund of money or cancellation of sale, even sale certificate was not issued rather he was demanding certain documents to ensure that property in dispute are free from encumbrances. It was incumbent upon the authorised officer to provide those documents and if otherwise not available or were not required, he should have communicated in detail before forfeiting the EMD amount, but the secured creditor did not follow the procedure as laid down in law.
In Smt. Alisha Khan Vs. Indian Bank [Writ Petition No. 15336 of 2020] Jabalpur Bench of Hon’ble Madhya Pradesh High Court has delivered judgement as under:
“2. Property in question i.e. House No.403 Ashoka Vihar Colony, Bhopal is a secured asset in the account of one Shri Nawab Khan Son of Shri Basheer Khan, which has been a non performance Asset. The respondent Bank proceeded to auction the same under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Rules made thereunder. The petitioner being successful highest bidder was required to deposit the remaining 75% of the bid within the time stipulated in the auction notice. The petitioner despite the repeated reminders and relaxation of Covid-19 Pandemic failed to comply the terms and conditions accepted by her, which led the Bank to cancel the sale and forfeit the amount deposited.
Though petitioner alleges high handedness of the respondent Bank in cancelling the sale and forfeiture of the amount deposited. However, from the material on record it is established that it is the petitioner who having not deposited the 75% of the auction sale within stipulated time, has to blame herself. The circular of the Reserve Bank of India relied by the petitioner in paragraph 6.7 of the petition is of no assistance to the petitioner, as it is applicable to the borrowers. Even the impugned cancellation communication reveals that the petitioner was given the reminders and Covid 19 extension which is not denied by the petitioner.
In view whereof, we do not perceive any illegality in the impugned communication as would warrant any indulgence.
As regard to challenge to fresh auction notice, the Bank being a secured creditor and the property in question being a secured asset and since there is no accrual of right in the property in favour of the petitioner, the impugned auction notice cannot be faulted with.
Consequently, petition fails and is dismissed. No costs.”
Petitioner Smt. Alisha Khan has filed a review petition [RP No. 251 of 2021] against aforesaid judgement wherein Jabalpur Bench of Hon’ble Madhya Pradesh High Court has passed following order:
“This review petition has been filed by Smt. Alisha Khan seeking review of order passed by the Division Bench of this Court in WP-15336-2020 [Smt. Alisha Khan vs. Indian Bank (Allahabad Bank) and others] dated 22.10.2020, by which the writ petition filed by the review petitioner assailing communication dated 23.07.2020 and auction notice dated 20.09.2020 has been dismissed. Learned counsel for the petitioner submits that when the e-auction took place on 17.03.2020, on the same day, Debts Recovery Tribunal (DRT) passed an interim order in favour of the borrower. The petitioner therefore could not deposit the remaining 75% of the auction amount. Alternatively, he argued that since the petitioner was facing financial crises on account of the lockdown, she could not have arranged the amount. It is argued that non-consideration of the entitlement of the petitioner for refund of 25% amount already deposited by the her by the Division Bench is also an error apparent on the face of the record. A perusal of the order passed by the Division Bench of this Court dated 22.10.2020 indicates that neither the argument that an interim order was passed by the DRT in favour of the borrower on the same date was made nor any argument was made that the remaining 25% amount was deposited by the petitioner at the time of e-auction should be refunded. On a pointed quarry by the Court, learned counsel for the petitioner could not deny that in fact no prayer to that effect was made in the prayer clause of the memo of writ petition. The order dated 22.10.2020 passed by the Division Bench of this Court therefore cannot be faulted for something which was not argued before it. Rehearing under the garb of review is not permissible. We do not see any reason to review the dated 22.10.2020. Accordingly, review petition fails and is hereby dismissed.”
Smt. Alisha Khan filed an appeal before the Hon’ble Apex Court against the judgement of Hon’ble Madhya Pradesh High Court in the case of Alisha Khan Vs. Indian Bank [Civil Appeal Nos. 15959-15960 of 2021] Hon’ble Apex Court has held on 13.12.2021 as under :
“Having gone through the impugned judgement and orders passed by the High Court, we are of the opinion that the High Court ought to have allowed the refund of the amount deposited being 25% of the auction sale consideration. Considering the fact that though initially the appellant deposited 25% of the auction sale consideration, however, subsequently she could not deposit balance 75% due to COVID-19 pandemic. It is required to be noted that subsequently the fresh action has taken place and the property has been sold. It is not the case of the respondents that in the subsequent sale, lesser amount is received. Thus, as such, there is no loss caused to the respondents.
Considering the aforesaid facts and circumstances we allow these appeals and set aside the order of forfeiture of 25% of the amount of auction sale consideration and direct the respondent bank to refund/return the amount earlier deposited by the appellant, deposited as the part auction sale consideration (minus 50,000/- towards the expenditure which were required to be incurred by the respondent bank for conducting the fresh auction) within a period of four weeks from today.”
Hon’ble Apex Court in the Alisha Khan case (supra) has considered the provision of SARFAESI Act, 2002. Hon’ble Apex Court has set aside the order of forfeiture of 25% of the amount of auction sale consideration and directed the bank to refund the amount earlier deposited by the auction purchaser. In the present case also appellant has deposited 25% of the sale consideration amount but did not deposit remaining 75% of the auction sale consideration amount. It has already been held that he did not deposit the amount due to the reason that the property in dispute was not free from all encumbrances. Accordingly, the law laid down by the Hon’ble Apex Court in Alisha Khan case (supra) would squarely apply on the facts of the present case.
Learned counsel for the respondent has placed reliance upon the judgement of Hon’ble Delhi High Court in Veena Garg Vs. Delhi Development Authority [2022 SCC OnLine Delhi 1127]. In the said case the prayers are different. In the present case there is a forfeiture of EMD amount under the provision of Rule 9(5) of the Rules of 2002. In Veena Garg case (supra) it was held that participating in the tender the bidder cannot seek for deviation from the tender documents which has been accepted by the petitioner on his own accord. However, in the present case the secured creditor bank has granted time to the appellant after the stipulated period of 15 days, accordingly, they waived their right of forfeiture. Hence, cited case is not applicable in the present case.
Reliance is also placed upon the judgement of National Company Law Appellate Tribunal in Saboo Tor Pvt. Ltd. Vs. Sanjay Gupta [2021 SCC OnLine NCLAT 6]. Cited case is also different as it was and the present case is filed under SARFAESI Act. Hence, it is not applicable in the present case.
Reliance has been placed upon the judgement of National Highway Authority of India Vs. Ganga Enterprise & Anr. [(2003) 7 SCC 410]. This judgement is also distinguishable. It was the case wherein Hon’ble Apex Court’s finding was based upon Indian Contract Act and it was held that a person may have right to withdraw his offer but if he made his offer on a condition that some earnest money will be forfeited for not entering into contract or if some act is not performed, then even though he may have a right to withdraw his offer, he has no right to claim that the earnest/security be returned to him, which has been given for a particular purpose. In the present case it was incumbent upon the secured creditor to provide all the details of the secured asset to the auction purchaser, but neither these details were provided nor any plausible or reasonable explanation was given for not providing the same. Further in view of the judgement of Alisha Khan case (supra) appellant is entitled for refund of the earnest money.
Reliance is also placed upon the judgement in State of Harayana & Ors. Vs. Mallik Traders [(2011) 23 SCC 200]. This case is also distinguishable as on the facts of the case it was based on Indian Contract Act wherein it was held that a person may have a right to withdraw his offer, but if he has made his offer on a condition that the bid security amount can be forfeited in case he withdraw the offer during the period of bid validity, he has no right to claim that the bid security should not be forfeited and it should be returned to him. In the present case the appellant is not withdrawing the EMD amount rather appellant sought certain information regarding encumbrances over the secured asset, which was not provided to him. Hence, the case law could not be applicable in the facts of the present case.
Reliance is also placed upon the case of Pawan Kumar Agarwal Vs. Association of Management Studies [(2009) 6 SCC 171], however, this case is also not applicable to the facts of the present case.
On the basis of the discussion made above, I am of the view that the secured creditor was under obligation to provide detail information sought for in the queries raised by the appellant, but same was not done by the secured creditor. Secured creditor has waived its right of
forfeiture by extending time under Rule 9(4) and 9(5) of the Rules of 2002. Hence, forfeiture of the security deposit made by the secured creditor respondent no. 1 and 2 is against the law as has been held by the Hon’ble Supreme Court in Alisha Khan case (supra).
I am also of the considered view that learned DRT has erred in dismissing the application for impleadment as well as for refund of the amount deposited by the appellant. Accordingly, the appeal is liable to be allowed.
ORDER
Appeal is allowed. Order dated 16.01.2017 passed by the learned DRT-1, Kolkata in I.A. No. 1000 of 2015 in S.A. No. 09 of 2017 is set aside. Respondent no. 1 and 2 are directed to refund the amount of Rs.1.95 crore to the appellant with interest at the rate applicable to the FDR of the Bank. SARFAESI applicant is further directed to implead the appellant as defendant in the S.A.
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 ……… day of August, 2022.
Learned counsel for the respondent bank prays for stay of operation of the impugned order for fifteen days. I do not find any ground to stay of operation of the order. Accordingly, prayer is declined.