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Judgment
JUSTICE R. D. KHARE, CHAIRPERSON
The present appeal has been filed u/s section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act") against the order dated 19.02.2019, whereby the S.A. No. 226/2015 filed by the appellant has been dismissed.
Brief facts of the matter are that the appellant was granted the housing loan by the respondent-Bank, for which the appellant mortgaged his property with the Bank by depositing original title deed, but due to non-repayment of the same, the account was classified as NPA and demand notice dated 20.12.2007 was issued for a sum of Rs.3,07,912/-. Since the appellant-borrower did not pay any heed to the said demand, therefore, the possession notice dated 23.12.2013 was issued under section 13(4) of the SARFAESI Act and symbolic possession of the property in question was taken by the Bank.
It appears that appellant had earlier challenged the proclamation of sale dated 02.01.2009 by filing the S.A. No. 549/2011, which was dismissed as infructuous on the ground that the said auction could not materialize for want of bidders. Thereafter, the respondent-Bank issued fresh auction sale notice dated 07.07.2014 and the same was published in two newspapers on 06.07.2014 scheduling the auction of the property on 28.08.2014 and the property was sold and after receiving of entire sale consideration, the sale certificate was issued in favour or the respondent no. 2 on 15.09.2014, which was registered vide sale deed dated 23.09.2014.
The appellant-borrower challenged the sale dated 28.08.2014 pursuant to sale notice dated 07.07.2014 and the sale certificated dated 15.09.2014 as well as the sale deed dated 23.09.2014 by filing the S.A. No. 226/2015 before the Tribunal below, which has been dismissed by the Tribunal below vide order impugned holding that no illegality appears in the sale conducted by the respondent-Bank. Being aggrieved by the said order, the present appeal has been filed by the appellant.
Learned counsel for the appellant submitted that the respondent-Bank has not served any demand notice, possession notice and sale notice upon the borrowers. It was further contended that no notice under Rule 8(6) of the Rules, 2002 has ever been issued or served upon the borrower, as such there is clear violation of Rule 8(6) of the Rules. It was further contended that the property has been sold by the Bank at undervalued price and also against the valuation report of the Bank. It was further contended that the Tribunal below has not considered the said facts while passing the order impugned, therefore, the entire proceedings of the bank are liable to be set aside. It was thus prayed that the order impugned may be set aside and the appeal may be allowed.
Learned counsel for the respondent-bank submitted that the right of the Bank to file reply has already been closed, therefore, he pressed the objection filed before the Tribunal below, copies of which are placed from page no. 36 to 69 of the paper book. It was further contended that all the notices have been served upon the borrowers in accordance with the Act and rules made thereunder and after considering the same, the Tribunal below has dismissed the S.A. of the appellant holding that there is no illegality or infirmity in the proceedings of the Bank. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.
Learned counsel for the respondent-auction purchaser has adopted the arguments as advanced by learned counsel for the respondent-Bank, adding that she was the successful bidder and has deposited the entire sale consideration with the Bank in accordance with the Rules, 2002 and the sale deed has also been executed by the bank in her favour, It was, therefore, prayed that the appeal of the appellant may be dismissed with heavy costs.
Having heard the learned counsels for the parties and considering the material available on record, undisputedly, a housing loan of Rs.2.50 lacs was granted by the Bank in the year 2001 and the same was availed by the appellant. While going through the objection filed by the Bank before the Tribunal below, it is found that demand notice dated 20.12.2007 was sent to the borrower through courier on 26.12.2007, which was duly served. The copy of demand notice and courier receipt are placed at page no. 43 to 47 of the paper book. Copy of the possession notice dated 23.12.2013 is also placed at page no. 48 of the paper book, which appears to have been handed over to the borrower by hand because the receipt of the borrower is on the said notice itself, thus the possession notice is held to have been served in accordance with the Rule 8(1) of the Rules, 2002.
So far as the auction sale dated 28.08.2014 is concerned, the respondent-Bank had got the property valued from its valuer and the valuation report of the said valuer is dated 21.10.2013, copy of which are placed at page no. 56 to 62. As per the said report, the market value of the property in question was assessed to be Rs.21.00 lacs and realizable value Rs.18.00 lacs and the distress value Rs.15.75 lacs, but as per the sale certificate dated 15.09.2014, copy of which is placed at page no. 68 of the paper book, the property has been sold for a sum of Rs.14.35 lacs, thus the property has been sold below the distress value, which could not be done and is against the provisions of the Act and Rules made thereunder. On this count alone, the auction sale dated 28.08.2014 is liable to be set aside.
So far as the contention of the appellant that Rule 8(6) of the Rules, 2002 has not been complied with by the Bank is concerned, the copy of the sale notice dated 07.07.2014 is placed at page no. 63 of the paper book. The said notice cannot be termed as sale notice under Rule 8(6) on the ground that the same does not contain the date and place of auction nor gives the right of redemption to the borrower by paying the dues of the Bank. Perusal of the said notice also shows that it is an intimation letter to the appellant with regard to the publication of sale notice dated 27.05.2014 in the newspapers on 06.07.2014, whereas no sale notice of 27.05.2014 is on record. From the contents of the said notice, it appears that the same was issued by the Bank in very casual manner. For the sake of argument, if it is presumed that the said notice was issued under Rule 8(6), even then there is violation of Rule 8(6) because the sale notice was published on 06.07.2014 which is prior to its issuance. As such it held that no notice under Rule 8(6) has ever been issued/served by the Bank. As such there is clear violation of Rule 8(6) of the Rules, 2002. On this count also, the auction sale dated 28.08.2014 is liable to be set aside.
In view of the discussions as held above, the auction sale dated 28.08.2014 pursuant to the sale notice dated 07.07.2014 and its subsequent actions are set aside.
Accordingly, the order impugned is set aside and the appeal filed by the appellant is allowed with no order as to costs.
The respondent-Bank is directed to refund the auction amount to the auction purchaser within 15 days from today along with interest @ 8% P.A. simple from the date of deposit till the date of payment. It is made clear that the said interest is only payable, if the possession of the property in question is not given to the auction purchaser.
The respondent-Bank is further directed to give the details of the outstanding amount payable by the appellant within 20 days from today, which shall be paid by the appellant within a month from today. In case the appellant fails to deposit the same within the stipulated period, the Bank shall be free to proceed for its recovery in accordance with the provisions of the Act and rules made thereunder.
A copy of this judgment be forwarded to the parties as well as to the DRT concerned and be also uploaded on e-DRT Portal.