Santosh Kumar Gupta vs Authorized Officer, UCO Bank & Ors.

JUSTICE R. D. KHARE, CHAIRPERSON

The present 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 (in short "The SARFAESI Act") against the order dated 08.02.2023, whereby the Tribunal below has allowed the S.A. No. 340/2021 filed by the respondent nos. 3 & 4-borrowers.

The brief facts of the case are that the appellant is an auction purchaser. The respondent no. 1 was granted a cash credit limit of Rs. 9.50 lacs by the respondent-Bank through its proprietor respondent no. 4. In order to secure the said loan, one Smt. Madhuri Lata created an equitable mortgage over her property in question by depositing title deed with the respondent-Bank. Since the respondent-borrower did not adhere to the terms of loan agreement, therefore, the account was classified as NPA and thereafter the demand notice and possession notice were issued by the respondent-Bank, which were challenged by the borrowers before the Tribunal below by filing the S.A. and the same has already been disposed of.

It appears that the respondent-Bank issued sale notice dated 08.09.2021 scheduling the auction to be held on 24.09.2021. The borrower challenged the said auction sale notice by filing the S.A. No. 340/2021 before the Tribunal below including the entire actions of the respondent-Bank. Since the said auction could not materialize, therefore, the another sale notice dated 28.09.2021 was issued scheduling the auction of the property in question on 16.10.2021. The said sale was challenged by the borrower by filing an amendment application, which was allowed by the Tribunal below.

The Tribunal below vide order impugned has allowed the aforesaid S.A. setting aside the sale notice dated 28.09.2021 along with entire subsequent SARFAESI actions undertaken by the respondent-Bank and in first para of the said order, it has also been held that upto the possession notice matter has already been decided. Being aggrieved by the said order to the extent of setting aside the sale notice and subsequent actions thereof, the present appeal has been filed by the appellant-auction purchaser.

Learned counsel for the appellant submitted that the appellant is auction purchaser, who had participated in the auction and deposited the entire sale consideration with the respondent-Bank in accordance with the Act and Rules made thereunder, but the Tribunal below has set aside the auction sale on the ground of non-compliance of Rule 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the Rules, 2002').

Learned counsel has drawn attention of this Court to page no. 46 of the paper book, which is tracking report. Learned counsel has further drawn attention of this Court to page no. 47 of the paper book, which is postal receipt. Learned counsel also submitted that from the tracking report, it is clear that the sale notice was dispatched on 28.09.2021 and the same was delivered on 05.10.2021. Learned counsel further submitted that the publication of sale notice was made on the same day, as held by the Tribunal below. It was further submitted by the appellant that there is no illegality in the process of the Bank, as there is no violation of Rule 8(6) and Rule 9(1) of the Rules, 2002. Learned counsel has next drawn attention of this Court to page no. 39 of the paper book, which is sale notice dated 28.09.2021 and has stated that legal heir of the mortgagor, namely, Madhuri Lata was duly noticed, which is authenticated by the annexure no. 4 of the paper book at page no. 39 of the paper book, therefore, it was contended that the same was served, but they have not contested. Learned counsel further submitted that once the sale has been conducted and sale certificate has been issued, the Bank cannot accept the money from the borrower. It was thus contended that the order impugned is not sustainable. It was, therefore, prayed that the order impugned may be set aside and the appeal may be allowed.

Learned counsel for the respondent-Bank submitted that he supports arguments as advanced by the learned counsel for the appellant-auction purchaser.

Learned counsel for the respondents-borrowers submitted that no sale notice under Rule 8(6) of the Rules, 2002 has been issued by the Bank and the notice at page no. 7 of the reply of the Bank is not a sale notice and it is just an information about of sale notice to be published. Learned counsel further submitted that the auction sale notice was issued on 28.09.2021 scheduling the auction on 16.10.2021, but the same was delivered on 05.10.2021, which is within 15 days, thus there is clear cut violation of Rule 8(6) and Rule 9(1) of the Rules, 2002, hence the Tribunal below has rightly set aside the auction sale notice and its subsequent actions. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.

Having heard the learned counsels for the parties and considering the material available on record, there is no dispute with regard to the demand notice and possession notice as held by the Tribunal below vide order impugned, because if there was any grievance against the said finding of the Tribunal below, the borrower would have challenged the same, but they did not do so, therefore, the process of the Bank upto the stage of possession notice has attained finality.

The main dispute involved in the present case is, as to whether the Rule 8(6) and Rule 9(1) of the Rules, 2002 have been complied with or not?

It is to be seen that the sale notice under Rule 8(6) of the Rules, 2002 was issued on 28.09.2021 and the same was dispatched on 28.09.2021 itself, which is evident from the postal receipts filed at page no. 9 of the reply of the Bank and the same was delivered to the respondent-borrower on 05.10.2021 as per tracking report appended at page no. 46 of the paper book. The said tracking report pertains to the delivery of notice upon the respondent-borrower. As per the postal receipts filed by the respondent-Bank, the sale notices were sent to the respondent-borrower and the legal heirs of the mortgagor Madhuri Lata, but the Bank has failed to produce any tracking report pertaining to the service of notice upon the legal heirs of the said mortgagor i.e. Madhuri Lata, who had expired on 20.08.2018. The said sale notice was published in the newspapers, copy of which are placed at page no. 11 & 12 of the reply of the Bank, but the said documents do not contain the name of the newspapers nor the date of publication, whereas in the impugned order, the Tribunal below has stated that the sale notice was published in the newspapers on 28.09.2021, namely, Hindustan Times and Times of India. Admittedly, this was the second sale, therefore, a clear cut 15 days' sale notice was to be given by the Bank in view of the Rule 9(1) of the Rules, 2002. In the present case, the sale notice was served on 05.10.2021 and the sale was conducted on 16.10.2021. If the said period is counted from the date of service of sale notice, the sale was held on 11^th day. Thus, the Tribunal below has rightly held that there is violation of Rule 8(6) and Rule 9(1) of the Rules, 2002.

In view of the discussions as held above, the order impugned does not call for any interference by this Appellate Tribunal. Hence, the appeal deserves dismissal. Accordingly, the appeal is dismissed with no order as to costs.

A copy of this judgment be supplied to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.