Smt. Lilawati Sharma & Anr. vs Bank Of India & Ors.

JUSTICE R. D. KHARE, CHAIRPERSON

The present appeal has been preferred by the appellants 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 19.02.2020, whereby the S.A. No. 736/2019 filed by the appellants has been dismissed by the Tribunal below.

Brief facts of the matter are that one M/s Oriental Computers Incorporation was granted cash credit hypothecation limit by the respondents-Bank through its proprietor Shri Prabhat Kumar Sharma. In order to secure the said facility, Shri Ram Kawal Sharma, who is father of the proprietor of the said firm, stood as guarantor and created equitable mortgager over his immovable property by depositing original title deed with the respondent-Bank. Since the borrower did not maintain the financial discipline, therefore, the account was classified as NPA on 31.12.2017 and demand notice dated 16.01.2018 was issued u/s 13(2) of the SARFAESI Act. Against the said notice, the borrower submitted a representation dated 01.02.2018 before the respondent-Bank and intimated about the death of the mortgagor namely Ram Kawal Sharma. In response to it, the respondent-Bank vide letter dated 09.02.2018 requested the borrower to provide the death certificate of Sharma and also the details of his legal heirs. In response to it, the borrower vide letter dated 01.03.2018 submitted the death certificate in respect of Mr. Sharma and informed the Bank that he is only son of his parents. Therefore, the respondent-Bank issued fresh demand notice dated 01.05.2018 u/s 13(2) of the SARFAESI Act to the borrower and also to the legal heirs of Late Sharma namely Prabhat Sharma and Smt. Leelawati Sharma on 02.05.2018 through registered post for a sum of Rs.35,16,780.06. The borrowers represented the said demand notice vide objection dated 10.06.2018 stating therein that Aruna Sharma is also one of the legal heirs of Late Mr. Sharma, which was received by the Bank on 27.06.2018 and the same was rejected vide letter dated 02.07.2018. Since the borrowers did not pay any heed to the said demand, therefore, the respondent-Bank issued possession notice dated 17.07.2018, which was dispatched to the borrowers on 21.07.2018 and the same was published in the newspapers on 21.07.2018. Thereafter, the e-auction sale notice was issued and published in newspapers on 23.11.2018 scheduling the auction of the property in question on 27.12.2018 and the property was sold in favour of the respondent-auction purchaser for a sum of Rs.24.71 lacs.

It appears that thereafter, respondent-Bank obtained an order dated 06.12.2019 from the District Magistrate concerned u/s 14 of the said Act.

The appellants challenged the entire proceedings/actions of the respondent-Bank including the order dated 06.12.2019 of the District Magistrate before the Tribunal below by filing S.A. 736/2019 along with the application for condonation of delay. The Tribunal below vide order impugned have dismissed the S.A. of the appellants on the ground of delay up to the extent of auction sale notice as well as on merits also. Being aggrieved by the said order, the present appeal has been filed by the appellants.

Learned counsel for the appellants submitted that the appellants are neither borrowers nor guarantors to the loan advanced in favour of M/s Oriental Computers Corporation. It was further contended that the appellant no. 1 was residing with her daughter appellant no. 2 for the last more than one and a half year for the purpose of caring of her son-in-law, who was suffering from the brain hemorrhage from 15.08.2018 and remained on bed for more than one year and as such the appellants were totally unaware about the proceedings of the Bank.

It was further contended that it also came to the knowledge of the appellants that borrower-Prabhat Kumar Sharma had submitted his objections u/s 13(3-A) of the Act on 10.06.2018 to the Bank informing that there are two other heirs of his father Late Ram Kawal Sharma, namely Smt. Lilawati Sharma, who is wife of late Sharma (appellant no. 1) and Aruna Sharma (appellant no. 2), who is the daughter of the said deceased person. It was also contended that objection dated 10.06.2018 of the borrower was decided by the Bank vide letter dated 02.07.2018, copy of which is placed at pages no. 66 to 68 of the paper book and has stated that the Bank only recognized Prabhat Kumar Sharma and his mother Smt. Lilawati Sharma as the legal representatives of the deceased Ram Kawal Sharma, therefore, no notice was issued to Mrs. Aruna Sharma. It was thus contended that even after having knowledge about the heirs of the deceased mortgagor Ram Kawal Sharma, no notice viz; demand notice, possession notice or sale notice has ever been served upon the appellants, which violates entire proceedings of the Bank.

Learned counsel further submitted that the Tribunal below has committed grave error in holding that the profile of the guarantor reveals that the deceased guarantor had declared only Lilawati Sharma and Shri Prabhat Sharma as his legal heirs. It was further contended that if the authorized officer in his reply to the objection u/s 13(3-A) filed by Prabhat Kumar Sharma, the borrower, had admitted that appellant no. 1 Lilawati Sharma is the heir of Late Ram Kawal Sharma (deceased mortgagor), at least notices should have been issued to her, but from the newspaper publication of the symbolic possession notice and the e-auction notice, it is evident that the same has not been addressed or issued to her, whereas it was mandatory for the authorized officer, after coming to know about the death of the mortgagor late Ram Kawal Sharma, to issue notices to his legal heir Smt. Lilawati Sharma, to whom the authorized officer had recognized as legal heir of deceased guarantor and He was also required to serve notice to appellant no. 2-Aruna Sharma, daughter of Late Ram Kawal Sharma (deceased mortgagor) before proceeding further.

It was also contended that the aspect of delay in challenging the action of the bank raised by appellant no. 1 has also not been dealt with by the Tribunal below correctly, as from the documents, which have been filed at pages 138 to 153 of the paper book, it is very evident that the husband of appellant no. 2, who had suffered a brain hemorrhage, remained under treatment for more than one year, compelled appellant no. 1 to live with appellant no. 2 for taking care of her son-in-law.

It was further contended that the finding of the Ld. Tribunal that despite specifically asked to supply details of legal heirs of the deceased Ram Kawal Sharma vide letter dated 09.02.2018, Shri Prabhat Sharma, who is the son of appellant no. 1, failed to provide the details of any other legal heirs, is highly perverse and patently erroneous on the face of the record, as Prabhat Sharma in his objection dated 10.06.2018 under section 13(3-A) of the Act had specifically given the details of the heirs of late Ram Kawal Sharma, copy of which is placed at page no. 60 to 64 of the paper book and the said fact is also evident from the reply of the objection given by the authorized officer of the Bank.

It was lastly contended that in the facts and circumstances of the case that despite having detailed knowledge about the legal heirs of deceased mortgagor Ram Kawal Sharma, no effort was made by the authorized officer of the Bank to issue symbolic possession notice or e-auction sale notice to all the heirs of the deceased mortgagor, it was thus contended that the entire proceedings of the Bank stands vitiated and liable to be quashed. It was, therefore, prayed that the order impugned may be set aside and the appeal filed by the appellant may be dismissed with heavy costs.

Learned counsel for the respondent-Bank submitted that the respondent Bank issued the 13(2) demand notice on 16.01.2018, but the respondent Bank was informed by the borrower vide his letter dated 01.02.2018 that the mortgagor Shri Ram Kawal Sharma has expired on 06.10.2017, therefore, the respondent-Bank withdrew its demand notice dated 16.01.2018 and wrote a letter dated 09.02.2018 to the borrower namely Mr. Prabhat Sharma and asked for the details of legal heirs of the Late Shri Ram Kawal Sharma and the borrower vide letter dated 01.03.2018 informed the Bank that he is the only son of Late Shri Ram Kawal Sharma.

Learned counsel further submitted that at the time of advancing the loan, the guarantor/mortgagor Shri Ram Kawal Sharma had provided the details of his legal heirs i.e. Smt. Lilawati Sharma and Mr. Prabhat Sharma in the CBD 13 form and there was not mention of any other legal heir. It was thus contended that relying upon the details provided by the Borrower-Mr. Prabhat Sharma, the respondent-Bank proceeded with the SARFAESI proceedings and issued a fresh 13(2) Demand notice dated 01.05.2018 to Borrower-Prabhat Sharma, S/o Late Ram Kawal Sharma and to Smt. Lilawati Sharma, W/o Late Ram Kawal Sharma and as such the Bank proceeded for its recovery and sold the property on 27.12.2018. It was also contended that the present S.A. was filed by the appellants but the borrower was not made party in the present case by the appellants deliberately.

Learned counsel further submitted that the appellants has not filed any details of the medical prescriptions or documents before the Tribunal below in support of the delay occurred in filing the present S.A. before the Tribunal below, therefore, the new documents, which have been filed along with the present appeal, cannot be permitted to be filed before this Tribunal directly. It was thus contended that the plea taken by the appellants that they were not aware about the proceedings of the Bank and the appellant no. 1 lived with her daughter Smt. Aruna Sharma, appellant no. 2 in Allahabad is not acceptable and on this ground alone, the present appeal deserves dismissal with exemplary costs.

Learned counsel for the respondent-auction purchaser has adopted the arguments as advanced on behalf of the respondent-Bank adding further that he is bonafide purchaser of the property in question, as he has deposited the entire sale consideration with the respondent-Bank. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs, as the sale cannot be disturbed at this stage.

Having heard the learned counsels for the parties and considering the material available on record, undisputedly, the appellants are neither borrower nor guarantor or mortgagor to the loan availed by M/s Oriental Computers Corporation through its proprietor Prabhat Sharma, who is son of appellant no. 1 and brother of appellant no. 2 and son of the mortgagor deceased Ram Kawal Sharma. It is also not disputed that the account was classified as NPA on 31.12.2017 and the mortgagor Ram Kawal Sharma had died on 06.10.2017 i.e. prior to the date of NPA.

The controversy involved in the present case is, as to whether the Tribunal below has rightly dismissed the S.A. of the appellant on the ground of limitation or not?

In the present case, after issuance of demand notice, possession notice, the respondent-Bank issued sale notice 23.11.2018 and conducted the auction on 27.12.2018 and thereafter, an order was obtained by the Bank from ADM Jabalpur on 06.12.2019 u/s 14 of the SARFAESI Act and these proceedings were challenged by the appellant before the Tribunal below u/s 17 of the SARFAESI Act on 23.12.2019. As per Section 17 of the SARFAESI Act, the S.A. was to be filed by the appellants on or before 10.02.2019. As such the S.A. filed by the appellants was clearly barred by time with regard to the demand notice, possession notice as well as sale notice, but the S.A. was filed within the time from the date of the order passed by the ADM Jabalpur.

It is to be seen that after classification of the account as NPA, the first demand notice was issued by the respondent-Bank on 16.01.2018, which was represented by the borrower Prabhat Sharma on 01.02.2018, copy of which is placed at page no. 40 to 42 of the supplementary affidavit filed by the appellants. The borrower Prabhat Sharma vide said representation had informed the respondent-Bank about the death of the mortgagor Ram Kawal Sharma. In response to it, the respondent-Bank by letter dated 09.02.2018 had asked for the death certificate of Ram Kawal Sharma and the details of the legal heirs of deceased Ram Kawal Sharma. Further, the borrower-Prabhat Sharma vide letter dated 01.03.2018, copy of which is placed at page no. 44 of the supplementary affidavit filed by the appellants, had sought the query from the Bank as under:-

From the above, it is clear that the borrower Prabhat Sharma has given the information/document available with him and sought the clarification about the legal heirs of deceased Ram Kawal Sharma, but instead of doing so, the respondent-Bank issued a fresh demand notice on 01.05.2018 to the borrower and also to the legal heirs of the said deceased namely Prabhat Sharma and Smt. Liawati Sharma, which was also represented by the borrower Prabhat Sharma vide letter dated 10.06.2018. Copy of the said letter is at page no. 60 of the paper book. The borrower Prabhat Sharma vide said representation u/s 13(3-A) of the SARFAESI Act has raised objection as under:-

The above representation dated 10.06.2018 of the borrower was decided by the respondent-Bank vide letter dated 02.07.2018, copy of which is placed at page no. 47 of the supplementary affidavit filed by the appellants. The respondent-Bank in paragraph no. G of the said letter has stated as under:-

While going through the order impugned, it is found that the Tribunal below vide order impugned has rejected the S.A. of the appellants to the extent of demand notice, possession notice as well as sale notice only on the ground of delay holding that the appellants have not filed any medical certificates or prescription in support of their contention, which is not sustainable, because in order to condone the delay in the SARFAESI proceedings, the main essence of condonation of delay is the service of notice upon the party or the date of knowledge of the cause of action arose in the matter, but in the present case, the Tribunal below has not considered the facts as mentioned in the preceding paragraphs of this order while passing the order impugned.

Further, the finding of the Tribunal below given in the order impugned that Shri Prabhat Sharma, who is son of applicant no. 1, failed to provide the details of any other LRs rather he has written in para 2 of his letter dated 01.03.2018 that he is the only son of his parents is incorrect, because in the same para of the said letter, it is also stated by the borrower "you are requested to let me know who are the legal heir as per law that I should intimate you against your query as I am not sure about who all would be the valid legal heirs", but the Tribunal below has ignored the same.

In nutshell, it can be said that the respondent-Bank was well aware about the legal heirs of deceased Ram Kawal Sharma prior to issuance of possession notice, but the Bank has not taken note of it and was continuously proceeding for its recovery by auction sale of the property in question, which has been done. However, the legal heir cannot be ignored, as it is necessary party because the legal heir comes under the definition of borrower after death of the original borrower, therefore, the Tribunal below ought to have considered the facts as mentioned above while deciding the S.A. of the appellants, but it did not do so, therefore, it is fit case for remand.

So far as the order impugned to the extent of challenging the order of the ADM, Jabalpur is concerned, in my opinion, the same is not required to be considered and decided at this stage, because the fate of the said issue is based upon the result of the above case.

In view of the discussions as held above, the order impugned is set aside and the case is remanded back to the Tribunal below for deciding the issue of limitation afresh in accordance with law without being influenced by any of the observations made herein above after affording proper opportunity of hearing to the parties concerned.

The appeal filed by the appellants is accordingly disposed off with no order as to costs.

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