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Judgment
Anil Kumar Srivastava, Chairperson
THE APPELLATE TRIBUNAL :
Instant Appeal has arisen against a judgment and order dated 11.05.2022 passed by the Learned Debts Recovery Tribunal, Visakhapatnam in SA No. 119 of 2020 whereby the Learned DRT dismissed the SARFAESI Application.
As per pleadings, Appellant herein who is SARFAESI Applicant before the Learned DRT had availed a housing loan of Rs.75,00,000/- on 30.03.2016 and Rs. 75,00,000/- under housing loan on 31.03.2016. Equitable mortgage was created in favour of the Bank. Loan account became irregular and classified as NPA. Demand Notice under Section 13(2) of the SARFAESI Act was issued on 16.08.2019 wherein no representation was submitted by the Appellants. Thereafter, symbolic possession was taken on 28.11.2019 by the Bank. Notice under Section 13(4) of the SARFAESI Act was also published in two newspapers namely Sakshi in Telegu and HansIndi, English Newspaper on 01.12.2019. Valuation Report was obtained by the Bank. Sale notice dated 07.12.2019 issued by the Bank which was not served. Another sale notice dated 28.01.2020 was issued which was served upon the Appellant. It was also affixed on the conspicuous place of the secured assets and published in two newspapers. Sale date was fixed for 10th March, 2020 but could not be conducted as no bidder came.
Again, sale notice dated 14.08.2020 was issued fixing the auction date on 10.09.2020. But the same was also not fructified.
Under the orders of Chief Judicial Magistrate Guntur passed under Section 14 of the SARFAESI Act, Advocate Commissioner was appointed for taking physical possession. Appellant preferred a Writ Petition No. 4430 of 2020 before the Hon’ble High Court of Andhra Pradesh. A fresh valuation report was obtained on 21.09.2020 and e-auction sale notice for 19.10.2020 was issued which was served upon the Appellants and was also affixed on the secured assets and published in two newspapers. Secured assets were sold in auction to Respondent Nos. 2 to 6. Confirmation letter was issued on 03.01.2020. Entire bid amount was deposited by the auction purchaser. Writ petition No. 4430 of 2020 was earlier dismissed on 04.12.2020 by the Hon’ble High Court. Relief for declaring the sale notice dated 28.01.2020 as null and void, to quash the sale notice was sought in the SARFAESI Application.
An amendment was sought by the Appellant in the Application under Section 17 of the SARFAESI Act to the effect that the e auction sale notice dated 19.10.2020 fixing the sale date on 30th November, 2020 is illegal and against principles of natural justice. Accordingly, same be set aside.
I have heard the Learned Counsel for the parties and perused the record.
At the very outset we would like to see the importance of pleadings. In Bachhaj Nahar versus Nilima Mandal and Another (2008) 17 SCC 491 Hon’ble Apex Court held that the pleadings are meant to give to each side intimation of the case of the other so that it may be met, to enable Courts to determine what is really an issue between the parties, and to prevent any deviation from the course which litigation on particular causes must take. It was further held that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief.
In Ram Sarup Gupta (dead) by LRs versus Bishun Narain Inter College and others (1987) 2 SCC 555, Hon’ble Apex Court held that –
The question which falls for consideration is whether the respondents in their written statement have raised the necessary pleading that the licence was irrevocable as contemplated by Section 60(b) of the Act and, if so, is there any evidence on record to support that plea. It is well settled that in the absence of pleadings, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to meet. In order to have a fair trial it is imperative that the party should settle the essential material facts so that other party may not be taken by surprise. The pleadings however should receive a liberal construction; no pedantic approach should be adopted to defeat justice on hair-splitting technicalities. Sometimes, pleadings are expressed in words which may not expressly make out a case in accordance with strict interpretation of law. In such a case it is the duty of the Court to ascertain the substance of the pleadings to determine the question. It is not desirable to place undue emphasis on form, instead the substance of the pleadings should be considered. Whenever the question about lack of pleading is raised the enquiry should not be so much about the form of the pleadings; instead the Court must find out whether in substance the parties knew the case and the issues upon which they went to trial. Once it is found that in spite of deficiency in the pleadings parties knew the case and they proceeded to trial on those issues by producing evidence, in that event it would not be open to a party to raise the question of absence of pleadings in appeal. In Bhagwati Prasad V. Chandramaul (1996) 2 SCR 286, 291: AIR 1966 SC 735, a Constitution Bench of this Court considering the question observed:
If a plea is not specifically made and yet it is covered by an issue by implication, and the parties knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disentitle a party from relying upon it if it is satisfactorily proved by evidence. The general rule no doubt is that the relief should be founded on pleadings made by the parties. But where the substantial matters relating to the title of both parties to the suit are touched, though indirectly or even obscurely in the issues, and evidence has been led about them, then the argument that a particular matter was not expressly taken in the pleadings would be purely formal and technical and cannot succeed in every case. What the court has to consider in dealing with such an objection is: did the parties know that the matter in question was involved in the trial, and did they lead evidence about it? If it appears that the parties did not know that the matter was in issue at the trial and one of them has had no opportunity to lead evidence in respect of it, that undoubtedly would be a different matter. To allow one party to rely upon a matter in respect of which the other party did not lead evidence and has had no opportunity to lead evidence, would introduce consideration of prejudice, and in doing justice to other party, the court cannot do injustice to another.”
In the light of the above settled principles of law now we have to see as to whether the SARFAESI applicant could successfully challenge the sale notice dated 28.10.2020?
SARFAESI Application was filed by the Appellant with the grounds that the proceedings initiated under sale notice dated 28.01.2020 are against law. The Bank is not covered under the definition of financial institution and has no locus standi. Rule 8(2) of the Security Interest (Enforcement) Rules regarding publication of notice under Section 13(2) and 13(4) of the SARFAESI Act are not complied. There is a violation of Rule 8(5) of the Security Interest (Enforcement) Rules. Property could have been sold for much value. It would be pertinent to note that in the pleadings that in Section 17 Application a challenge is also made to the order to Chief Judicial Magistrate Guntur passed under Section 14 of the SARFAESI Act. Although the same was also challenged before the Hon’ble High Court in Writ Petition No. 443 of 2020 which was dismissed by the Division Bench of the Hon’ble High Court on 04.12.2020 holding that the order passed by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act is a legal order. Apart from above pleas, no other plea is taken in the SARFAESI application under Section 17 of the SARFAESI Act.
Now we have to see as to whether the SARFAESI Applicant was successful in proving his case? Learned DRT has recorded a finding to the effect that the property was auctioned in accordance with law. It was not sold for less value. Valuation was fixed on the basis of report of the Authorised Valuer. Accordingly, SARFAESI Application was dismissed.
As far as question of violation of Rule 8(5) of the Security Interest (Enforcement) Rules are concerned, Rule 8(5) of the Security Interest (Enforcement) Rules provides that before effecting sale of the immovable property, 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 make the whole or any part of such secured asset. Bare perusal of the provision will show that the Authorised officer is required to obtain a valuation report from the approved valuer. Thereafter, he should fix reserve price of the property in consultation with the secured creditor and may sell the whole or any part of the immovable secured asset by different modes as provided under the Rules.
Now we have to see as to whether the Authorised officer has complied the mandatory requirements of Rule 8(5) of the Security Interest (Enforcement) Rules before effecting the sale of secured asset? It is a specific plea of the Respondents Bank that the report of the approved valuer was obtained by the Authorised officer before fixing the reserve price. Auction was held on 30th November, 2020. Report of approved valuer Sri Venkateswara Consultants S.19 Raghu Mansion, 5/1, Brodipet, Guntur -522002 was obtained by the Authorised Officer wherein the fair market value of the secured assets was assessed at Rs.2,73,05,255/-. The Book value was Rs.1,93,45,016/-and Distress value was assessed at Rs.2,18,44,204/-. Property was auctioned for an amount of Rs. 2,31,77,450/-.
Learned Counsel for the Appellant would submit that the valuation of the property is not properly made. In the publication of sale notice detail of the properties were mentioned as RCC roofed Ground, First, Second, third floors and subsequent floors if any, cost for part of construction in stilt and common services for building on residential sides item No. 1 191.77 square yards at D. No 51/B and Item No.2 194.55 yds at D No. 51/B of total residential site 386.32 sq.yds. at Gorantla Village and gram Panchayat area, Koretipadu sub district, Guntur. Reserve price was fixed for Rs.221.17 lacs. Sale was to be held on as is where is basis. Learned Counsel would submit that details of the property and the construction was not properly disclosed in the notice. In the sale notice dated 19.10.2020 the same details are mentioned. In the sale certificate also the same description is mentioned. It is further submitted that the secured asset was sold as a whole while the due debt could have been recovered from the sale of a portion of the secured assets.
Details of the secured assets were mentioned in the notice under Section 13(2) of the SARFAESI Act. dated 16.08.2019 as well as possession notice dated 28.11.2019 which are the same details which finds place in the sale notice. It is not in dispute that these notices were served upon the Appellants but neither any representation was made nor any objection was raised regarding the extent of the secured assets. Secured assets mentioned in the sale notice as well as possession notice were put to auction. In in the application under Section 17 of the Act, no such plea is taken by the Appellants that the debt could have been recovered by auctioning a portion of the secured assets. There was no requirement of putting the total secured assets for sale. In the absence of any such objection as well as a plea in the SARFAESI application now the Appellant cannot be permitted to raise such plea pending appeal. However, as far as valuation of the secured assets is concerned, valuation was assessed by approved valuer.
I have gone through the report of the approved valuer wherein he had given all the required details for valuing the property. Land was valued separately while the constructed area, buildings was separately valued by the valuer. He has specifically measured the stilt floor, ground floor 1st floor, 2nd floor and the 3rd floor. Thereafter, he quantified the valuation of the constructed area. It is nowhere opposed by the Appellant that the value of construction assessed by the approved valuer is not correct. Rather, it is submitted that it was under valued. But having gone through the report, I do not find any reason for not accepting the report of the approved valuer. Accordingly, I am of the considered view that the property was auctioned for an appropriate amount. It was not under valued.
An effort is made to make a case of violation of Rule 9(4) and 9(5) of the Rules. Learned Counsel for the Appellant argued that there is a violation of Rule 9(4) and 9(5) of the Rules. Sale consideration amount was not deposited in accordance with Rules. At the very outset, I am unable to accept the contention raised by the Learned Counsel for the Appellant on the ground that this plea was not taken in the SARFAESI application filed under Section 17 of the SARFAESI Act. As has been held by the Hon’ble Apex Court in the case of Bachhaj Nahar versus Nilima Mandal and Another (2008) 17 SCC 491 and Ram Sarup Gupta (dead) by LRs versus Bishun Narain Inter College and others (1987) 2 SCC 555, a plea which is not taken in the pleadings cannot be entertained subsequently. Pleadings are meant to give to each side intimation of the case of the other so that it may be met, to enable Courts to determine what is really at issue between the parties and to prevent any deviation from the course which litigation on all causes must take. In the present case Appellant has not taken any plea regarding non compliance or violation of Rule 9 (4) or Rule 9 (5) of the Rules. In such circumstances, when the plea of violation of Rule 9(4) or Rule 9(5) was not pleaded, Respondents had no opportunity to rebut the same. Accordingly, such plea of the Appellant cannot be entertained.
On the basis of discussion made above, I am of the considered view that impugned order does not suffer from any illegality or irregularity. Learned DRT has rightly arrived at the conclusion. Appeal lacks merit and is liable to be dismissed.
ORDER
Appeal is dismissed. Impugned order dated 11.05.2022 passed by the Learned Debts Recovery Tribunal, Visakhapatnam in SA No. 119 of 2020 is confirmed.
No Order as to costs.
File be consigned to Record Room.
Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.
Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.
Order pronounced by me in the open Court on 30th day of April, 2024.