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Judgment
R. D. Khare, Chairperson
The abovementioned appeals have been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of the Security Interest Act, 2002 (hereinafter referred to as The SARFAESI Act) against the same order dated 05.05.2017 passed by the Presiding Officer, DRT, Allahabad, whereby the securitization application no. 139/2013 filed by the respondent no. 1-borrower was allowed, therefore, these appeals are being decided by this common order/judgment.
The brief facts of the matter are, that the respondent no. 1 borrower was granted some financial assistance by the appellant-Bank, for which the borrower created equitable mortgage in favour of the appellant-bank over his immovable property by depositing original title deed with the appellant-Bank. The borrower failed to maintain the financial discipline in terms of the loan agreement, therefore, the account was classified as NPA and a demand notice dated 03.08.2007 was issued under section 13(2) of the SARFAESI Act, but the borrower did not pay any amount against the said demand, therefore, the appellant-Bank took the symbolic possession of the property in question by issuing possession notice dated 28.03.2012 under section 13(4) of the SARFAESI Act. Thereafter, the auction sale notice was published on 09.02.2013 in the newspapers fixing the date of auction for 16.03.2013 and the notice of sale was sent on 13.02.2013 vide letter dated 11.02.2013 as per documents placed at page no. 132 and 133 of the memo of appeal. The property was sold for Rs. 6.60 lacs and sale certificate was issued on 30.03.2013 in favour of the respondent no. 2.
The respondent no. 1-borrower challenged the entire proceedings of the Bank by filing the S.A. No. 139/2013 before the Tribunal below, which was allowed vide order impugned and the auction sale was set aside as well as subsequent process also. Being aggrieved by the said order, the Regular Appeal No. 135/2017 has been filed by the Bank and the Regular Appeal No. 138/2017 has been filed by the auction purchaser.
Learned counsel for the appellant submitted that the impugned order has been passed by the Tribunal below on two grounds, first is that the original photograph of affixation of sale notice on conspicuous part of the property in question has not been produced by the bank and another is that the auction sale notice has not been served upon all the borrowers. The learned counsel for the appellant submits that the photograph for pasting the publication of sale notice was taken by digital camera, print out of which was produced before the Tribunal below, but the same has not been considered, therefore, the observation of the Tribunal below is not tenable. It was further contended that the auction sale notice was served upon the S.A. applicant, who was the borrower and mortgagor of the property in question, as the other borrowers were not party before the DRT, therefore, the appellant did not feel it appropriate to serve the notice on the other borrowers, who have not approached before the Tribunal below.
It was further contended that if the borrower and mortgagor have been served, then there is no statutory requirement of serving the notice upon the non-borrower and non-mortgagor. In support of this contention, the learned counsel has relied upon a judgment passed by the Debts Recovery Appellate Tribunal, Delhi in Appeal No. 255/2015- State Bank of India Vs. Om Prakash & Ors. decided on 23/03/2016, reported in III(2016) B.C 111(DRAT) and has referred to para no. 11 of the said judgment.
The learned counsel for the appellant submitted that there is no violation of Rule 9(3), as there is no finding recorded by the Tribunal below with regard to the same, therefore, the argument as raised by the respondent-borrower needs no consideration.
The learned counsel for the auction purchaser has adopted the arguments as raised by the learned counsel for the appellant-bank.
The learned counsel for the respondent-borrower has referred to internal page no. 10 and para 5 of the order impugned and has stated that a clear 30 days notice has not been given to the borrowers as evident from a bare reading of para 5 of the order impugned itself. The learned counsel has further referred to Rule 8(6) of the Rules, 2002 and has stated that the requirement of 30 days time is to be counted from the date of service of the auction sale notice and not from the date of sending the same. It was also argued that the definition of the borrower includes the definition of the mortgagor and guarantor, therefore, the auction sale notice is required to be served upon the borrowers, mortgagors as well as guarantors because the mortgagor and guarantor also come within the definition of the borrower as per the provisions of the SARFAESI Act.
The learned counsel for the respondent-borrower has also drawn attention of this court to page no. 108 and 109 of the Memo of Appeal, which is notice dated 03/08/2007 under section 13(2) and possession notice dated 28.03.2012 of the SARFAESI Act and the same was sent to Shri Kalika Prasad and Shri Inderjeet. The learned counsel has further referred to a page no. 132 of the Memo of Appeal, which is photocopy of a letter, which was dispatched through registered post. From the said copy, it is clear that the auction sale notice was only sent to Kush Kumar Verma and not to Kalika Prasad and Inderjeet, which is evident from Sl. No. 27 of the copy of the Register at page No. 133 of the paper book.
The learned counsel for the respondent-borrower has further referred to Rule 8(7) of the Rules, 2002 and has argued that the appellant bank has not complied with the same, as the bank took several dates for producing the original photographs of affixation of the sale notice, but he could not file the same instead the bank filed photocopy of the photographs, which has been disbelieved by the Tribunal below.
The learned counsel for the borrower has further drawn attention of this Tribunal to para 11 of page 36 of the Memo of Appeal and has argued that Rule 9(3) of the Rules 2002 has been violated as 25% of the sale amount has not been deposited immediately as per the said unamended rule.
The learned counsel has relied upon the judgment passed by Honble Allahabad High Court in Dayanath Pandey Vs. State of U.P. reported in 2008(2) AWC 1255 on the point that a clear 30 days notice has to be given. He has further relied upon a judgment passed by the DRAT, Allahabad in Appeal Sl. No. 402/2012 Dilip Kumar Singh & Ors. Vs. Allahabad Bank & Ors. Decided on 18/07/2013 reported in 2013(2) DRTC 726 and has argued that as per Rule 9(3) 10% EMD amount cannot be adjusted towards 25% of sale amount.
The learned counsel for the auction purchaser submitted that he had purchased the property in the year 2013 and the sale certificate was issued on 30/03/2013 and sale deed was executed on 19/06/2013. The learned counsel further submitted that he is residing in the said premises since then, therefore, at this stage the sale cannot be disturbed. Hence, both the appeals filed by the Bank and Auction Purchaser may be allowed.
Having heard the learned counsels for the parties and considering the material available on record, there is no dispute with regard to service/issuance of demand notice under section 13(2) and possession under section 13(4) of the SARFAESI Act.
The first question in the present case is, as to whether the sale notice was required to be served on the borrower, mortgager and guarantor are not? Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as Rules, 2002) says that the authorized officer shall serve to the borrower a notice of 30 days for sale of the immovable secured assets. The definition of the borrower has been defined under section 2(f) of the SARFAESI Act. As per the said section, the borrower means any person who has been granted financial assistance by any Bank or financial institution or who has given any guarantee or created any mortgage or pledged as security for the financial assistance granted by any Bank or financial institution and includes a person who becomes borrower. As such the service of individual notice to the borrower by giving 30 days clear time for effecting any sale of immovable property is a statutory mandate. In the present case, no notice has been given to the guarantor, whereas the service of notice under Rule 8(6) of the Rules 2002 is mandatory. If the liability of the borrower as well as the mortgager or the guarantor is joint, collateral and several, then they are required to be served each and every notice issued under the SARFAESI Act and the Rules made thereunder. Hhence the contention of the appellant that the notice for sale was served upon the S.A. applicant, who was the borrower and mortgager of the property in question and the other borrower were not party before the DRT, therefore, they were not required to be served, is not tenable.
So far as the compliance of Rule 8(7) of the Rules, 2002 is concerned, the submission of the learned counsel for the appellant-Bank that the recording of pasting of the publication of sale notice on the conspicuous part of the property in question was taken by the digital camera, hence original photograph could not be produced, is not acceptable because the photocopy of the photograph is made from the original taken either by the digital camera or by mobile or by normal camera. In this regard, the appellant has not placed any document with regard to affixation of publication of sale notice, which may show that the publication of sale notice was affixed on conspicuous part of the property in question. It is also observed from the order impugned that the Bank was given several opportunities to produce the original of the same, but the same had not been complied with. Before this Tribunal also, the Bank has failed to produce the same. Hence, the Tribunal below has rightly held that there is violation Rule 8(7) of the Rules, 2002.
With regard to the violation of Rule 9(3) of the Rules, 2002, the contention of the learned counsel for the appellant that there was no finding given by the Tribunal below for the same, therefore, the same needs no consideration, is incorrect, as the Tribunal below in this regard, has recorded the finding that the Bank has no right to generalize the interpretation of word immediate and published sale notice with the time of 48 hours for payment required to be deposited in compliance of the said Rule, which is correct, as the Bank has no right to extend the time while publishing the sale notice against the Act and Rules made thereunder. In this regard, the Honble High Courts as well as the Honble Apex Court has already interpreted the word immediate. The word immediate means on the same day of the auction or by the next day but not later-on. In the present case, the Bank has published the sale notice, in which the condition was laid down that the purchaser shall deposit 25% of the auction amount within 48 hours, which is against the provisions of the Rule 9(3) of the Rules, 2002. As such on this count also, the sale is defective.
In view of the discussions as recorded above, this Tribunal is of the considered opinion that there exists no legal infirmity in the order impugned in the present appeals, which, thus, calls for no interference by this Appellate Tribunal. Accordingly, both the appeals are dismissed with no order as to costs.