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Judgment
Anil Kumar Srivastava, Chairperson
THE APPELLATE TRIBUNAL :
Instant appeal is preferred by the Appellant Bank against order dated 28th July, 2022 passed by Learned DRT-II, Kolkata in I.A. 600 of 2022 arising out of S.A. 273 of 2018. Learned DRT held that the sale is bad in law and accordingly quashed the same.
As per the pleadings of the parties, the Appellant Bank is the Defendant in S.A. 273 of 2018 while Respondents No. 1, 2 and 3 are borrowers. Respondent No. 4 is alleged tenant and Respondents No. 5 to 7 are the auction purchasers. SARFAESI Application No. 273 of 2018 was filed by the Respondent No. 1, 2 and 3 challenging the Possession Notice issued by the Bank. Sale notice was published by the Bank on 14th November, 2021. No bidder came accordingly auction sale could not take place. Fresh sale notice was issued on 23rd December, 2021 fixing e-auction on 20th January, 2022. However, no bidder came to participate. Again fresh sale notice was issued on 25th January, 2022 fixing e-auction on 17th February, 2022 which too was frustrated as no bidder appeared.
Again sale notice was issued on 13th March, 2022 fixing e-auction on 30th March, 2022 wherein intending purchasers participated by paying 10% of the bid amount as earnest money. Reserve price was fixed at Rs.2,30,54,000,00. Earnest money was deposited in the MSTC wallet (MSTC is third party who conducts e-auction for and on behalf of Banks). E-auction was successfully affected in favour of Om Prakash Bhuwalka, Om Prakash Bajoria and Surender Singh, Respondents No. 5, 6 and 7 on 30th March, 2022. An amount of Rs.23,05,400.00 was deposited by the Auction Purchasers which was refunded by MSTC to the Bank on 4th April, 2022. Successful Auction Purchasers paid 25% sale consideration (including 10% earnest money, in compliance of Rule 9 (3) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to Rules) on 30th March, 2022. By the impugned order Learned DRT held that 25% of the amount was deposited on 4th April, 2022 which was in clear violation of Rule 9 (3) apart from other infirmities. Accordingly, the sale was quashed. This order is under challenge in the present appeal.
As far as the facts are concerned, they are not disputed. Learned Counsel for the Appellant submitted that the Learned DRT has erred in quashing the sale by holding that the amount was not deposited as per the provisions of Rule 9 (3) of the Rules. Learned Counsel has placed reliance upon Statement of Accounts maintained by the Bank. It is submitted that the auction sale was conducted on 30th March, 2022 and the total 25% of the bid amount was deposited on 30th March, 2022. Accordingly, there is no illegality or irregularity in depositing the amount.
Learned Counsel for Respondents submitted that Learned DRT has rightly quashed the sale. The sale amount was not deposited on 30th March, 2022 rather it was deposited subsequently, as is evident from an e-mail message dated 1st April, 2022 wherein the auction purchasers were asked to pay 25% of the bid amount immediately but not later than 2nd April, 2022. Learned Counsel submits that had the amount been deposited on 30th March, 2022, there would have been no occasion to write this letter.
Learned DRT held in the impugned order that 25% of the bid amount was deposited on 4th April, 2022, as is evident from the ledger account filed by the Bank in its affidavit-in-opposition; accordingly, Learned DRT was of the view that the sale was bad in law and was set aside.
Rules 8 (6) and 9 (3) of the Security Interest (Enforcement) Rules, 2002 are quoted below:
“9 (3)On every sale of immovable property, the purchaser shall immediately, is on the same day or not later than next working day, as the case may be, pay a deposit of twenty-five per cent of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again.”
“8 (6) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immoveable secured assets under sub-rule (5).”
Rule 9 (3) is the relevant Rule wherein it is specifically provided that the purchaser shall on the same date of sale or not later than next working day pay a deposit of 25% of the amount of sale price, which is inclusive of earnest money deposited. It is a mandatory provision. In case of default, property shall be sold again.
Now, it is to be seen as to whether compliance of Rule 9 (3) was made or not. Admittedly, as per the sale notice, reserve price was fixed at Rs.2,30,54,050.00; EMD was Rs.23,05,400.00. As per Statement of Account as on 30th March, 2020 an amount of Rs.18,00,000.00, Rs.7,00,000.00 and Rs.10,30,500.00; totaling Rs.35,30,500.00, was deposited. Rs.23,05,400.00 was already deposited as 10% of the reserve price as Earnest Money. Accordingly, a total amount of Rs.58,35,900.00 was deposited which was more than 25% of the bid amount. It would be apparent from the record that the amount of earnest money which was deposited with the MSTC, a third party which conducted the auction proceedings, was transferred in Account ID No. 547301980050000 of the Applicant Bank on 4th April, 2022. Hence compliance of Rule 9 (3) was sufficiently done.
As far as the letter dated 1st April, 2022 is concerned, this letter was sent through e-mail ID No. [email protected] wherein a copy was also sent to the Applicant Bank at the e-mail ID CB1437@ unionbankofindia.com. It means, this letter was not issued by the Applicant Bank rather this letter was issued by the MSTC which conducted the sale with whom EMD, being 10% of the bid amount, was deposited while the remaining 15% of the amount was deposited by the auction purchasers on 30th March, 2022 in the Bank. Hence, the MSTC was not in the knowledge of the same. Accordingly, the amount was deposited in time in accordance with Rule 9 (6). Learned DRT has erred in holding that 25% amount was not paid by the auction purchasers on 30th March, 2022 rather it was paid on 4th April, 2022. This finding is erroneous and against the record.
Learned Counsel for Respondents further submitted that the Statement of Account submitted by the Bank is not in accordance with the Bankers Book Evidence Act. No certificate is given in accordance with Rule 12 Sub-Rule 11 of the Debts Recovery Procedure Rules, 1993, hence, the Statement of Account could not be taken into consideration. I do not find any force in the argument. Rule 12 of the Debts Recovery Procedure Rules, 1993 deals with the filing of written statement by the Defendant in the proceedings. In the present case the Statement of Account was filed at the interim stage. The Statement of Account filed by the Bank is not challenged on the ground that the entries are fake or fabricated or the amount, as shown to have been deposited on 30th March, 2022, was not deposited on the said date.
Learned DRT has, in the impugned order, held that there are other infirmities in sale process but has not dealt any such infirmities. Merely recording a finding without any reason is nothing but an absurdity in the order. The judicial authority or forum is required to place its decision on the reasoning to be recorded in writing. It appears that Learned Presiding Officer, DRT-II, Kolkata was persuaded to record the finding without any reasoning which is against the law.
On the basis of the discussion made above, I am of the firm view that the impugned order suffers from material illegality which cannot sustain and is liable to be set aside.
ORDER
Accordingly, the appeal is allowed. The impugned order dated 28th July, 2022 is set aside. DRT-II, Kolkata is hereby directed to decide the SARFAESI Application strictly in accordance with law after affording opportunity of hearing to the parties.
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 dictated, signed and pronounced by me in the open Court on this the 23rd day of September, 2022.