FRANCO LEONE LIMITED Vs. PUNJAB AND SIND BANK

JUDGEMENT

(1.) The present petition under Article 227 of the Constitution of India impugns the auction notice dated 1st September, 2021 and consequential proceedings emanating therefrom under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

(2.) Brief facts leading up to the filing of the present petition are that the petitioner no.1 (petitioner company), of which petitioners no. 2 to 4 are directors, availed various credit facilities from the respondent bank. To avail such credit facilities, the petitioner company had mortgaged 12 properties with the respondent bank. On 31st March, 2018, the account of the petitioner company was declared to be Non Performing Asset (NPA) and a demand notice dated 5th May, 2018 was issued to the petitioners by the respondent bank under Section 13(2) of the SARFAESI Act, calling upon the petitioners to make payment of Rs.46,13,45,410.39/-. The petitioners, from 26th October, 2018 to 31st February, 2020, sought permission of the respondent bank to sell a few of the properties to repay their dues. Finally, on 24th February, 2021, the petitioners proposed a One Time Settlement (OTS) payment of Rs.30,00,00,000/- in respect of their dues. In the meanwhile, consequent to the respondent bank taking steps under Section 13(4) of the SARFAESI Act to take possession of the mortgaged properties, the petitioners, vide letter dated 29th November, 2018, handed over possession of property bearing no. 11786/6, Ground Floor, Sat Nagar, Karol Bagh, New Delhi-110005. Vide letter dated 23rd August, 2021, the respondent bank requested the petitioners to improve their OTS proposal to match it with the Recovery Management Policy of the bank. In response to the letter by the respondent bank, the petitioners requested a copy of the bank policy to improve their offer, however, the respondent bank issued the impugned auction notice dated 1st September, 2021 to sell 8 out of the 12 mortgaged properties of the petitioners.

(3.) The present auction notice was challenged by the petitioner by way of filing a Securitization Application, being SA No.119/2021 before the Debts Recovery Tribunal-II (DRT) on 24th September, 2021. Notice on the said application was issued to the bank, returnable for 27th September, 2021. On 27th September, 2021, the Presiding Officer was on leave and the matter was adjourned to 1st October, 2021. The term of the Presiding Officer ended on 30th September, 2021.