UNION BANK OF INDIA Vs. RAJENDRA WADHWA

JUDGEMENT

(1.) This petition has been filed against the order passed by the Debts Recovery Appellate Tribunal, Camp at Jabalpur in Appeal No. 133/2011. The Appellate Tribunal has dismissed the appeal and affirmed the order passed by the Debts Recovery Tribunal. The question for consideration in the petition before this Court is interpretation of Rule 8 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (hereinafter referred as to "the Act").

(2.) The respondent No. 1 had a credit (Hypothecation) and Bank Guarantee account with the petitioner bank. His account was classified as Non Performing Assets (NPA). The proceeding was initiated against respondent No. 1 under the Act. A demand notice was issued to the respondent on 3.9.2007 under Section 13(2) of the Act. Thereafter, a notice dated 21.11.2007 was issued by the bank for taking possession of the secured assets. In terms of notice the possession of secured assets had been taken on 7.12.2007. The possession notice was published in the news paper in accordance with the Rules of the Act, as claimed by the bank.

(3.) The petitioner Bank published a notice in the news paper on 26.2.2008 in regard to holding auction of sale of properties. The respondent filed a petition against the sale of properties, which was registered as W.P. No. 3541/2008. The Court stayed the sale of properties vide order dated 26.3.2008. The petitioner-Bank had challenged the order in appeal and the Division Bench vide order dated 28.3.2008 passed in W.A. No. 376/2008 permitted the petitioner to continue with auction which was scheduled to be held on 29.3.2008. The Division Bench further ordered that sale shall not be confirmed. Ultimately, the petitioner-Bank sold three properties out of eight mortgaged properties in auction held on 30.6.2008 for a consideration of Rs.12.85 lacs. Thereafter, a Securitization Application was filed before the Debts Recovery Tribunal under Section 17 of the Act on 31.12.2008. The Debts Recovery Tribunal allowed the application set aside the sale of secured assets vide order dated 30.8.2011 on the ground that it was mandatory for the bank to publish the possession notice in the news paper within seven days from the date of taking possession of secured assets in accordance with Rule 8(2) of the Act. Because there was violation of the Rule hence the proceeding conducted by the bank in regard to sale of the properties are null and void. Against the aforesaid order an appeal was filed by the petitioner before the Debts Recovery Tribunal. The same has been dismissed by the Tribunal holding that the compliance of Rule 8(2) of the Act is mandatory.