PUNJAB NATIONAL BANK Vs. MOHD. ABDUL KALAM

JUDGEMENT

(1.) The petitioner-Bank has preferred the present Writ Petition challenging the order dtd. 3/4/2013 passed by the learned Debt Recovery Appellate Tribunal, Allahabad in Appeal No. R-81/2012, whereby the Appellate Tribunal set aside the order dtd. 25/4/2012 passed in Case No 71/09 by the learned Debts Recovery Tribunal, Jabalpur and allowed the appeal filed by respondent No.1.

(2.) The facts, in brief, necessary for adjudication of the present writ petition are that the petitioner-Bank initiated proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against respondent No.2, Shri Sanjay Dubey. The said action was challenged by respondent No.2 by filing a Securitisation Application on 06/05/09 before the Debts Recovery Tribunal, Jabalpur, which was registered as S.A. No. 71/2009. During pendency on 22/05/09 of the said application, the learned Tribunal passed an interim order directing the parties to maintain status quo. Pursuant to the auction publication notice dtd. 21/4/2009, tenders were invited for sale of the secured asset on 27/4/2009 with a reserve price of Rs.18.00 lakhs. In response thereto, a bid of Rs.18.01 lakhs was received from respondent No.1 Mohd. Abdul Kalam against the outstanding dues of Rs.48,22,663.42. The entire auction amount was deposited by respondent No.1. However, in view of the interim order of status quo passed by the Debts Recovery Tribunal, Jabalpur neither the sale certificate was issued nor possession of the secured asset was delivered to respondent No.1.The OTS tender of respondent No.1 was accepted by the petitioner-Bank vide letter dtd. 28/4/2009, wherein it was clearly stipulated that the sale was on "as is where is" basis and that such acceptance was subject to confirmation by the Bank as secured creditor. Respondent No.1 was directed to deposit 25% of the sale amount and the balance by 14/5/2009. During pendency of S.A. No.71/2009 on 25/4/11, respondent No.2 offered a settlement to liquidate the entire outstanding dues. Since the auction sale had not been confirmed, the petitioner-Bank accepted the settlement for a sum of Rs.73.80 lakhs, which was duly deposited by respondent No.2.The learned Debts Recovery Tribunal, Jabalpur, vide judgment dtd. 25/4/2012, taking into consideration the settlement arrived at between the petitioner-Bank and respondent No.2, permitted respondent No.2 to settle the account and directed the Bank to release the title deeds after receipt of the entire settlement amount. To compensate respondent No.1, the Tribunal directed payment of interest @ 7.5% per annum on Rs.18.01 lakhs, along with costs of the proceedings.

(3.) Respondent No.1 objected to the compromise before the Debts Recovery Tribunal, Jabalpur on the ground that once the auction had taken place, the Bank could not have entered into a settlement with the borrower. Reliance was placed on the decision reported in AIR 2012 MP 35. The learned Tribunal, relying upon the settled legal proposition that an auction purchaser acquires a right only upon confirmation of sale and till such confirmation the right remains inchoate, rejected the objection raised by respondent No.1.Aggrieved, respondent No.1 preferred Appeal No. R-81/2012 before the Debts Recovery Appellate Tribunal, Allahabad. The Appellate Tribunal allowed the appeal, holding that since the auction was conducted on 27/4/2009 and the bid amount was accepted, the sale stood confirmed and merely because of the status quo order the sale certificate could not be issued. Consequently, the Appellate Tribunal directed the petitioner-Bank to issue a sale certificate in favour of respondent No.1.