BHASKER ELECTRIC COMPANY Vs. CENTRAL BANK OF INDIA

JUDGEMENT

(1.) The present writ petition has been filed for quashing order dtd. 10/4/2019 passed by the Debt Recovery Appellate Tribunal, Allahabad in Appeal Serial No. 31 of 2018, whereby the appeal preferred by the petitioner under Sec. 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act, 2002") against the order dtd. 27/2/2018 passed by the Presiding Officer, Debts Recovery Tribunal, Ranchi in S.A No. 13 of 2018 has been rejected. Further prayer has been made for quashing the Sale Certificate dtd. 23/2/2018 issued in favour of the respondent no. 7 pursuant to e-auction sale held on 16/2/2018.

(2.) The factual background of the case as stated in the writ petition is that the petitioner being a partnership firm availed credit facilities of Rs.110.00 lakhs sanctioned by the respondent-bank on 10/11/1997 which was subsequently enhanced to Rs.120.00 lakhs on 16/2/1999 and further enhanced to Rs.147.00 lakhs on 14/9/2000. Thereafter, the said limit was reduced to Rs.120.00 lakhs on 1/4/2002. One of the partners of the petitioner namely, Rajendra Singh, husband of Sushma Devi stood as guarantor for the said loan and also mortgaged his immovable property along with the immovable properties of another guarantor namely, Sushma Devi (three sale deeds kept as secured asset) for securing the loan. One more person namely, Vinay Kumar Singh also stood as guarantor. In the year 2004, the loan account became sticky as a result of which the account was classified as NPA on 31/3/2004 and at that time, the outstanding dues was to the tune of Rs.1,47,48,616.37. The respondent-bank issued notice under Sec. 13(2) of the SARFAESI Act, 2002 and upon receipt of the said notice, the petitioner filed objection under Sec. 13(3-A) of the SARFAESI Act, 2002, however, the respondent-bank did not dispose of the said representation within the stipulated period. Thereafter, the respondent no. 6 issued possession notice on 3/8/2007 in terms of Rule 8(1) of the Security Interest (Enforcement) Rules, 2002. The petitioner filed SARFAESI Application being S.A No. 18 of 2007 before the Debts Recovery Tribunal, Ranchi and the said application was allowed in terms with order dtd. 21/10/2020. In compliance of the order dtd. 21/10/2010, the respondent no. 6 issued fresh demand notice dtd. 23/2/2011 under Sec. 13(2) of the SARFAESI Act, 2002 with direction to deposit a sum of Rs.2,82,31,947.00 (principal amount plus interest due on the date of the said notice) within a period of 60 days, failing which appropriate step under Sec. 13(4) of the SARFAESI Act, 2002 was warned to be taken. The said demand notice was followed by issuance of possession notice under rule 8(1) of the Rules, 2002 with respect to the mortgaged properties which was also published in two leading newspapers in compliance of rule 8(2) of the Rules, 2002. After issuance of possession notice with respect to the mortgaged properties, the petitioner approached the bank for settlement of the outstanding dues of Rs.212.00 lakhs which was duly sanctioned by the bank in terms of letter dtd. 15/3/2012, however, out of the sanctioned compromise amount, the petitioner could deposit Rs.80.00 lakhs only and the remaining balance of OTS amount could not be deposited due to paucity of fund. Upon failure of the petitioner to follow the terms and conditions of the OTS proposal, the respondent-bank took physical possession of the property by invoking Sec. 14 of the SARFAESI Act, 2002 on filing an application before the Deputy Commissioner-cum-District Magistrate, Ranchi which was allowed in terms of order dtd. 21/9/2013. In the meantime, the respondent-bank published e-auction sale notice dtd. 11/1/2018 in daily newspapers "Prabhat Khabar" and "The Times of India" dtd. 12/1/2018, whereby the immovable properties as detailed in e-auction sale notice were scheduled to be e-auctioned on 16/2/2018 by fixing only one reserve price amounting to Rs.1,72,37,000.00 for two secured properties. The petitioner with an intention to liquidate the outstanding dues of the bank, filed representation dtd. 12/1/2018, proposing Chief Manager, Central Bank of India, Main Road Branch, Ranchi to settle the entire outstanding loan for a sum of Rs.132.00 lakhs out of which Rs.10.00 lakhs was deposited immediately with request to keep the said amount in ..No Lien Account‟ of the bank and the remaining amount of Rs.122.00 lakhs was agreed to be deposited within one month after sanction of the compromise proposal. The said compromise letter was forwarded to all concerned authorities of the bank including the AGM (Recovery), Central Bank of India, Central Office, Mumbai so that the appropriate authority of the bank could take an immediate decision on the proposal of the petitioner. Thereafter, one of the representatives of the partnership firm namely, Mr. Lalan Singh also approached the Central Bank of India, Central Office, Mumbai and upon much persuasion, the respondent no. 2 agreed to settle the entire outstanding dues for a sum of Rs.132.00 lakhs under the Special OTS Scheme. Thereafter, the petitioner was directed to deposit the remaining amount of settlement with the Branch and the representative of the petitioner was informed that Central Office, Mumbai had already forwarded and communicated the letter with respect to the compromise to the respondent nos. 4 and 5, however, when the petitioner moved before the respondent nos. 4 and 5, they failed to take cognizance of verbal request of the petitioner and told that the property would be sold at any cost. The petitioner filed a writ petition being W.P.(C) No. 662 of 2018 for setting aside the e-auction notice dtd. 11/1/2018 which was disposed of on 15/2/2018 with a direction to the petitioner to prefer application under Sec. 17 of the SARFAESI Act, 2002. The petitioner filed application being S.A No. 13 of 2018, however, the same was dismissed vide order dtd. 27/2/2018. The petitioner challenged the order dtd. 27/2/2018 before the Debts Recovery Appellate Tribunal, Allahabad in Appeal Serial No. 31 of 2018 which was also dismissed vide order dtd. 10/4/2019. Hence, the present writ petition.

(3.) Learned counsel for the petitioner submits that the bank has not complied the mandatory provisions of rule 8(6) of the Rules, 2002 inasmuch as no individual notice was ever served upon the borrower and the guarantors. The claim of the bank is that the e-auction sale notice dtd. 11/1/2018 was dispatched through three registered letters for services upon the borrower and the guarantors also enclosing copy of the dispatched proof of the registered letters dtd. 12/1/2018. However, on scrutiny of the said dispatch proof of the letters sent on 12/1/2018, the petitioner came to know that the said registered letters were delivered on 13/1/2018 by Ranchi University, which is apparent from the delivery report as obtained from Internet and also as per the report obtained from the postal department under RTI Act. In fact, the said registered letters were never served either upon the borrower or upon the guarantors. It is further submitted that on 22/10/2013, the immovable properties were sealed and locked under the orders of the Deputy Commissioner, Ranchi and thereafter the seals of the immovable properties were never broken or unlocked by any of the authorities including any officer of the bank and thus, the valuation report prepared at the instance of the bank appears to be merely a table work which has no value in the eye of law. The bank is claiming that the requirement of rule 8(7) of the Rules, 2002 has been complied by affixing the e- auction sale notice on conspicuous parts of the immovable properties, however, the photographs produced before the Debts Recovery Tribunal, Ranchi were not in relation to the sale notice dtd. 11/1/2018. Thus, by no stretch of imagination it can be said that rule 8(7) of the Rules, 2002 was complied by the bank and thus due to non-fulfilment of the said mandatory provision, the petitioner‟s application/appeal ought to have been allowed and the sale conducted by the bank ought to have been set aside by the Debts Recovery Tribunal, Ranchi as well as the Debts Recovery Appellate Tribunal, Allahabad. It is further submitted that another application being S.A No. 32 of 2018 filed by one of the partners of the petitioner namely, Rajendra Singh is still pending for adjudication before the Debts Recovery Tribunal, Ranchi, wherein the applicant has challenged the e-auction sale notice dtd. 11/1/2018 and also the sale certificate issued in favour of the purchaser pursuant to e- auction sale conducted on 16/2/2018. Since another partner of the petitioner has individual interest in challenging the action of the respondent-bank with respect to his mortgaged property, the said SARFAESI Application has been filed by him before the Debts Recovery Tribunal, Ranchi for adjudication and the dismissal of appeal by the Appellate Tribunal should not come in the way of adjudicating the same. It is also submitted that the e-auction sale conducted at the instance of the bank is liable to be set aside at any stage due to non-compliance of the mandatory provisions of the Rules, 2002. The petitioner was not obliged to implead the auction purchaser as a party respondent in the proceeding pending before the Debts Recovery Tribunal, Ranchi especially in view of the fact that it had challenged the e-auction sale notice subsequent to which the auction sale was conducted at the instance of the bank. The petitioner cannot be deprived of its right to redeem the property under the Special OTS Scheme of the respondent-bank inasmuch as prior to e-auction sale of the property, the compromise offer given by the petitioner was duly approved by the AGM (Recovery), Central Bank of India, Central Office, Mumbai. The respondent nos. 3 to 5 were legally obliged under law to communicate the compromise acceptance letter to the petitioner well within time i.e., prior to e-auction sale scheduled to be held on 16/2/2018 so as to provide an opportunity to the petitioner to repay the entire dues under the Special OTS Scheme of the bank.