Bank's Repetitive Applications Without Steps to Conduct Auction: DRAT Dismisses ICICI Bank's Appeal [Read Order]

The Allahabad bench of the Debts Recovery Appellate Tribunal (DRAT) has dismissed an appeal filed by the ICICI Bank, as the bank had only filed applications after applications, but it had failed to take any steps for the issuance of a sale notice for auctioning the property mortgaged with it from which the recovery can be made.

The appeal was filed by ICICI Bank which challenged an order of the Recovery Officer. The case arose from recovery proceedings initiated after ICICI Bank obtained a decree and a recovery certificate in June 2017 for Rs. 18.99 crore against Maharana Pratap Education Centre and its guarantors.

The core issue was whether the Bank’s repeated applications before the Recovery Officer were justified or whether they unnecessarily complicated the recovery process without taking concrete steps to auction mortgaged properties.

Following issuance of the recovery certificate, the Recovery Officer directed the borrowers to disclose assets and deposit dues. When they failed to comply, the Officer attached mortgaged properties in Jaipur and Kanpur.

ICICI Bank then filed multiple applications in October 2018 seeking attachment of receivables of Pratap University and Maharana Pratap Engineering College, attachment of immovable property in New Delhi, and directions to the Income Tax Department and Indian Banks’ Association to disclose borrowers’ accounts.

These applications were allowed on 11 October 2018. However, the borrowers did not comply, and the Bank continued filing further applications in 2019, including requests for auction of attached properties and attachment of personal shares of respondent no 3.

The Recovery Officer, while considering these later applications, observed that instead of filing steps to put attached properties on auction sale, the Bank was complicating the case by filing repetitive applications, many of which had already been dealt with.

The Officer allowed only the application dated 26 March 2019 for the auction of properties, directing the Bank to file the proclamation of sale and fresh valuation reports.

ICICI Bank appealed under Section 30 of the Recovery of Debts and Bankruptcy Act, arguing that its applications were necessary to enforce earlier orders and secure recovery, and that the Officer’s observations were perverse.

The bench of RD Khare examined the record and noted that the Bank itself admitted in its appeal memo that the applications filed in 2019 were in pursuance of earlier orders. This confirmed that they were not for new relief but for enforcing existing directions.

The Tribunal agreed with the Recovery Officer’s finding that the Bank had failed to take effective steps for auctioning mortgaged properties, which was the proper route for recovery.

Filing multiple applications without initiating auction proceedings only delayed enforcement. The Tribunal emphasised that once properties are attached, the next logical step is proclamation and auction, not repeated requests for ancillary attachments

The Tribunal found no illegality or infirmity in the order and dismissed ICICI Bank’s appeal,