DRT upholds Union Bank's Auction Sale, Rejects Borrowers' Claim of Improper Notice [Read Order]
The DRT concluded that the bank had complied with all legal requirements and that the borrowers had failed to establish any infirmity in the SARFAESI proceedings.
The Debts Recovery Tribunal (DRT), Allahabad, has dismissed a Securitization Application filed by borrowers against Union Bank of India, upholding the bank's auction sale of the mortgaged property. The Tribunal found that the bank had complied with all legal requirements under the SARFAESI Act, and the borrowers had failed to prove any procedural lapses.
The applicants, M/S Kamdhenu Agrotech and others, had challenged the SARFAESI proceedings initiated by the bank for defaulting on a loan. They alleged the account was wrongly classified as a Non-Performing Asset (NPA), that demand and possession notices were not properly served on all applicants, and that the auction was conducted illegally without giving them proper notice or an opportunity to redeem the mortgage.
The respondent Bank countered these claims, asserting that all procedures were followed in accordance with the SARFAESI Act and Rules. It submitted postal receipts to prove that demand and possession notices were served at the address provided by the borrowers and that their representation was considered and rejected.
The auction purchaser also supported the bank's case, stating he had participated in the auction in good faith, was the highest bidder, and had completed the payment as required, with the sale certificate and mutation being duly processed in his favour.
The DRT found that the borrowers' claim of improper service of notices was untenable. It noted that the borrowers had provided a specific address in their loan documents and had only later, in a rejoinder, claimed to be permanent residents of Ghaziabad.
The Tribunal rejected this new plea as an attempt to override their initial admissions. Regarding the requirement for a 30-day notice before the auction, the DRT relied on a Supreme Court ruling to clarify that there is no mandatory 30-day gap required between the notice to the borrower and the public newspaper notice.
The Tribunal also dismissed the allegation that the property was sold at a low price, observing that the sale price of Rs. 41.25 lacs was actually 25% above the reserve price of Rs. 33 lacs, and the borrowers had provided no valuation report to support their claim.
Consequently, the DRT concluded that the bank had complied with all legal requirements and that the borrowers had failed to establish any infirmity in the SARFAESI proceedings. Accordingly, the DRT dismissed the borrowers' Securitization Application and directed the parties to bear their own costs of the litigation.
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