No Procedural Lapse in Union Bank's Auction: DRAT dismisses Borrowers' Plea Over Notice Service and Sale Timing [Read Order]

The appeal was filed by M/S Escape Live Care Pvt. Ltd. and its directors against a DRT order that upheld the bank's auction proceedings. The borrowers had challenged the auction on the grounds of alleged procedural lapses in the issuance of notices and the conduct of the sale.

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The appellants-borrowers challenged the auction sale notice dated 22.07.2013 by filing S.A. No. 401 of 2013 before the Tribunal below. During the pendency of said S.A., the respondent-Bank issued another auction sale notice vidé letters dated 09.11.2013 and 23.11.2013 fixing the sale on 27.12.2013, which did not materialize. Thereafter, the auction sale notice dated 25.02.2014 was issued and the same was published in two newspapers on 26.02.2014 fixing the date of auction for 27.03.2014.

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Pursuant to the said sale notice, the property was sold for a sum of Rs. 55.51 Iacs and Rs. 1.11 crores and after receipt of entire sale proceeds, the sale was confirmed and sale certificates were issued on 29.04.2014 as well as the sale deed was also executed on 15.09.2015 in favour of the respondent No. 3.

It appears that the respondent-borrower impleaded auction purchaser as party in the S.A., who filed a detailed objection in the pending S.A. before the Tribunal below. An application dated 28.04.2014 was filed by the respondent-Bank under section 14 of the SARFAESI Act before the District Magistrate, Haridwar, which was allowed vide order dated 13.05.2014 directing the Police Authority to provide necessary police assistance for taking over the peaceful physical possession of the property in question and. the possession was taken on 29.05.2014 and the same was handed over by the Bank to the auction purchaser on the same day.

Counsel for the respondent-Bank submitted that notice under section 13(4) was received by one person on behalf of all the borrowers/guarantors on 24.12.2012 and the possession notice dated 10.12.2012 was received by one Deepanshu Jain, who is director of appellant No. 1 and the possession was taken over on 24.12.2012. The possession notice was affixed on conspicuous part of the property in question and also published in two newspapers.

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The physical possession was taken on 26.06.2013 in presence of the borrowers and guarantors and inventory was also prepared. It was further contended that the auction sale notice dated 25.02.2014 was issued and dispatched on the same day, the copy of postal receipts affixed on the notice itself, which was served upon the borrowers and guarantors as per the said receipts, which are on record. It was further contended that the auction sale notice was published in the newspapers on 26.02.2014 fixing the date of auction on 27.03.2014, which is annexure 6 at page No. 57 and 58 of the memo of the appeal.

It was further contended that after auction the sale deed was executed in favour of the auction purchaser, who is in possession of the same since 29.05.2014. It was thus contended that there is no violation of any provisions of the Act and Rules made thereunder, hence the appeal deserves to be dismissed with heavy costs.

The contention of the appellants that the Respondent bank has not complied with section 13(2) of the SARFAESI Act, 2002 is not tenable, as the notices issued by the Respondent bank under Section 13(2) of the SARFAESI Act, 2002 have been placed as Annexure no. 1 at page no. 13 to 18 of the reply of the Bank, which contain the details as required under the said Act & Rules made thereunder and the same were sent to all the borrowers concerned, which were received by Vijendra Jain, appellant no. 2 on behalf of the other appellants on 10.12.2012, but they had not filed any objection to the same.

It is observed that the address of the appellants no. 2 to 4 are the same, which means all were residing in the same house and all the appellants-borrowers are family members, hence it cannot be said that they were not aware of the .said notice and did not get any opportunity to file objection under section 13(3-A) of the SARFAESI Act.

With regard to non compliance of section 13(4) of the SARFAESI Act, 2002,it was found that the appellants have not sought any relief against the possession notice issued by the Bank under section 13(4) of the SARFAESI Act, 2002 before the Tribunal below. Thus the appellant cannot be permitted to raise this question directly before this Tribunal.

It appears that the respondent-bank had issued sale notice dated 25.02.2014 scheduling the auction of the property in question on 27.03.2014, which was sent to the borrowers through speed post on the same day and its postal receipts are affixed on the sale notice itself. Copy of the sale notice is placed as annexure 6 at page No. 53 of the reply of the respondent-Bank. The said notice was also published fn two newspapers on 26.02.2014, copies of which are placed from page No. 56 to 58 of the reply of the respondent-bank.

Admittedly, the present sale notice is a third sale notice, for which the proviso of Rule 9(1) of the Security Interest (Enforcement) Rules, 2002 says that if sale of immovable property by any one of the methods specified by sub-rule(5) of the Rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale. Thus, the contention of the appellant that the auction sale was conducted by the Bank on 30 th day is not tenable because in the present case, only fifteen days' sale notice was required to be given, which has been done by the Bank, as the sale notice was issued and sent on 25.02.2014 and the same was published on 26.02.2014 and the auction sale was conducted on 27.03.2014.

Justice R. D. Khare, Chairperson, however, found no merit in the borrowers' contentions. So far as the compliance of Rules 9(3) and (4) of the Rules 2002 is concerned, after completion of auction and declaration of highest bidder vide letter dated 27.03.2014 by the Bank and deposition of 25% of the bid amount by the auction purchaser.

The Tribunal below had passed an order dated 31.03.2014, copy of which has been placed at page No. 143 of the paper book, directing the appellants to deposit a sum of Rs. 15.00 Iakhs by 15.04.2014 and the Bank was directed not to issue the sale certificate in favour of the auction purchaser till next date of hearing and in case of failure to comply the same, the Bank would be at liberty to issue the sale certificate in favour of the auction purchaser thereafter, but the said order was not complied with by the borrowers, therefore, in pursuance of the said order, the réspondent-Bank confirmed the sale vide letter dated 16.04.2014 intimating the auction purchaser to deposit the remaining amount of 65% of the bid value within 14 days from the date the said letter..

Accordingly, the remaining 65% of the bid amount was deposited by the auction purchaser and the respondent-Bank had issued the sale certificates on 29.04.2024, which is on 13 th day. As such there is no violation of Rules 9(3) and (4) of the Rules 2002. Thus the appeal is liable to be dismissed.

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