The Allahabad High Court allowed the petition seeking quashing of the order dated 19.10.2020 that DRT shall adjudicate it first in the light of direction by this Court.
A single judge bench of this Court comprising of Hon’ble Justice Saurabh Shyam Shamshery held that any videography of handing over possession would have no consequence if the document could not be considered to be a ‘possession memo’ as required by due procedure.
Brief Facts:
Punjab National Bank had granted certain credit facilities to the Borrower Company, however, it defaulted in payment. The bank accordingly initiated proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”), and the mortgaged property was put for auction. The DRT passed an interim order dated 19.07.2011, allowing the bank to proceed further with the auction. The petitioner (auction purchaser) filed an application before DRT for impleadment and clarification of the interim order dated 19.07.2011 passed by DRT.
On the above-referred application, the DRT passed an order dated 08.05.2014 which was challenged by the bank before Debts Recovery Appellate Tribunal, Allahabad (“DRAT”) by filing an Appeal. Meanwhile, the Securitization application filed by the borrower was allowed to be withdrawn by order dated 25.06.2014. Subsequently, the appeal filed by the bank (against the order of DRT quashing auction) was allowed by DRAT by an order dated 23.12.2014, and the impugned order dated 08.05.2014 and 25.06.2014 therein was set aside and liberty was granted to the auction purchaser to challenge auction proceedings. The bank challenged the above order before DRAT, which was allowed by the impugned order dated 19.10.2020 that DRT shall adjudicate it first in the light of direction. The above order is impugned in the present writ petition at the instance of the auction purchaser.
Contentions of the Petitioner:
The learned Counsel for the Petitioner submitted that sufficient opportunity was granted to the bank, but no evidence was submitted during proceedings before DRT. The learned Counsel for the petitioner submitted that the respondent bank, on one hand, had taken a stand that they had delivered possession to the petitioner company, however, on another hand they made an averment that the possession of the unit was delivered to one Sri Aash Ahmad. The respondent bank has further issued a letter on 19.07.2014 to one of the Director of the applicant company that since the plant and machinery installed at the factory premises are huge so Sri Aash Mohd., who has no concerns with the petitioner company, had requested for further time of 1 to 1/2 month to remove the same.
Contentions of the Respondent:
The learned Counsel for the Respondent submitted that there is sufficient evidence with the bank that possession of land along with machinery was handed over to the auction purchaser, which is essential to be looked into for proper adjudication of the dispute, therefore, there was no illegality in impugned order whereby matter was remanded back for consideration with liberty to submit evidence.
Observations of the Court:
This Court observed that handing over possession of an auction property requires a procedure to be allowed. A possession memo duly signed by a representative of a bank, auction purchaser, and witnesses has to be prepared. To handover, possession cannot be an empty formality. In the present case, learned counsel for the bank alleged that possession of plant and machinery was handed over to the auction purchaser/petitioner in the presence of an authorized representative of the auction purchaser on 12.06.2014 and it was videographed also.
Further, the Court observed that authorized signatory signs the document without any name/designation as well as same has signed below word ‘received’, but it is dated 18.06.2014, though by an order dated 08.05.2014, the DRT has held that auction dated 17.02.2014 was illegal, therefore, there was no occasion for bank to handover possession.
In view of this Court, the above-referred document by any legal acumen could not be considered a ‘possession memo’ as required by the due procedure, therefore, any videography of such actions would have no consequence. The bank has brought on the best evidence in support of its claim that the property was handed over to the auction purchaser, however, as referred to above, it cannot be construed to be a legal document for possession.
The decision of the Court:
The Allahabad High Court allowed the petition and quashed the impugned order dated 19.10.2020.
Case Title: M/S Shree Bhoomi Food Beverages Private Limited vs Debts Recovers Appellate Tribunal And 4 Others
Coram: Hon’ble Justice Saurabh Shyam Shamshery
Case no.: WRIT - C No. - 26184 of 2020
Advocate for the Petitioner: Sri Shashi Nandan, Senior Advocate assisted by Sri Gyan Prakash Srivastava, Advocate
Advocate for the Respondent: Sri Sanjai Singh and Sri Krishna Mohan Asthana, Advocates
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