The Central Bank Of India & Others vs Sri Srikanta Mahaldar
2022 Latest Caselaw 4247 Cal

15.07.2022
 Court No.32
  rpan/08

                                     FMA 1277 of 2018
                                              with
                       IA No.: CAN 1 of 2017 (Old No. CAN 9216 of 2017)
                             The Central Bank of India & Others
                                            - Versus -
                                    Sri Srikanta Mahaldar

                               Mr. Bishwambher Jha
                                           ... for the Appellants.
                               Mr. Subhabrata Basu,
                               Mr. Shovan Banerjee,
                               Ms. Urvashi Jain
                                          ... Respondent.

The present appeal has been preferred by the

Central Bank of India [in short, the bank] and its

functionaries challenging an order dated 13 th July, 2017

passed in a writ petition, being WP No.7478 (W) of 2016.

Shorn of unnecessary details the facts are that

responding to a public notice, published in the Times of

India on 15th February, 2013, the writ

petitioner/respondent participated in the auction sale

pertaining to a property described under Sl. No.6 in the

auction sale notice. On the basis of the said notice, the

respondent paid an amount of Rs.1,80,607/- to the bank

through a bank draft on 11 th March, 2013. The

respondent emerged to be the successful bidder and paid

a further amount of Rs.2,70,000/- on 25 th March, 2013

and lastly, an amount of Rs.13,50,000/- on 3 rd April,

2013. In total, the respondent thus paid an amount of

Rs.18,00,607/- to the bank. Thereafter, the bank issued

a sale certificate. However, physical possession of the

property was not handed over to the respondent. A

complaint to that effect was lodged on 19 th November,

2015. Further reminders were issued but the bank

neither did refund the amount already paid nor did it

hand over the possession of the property. Aggrieved

thereby, the respondent preferred the writ petition in

which the order impugned in the present appeal was

passed.

Drawing our attention to the auction sale notice,

Mr. Jha, learned advocate appearing for the appellants

submits that the property was sold to the respondent on

'as is where is basis' and 'as is what is basis' &

'whatever there is basis' & 'without recourse basis'. In

the said notice it was also stated that the bank is not

responsible for title, condition or any other fact affecting

the property. There was no rider to the effect that actual

physical possession of the property shall be handed over

to the respondent. Having agreed to such conditions, the

respondent participated and as such he could not have

refused to take over symbolic possession of the property

from the bank. It was for the respondent himself to

obtain physical possession of the property. No objection

was also raised by the respondent during inspection.

He argues that the respondent is bound by the

terms and conditions of the auction sale notice. In the

sale certificate it was also stated that the property has

been sold on 'as is where is basis' and 'as is what is

basis'. The respondent refused to take over symbolic

possession of the property from the bank and claimed

refund. From such facts, it is explicit that no legal right

of the respondent was infringed warranting interference

of this Court.

As regards interest component imposed by the

judgment, Mr. Jha submits that the benchmark

guidelines, issued by the Reserve Bank of India, needs to

be followed and that at best the respondent may claim

an interest @ 9% p.a. In support of his arguments, Mr.

Jha has placed reliance upon a judgment delivered in

the case of Union of India Vs. A. K. Mukherjee.

Per contra, Mr. Basu, learned advocate appearing

for the writ petitioner/respondent submits that the

respondent had been misled by the bank. It was an

obligation on the part of the bank to hand over the

physical possession of the property after the respondent

emerged to be the successful in the auction sale process.

The bank had neither returned the amount of

Rs.18,00,000/- nor had handed over the possession of

the property to the respondent.

He argues that the provisions of the Securitisation

and Reconstruction of Financial Assets and Enforcement

of Security Interest Act, 2002 [in short, the Act of 2002]

and the Security Interest (Enforcement) Rules, 2002 [in

short, the said Rules] were not followed by the said bank

and as such, the learned Single Judge rightly directed

the bank to refund the amount of Rs.18,00,000/- along

with interest @ 18% p.a. on and from 11th March, 2013.

A successful bidder of the secured asset under

public auction has to pay the sale consideration as per

the timelines under Rule 9(3) and 9(4) of the said Rules.

In the instant case, in spite of receipt of the entire

amount, the bank withheld delivery of the possession. A

duty is cast upon the authorised officer of the secured

creditor to disclose to the auction purchaser any

material defect in the title, failing which it would be

construed that the purchaser was misled. If a secured

creditor fails to disclose any such defect relating to the

auction property, it cannot later claim protection on the

pretext of 'as is where is basis' and 'as is what is basis'.

The sale certificate, as issued, is also not in consonance

with the terms, as incorporated under Appendix - V Rule

9(6) of the said Rules. The judgment delivered in the

case of A. K. Mukherjee (supra), as relied upon by Mr.

Jha, is, in our opinion, distinguishable on facts and has

no manner of application in the present case.

In view thereof, we do not find any infirmity in the

direction upon the bank to refund an of Rs.18,00,000/-

to the respondent.

Pursuant to our earlier order, today, Mr. Sachin

Kumar, Chief Manager, Regional Officer, Kolkata, South

Region, Central Bank of India is personally present along

with four bank drafts of Rs.4,50,000/- each, aggregating

an amount of Rs.18,00,000/-. The respondent is also

present today before this Court. The learned advocate-

on-record has identified the respondent and he has also

placed the original Aadhaar Card, the PAN Card as well

as the Pension Payment Order booklet of the respondent.

The originals are returned and the photocopies of the

said documents are kept on record.

Mr. Sachin Kumar, Chief Manager, Regional

Officer, Kolkata, South Region, Central Bank of India

has handed over four bank drafts to the respondent in

court today. The respondent has also issued a receipt to

Mr. Kumar. Let the photocopies of the bank drafts and

the receipt be kept on record.

It appears from the records that though the appeal

was filed on 31st August, 2017 along with an application

for stay, no steps were taken by the bank to have the

matter heard expeditiously. In the affidavit-in-reply,

filed on behalf of the bank, it has been disclosed that out

of the sale proceeds paid by the respondent, an amount

of Rs.12,40,583/- was utilized for the closure of the

underlying credit facility and the rest amount of

Rs.5,59,417/- was returned to the borrower, namely, Mr.

A. K. Paul on 20th November, 2013. Even after returning

an amount of Rs.5,59,417/- to the previous borrower,

the bank is taking a stand that it was having symbolic

possession. The bank illegally withheld the amount of

Rs.18,00,000/-, as paid by the respondent in the month

of March, 2013. Repeated representations were

submitted by the respondent thereafter but the bank did

not bother to respond such representations and as such,

the respondent was constrained to file the writ petition

in the year 2016. Today, we are in the year 2022 and

the respondent has not yet got back the said amount of

Rs.18,00,000/-. The liability in relation to the sum had

arisen out of a commercial transaction. The bank had

utilized the amount of Rs.18,00,000/- paid by the

respondent since the year 2013. The reduction of the

rate of interest, as prayed for on behalf of the appellants,

will amount to giving a premium to those, who trade

upon the money of others. In view thereof, we are of the

opinion that the learned Single Judge has rightly

directed the bank to pay an interest at the rate of 18%

per annum and we do not find any reason to interfere

with such direction.

The appeal and the stay application are,

accordingly, dismissed.

The personal appearance of the Chief Manager of

the said bank is dispensed with.

There shall, however, be no order as to costs.

Urgent photostat certified copy of this order, if

applied for, be supplied to the parties, upon compliance

of all requisite formalities.

(Raja Basu Chowdhury, J.) (Tapabrata Chakraborty, J.)