Sri Sukumar Banaerjee vs State Of Bank Of India & Ors
2023 Latest Caselaw 4702 Cal

                IN THE HIGH COURT AT CALCUTTA
                 CIVIL REVISIONAL JURISDICTION
                         APPELLATE SIDE

PRESENT:

THE HON'BLE JUSTICE AJOY KUMAR MUKHERJEE

                               C.O. 2438 of 2019


                            Sri Sukumar Banaerjee
                                      Vs
                         State of Bank of India & Ors.

For the petitioners                   :       Mr. U.N. Betal
                                              Mr. Suman Saha
                                              Mr. Soumadip Saha


For the O.P. No.1 to 3                :       Ms. Deblina Lahiri
                                              Mr. Mrinmoy Chatterjee

Heard on                              :       20.06.2023

Judgment on                           :       03.08.2023


Ajoy Kumar Mukherjee, J.

1. Debts Recovery Appellate Tribunal's judgment and order dated

28.06.2019 passed in Appeal No. 177 of 2018, has been assailed in the

present application. By the order impugned learned Appellate Tribunal has

set aside the order dated 29.09.2016 passed by learned Debts Recovery

Tribunal, Kolkata dated 26.02.2018, thereby remanding the matter to the

Tribunal below to decide the SARFAESI application (SA) afresh.

2. Petitioners case in brief is that in 2005 he availed cash credit facility

of Rs. 40,00,000/- from respondent no.1/bank. On 09.12.2014 as per the

statement of account debit balance in loan account was Rs. 35,10,287.33/-

which was under the total credit limit. Bank issued demand notice dated

02.02.2015 under section 13(2) of the Securitization and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI

Act) and claimed outstanding amount of Rs. 35,63,076.86/- as on

14.01.2015 plus further interest and cost charges. Petitioner made a

representation on 29.07.2015 to the bank praying time for repayment, but

the bank did not give reply to the same, though the bank under the law is

bound to give reply to the representation within 15 days under section

13(3A) of the Act. On 08.01.2016 opposite party (bank) had taken physical

possession of the secured asset without delivering the possession notice to

the borrower as per rule 8(1) of the Security Interest (Enforcement) Rules,

2002 and only affixed the possession notice. Petitioner submits that after

receiving notice under section 13(2), he deposited Rs. 26,07,740/- in

between 18.12.2014 to 28.01.2016 and as such as on 28.01.2016, the loan

account balance was only Rs. 9,74,172.33/-.

3. On 22.02.2016 the petitioner being the borrower challenging the

aforesaid SARFAESI actions, preferred an application under section 17 of

the Act of 2002 being SA No. 94 of 2016 before the Debts Recovery Tribunal-

II (DRT-11), Kolkata. It is alleged that during pendency of the said

application, the respondent/bank was trying to sell the secured asset. The

petitioner was served a sale notice on 21.08.2016 which was sent on

18.08.2016 by the opposite party/bank. In fact Bank sent the sale notice on

18.08.2016 by registered Post with A.D. and it was delivered to the

petitioner on 21.08.2016 but the sale was conducted on 15.09.2016 and on

21.09.2016 respondent/bank issued sale certificate in favour of auction

purchaser. Petitioners specific case is that there is no clear 30 days notice

given to the borrower by the secured creditor. The impugned sale came into

knowledge of the petitioner after eight months from the date of sale, as and

when the bank disclosed such fact before the Tribunal on 02.06.2017. In

such view of the matter, the bank has clearly violated Rule 8 (6) of the

Security Interest(Enforcement) Rules 2002 for not giving clear 30 days

notice from the date of sale to the borrower and/or guarantor. Accordingly

the sale notice is illegal. The petitioner herein preferred an interim

application being I.A. No. 518 of 2016 to stay the operation of the aforesaid

sale notice dated 11.08.2016.

4. Petitioner contended that Tribunal below did not consider the fact that

on 29.09.2016, in presence of one Shri S.Gupta, Chief Manager for the

respondent bank and learned counsel appeared on behalf of the petitioner,

the DRT-2 disposed of SARFAESI application as well as interim application

and passed an order to defer the sale subject to payment of Rs. 2,00,000/-

by the petitioner within two weeks from the date of order and subject to

total payment of Rs. 7.50 Lakhs within 4 weeks from the date of order and

respondent/bank was directed to hand over the physical possession of the

property to the petitioner.

5. Although aforesaid order was known to the respondent/bank and it

was passed in presence of chief manager of the Bank, but the bank did not

prefer any appeal challenging the said order dated 29.09.2016. Petitioner

contended that on 13.10.2016 and on 31.10.2016, petitioner visited the

branch office of the respondent/bank to deposit the respective demand draft

in terms of the order dated 29.09.2016, but due to non-availability of the

certified copy of the order, the respondent bank refused to receive the said

demand drafts from the petitioner. The petitioner states that he sent two

original demand drafts of one Rs. 2,00,000/- being no. 861183 and Rs. 5.50

Lakhs being no. 861211, drawn on United Bank Of India along with

Advocates letter on 17.11.2016 to the authorized officer of the bank. Despite

the acknowledgement of delivery of such letter as per the postal track

record, the respondent bank without giving any justified reason is now

illegally denying the receipt of such letter as well as receipt of original

demand drafts. As respondent/bank did not comply the directions passed

by the learned Tribunal on 29.09.2016 petitioner filed a Miscellaneous

Application being MA No. 1/2017 before the Tribunal for enforcement of the

order dated 29.09.2016. Subsequently due to alteration of territorial

jurisdiction the said MA No. 1/2017 was transferred to Siliguri DRT and

renumbered as TSA 2 of 2017. On 02.06.2017 leaned counsel for the

respondent appeared along with the Senior Manager of the Bank and

without filing affidavit in opposition, only submitted that the secured assets

has already been sold on 15.09.2016 for Rs. 23, 55,00/- and sale

certificate has been issued on 21.09.2016. Petitioner on the same date filed

an application before the Siliguri, DRT for setting aside the sale conducted

on 15.09.2019 alleging violation of the provisions under Rule 8(6) of the

Security Interest (Enforcement) Rules 2002.

6. Bank filed written objection and petitioner also filed reply to such

objection. Learned DRT on 26.02.2018, considering the written objections

and arguments advanced by both the parties, have been pleased to set aside

the impugned sale conducted on 15.09.2016 interms of the sale notice

dated 18.08.2016 and directed the respondent bank to hand over the

possession of the secured asset to the borrower/petitioner and also directed

to return the amount to the successful bidder deposited with the bank.

Petitioner contended that opposite party/bank neither challenged the order

dated 29.09.2016 nor assailed the order passed by Siliguri DRT on

02.06.2017 whereby the sale was set aside and physical possession of the

secured asset was directed to be restored to the borrower.

7. On 28.06.2009 the Debts Recovery Appellate Tribunal , Kolkata has

been pleased to allow the aforesaid Appeal being Appeal being No. 177 of

2018 and thereby set aside the aforesaid order dated 26.02.2018 and

29.09.2016 and the matter was remanded back to the Tribunal below to

decide the said SARFAESI Application afresh.

8. Mr. Betal learned Counsel appearing on behalf of the petitioner

submits that the order is perverse and not sustainable in the eye of law.

Learned Appellate Tribunal failed to appreciate that if the statute requires a

particular act/thing to be performed or done in a particular manner, it has

to be performed/done in that manner alone or not at all. In the present

case, the respondent/bank authority concerned has acted beyond the

provision under Rule 8 (6) of the Rule of 2002. The respondent/bank never

challenged the order dated 29.09.2016 nor they have raised any objection in

the aforesaid MA proceeding initiated by the petitioner. Learned court below

failed to appreciate that at the time of passing the order dated 29.09.2016,

chief Manager of the respondent bank was present. The petitioner was all

along tried to pay the amount to the bank by making several attempts but

the respondent bank whimsically and without any valid reason disregarded

the direction of the Tribunal, which was passed in presence of both the

parties. Appellate tribunal further failed to appreciate that opposite

party/Bank had issued sale notice dated 11.08.2016 to the petitioner which

was sent on 18.08.2016 and was delivered on 21.08.2016. Tribunal below

failed to appreciate that no question was left for adjudication of the

impugned sale and restoration of possession before the Siliguri DRT. The

Tribunal further failed to appreciate that the order for remanding the matter

to the learned tribunal cannot give any scope to the bank for correcting the

sale held on 15.09.2016 and therefore remand of the matter to the Tribunal

regarding the adjudication of legality of sale is unnecessary. The Tribunal

below should have considered that in the event of setting aside of the sale

held on 15.09.2016, the respondent bank will not be prejudiced as they

have every right to issue a sale notice afresh but if the sale is sustained the

petitioner herein shall suffer irreparable loss and injury which cannot be

compensated with money, as the security asset is a residential house.

9. Ms Debalina Lahiri learned counsel on behalf of opposite party/bank

contended that the order dated 29.09.2016 passed by the Tribunal was

prima facie bad in as much as on the date of passing such order the

opposite party no. 1 to 3 had conducted sale of the secured asset in terms

of the sale notice dated 11.08.2016 on 15.09.2016. The said order dated

29.09.2016 was also not complied by the petitioner herein. The Hon'ble

Debts Recovery Appellate Tribunal Kolkata rightly observed that the order

dated 29.09.2016 reflects that such notice regarding the day's hearing had

been sent to the respondent/bank but there is no mention that the notices

were delivered to the bank. She further contended that the name of one S.

Gupta, Chief Manager of respondent bank is appearing in the order, but the

presence of such officer was disputed by the bank and even no argument or

any submission of the said officer was recorded in the said order. Thus, said

order dated 29.9.2016 was passed virtually on the basis of the submissions

made on behalf of the borrower.

10. Ms Lahiri further contended that Issue for consideration before the

Tribunal below on 29.09.2016 was as to whether the proposed sale was

liable to be stayed or not and nothing more. The Tribunal below had not

pondered over on this issue nor has taken note of the fact that sale has

already been conducted on 15.09.2016. In this context, she stressed that

the bank can only consider the proposal given by the borrower regarding

payment, in connection with one time settlement, as per the guidelines of

the Reserve Bank of India. Since the sale was conducted and sale certificate

was issued prior to the order dated 29th September, 2016, so the issue of

redemption of property was also involved in the matter, which was not

taken care of. Thus the order dated 29th September, 2016 passed by

Tribunal cannot be said to be justified and SARFAESI Application was

disposed of in utter disregard to the established procedure of law, since no

opportunity was given to the bank to contest the SARFAESI Application and

there were directions on payment by the petitioner followed by handing over

possession of the property back to be petitioner without appreciating the

point of fact and point of law on merit. The Appellate Tribunal was

absolutely right in remanding the entire SARFAESI application, granting

equal opportunity to both the parties to contend their respective cases

including grant of liberty to amend their respective pleadings.

11. The opposite party/bank strenuously argued that the issue as to

whether the proceedings under section 17 of the SARFAESI Act has been

undertaken by the bank in a proper manner or not cannot be adjudicated by

this High Court as First Forum.

12. In fact the Forum below had found that there was no adjudication of

their respective cases of the parties on merit. Unless the case is sent back

on remand the disputed questions regarding service of notice,

payment/non-payment, service of bank drafts upon bank etc. could not be

adjudicated by the Appellate Forum, as a First Forum because in such event

either of the parties would have lost a Forum.

13. Ms. Lahiri further contended that under section 13(8) of the Act of

2002, the right of redemption of the property is available only where the

amount of dues of the secured creditor together with all costs charges and

expenses incurred by him is tendered to the secured creditor at any time

before the date of publication of notice for public auction or inviting

quotations or tender from public or private treaty for transfer by way of lease

assignment or sale of the secured asset. Therefore, there was no power of

the DRT to direct restoration of possession on the terms it had so directed

and thereby the Tribunal has exceeded its jurisdiction. This court in

exercising jurisdiction under Article 227 of the Constitution of India in

essence, cannot sit to hear second appeal and cannot act as a First Forum

to adjudicate on the said facts, in absence of proper evidence before this

court. Examination of evidence and appreciation of facts to answer those

disputed questions is the task entrusted upon the Debts Recovery Tribunal

which has not been done at all in the present context.

14. In fact DRAT has rightly noted all the aforesaid irregularities in the

proceeding conducted by DRT and rightly sent the mater back in remand

which is sustainable in the eye of law because such order will not prejudice

either of the parties. Accordingly she has prayed for dismissal of the present

application.

15. From the aforesaid rival contentions, various conflicting factual as

well as legal issues have emerged, some of which may be stated hereunder:-

(a) Whether opposite party/bank violated provisions under Rule 8(6)

and 9(1) and 9(4) of the Securing Interest(Enforcement) Rule 2002.

(b) Whether bank has intentionally suppressed the fact about sale of

the secured property when the order dated 29.09.2016 was passed.

(c) Whether notice regarding days hearing on 29.09.2016 were duly

served upon the Bank or not.

(d) Whether on 29.09.2016, the Bank was represented at all or not.

(e) Whether Tribunal was erred in deciding entire SARFAESI

application, while the issue for consideration before the Tribunal

on 29.09.2016 was as to whether the proposed sale was liable to be

stayed or not.

(f) Whether at the time of passing the order, the Tribunal duly

analysed that the steps taken by Bank, are in accordance with law.

(g) Whether sufficient opportunity was granted to the Bank to contest

the SARFAESI application at the time of passing orders by the DRT

under challenge.

(h) Whether Tribunal was justified from the facts and circumstances of

the case, to direct restoration of possession on the terms, it had so

directed.

(i) Whether the direction passed by Tribunal in it's order dated

29.09.2016 to receive outstanding amount in instalments was in

accordance with the guidelines of Reserve Bank of India or not.

(j) Whether Bank has violated the provision under section 13(3A) of

the SARFAESI Act by not giving reply to petitioner's representation

dated 29.07.2015 or not.

(k) Whether Bank violated the provision under Rule 8(1) of the

Security Interest (Enforcement) Rules, 2002 in taking possession of

the secured asset without delivering possession notice to Borrower.

(l) Whether Bank has waived their right to challenge the order dated

29.09.2016 by not preferring any appeal against the order.

(m) Whether Bank refused to receive demand drafts from petitioner

in terms of order dated 29.09.2016, on the ground of non-

availability of certified copy of order, when petitioner allegedly went

to tender the same on 13.10.2016 and 31.10.2016.

(n) Whether despite acknowledgement of delivery as per postal track

report, the Bank illegally denying the receipt of the two Bank

drafts.

(o) Whether the petitioner/borrower without complying the order

dated 29.09.2016 had sought for direction upon Bank to comply

with the order about restoration of physical possession of the

secured arrest.

16. It appears that aforesaid Appeal No. 177 of 2018 was preferred before

Debts Recovery Appellate Tribunal against the order dated 26th February.

The relevant portion of order dated 26.02.2018 may be reproduced below:-

"I have heard the Ld. Counsel for parties and perused the record. It is revealed from the record that the sale has taken place on 15.09.2016. Sale notice was served upon the borrower on 21.08.2016 a such 30 days clear notice of sale was not given to him which is mandatory provision of rule 8(6) of Security Interest (Enforcement) Rule 2002. As such, I am of the view that the sale dated 15.09.2016 is in violation of the procedure prescribed under rule 8, Sub-Rule-6 of the security Interest (Enforcement Rule 2002. Hence the sale is set aside. Successful bidder be paid the amount deposited with the bank and possession of the property in question be handed over to the borrower. The Bank is at liberty to take further steps as per Law. Issue copies of this order to the parties for compliance."

17. From the aforesaid cryptic order passed by Tribunal on 26.02.2018, it

is evident that without going through the disputed issues, some of which are

extracted above, Tribunal disposed of the SARFAESI application conclusively

ignoring such issues raised by the parties and which involves not only

question of law but also question of fact, and which can be adjudicated only

on appreciation of evidence.

18. In the context I am agreeable with the submissions made on behalf of

Bank that unless the Appellate Tribunal would not have sent the matter

back on remand, the disputed facts inter alia as extracted above like service

of notice, payment or non-payment by petitioner in terms of direction,

service of bank draft upon Bank, which has been denied by the Bank etc.,

could have been adjudicated by the Appellate forum as the first forum and

in any such event, either of the parties would have lost a forum.

19. Furthermore this court in exercising supervisory jurisdiction under

Article 227 of the Constitution of India cannot sit in Second Appeal and

cannot act as first forum to determine the legality and validity of sale

certificate as well as sale , when there is no proper evidence before this court

except some Xerox copies of document. In fact the Appellate Tribunal below

is justified in remanding the case, as examination of evidence and

appreciation of facts and the application of law to the facts as First Forum,

is required to be conducted by the Tribunal in order to adjudicate the issues

raised by the parties, which has not been done by the Tribunal, as

appearing from the aforesaid quoted order of Tribunal. The Debt Recovery

Appellate Tribunal has noted some main disputed issues, which remains

unanswered in the order under challenge and DRAT has rightly remanded

the mater for fresh adjudication without depriving either of the litigants to

agitate their respective issues.

20. In such view of the matter the order impugned does not call for any

interference.

21. C.O. 2438 of 2019 along with connected application are accordingly

disposed of.

There will be no order as to the costs.

Urgent Photostat certified copy of this judgment, if applied for, be supplied

to the parties upon compliance with all requisite formalities.

(AJOY KUMAR MUKHERJEE, J.)