Orissa High Court
M/S. Jagannath Cashew vs Registrar on 15 October, 2025
Author: S.K. Sahoo
Bench: S.K. Sahoo
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.24539 of 2019
An application under Articles 226 and 227 of the Constitution of
India
-------------------------
M/s. Jagannath Cashew
Processing Unit (Loanee)
& another ....... Petitioners
-Versus-
Registrar, Debts Recovery
Appellate Tribunal (DRAT)
Kolkata and others ....... Opp. Parties
For Petitioners: - Mr. Ramakanta Mohanty
Senior Advocate
For Opp. Parties: - Mr. S.P. Mishra
Senior Advocate along with
Mr. B.N. Udgata, Advocate
(for opp. party no.3)
Mr. D.C. Sabat, Advocate
(for opp. party no.5)
-------------------------
P R E S E N T:
THE HONOURABLE MR. JUSTICE S.K. SAHOO
AND
THE HONOURABLE MR. JUSTICE SIBO SANKAR MISHRA
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Date of Hearing: 06.08.2025 Date of Order: 15.10.2025
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Page 1 of 19
S.S. Mishra, J: This writ petition has been filed by the petitioners
assailing the order dated 15.11.2019 passed by the Debts
Recovery Appellate Tribunal, Kolkata (hereinafter referred to as
"DRAT") in Appeal No.42 of 2019, whereby the learned Appellate
Tribunal allowed the appeal filed by the State Bank of India
(since merged with Union Bank of India) and reversed the order
dated 02.04.2019 of the learned Debts Recovery Tribunal,
Cuttack (hereinafter referred to as "DRT"). By the said order
dated 02.04.2019, the DRT had allowed S.A. No. 1 of 2018 filed
by the petitioners under Section 17 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as "SARFAESI Act"),
quashed the demand and possession notices as well as the
auction sale and directed refund of the auction purchaser's
money with interest. The petitioners seek quashing of the DRAT
order and a declaration that the measures taken by the bank
under Sections 13(2), 13(4) and 14 of the SARFAESI Act,
including the auction sale and the consequential sale certificate
and registered sale deed executed in favour of Opposite Party
No.5, are illegal and void.
2. Mr. Ramakanta Mohanty, learned Senior Counsel
appearing for the petitioners, Mr. S.P. Mishra, Senior Advocate,
Page 2 of 19
for opposite party no. 3 and Mr. D.C. Sabat, Advocate for
opposite party no. 5, have been heard in extenso.
3. The facts giving rise to the present writ petition are
that the petitioners, a proprietorship concern and its guarantor,
had availed a cash credit limit of Rs.10,00,000/- (rupees ten
lakh) in 2004, subsequently enhanced to Rs.20,00,000/- (rupees
twenty lakh) in 2010, secured by mortgage of immovable
properties of the proprietor and guarantor. Upon default, the
loan account was classified as Non-Performing Asset (NPA). The
bank issued notices under Section 13(2) of the SARFAESI Act on
06.02.2015 and 24.02.2016, followed by possession notices
under Section 13(4) on 03.07.2015 and 04.07.2016.
4. The secured asset was brought to auction on
18.04.2017 and sold on 19.05.2017 for Rs. 29,04,000/- to
Opposite Party No.5. A sale certificate was issued on 12.06.2017
and pursuant to an order of the District Magistrate under Section
14 of the SARFAESI Act, physical possession was delivered to the
auction purchaser on 20.12.2017. A registered sale deed was
executed on 22.12.2017.
5. Meanwhile, a civil suit (C.S. No.244/2016) for specific
performance had been instituted by one Samarendra Nanda
based on an agreement with the guarantor. The Civil Court had
passed an interim order of status quo which was later set aside
Page 3 of 19
in appeal. In CMP No.586 of 2017, this Court had also directed
maintenance of status quo on 12.05.2017, which order was
vacated on 01.11.2017.
6. The petitioners filed S.A. No.1 of 2018 before the
learned DRT, Cuttack, challenging the measures under Section
13(4) and the subsequent auction sale. By order dated
02.04.2019, the DRT allowed the S.A., quashed the demand and
possession notices, the auction notice and the sale certificate
and directed refund of the sale consideration to the auction
purchaser with FD interest, while requiring the petitioners to
deposit Rs.25,00,000/- (rupees twenty five lakhs) and the
balance dues within one month.
7. The bank preferred appeal before the DRAT, Kolkata.
By judgment dated 15.11.2019, the DRAT allowed the appeal,
set aside the order of DRT and upheld the measures taken by the
bank. The petitioners have now approached this Court
challenging the order of the DRAT.
8. Mr. Ramakanta Mohanty, learned Senior Counsel for
the petitioners, submitted that the impugned order of the DRAT
is unsustainable in law and on facts. It is contended that the loan
account of the petitioners was arbitrarily classified as Non-
Performing Asset (NPA) on different dates in different
proceedings, which reflects non-application of mind and renders
Page 4 of 19
the entire exercise under the SARFAESI Act invalid. It is urged
that in the notices under Section 13(2) as well as in the affidavits
filed before the District Magistrate, the bank has mentioned
contradictory dates of NPA, and such inconsistency goes to the
root of the matter.
He further argued that the auction sale held on
19.05.2017 and the issuance of the sale certificate on
12.06.2017 are void, having been conducted during the
subsistence of an interim status quo order passed by this Court
on 12.05.2017 in CMP No.586 of 2017. According to the
petitioners, once this Court had directed maintenance of status
quo, the bank could not have proceeded with confirmation of
sale and the subsequent transfer in favour of the auction
purchaser is a nullity in the eyes of law, irrespective of the
bank's alleged knowledge of the order.
He also emphasized that the property was grossly
undervalued. The valuation report assessed the property was
more than Rs.80 lakhs, whereas it was sold only for Rs. 29.04
lakhs, i.e., at nearly one-third of its real value. Such an arbitrary
undervaluation defeats the object of maximizing recovery and
shows mala fides in the conduct of the bank. The petitioners
further contended that even after the auction sale, the bank
offered a One Time Settlement (OTS) proposal on 29.06.2017
Page 5 of 19
without disclosing the fact of the completed sale, which amounts
to suppression of material facts and abuse of process.
He further argued that the learned DRT had rightly
appreciated these aspects, quashed the measures taken by the
bank under Sections 13(2), 13(4) and 14 of the SARFAESI Act,
and protected the interest of the petitioners as well as the
auction purchaser by directing refund of the amount with
interest. The learned DRAT, however, committed serious error in
reversing the well-reasoned findings of the learned DRT. It is
urged that the order of the DRAT should be set aside and the
order of the DRT be restored.
9. Per contra, Mr. S.P. Mishra, learned Senior Counsel
for the opposite party no.3 submitted that the writ petition is
devoid of merits and deserves to be dismissed. It is argued that
the petitioners have themselves been chronic defaulters and
have approached the Court only after exhausting all
opportunities. The petitioners failed to challenge the demand
notices under Section 13(2) and the possession notices under
Section 13(4) of the SARFAESI Act within the period of limitation
prescribed by law. By not doing so, they waived their right to
object and therefore, cannot be permitted to reagitate stale
claims after the sale was duly concluded and third-party rights
was created.
Page 6 of 19
It is further contended that the allegation regarding
different NPA dates is misconceived. The account was rightly
classified as NPA on account of persistent defaults and a mere
variation in the date of classification in different documents does
not invalidate the proceedings, especially when the factum of
default is undisputed.
On the issue of the status quo order dated
12.05.2017 passed by this Court, learned Senior Counsel
submitted that the bank was not aware of the said order at the
time of conducting the auction and issuing the sale certificate.
Knowledge of the order was received only after 17.06.2017, by
which time the sale had already been confirmed. In any event,
once the sale certificate was issued, possession delivered and the
sale deed registered, the rights of the auction purchaser stood
crystallized and cannot now be unsettled at the instance of the
petitioners.
Learned Senior Counsel further argued that the
allegation of undervaluation is unfounded. The reserve price was
fixed in accordance with the procedure and the property was sold
at a fair market rate. In fact, the guarantor himself had earlier
agreed to sell the same property to one Samarendra Nanda for a
nominal consideration of Rs.3 lakhs, which belies the allegation
of undervaluation. As regards the OTS proposal dated
Page 7 of 19
29.06.2017, it is submitted that such proposal has no effect once
the sale had already been completed and no right accrued to the
petitioners thereby.
It is lastly contended that the learned DRAT, being
the Appellate Authority, has examined the entire matter and
passed a reasoned order. There is no perversity or jurisdictional
error in the order of the learned DRAT warranting interference in
writ jurisdiction and thus, the writ petition is liable to be
dismissed.
10. From the pleadings, documents placed on record and
the contentions raised by the parties through their counsel
before the forum below and this Court, the following admitted
facts has borne on record:
M/s Jagannath Cashew Processing Unit (Loanee)
is a proprietorship concern of Sri Deba Dash, son of
Late Radha Krushna Dash of Ashok Nagar, Dist-
Athagarh, Cuttack;
Ashok Kumar Dash, is the brother of Deba Dash,
stood as the guarantor to the loan and mortgaged
the property in subject;
Page 8 of 19
M/s Jagannath Cashew Processing Unit availed
cash credit limit of Rs.10,00,000/- in 2004, which
was enhanced to Rs.20,00,000/- in 2010;
Upon default, the loan account was classified as
Non-Performing Asset (NPA);
The bank issued notices under Section 13(2) of
the SARFAESI Act on 06.02.2015 and 24.02.2016,
followed by possession notices under Section 13(4)
of the SARFAESI Act on 03.07.2015 and 04.07.2016;
The secured asset was brought to the auction
and sold on 19.05.2017 for Rs.29,04,000/- to
opposite party no.5 Banoj Kumar Dash;
By resorting to Section 14 of SARFAESI Act,
physical possession was taken over and delivered to
the auction purchaser on 20.12.2017 and
subsequently sale deed was executed on 22.12.2017.
11. On the basis of the aforementioned admitted factual
background, the petitioners herein have highlighted primarily
three points:-
(i) The auction sale was carried out by the bank
during the subsistence of the status quo order dated
12.05.2017 passed by this Court;
Page 9 of 19
(ii) The secured asset was auctioned by
undervaluing the property; and
(iii) Even after the property was auctioned and sale
was confirmed, the bank proposed for settlement of
the account on 29.06.2017 without disclosing the
sale proceeding, which is misleading and goes to
show that the auction was hurriedly done knowing
fully well that there is a status quo order operating.
12. To address the aforementioned three points and to
put the record straight on facts, it would be relevant to
reproduce the proceedings dated 27.02.2023 and 19.07.2023 in
the present case:
"08. 27.02.2023: This matter is taken up
through hybrid mode.
2. Heard Mr. R. Mohanty, learned Senior
Counsel appearing along with Mr. S.K. Pattnaik,
learned counsel for the petitioners and Mr. B.N.
Udgata, learned counsel for opposite party-bank.
3. Mr. R. Mohanty, learned Senior Counsel
appearing along with Mr. S.K. Pattnaik, learned
counsel for the petitioners contended that the
petitioners had availed a loan and there is
outstanding of rupees twenty four lakhs and
some odd, against which a Debt Recovery
proceeding was initiated. It is contended that for
the selfsame property, a suit is pending before
the appropriate forum. But when the status quo
order is continuing, the property in question was
sold by the bank and realized an amount of
Page 10 of 19
rupees twenty nine lakhs. Therefore, balance
amount of rupees five and some odd has to be
returned to the petitioners. But instead of doing
so, the petitioners were called upon to deposit a
sum of Rs.25,00,000/-, which was deposited by
the petitioners before the bank. Thereby, the
petitioners are grossly prejudice by the arbitrary
action of the opposite party-bank.
4. Mr. B.N. Udgata, learned counsel for
opposite party-bank contended that there is an
outstanding of rupees twenty four lakhs and
some odd against the petitioners. It is
contended that though the civil suit is pending
before the appropriate forum and status quo
order is operating, but the same has not been
brought to the notice of the bank at any point of
time and, as such, the property was sold and an
amount of Rs.29,00,000/- was realized, which
was kept in a separate account of the bank. So
far as deposit of Rs.25,00,000/- by the
petitioner as per the direction of the Debts
Recovery Tribunal is concerned, the same was
also kept in a separate account. Therefore, if the
petitioners so like, they may get refund of the
said amount. However, in the meantime, third
party interest has been created by putting the
property in auction. It is further contended that
bank has not aware of the position with regard
to the order passed by the civil court and,
therefore, such things were happened.
5. But fact remains, the property in question
has already been sold and an amount of
Rs.29,00,000/- has already been realized by the
bank. Therefore, adjusting the loan amount,
balance amount should have been refunded to
the petitioners. Instead of doing so, the
petitioners have been called upon to deposit
Rs.25,00,000/-, which they deposited before the
Page 11 of 19
bank and ultimately the same was deposited by
the bank before the Debts Recovery Tribunal.
6. List this matter after one week along with
the records of C.M.P. No. 586 of 2017 disposed
of on 01.11.2017.
09. 19.07.2023: This matter is taken up
through hybrid mode.
2. Mr. S.P. Mishra, learned Senior Advocate
appearing for the opposite party-Bank
contended that so far as the demand raised by
the Bank on the petitioners for an amount of
Rs.25.00 lakhs, the same has already been
realized from the sale proceeds of the property
of the petitioners at Rs.29.00 lakhs and
therefore, the bank will refund the balance
amount of Rs.4.00 lakhs to the petitioner. So far
as demand raised by the bank on the petitioners
for Rs.25.00 lakhs, the same will be refunded to
him. The entire exercise shall be completed
within a week.
3. Call this matter after one week."
13. It appears that pursuant to the aforementioned
orders, the bank has not only refunded Rs.25,00,000/- (rupees
twenty five lakhs only) deposited by the petitioners but also the
differential amount of Rs.4,00,000/- (rupees four lakhs only)
from that of the auction sale price after deducting the defaulted
amount.
14. The main thrust of argument of the learned Senior
Counsel appearing for the petitioners appears to be that the
entire auction process carried out by the respondent-Bank is
Page 12 of 19
vitiated because on the face of the status quo order being in
force, the auction process should not have been carried out and
even if it is carried out, it is against the injunction order passed
by this Court.
15. In this regard, it is relevant to mention that the
guarantor, being the mortgager of the property, who is the
brother of the proprietor, the loanee, conspicuously entered into
an agreement to sale of the property in subject on 28.06.2016
after the notice under Section 13(2) of the SARFAESI Act was
issued on 06.02.2015 and 24.02.2016. The guarantor Ashok
Dash entered into the agreement with one Samarendra Nanda
for sale of the property valued at Rs.3,00,000/-. The very fact
that the guarantor entered into an agreement with Samarendra
Nanda for sale of the property in subject at Rs.3,00,000/- goes
to answer the second point raised by the petitioners that the
property was auctioned by undervaluing the market price. It is
pertinent to mention that the property has been auctioned at
Rs.29,04,000/- (rupees twenty nine lakh four thousand).
Therefore, it could be safely concluded that the contention raised
by the petitioners is baseless. Accordingly, point no.2 is
answered.
16. It appears that Samarendra Nanda filed a specific
performance suit numbered as C.S. No.244 of 2016 before the
Page 13 of 19
learned Civil Judge (Junior Division), Athagarh against Ashok
Dash, the guarantor/mortgager. The said suit appears to be a
collusive one.
17. The plaintiff Samarendra Nanda by highlighting the
notice under Section 13(4) of the SARFAESI Act issued by the
bank and published in the daily newspaper "Sambad" on
10.07.2016, sought a status quo order. The learned Civil Judge
(Junior Division), Athagarh issued a status quo order. The
defendant-Bank filed FAO No.1 of 2017 before the learned
Additional District Judge, Athagarh challenging the interim status
quo order. The learned Additional District Judge, Athagarh vide
order dated 23.02.2017 vacated the status quo order passed by
the learned Civil Judge (Junior Division), Athagarh on
06.02.2016 in C.S. No. 244 of 2016. The said plaintiff-
Samarendra Nanda filed CMP No. 586 of 2017 before this Court
assailing the order dated 23.02.2017 passed by the learned
Additional District Judge, Athagarh. This Court vide order dated
12.05.2017 passed the following orders:
"C.M.P. No. 586 of 2017
03. 12.05.2017 Registry is directed to assign
the number.
A copy of the petition be served on Mr. P.V.
Balkrishnan, who usually appears on behalf of
State Bank of India in course of the day.
Page 14 of 19
Issue notice to the opposite party no.2 by
registered post with A.D. indicating therein that
the matter is likely to be disposed of at the
stage of admission. Requisites shall be filed in
course of the day. Failure to file requisites within
the stipulated time, the interim order shall stand
automatically vacated.
List the C.M.P. on 28th June, 2017 indicating the
name of Mr. P.V. Balkrishnan in the cause list.
Misc. Case No. 14 of 2017
04. 12.05.2017 As an interim, parties are
directed to maintain status quo over the suit
property till the next date."
18. Perusal of the aforementioned orders indicates that
the orders were passed ex-parte. This Court has directed to
serve the copy of the petition on Mr. P.V. Balkrishna, learned
counsel who usually appears for the bank. There is nothing on
record to suggest that the copy of the petition and the order
dated 12.05.2017 passed by this Court in CMP No.586 of 2017
was communicated either to the bank or served on the counsel
for the bank before the property was put to auction sale and
issuance of sale certificate on 12.06.2017. On the contrary, a
letter dated 17.06.2017 is found on record demonstrating that
the bank was informed about the pendency of the proceeding
before this Court in CMP No.586 of 2017, which was written by
the bank counsel to the Assistant General Manager of the bank.
Therefore, prima facie it appears that there was no information
available with the bank regarding existence of the status quo
Page 15 of 19
order passed by this Court in CMP No.586 of 2017 before
17.06.2017 and obviously before the sale certificate was issued
on 12.06.2017.
19. During hearing of the present writ petition, a specific
query was put to the learned Senior Counsel appearing for the
petitioners to show any document, which would demonstrate
that the order dated 12.05.2017 passed by this Court was even
communicated to Mr. P.V. Balkrishna, Advocate for the bank
before the sale certificate was issued. The learned Senior
Counsel could not affirmatively submit anything contrary or could
produce any document. Therefore, the very ground of attack to
the impugned order that the auction was carried out during the
subsistence of the status quo order falls flat.
20. Regarding the third point raised by the learned
counsel for the petitioners that even after the auction sale, the
OTS proposal dated 29.06.2017 was given to the petitioners is
also of no consequence inasmuch as in the counter affidavit, the
respondent-Bank in paragraph-10 has specifically averred that
there was an One Time Settlement (OTS) Scheme, namely RINN
Samadhan Scheme was floated by the bank during that period
and routinely the OTS proposal was sent to all the defaulters.
Since the petitioner was one of the defaulters shown in the bank
ledger, the proposal was also given to the petitioner.
Page 16 of 19
21. Mr. S.P. Mishra, learned Senior Counsel appearing for
the bank has contended that the OTS proposal given after the
sale confirmation was an inadvertent error, but that would in no
way affect the auction process carried out by the bank by
following due process of law. We agree with the contention
raised by the bank regarding the same.
22. It is also noteworthy to mention here that after the
confirmation of the sale, the sale deed has already been
executed and possession of the auction property has been
handed over on 20.12.2017 to the opposite party no.5 and the
sale became absolute. Much water has flown under the bridge by
now. Therefore, at this belated stage, upsetting the auction sale,
which was carried out by following due process of law will not
only be prejudicial to the bank but also to the opposite party
no.5 who cannot be made to suffer for no fault on his part.
23. By taking into account the aforementioned, the Debts
Recovery Appellate Tribunal, Kolkata in the impugned order
dated 15.11.2019 has observed as under:
"18. It is worthwhile to mention that after
confirmation of sale, sale deed has been
executed and possession of the property has
also been handed over on 20.12.2017. Thus, the
sale became absolute. The borrower/guarantor
had never appeared before the bank to redeem
the property before publication of sale notice.
Therefore, the right to redeem the property has
Page 17 of 19
been extinguished and the valuable right has
been created in favour of the auction purchaser.
Thus, the Tribunal below has erred in allowing
redemption of the property. Further, the
Tribunal below has directed to calculate the
interest at 10% simple from the date of demand
notice. It is apparently against the provisions of
the Act because while deciding the S.A., the
Tribunal has to analyze the steps taken by the
bank and cannot quantify the amount much less
the issue of applicability of rate of interest. This
way also the order impugned is not sustainable.
19. As observed above, although the issue of
taking possession of the property on 20.12.2017
in compliance of District Magistrate order was
within limitation, but firstly the respondent has
not pleaded in any of the grounds to challenge
the order of the District Magistrate and no relief
was sought for quashing the said order or
restoring back the possession of the secured
assets. Thus, the relief which was not pleaded
cannot be granted. Secondly, this issue was not
argued before the Tribunal below and no finding
has been recorded in the impugned order on this
aspect so this cannot be entertained at the
appellate stage. If the respondent was having
any grievance with regard to such non-recording
of finding, he was free to challenge the order to
this extent but no such appeal was filed. Thirdly,
the only objection is with regard to date of
N.P.A. as mentioned in affidavit filed before the
District Magistrate to be 30.11.2013, whereas
the bank has mentioned the date of N.P.A. as
28.12.2015 in subsequent demand notice. So,
this way there is variance in the dates but the
District Magistrate is not required to make any
enquiry about the contents mentioned in the
affidavit. He has to satisfy as to whether all the
points required under Sec.14(1) of the
SARFAESI Act were covered in affidavit or not.
Page 18 of 19
The District Magistrate cannot go into the
niceties of the contents. So, it cannot be said
that there is any irregularity in the order of the
District Magistrate. Further, possession of the
property has already been delivered to the
auction purchaser on 20.12.2017. Therefore, the
same cannot be restored back on the ground of
redemption of the property at this belated stage.
20. In view of the aforesaid, the impugned order
dated 02.04.2019 is liable to be quashed.
Hence, the appeal is allowed and the order dated
02.04.2019 is set aside. No order as to costs."
24. In view of the foregoing discussions, we find no
infirmity, perversity in the impugned order dated 15.11.2019 of
the learned Debts Recovery Appellate Tribunal which
necessitated for interference by us in this writ petition.
25. Accordingly, the writ petition fails and dismissed. No
costs.
..........................
S.S. Mishra, J.
S.K. Sahoo, J. I agree.
................................
S. K. Sahoo, J.
Digitally Signed Orissa High Court, Cuttack
Signed by: ASHOK KUMAR JAGADEB th MOHAPATRA
Designation: Secretary The 15 October 2025/Ashok
Reason: Authentication
Location: High Court of Orissa
Date: 16-Oct-2025 15:31:09
