Punjab-Haryana High Court
Bank Of India vs The Debts Recovery Tribunal , Delhi & Ors on 1 July, 2024
Author: Lisa Gill
Bench: Lisa Gill
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Civil Writ Petition No. 28310 of 2018
Date of Decision: July 1 , 2024.
Bank of India ...... PETITIONER (s)
Versus
The Debt Recovery Appellate Tribunal, Delhi and others
...... RESPONDENT (s)
CORAM:- HON'BLE MRS.JUSTICE LISA GILL
HON'BLE MRS.JUSTICE AMARJOT BHATTI
Argued by: Mr. G.S.Anand, Advocate
for the petitioner.
Mr. I.P.Singh, Advocate
for respondent No.2.
*****
1. Whether reporters of local papers may be allowed to see
the judgment?
2. To be referred to the reporters or not?
3. Whether the judgment should be reported in the digest?
*****
LISA GILL, J.
1. Prayer in this writ petition filed by petitioner-Bank of India is for
setting aside order dated 09.08.2018 (Annexure P5) passed by learned Debt
Recovery Appellate Tribunal, Delhi (for short, 'DRAT, Delhi') to the extent of
the rate of interest awarded to respondent No.2.
2. Brief facts necessary for adjudication of the matter are that, in
proceedings initiated under Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (for short, the 'SARFAESI' Act)
against respondent No.3 - borrower, property i.e., secured asset/mortgaged
property was sold in auction held on 24.08.2011 pursuant to sale notice dated
20.10.2011 to respondent No.2, namely, M/s Stelco Limited. Description of the
property, in question, is detailed in sale certificate dated 20.10.2011 attached as
Annexure A6 with appeal filed by respondent No.2 before learned DRAT, Delhi.
Respondent No.2 filed SA No.246 of 2011, titled, M/s Mitsons Agro Mills
Private Limited v. Bank of India and others. SA No.246 of 2011 was allowed by
learned DRT-II, Chandigarh vide order dated 21.07.2016 while cancelling the
sale conducted in favour of respondent No.2 on the premise that auction held on
24.08.2011 was in violation of specific provisions of SARFAESI Act inasmuch
as 30 days' clear mandatory notice had not been given to the applicants.
Contentions on behalf of respondent No.2 that it had already deposited the entire
amount in the year 2011 and that a loan had been taken to deposit the amount
with the Bank were noted. The sale was, however, cancelled with a direction that
money so deposited by the auction purchaser be returned to it within 30 days
from the date of passing of order with simple interest at the rate of 7.5% per
annum. The auction purchaser was directed to hand over free and vacant
possession of the property to authorized officer of the Bank within one week of
receipt of the amount from the Bank. The bank was thereafter held free to
proceed with the property, in accordance with law.
3. Appeal No.347 of 2016 against order dated 21.07.2016 passed by
learned DRT-II, Chandigarh was preferred by respondent No.2-M/s Stelco
Limited. Sole grievance raised was that it was entitled to interest at the rate of
12% per annum with monthly rests instead of 7.5% per annum simple interest as
awarded by learned DRT-II, Chandigarh.
4. Learned DRAT, Delhi vide impugned order 09.08.2018 disposed of
the appeal while directing payment to respondent No.2-auction purchaser of
simple interest at the rate of 12% per annum from the date of deposit of auction
amount to the Bank till the date of its refund. It was further observed in
impugned order dated 09.08.2018 that as the Bank had refunded the money with
interest as awarded by learned DRT-II, Chandigarh, the auction purchaser would
be entitled only to difference of rate of interest as awarded by DRT-II,
Chandigarh and the Appellate Tribunal.
5. Aggrieved with the enhancement in the rate of interest vide order
dated 09.08.2018 passed by learned DRAT, Delhi, present writ petition was filed
by petitioner-Bank of India.
6. It is to be noted at this stage that, order dated 21.07.2016 passed by
learned DRT-II, Chandigarh was accepted by petitioner-Bank and no appeal was
preferred by the Bank challenging the said decision.
7. Learned counsel for petitioner-Bank vehemently argued that
enhancement of rate of interest already awarded by learned DRT-II, Chandigarh
to auction purchaser is completely and totally unjustified. It is further
vehemently argued that price of the asset sold to the auction purchaser in the year
2011 has plummeted, thus, leading to a double blow to the petitioner bank
inasmuch as it had to refund the auction money which is of a higher value and
now an enhanced rate of interest would also be paid by petitioner-Bank. The rate
of interest on refund should not be taken in isolation in the peculiar facts and
circumstances of the case because fall in the value of the property/secured asset
over the years cannot be ignored. In fact, in such a situation grant of higher rate
of interest would amount to unjust enrichment of the auction purchaser. It was,
thus, prayed that this writ petition be allowed.
8. Per contra, learned counsel for respondent No.2 has controverted the
averments as above. It was submitted that it was entirely the fault of petitioner-
Bank inasmuch as auction was held to be conducted by the authorized officer of
the Bank in utter violation of mandatory provisions of SARFAESI Act and
applicable Rules. The auction in favour of respondent No.2 was set aside by
learned DRT-II, Chandigarh vide order dated 21.07.2016 passed in SA No.246 of
2011 filed on 21.07.2011. Respondent-auction purchaser, it was submitted, had
deposited the entire amount of Rs.4,75,50,000/- within the stipulated period and
sale-certificate had been issued in its favour 20.10.2011. Auction purchaser, it
was further submitted, had availed of loan facility from Punjab National Bank to
deposit the auction amount, where auction purchaser had to pay the interest at the
rate of 13% to 14.25% per annum with monthly rests. Auction purchaser was
depositing the said installments as they fell due and at the same time, it had to
face litigation which ensued upon filing of SA No.246 of 2011 by the borrower.
It was further submitted that the auction purchaser diligently pursued the
proceedings in the SA and there was no delay which was caused on its part.
9. Learned counsel for auction purchaser further argued that there was
no question of any unjust enrichment of the auction purchaser, who had, in fact,
suffered great loss while on the other hand, the petitioner did not suffer any loss,
whatsoever. Respondent No.2 had participated in auction proceedings in a
bonafide manner and was not responsible for any lapses which squarely lay at the
door of the Bank. OA No.314 of 2006 filed by petitioner-Bank was allowed on
26.08.2016 and the Bank was held entitled to recover a sum of Rs.1,23,37,638.44
alongwith simple interest at the rate of 12% per annum. Rs.4,75,50,000/-
deposited by the auction purchaser in August, 2011 was refunded on 23.01.2017
with simple interest at the rate of 7.5% per annum with the said amount having
been utilized by petitioner-Bank for commercial purposes during this period. It
was, thus, prayed that this writ petition be dismissed.
10. We heard learned counsel for the parties and have carefully perused
the file.
11. Purchase of the secured asset by respondent No.2-auction purchaser
in the auction held on 24.08.2011, subsequent setting aside of the auction by
learned DRT-II, Chandigarh vide order dated 21.07.2016 in view of the violation
of applicable mandatory provisions by petitioner-Bank is a matter of record. It
was further admitted that the entire auction amount Rs.4,75,50,000/- was
deposited by the auction purchaser within the stipulated period in August, 2011
and sale-certificate dated 20.10.2011 was issued in its favour. Sole question
raised for adjudication in this writ petition is as to whether award of 12% simple
interest per annum by learned DRAT, Delhi vide impugned dated 09.08.2018 is
justified or is liable to be set aside. In our considered opinion, learned counsel
for petitioner-Bank is unable to point out any ground, whatsoever, which calls for
any variation in impugned order dated 09.08.2018 passed by learned DRAT,
Delhi. Nothing has been indicated on record to reflect that the auction purchaser
was at fault, whatsoever, in the entire proceedings. Auction held on 24.08.2011
was set aside on the ground of violation of applicable mandatory provisions of
law. Compliance thereof was necessarily to be carried out by the Bank itself and
it cannot be found saying that it is the auction purchaser who should bear the
brunt of such shortcoming on its part. It is further not denied that the auction
purchaser had deposited the amount in question within the stipulated period.
Learned DRAT, Delhi has correctly referred to the judgments of Hon'ble the
Supreme Court while granting simple interest at the rate of 12% per annum while
holding the auction purchaser entitled to only get the difference in the rate of
interest awarded by learned DRT-II, Chandigarh and DRAT.
12. Keeping in view the facts and circumstances as above, no ground,
whatsoever, is made out of interference in the present writ petition. Impugned
order dated 09.08.2018 (Annexure P15) passed by learned DRAT, Delhi is, thus,
upheld.
13. Writ petition is, accordingly, dismissed with no order as to costs.
( LISA GILL )
JUDGE
( AMARJOT BHATTI )
July 1 , 2024. JUDGE
'om'
Whether speaking/reasoned: Yes/No
Whether reportable: Yes/No
