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Allahabad High Court · body

2016 DIGILAW 216 (ALL)

Shashi Kala Sharma v. Allahabad Bank

2016-01-15

V.K.MATHUR

body2016
JUDGMENT : V.K. Mathur, Chairperson The present Appeal has been preferred by the Appellant under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SRFAESI Act') against the order dated 6th March, 2014 passed by the learned DRT, Allahabad in S.A. No. 97/2010, by which the securitization application filed by the Appellant was dismissed. 2. The brief facts of the present case are that the Appellant is the borrower/mortgager who had taken the loan from the respondent No. 1-Bank totalling Rs. 9.80 lacs which was sanctioned on 15th January, 2007 towards the purchase, construction and renovation of house. The Appellant failed to repay the installments regularly to the respondent-Bank, therefore, the respondent-Bank issued a notice dated 18th April, 2009 under Section 13(2) of the SRFAESI Act demanding a sum of Rs. 12,51,820/-. 3. It is further stated that since the Appellant did not regularise their account, therefore, the respondent Bank initiated the recovery proceedings against the Appellant by taking recourse to Section 13(4) of the SRFAESI Act which was published in the newspaper on 19th June, 2010. The sale notice was issued on 14th June, 2011 which was published in two daily Newspapers on 18th June, 2011 scheduling the auction of the mortgaged property on 22nd July, 2011. The public auction took place on 22nd July, 2011 in favour of the respondent No. 2 for a sum of Rs. 9,88,000/-. The Appellant filed the Securitization Application under Section 17 of the SRFAESI Act before the learned DRT, Allahabad challenging the auction process wherein the application was dismissed. 4. Aggrieved by the order dated 6th March, 2014 passed by the learned DRT, the Appellant has filed the present Appeal before this Tribunal under Section 18 of the SRFAESI Act. 5. The learned Counsel for the Appellant-Borrower submitted that the learned DRT has erred in dismissing the securitization application of the Appellant. The Appellant was ready to pay the dues of the Bank. It was averred that there is violation of mandatory Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules') and the respondent No. 2-Auction Purchaser had not paid 25% of the sale price immediately by cash on the date of auction but the same was paid by cheque which was encashed on the next date of auction. 6. 6. It was further stated that the mortgaged property was auctioned at an inadequate price and as such the impugned order dated 6th March, 2014 cannot be sustained, the auction sale on 22nd July, 2011 be set aside and the Appellant is entitled to redeem the property. 7. In support of his contention, the learned Counsel for the Appellant placed reliance in the case of Rao Mahmood Ahmad Khan through Their L.R. v. Ranbir Singh, A.I.R. 1995 S.C. 2195, in which it was held that under Order 21, Rules 84, 85 and 86 of C.P.C., Provisions of Rules 84, 85 and 86 are similar to the provisions of Rules 285-D and 285-E of U.P. Zamindari Abolition and Land Reforms Rules, 1952, providing for deposit of 25% of bid amount immediately and on failure to do so re-sale of the property forthwith. It was also held that depositing of 25% of the bid amount in the auction sale is mandatory under Rule 285-D and such amount should be deposited in cash and not by cheque. 8. The learned Counsel for the respondent No. 1 Bank submitted that the learned Tribunal below has rightly dismissed the Securitization Application of the Appellant. The respondent No. 2-Auction Purchaser has immediately paid the deposit of 25% of the amount of the sale price by cheque in compliance of Rule 9(3) of the Security Interest (Enforcement) Rules 2002. It was also submitted that the auction purchaser also deposited the remaining balance amount within 15 days from the date of sale and the sale certificate was issued to the auction purchaser on 2nd August, 2011 by the Bank. 9. In support of his contention, the learned Counsel for the respondent-Bank placed reliance in the case of Rosali V. v. Taico Bank, 2007 (1) Bank C.L.R. 260 (S.C.). 10. The learned Counsel for the Respondent No. 2-Auction Purchaser reiterated the submission of the learned Counsel for the respondent-Bank. It was further stated that the respondent No. 2 is a bona fide purchaser and the learned DRT has rightly dismissed the Securitization Application of the Appellant. 11. Heard the learned Counsels for the parties and perused the record of the case. 12. In the present matter, the respondent-Bank issued the demand notice under Section 13(2) of the SRFAESI Act on 18th April, 2009 for a sum of Rs. 11. Heard the learned Counsels for the parties and perused the record of the case. 12. In the present matter, the respondent-Bank issued the demand notice under Section 13(2) of the SRFAESI Act on 18th April, 2009 for a sum of Rs. 12,51,820/- and the possession notice under Section 13(4) of the SRFAESI Act was issued which was published in two newspapers on 19th June, 2010. Thereafter, the respondent-Bank published the auction notice in two newspapers on 18th June, 2011 by fixing the date of auction on 22nd July, 2011. 13. It would be relevant to quote Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 which is as under :- "9(3) on every sale of immovable property, the purchaser shall immediately pay a deposit of twenty five percent of the amount of the sale price, to the authorised officer conducting the sale and in default of such deposit, the property shall forthwith be sold again." 14. In Rosali v. Taico Bank in 2007 (1) Bank C.L.R. 260 (S.C.), the Hon'ble Supreme Court has held as under : "Code of Civil Procedure, 1908, Order 21, Rules 84 and 85-Word "immediately" used in Rule 84-Interpretation and meaning of- 22. It is well-settled principle of interpretation of a statute that where literal meaning leads to anomaly and absurdity, it would be avoided. 26. It is also well-settled principle of law that common sense construction rule should be taken recourse to in certain cases. 30. The term "immediately", therefore, must be construed having regard to the aforementioned principles. The term has two meaning. One, indicating the relation of cause and effect and the other, the absence of time between two events. In the former sense, it means proximately, without intervention of anything, as opposed to "immediately". In the latter sense, it means instantaneously. 31. The term "immediately", is, thus, required to be construed as meaning with all reasonable speed, considering the circumstances of the case. 32. In a given situation, the term "immediately" may mean "within" reasonable time. Where an act is to be done within reasonable time, it must be done immediately. 36. We, therefore, are clearly of the opinion that the High Court was not correct in holding that in the facts and circumstances of the case, the provisions of Order 21, Rule 84 had not been complied with. 40. Where an act is to be done within reasonable time, it must be done immediately. 36. We, therefore, are clearly of the opinion that the High Court was not correct in holding that in the facts and circumstances of the case, the provisions of Order 21, Rule 84 had not been complied with. 40. We may also notice that the auction purchaser had deposited the full purchase money within the time stipulated in terms of Order 21, Rule 85 of the Code." 15. It has been mainly contended by the Appellant that there is violation of mandatory Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 since the respondent No. 2-Auction Purchaser had not paid 25% of the sale price immediately on the date of auction by cash or Bankers Cheque/Demand Draft but the same was paid by cheque. 16. It is an admitted case that the respondent No. 2-Auction Purchaser participated in the auction and deposited the earnest money through Bankers Cheque No. 153483 for Rs. 1.00 lac and thereafter, in compliance of Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 deposited Rs. 5.00 Lacs through cheque on the date of auction on 22nd July, 2011. In the instant case, the respondent No. 2-Auction Purchaser has paid Rs. 5.00 lacs by cheque on the auction date which is more than 25% of the amount of sale price amounting to Rs. 9,88,000/-. 17. It cannot therefore be said that the auction purchaser had not immediately paid 25% of the amount of sale price on the date of auction and the cheque was encashed by the respondent-Bank on the next date which is a valid deposit and due compliance of Rule 9(3) of the Rules regarding immediate payment as held by the Hon'ble Supreme Court in the case of Rosali V. v. Taico Bank, (supra) in which provision of Order 21, Rule 84 is similar to the provision of Rule 9(3) of the Rules. The auction purchaser had thereafter deposited the remaining amount of Rs. 3,88,000/- through cheque within 15 days from the date of sale. Thus, there is no legal infirmity in compliance of Rule 9(3) of the Security Interest (Enforcement) Rules, 2002. 18. The contention of the learned Counsel for the Appellant is that 25% of the sale price should have only be paid by cash and not by cheque cannot be accepted. 3,88,000/- through cheque within 15 days from the date of sale. Thus, there is no legal infirmity in compliance of Rule 9(3) of the Security Interest (Enforcement) Rules, 2002. 18. The contention of the learned Counsel for the Appellant is that 25% of the sale price should have only be paid by cash and not by cheque cannot be accepted. The authority cited by the learned Counsel for the Appellant that the deposit of 25% of the bid amount in the auction sale in cash and not by cheque is distinguishable and not applicable in the facts and circumstances of the present case. 19. In Indian Bank v. Blue daggers Estates Limited, (2010) 8 S.C.C. 129 , the Hon'ble Supreme Court has observed as under : "25. The Court cannot lose sight of the fact that the Bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the Bank are duty-bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the Bank is not only entitled but duty-bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of Banks and financial institutions." 20. In the present case, merely because the fixation of the reserve price of the property was stated by the Appellant to be less, in the absence of a challenge at the relevant time and not raising a challenge in proper manner, would not be sufficient to be set aside the auction sale. The auction cannot be held bad on the ground that it has fetched inadequate price the learned Counsel for the Appellant has also not pleaded any ground of fraud or submitted any evidence in this regard. Thus, it cannot be held that there was non-compliance of the ‘Rules’ to set aside the auction sale of the property. 21. The auction cannot be held bad on the ground that it has fetched inadequate price the learned Counsel for the Appellant has also not pleaded any ground of fraud or submitted any evidence in this regard. Thus, it cannot be held that there was non-compliance of the ‘Rules’ to set aside the auction sale of the property. 21. In the instant case on hand, the Appellant-borrower had not exercised any right of redemption under Section 13(8) of the SRFAESI Act and there was no efforts at all on part of the Appellant to settle her dues after the issuance of the sale notice dated 14th June, 2011 which was duly published in two leading newspapers on 18th June, 2011. As such when the Appellant-Borrower had not approached the respondent No. 1-Bank with regard to the repayment of due amount to redeem the mortgaged property, the Appellant has lost her right of redemption. 22. In the present matter, the respondent No. 2-auction purchaser is a bona fide purchaser who had invested substantial amount in the year 2011 and the sale certificate was issued to the auction purchaser on 2nd August, 2011 by the Bank. The Appellant-borrower has also forfeited her right of redemption of the mortgaged property. 23. In view of the above discussion, there is no illegality in the impugned order dated 6th March, 2014 passed by the learned DRT, Allahabad dismissing the Securitization Application filed by the Appellant. Consequently, the Appellant is also not entitled to set aside the auction sale. 24. There is no merit in the present Appeal which is dismissed with no order as to costs.