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2018 DIGILAW 780 (ALL)

Dawar Footwear Industries v. Bank of India

2018-04-02

AMRESHWAR PRATAP SAHI, SHASHI KANT

body2018
JUDGMENT : 1. Heard Sri Shashi Nandan Senior Advocate along with Sri Rahul Agarwal, learned counsel for the petitioner, Sri Kartikeya Saran along with R.P. Pandey and Sri Misra Staff for the respondent Nos. 1, 2 and 3. 2. This writ petition has been filed questioning the correctness of the decision of the respondent-bank cancelling the e-auction dated 9th March, 2017 as communicated by the letters dated 22th February, 2018 and 12th March, 2018. 3. A supplementary affidavit has been filed today bringing on record a copy of a writ petition filed at Lucknow as well as the orders passed therein that was filed by the respondent No. 4 who is the borrower. 4. The dispute relates to a property which has been made subject-matter of auction when proceedings were initiated against the respondent No. 4 under the Securitization Act, 2002. The respondent No. 4 filed an application/appeal under Section 17 of this SARFAESI Act, 2002. During the pendency of the said application, it appears that some payment proposal was made by the 4th respondent but the bank proceeded to publish notices for auctioning of the property in proceedings under the SARFAESI Act, 2002. Aggrieved the 4th respondent filed Writ Petition No. 5211 (M/S) of 2017 at Lucknow. The said writ petition was entertained and an interim order was passed on 08.03.2017 whereby the Court observed that the auction of the property may take place but the same shall not be finalized till the next date of listing. 5. The order passed by the Court is annexure-4 to the writ petition and is extracted hereinunder:-- "Supplementary affidavit filed on behalf of the petitioner, taken on record. Heard Sri Anurag Srivastava, learned counsel for the petitioner, Sri G.M. Kamil, learned counsel for opposite party No. 1/Union of India, Sri Dinesh Kumar Pathak, learned counsel for opposite party No. 2/Bank of India and perused the record. Learned counsel for the petitioner, for the purpose of interim relief submits that petitioner/M/s. B.B. Foods Private Limited (a company incorporated under the provisions of the Companies Act, 1956) had taken a loan from opposite party No. 2/Bank of India, Mid Corporate Branch 49-50, Sulabhpuram, Sikandra Bodla Road, Agra. As the company did not pay the loan, so a proceedings has been initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. As the company did not pay the loan, so a proceedings has been initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereafter, the petitioner filed S.A. No. 339 of 2014 (M/s B.B. Foods Private Limited v. Bank of India) before Debt Recovery Tribunal, Lucknow. In the meantime, opposite party No. 2/Bank of India had proceeded for auction of the property of the petitioner/company, so an application has been moved on behalf of the petitioner for restraining the opposite party No. 2/Bank of India for auctioning the property in question. However, no heed has been paid in the matter in question. Sri D.K. Pathak, learned counsel for opposite party No. 2/Bank of India submits that in view of the notification No. S.O.454(E) : MANU/FNSV/0010/2017 dated 15.2.2017 issued by Government of India, Ministry of Finance, Department of Financial Services, New Delhi (Published by Authority in the Gazette of India, Extraordinary, Part-II Section 3 sub-section (ii) No. 411), Debt Recovery Tribunal Lucknow has got no jurisdiction to entertain the S.A. No. 339 of 2014. Sri Anurag Srivastava, learned counsel for the petitioner on the basis of averments as made in the supplementary affidavit, submits that notification No. S.O.454 (E) : MANU/FNSV/0010/2017 dated 15.2.2017 has been brought to the notice of the Debt Recovery Tribunal and on 16.2.2017 the order was passed which reads as under:-- "Vide Notification No. S.O.454 (E) : MANU/FNSV/0010/2017 dated 15.2.2017 issued by the Government of India, Ministry of Finance, Department of Financial Services, New Delhi [published by Authority in the Gazette of India, Extraordinary Part II-Section 3-sub-section (ii), No. 411], the case does not relates to jurisdiction of Debts Recovery Tribunal Lucknow, Hence fixed 17.5.2017 for further hearing." Accordingly a request has been made on behalf of the petitioner that the Bank of India may be restrained from the proceeding for auction of the property which is mortgaged with the Bank, as the matter is sub-judiced before Debt Recovery Tribunal, Lucknow. After hearing learned counsel for the parties, who are present today, and going through the record as well as taking into consideration the fact that the matter is sub judiced before Debt Recovery Tribunal in S.A. 339 of 2014 and no final order has been passed and if the property of the petitioner is put to auction, he will suffer irreparable loss, as his case (S.A. No. 339 of 2014) will not be adjudicated and decided on merit, so as an interim measure, it is provided that auction shall taken place but the same should not be finalized till the next date of listing. Further, as prayed, it is open to the petitioner to move an application for transfer of S.A. No. 339 of 2014 from Debt Recovery Tribunal Lucknow to Debt Recovery Tribunal, Allahabad in view of the Notification No. S.O.454 (E) : MANU/FNSV/0010/2017 dated 15.2.2017 issued by the Government of India, Ministry of Finance, Department of Financial Services, New Delhi and the same may be decided by the Debt Recovery Tribunal Lucknow in the meantime. Learned counsel for the respondents prays for and is granted time to file counter-affidavit by the next date of listing. List in the week commencing 3.4.2017." 6. The bank has now proceeded to cancel the auction on the ground that the matter has been pending since long and the above noted order has been passed by the High Court at Lucknow. 7. Sri Shashi Nandan, learned Senior Counsel for the petitioner submits that this cannot be a ground to cancel the auction, inasmuch as, if under the rules particularly Rule-9 of 2002, none of the grounds that are prescribed therein are available. There is no occasion for the cancellation of the auction and therefore the reason for cancelling the auction not being tenable in the eyes of law, the same deserves to be quashed. Learned counsel submits that the High Court itself had permitted the auction to continue but had restrained its finalization. 8. The supplementary affidavit brings on record the fact that the case has been directed to be listed peremptorily in the week commencing 2nd of April, 2018 by the order dated 20th March, 2018. 9. Learned counsel submits that the High Court itself had permitted the auction to continue but had restrained its finalization. 8. The supplementary affidavit brings on record the fact that the case has been directed to be listed peremptorily in the week commencing 2nd of April, 2018 by the order dated 20th March, 2018. 9. It has been also brought to the notice of this Court by the learned counsel for the bank that the petitioner has filed an impleadment application on 27th March, 2018 in the above noted writ petition which fact is not stated either in the writ petition or the supplementary affidavit filed today. The affidavit appended to the impleadment application also discloses certain facts pertaining to the sequence of events and also of the proceeding pending in this regard. 10. It is thus clear that the borrower has filed an application under Section 17 of the Act, before the Tribunal. The writ petition was filed challenging the auction notices. It is correct that the Court did permit the auction proceeding to go on but the confirmation was stayed. The only conclusion that can be drawn from a perusal of the interim order is that there is no confirmed auction in favour of the petitioner. Thus in the light of the above facts, the challenge now raised to the auction notice at this stage would not be permissible, keeping in view the interim order passed by the High Court at Lucknow referred to and extracted herein above. A writ issued from this Court at Allahabad would run counter to the order passed at Lucknow. 11. The petitioner has already filed an impleadment application before the said Court. It is open to the petitioner to raise any such objections before the same Court where proceedings are pending. Apart from this, it may also be noticed that the highest bidder in an auction conducted under the SARFAESI Act, 2002 also has remedies under the said act as explained by the Apex Court in the case of Agarwal Tracom Pvt. Ltd. v. Punjab National Bank and others (2018) 1 SCC 626 : ( AIR 2017 SC 5562 ). 12. We are therefore, not inclined to interfere in this petition. It is accordingly rejected.