Research › Search › Judgment

Calcutta High Court · body

2019 DIGILAW 814 (CAL)

Baby Saha v. Authorised Officer, Bank of India

2019-08-21

SUBHASIS DASGUPTA

body2019
JUDGMENT : Subhasis Dasgupta, J. The impugned order dated 7th June, 2018 passed by the Chairperson, Debts Recovery Appellate Tribunal at Kolkata in Appeal No. 133 of 2017, dismissing the appeal and thereby affirming the order dated 16.06.2017 passed by the Presiding Officer DRT-3 rejecting the review application is the subject of challenge in this revisional application under Article 227 of the Constitution of India. 2. In order to perfectly address the issue, some salient facts may be mentioned here. 3. M/S. Pailan Educationa Trust admittedly was granted cash credit facilities for a sum of Rs.6.70 crores. Both petitioner and her husband were appointed as trustees to such trust. While obtaining such cash credit facilities as per agreement, the trust itself created equitable mortgage in respect of the properties of trust. Being a guarantor of such cash credit facility, the petitioner also executed equitable mortgage in respect of her own residential flat situated at 25, Benia Pukur Road, Kolkata. The borrower having committed default in the payment of loan amount, the opposite party bank being a secured creditor proceeded to serve a notice under Section 13(2) of SARFAESI Act, dated 31.10.2013, upon the petitioner guarantor to recover the amount remaining unpaid. The borrower of the loan having failed to discharge his liability as per terms of the notice under Section 13(2) of the SARFAESI Act, the opposite party bank took step to take possession of the secured asset of the petitioner complying with the provisions, as incorporated in Section 13(4) of the SARFAESI Act. The petitioner/guarantor challenged the legality and validity of such notice under Section 13(2) of the SARFAESI Act, disputing with the irregularities contained in the said notice and further alleging to have made some patent contravention with respect to the Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules 2002 by taking out an application under Section 17 of the SARFAESI Act, which was registered as S.A No. 564 of 2016, filed in the last week of December, 2016. On 04.01.2017 the Presiding Officer of DRT-3, Kolkata passed an interim order in connection therewith, when the petitioner challenged the notice issued under Section 13(2) together with notice issued under Section 8(6) directing the opposite party/ bank to go ahead with the sale as proposed, but the bank should not confirm the sale. On 04.01.2017 the Presiding Officer of DRT-3, Kolkata passed an interim order in connection therewith, when the petitioner challenged the notice issued under Section 13(2) together with notice issued under Section 8(6) directing the opposite party/ bank to go ahead with the sale as proposed, but the bank should not confirm the sale. On 28th March, 2017 petitioner sought for an adjournment, in order to take the services of an advocate of Delhi, who had been engaged in the matter. The Presiding Officer of DRT-3, Kolkata granted such adjournment on the prayer of the petitioner fixing the matter as specifically fixed on 30th March, 2017 for taking services of an advocate of Delhi. The Presiding Judge of DRT-3, Kolkata refused to grant similar prayer for adjournment on 30.03.2017 declining the matter to be accommodated any more on the ground that the secured assets of petitioner had already been put on sale on 06.01.2017 to O.P. No.3 being the highest bidder of Rs. 40.20 Lakhs. After the prayer for adjournment was rejected on 30th March, 2017, the presentee learned advocate for petitioner proceeded to give equitable offer to redeem the property agreeing to pay the entire bid amount along with expenses and interest with a prayer for releasing the property sold in auction. 4. Having considered the equitable offer being raised by the petitioner for redemption of the mortgaged property already sold in auction, the Tribunal clarified that in support of the prayer for redemption, the petitioner was under an obligation to pay the highest bid amount of Rs. 42.20 laksh, Rs 1 lakh in addition, with interest at the rate of 10% simple for three month commencing from January 2017 to March, 2017, and further Rs. 25,000/- towards expenses incurred by the bank in conducting the sale. The learned Judge while accepting such offer being raised by the petitioner, directed the petitioner to come with such money by demand draft or to send RTGS in the bank account of opposite party/bank by 4.00 p.m. on 30th March, 2017 with a further direction upon bank to secure presence of the auction purchaser. The learned Judge while accepting such offer being raised by the petitioner, directed the petitioner to come with such money by demand draft or to send RTGS in the bank account of opposite party/bank by 4.00 p.m. on 30th March, 2017 with a further direction upon bank to secure presence of the auction purchaser. The matter was again called at 4.00 p.m, on the same day, when the counsel for petitioner expressed the inability of petitioner to arrange the entire money, though arranged Rs.23 lakhs in the mean time, and accordingly sought for accommodating the petitioner by adjourning the case for a week and thereby providing an opportunity to petitioner for redemption of the mortgaged property in the name of making arrangement of money. 5. Upon consideration of such situation, the learned Judge of DRT-3, Kolkata proceeded to reject the adjournment holding the prayer to be neither reasonable, nor acceptable. The learned Judge of DRT-3, Kolkata then proceeded to dispose of the SARFAESI application under Section 17, filed by petitioner on merits. The learned Judge of DRT-3, Kolkata ultimately rejected the SA No. 564 of 2016 on 03.03.2017 having found no lacuna or error in the demand notice dated 31st October, 2013, as well as possession notice, dated 24th March, 2014 followed by sale notice, dated 30th November, 2016. 6. The petitioner instead of filing an appeal under Section 18 of the SARFAESI Act against the decision reached by the learned Judge DRT-3, Kolkata preferred to file a review application, which was ultimately dismissed on 16th June, 2018 rejecting the review application. An appeal was thereafter filed before the Chairperson of Debts Recovery Appellate Tribunal challenging the rejection of review application, which was ultimately dismissed. 7. Being aggrieved by and dissatisfied with the order of Chairperson of Debts Recovery Tribunal, Kolkata dismissing the application and thereby affirming the order of learned Judge DRT-3 rejecting the review application preferred this revisional application under Article 227 of the Constitution of India intending to challenge the order of the Chairperson, Debts Recovery Appellate Tribunal, Kolkata. 8. The auction purchaser/O.P. No.3 however, filed a separate CAN application being CAN No.3794 of 2019 praying for an order dismissing the instant revisional application with a direction upon the bank to deliver possession of the secured assets of petitioner to auction purchaser after executing a deed of conveyance, required for the purpose. 9. 8. The auction purchaser/O.P. No.3 however, filed a separate CAN application being CAN No.3794 of 2019 praying for an order dismissing the instant revisional application with a direction upon the bank to deliver possession of the secured assets of petitioner to auction purchaser after executing a deed of conveyance, required for the purpose. 9. While challenging the purported order of the Appellate Tribunal affirming the order of the DRT-3, Kolkata in rejecting the review application, learned advocate for the petitioner submitted that there had been complete violation of the natural justice denying the petitioner to have the services of an advocate of her choice, already engaged from the Delhi. In order to establish violation of natural justice, shelter was taken by learned advocate for the petitioner to a decision rendered in the case of Union Bank of India vs. Sanjoy Mittal & Ors, 2000 2 CHN 616 and Union Bank of India vs. Ranjan Roy & Ors. Referring such decision argument was raised by the petitioner that there had been undue haste to deny the petitioner from having the services of an advocate as per choice of petitioner, already engaged for the purpose from Delhi, while rejecting the prayer for adjournment and such undue haste, in the absence of anything others to the contrary being shown, would reveal mala fide act of opposite parties. 10. As regards the point raised regarding denial of natural justice to petitioner, both bank and O.P. No.3 together in unison submitted that there had been no violation of the natural justice, when the application under Section 17 of the SARFAESI Act was disposed of by the learned Judge DRT-3, Kolkata. It was argued by the opposite parties that in every stage of the proceedings, the petitioner was extended with sufficient opportunity to represent her case, required for the purpose, and it was not a case decided ex parte even in the absence of the learned advocate for the petitioner. 11. The settled proposition of law is that parties to a case should not go unheard, while passing an order, meaning thereby an opportunity of hearing must be given to either of the parities in application of the principle of natural justice. 12. 11. The settled proposition of law is that parties to a case should not go unheard, while passing an order, meaning thereby an opportunity of hearing must be given to either of the parities in application of the principle of natural justice. 12. Upon perusal of the impugned order, it appears that on the previous date, fixed on 28th March, 2017, the petitioner sought for adjournment citing the ground of obtaining services of an advocate of Delhi, already engaged for the purpose being an advocate as per choice of the petitioner, and the learned Judge of DRT-3 granted such adjournment to petitioner enabling the petitioner to have the required services of an advocate of her choice, who might be engaged from Delhi, and accordingly accommodated the petitioner fixing the matter as specifically fixed on 30th March, 2017. On the date specifically fixed for the purpose, the petitioner again sought for adjournment taking self same ground, what was previously taken on 28th March, 2017. The learned Judge of DRT-3, Kolkata refused to grant adjournment upon viewing the fact that sale of the secured asset of petitioner had already been made on 6th January, 2017 to auction purchaser/O.P. No. 3 upon payment of his highest bid amount of Rs. 40.20 lakhs. 13. It is very significant to reveal that the learned Judge DRT-3 proceeded to accommodate the petitioner granting adjournment providing opportunity to petitioner for obtaining services of an advocate of Delhi, if any, already engaged for the purpose. When the matter was fixed, as specifically fixed with the sufficient knowledge of the petitioner, it was for the petitioner to discharge her obligation by presenting the learned advocate of Delhi on the specially scheduled date, if at all engaged in the mean time. It is further significant to reveal that the moment when the order dated 30th March, 2017 was recorded at 4.P.M by the learned Judge DRT-3, Kolkata, there was counsel present for the petitioner, who was given the opportunity to present the case of the petitioner, when the concerned Debts Recovery Tribunal proceeded to dispose of the case on merits declining to grant any further adjournment. The facts and circumstances were highly indicative to reveal that there was no violation of natural justice, as proposed in this case by the petitioner. The decision referred by the petitioner as such would be without any significance in the given set of facts. The facts and circumstances were highly indicative to reveal that there was no violation of natural justice, as proposed in this case by the petitioner. The decision referred by the petitioner as such would be without any significance in the given set of facts. 14. Adverting to the copy of the order passed by the District Magistrate, South 24 Parganas in connection with Section 14 of SARFAESI Act, indicative of taking over possession of the secured asset of the petitioner, favourable to the purpose of the opposite party/ bank, learned advocate for the petitioner submitted that possession of the secured asset was taken contravening the provisions of Section 14 thereby making the possession illegal and bad in law, and thus same being illegally taken over would also be treated as bad in law and liable to be set aside. Reliance was placed by the petitioner on a decision delivered in the case of Pratima Roy & Anr. vs. Union of India & Ors,2014 SCCOnlineCal 4275 while making submission that the District Magistrate had no power to abdicate his duty of taking over his possession directing the police authorities to provide police force to secured creditor for taking over the secured assets. 15. Learned advocate for the auction purchaser taking support of the opposite parties' bank submitted in reply against such stand of petitioner that petitioner had already taken steps to challenge the sale, or at least to defer the sale alleging inconsistencies or discrepancies in the process, but the learned Judge of the concerned Debts Recovery Tribunal-3, Kolkata was not prepared to accept any such irregularities either to cancel the sale, or to postpone the sale, and accordingly passed an interim order dated 4th January, 2017 directing the bank to go ahead with the sale, but not to confirm the sale. 16. Though law point can be challenged at any point of time, but surprisingly this point could not be taken in the SARFAESI application of the petitioner under Section 17 of the Act. 16. Though law point can be challenged at any point of time, but surprisingly this point could not be taken in the SARFAESI application of the petitioner under Section 17 of the Act. The alleged irregularities, inconsistencies or discrepancies in the process of taking over possession of the secured assets leading to sale thereof on a scheduled date, though challenged and properly noticed by the concerned DRT, but the same not having been accepted, the petitioner shall be presumed to have allowed the possession to be taken over by the secured creditor/bank in terms of the Section 14 of the Act, so as to put the secured assets on sale to a scheduled date, which got sufficiently demonstrated from the interim order being granted on 4th January, 2017 directing secured creditor/bank to proceed with the sale but not to confirm the sale. The argument of the petitioner challenging the irregularities pertaining to the provisions of Section 14 of the SARFAESI Act as such would be without any consequence. 17. The next challenge was raised by the learned advocate for the petitioner submitting that the order dated 30th March, 2017 of the concerned DRT directing petitioner to arrange Rs. 44 lakhs in exercise of her right of redemption by 4 P.M on the same date was nothing but sufficient to reveal its harshness, as it was impossible to be performed. It was thus proposed that an order which was quite impossible to be performed, would not be sustainable because of its impossibility of performance. 18. Learned advocate for auction purchaser having rested on the documents of the bank submitted in reply to the aforesaid plea of the petitioner that the concerned DRT upon viewing the sale, which had already been taken place on 6th January, 2017 was compelled to pass the order simply to give effect to the provisions of the SARFAESI Act after clarifying that the offer of redemption was raised for the first time in the Tribunal on 30.03.2017. It was argued by the opposite parties that the notice under Section 13(2) of the SARFAESI Act having issued long before i.e. on 31st October, 2013, mentioning the outstanding dues liable to be recovered by the secured creditor, the petitioner had sufficient knowledge about the extent of the security furnished in this case restricted to her guaranteed amount, and despite knowing such facts, the choice of redemption was sought to be exercised about four years after, when the petitioner must be taken to have already arranged such money in exercise of her right of redemption, otherwise such offer would not have been made. 19. If an offer claiming right of redemption of mortgaged property is given, it must be presupposed that the party seeking right of redemption had sufficient money for the purpose, otherwise such offer would be construed to be an vague enough, simply thrown to drag the proceedings, favourable to the purpose of petitioner. Upon viewing such circumstances, the impossibility of performances of the order, though raised by the petitioner, cannot be taken to be an acceptable stand. 20. Regarding right of redemption, learned advocate for the petitioner submitted that unamended provisions of Section 13(8) of SARFAESI Act providing substantive right in favour of a person as regards his right of redemption of the mortgaged property could not be taken away by subsequent amendment on the premise that the notice under Section 13(2) of the SARFAESI Act was issued in the year 2013, and further the concerned Tribunal granted the interim order on 4th January, 2017, i.e, some days before the date of holding sale directing bank to go ahead with the sale, but not to confirm the sale. 21. Reliance was placed by the learned advocate for the petitioner on decision rendered in the case of Videocon International Limited vs. Securities and Exchange Board of India, (2015) 4 SCC 33 in order to establish that a vested substantive right could be taken away by an amendment only when said amendment expressly or by necessarily intendment so provided, in the absence of which, such vested substantive right as available as on the date of filing of dispute could be availed of. 22. 22. Reference was further made by the petitioner on a decision delivered in the case of Suhas H. Pophale vs. Oriental Insurance Company Limited, (2014) 4 SCC 657 and Its Estate Officer to show that amended provisions of Section 13(8) of the SARFAESI Act coming into effect from 01.09.2016 will necessarily have prospective effect, in the absence of anything others to the contrary having shown in the said amended Act itself. 23. Profit was sought to be obtained on this issue by learned advocate for the petitioner relying further on a decision delivered in the case of State of Punjab and Ors. vs. Bhajan Kaur and Ors, (2008) 12 SCC 112 . in his sincerest effort to pursuade this court on the issue that the rights and liabilities of the parties would have to be determined, when cause of action for filing the instant petition arose. It was thus proposed by the petitioner that the rights of the parties concerned were supposed to be determined on the basis of law as it then stood, and it would not be governable by the amended provisions of Section 13(8) of the SARFAESI Act. 24. In reply to the argument raised by the petitioner, learned advocate for the opposite parties submitted that since SARFAESI Act was a piece of special legislation, wherein some of the provisions thereunder have overriding effect over any other provisions of law contained in some other Acts, and when the amended Act had specifically spelt out categorically the stage for exercising the right of redemption of the mortgaged property, but necessarily it had to be exercised before the sale takes place, the same could not be stretched any more adhering to any other provisions of law. 25. The next question begging answer from this court is whether the unamended provisions of Section 13(8) or amended provision of Section 13(8) of the SARFAESI Act would be applicable in the given set of facts. 26. A statute is presumed to be perspective, unless held to be retrospective either expressly or by necessary implication. In the absence of any stipulation contained in the amending Act, the rights and liabilities would be governable on the basis of law as it then stood, i.e. before the amendment came into effect. 26. A statute is presumed to be perspective, unless held to be retrospective either expressly or by necessary implication. In the absence of any stipulation contained in the amending Act, the rights and liabilities would be governable on the basis of law as it then stood, i.e. before the amendment came into effect. The Appellate Tribunal held that the choice of redemption mentioned in Section 13(8) of the SARFAESI Act could only be made before sale, and that too on the deposit of the entire dues. To address the issue, both unamended and amended provisions of Section 13(8) of the SARFAESI Act may be shown as hereunder:- 27. Unamended Section 13(8): "If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset." 28. Amended Section 13(8): "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 publication auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,- (i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such secured creditor for transfer by way of lease or assignment or sale of such secured assets." 29. As per amended provisions of Section 13(8) of the Act, choice of redemption may be exercised by the party seeking right of a redemption upon deposit of all costs, charges, and expenses to the secured creditor at any time before the date of publication of notice for public auction or inviting quotation, tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets. Therefore, in view of such conspicuous provisions, the right of redemption may be exercised at any time before the date of publication of notice for the public auction, or inviting quotations or tender from public or private for sale meaning thereby it is restricted to the stages prior to holding the sale. As per unamended provisions of the Act, the right of redemption may be exercised upon deposit of all the dues together with all costs, charges and expenses to the secured creditor at any time before the date fixed for sale. Therefore, as per unamended provisions of the Act the right of redemption is available before the sale takes place. There is no apparent conflict between the unamended and amended provisions of Section 13(8) of the SARFAESI Act, as regards the right of redemption if any, preferred to be exercised for redeeming the mortgaged property. Both amended and unamended provisions of Section 13(8) of SARFAESI Act are very clear to reveal that right of redemption may be exercised before the sale takes place. There is a little difference in between the amended and unamended provisions of Section 13(8) of the SARFAESI Act. While amended provision has described specifically the stage for exercising the right of redumption upto the stage shown there under, but before the sale takes place; the unamended provision has limited the right of redemption to be exercised up to the stage of the sale and not beyond that, without detailing the stage prior to sale. But in either of two cases, the right of redemption has to be necessarily exercised before the sale takes place, what is common in both of the two. 30. In the instant case, the secured assets was put to sale on 6th January, 2017, prior to which, be it under the unamended or under amended provisions of Section 13(8) of the SARFAESI Act, the petitioner never exercised her right of redemption upon deposit of costs, charges and expenses incurred for the purpose to the secured creditor/bank. That being the position the judgment referred above would hardly have a relevance in the given set of facts. 31. According to learned advocate for the petitioner, the right of redemption could be exercised till the sale is confirmed. Further shelter was taken by the petitioner on a decision delivered in the case of Sm. That being the position the judgment referred above would hardly have a relevance in the given set of facts. 31. According to learned advocate for the petitioner, the right of redemption could be exercised till the sale is confirmed. Further shelter was taken by the petitioner on a decision delivered in the case of Sm. Priti Rekha Mitra vs. Narayanchandra Dutta, (1956) AIR Calcutta 510 in order to establish that in a mortgage suit for sale, the equity of redemption in a mortgagor survives under Order 34 Rule 5 until the court makes an order confirming the sale under Order 21 Rule 92 C.P.C. In an ordinary mortgage suit for sale the equity of redemption for the mortgagor survives till the sale is confirmed under Order 21 Rule 92 C.P.C., but the choice of right of redemption available to borrower/guarantor mentioned in Section 13(8) of the Act would be strictly guided by the provisions contained in the SARFAESI Act in view of the overriding provisions of the SARFAESI Act contained in Section 13(5) of such Act. The special provision contained in Section 13(8) by SARFAESI Act obviously for its overriding effect will not allow the general provisions of the law to come into operation so as to obtain any gain thereform. The decision referred above is without any consequence in the given text of this case. 32. Reference was made by the learned advocate for the petitioner to a further decision of the Apex Court delivered in the case of Radehey Shyam and Anr. vs. Chhabi Nath and Ors, (2015) 5 SCC 423 . with Jagdish Prasad vs. Iqbal Kaur and Ors. in order to establish that this court was vested with ample power akin to appeal court, while exercising its superintending jurisdiction under Article 227 of the Constitution of India. 33. Controverting the stand, as raised by the petitioner on such issue, learned advocate for the opposite parties submitted that in the name of exercising superintending capacity, the court would not be expected to act as a court of appeal, and to set aside the findings of both the courts below, which was not at all a perverse finding. 34. 33. Controverting the stand, as raised by the petitioner on such issue, learned advocate for the opposite parties submitted that in the name of exercising superintending capacity, the court would not be expected to act as a court of appeal, and to set aside the findings of both the courts below, which was not at all a perverse finding. 34. In the considered view of this court, the supervisory jurisdiction under Article 227 of the Constitution of India is exercisable only when there is manifest error apparent on the face of order, resulting in grave injustice or gross violation of justice for such error apparent. 35. Upon perusal of the impugned order, passed by the learned Appellate Tribunal, it appears that while affirming the order of the concerned Debts Recovery Tribunal in the matter of rejection of review application, there left nothing indicative of occasioning any manifest error apparent on the face of order occasioning thereby a gross violation of justice requiring interference under Article 227 of the Constitution of India. 36. The finding thus reached by the Debts Recovery Appellate Tribunal declining to interfere with the order, dated 13.06.2017, passed by the Presiding Judge of the DRT-3, Kolkata in rejecting the review application being based on perfect appreciation of position of law would go unaltered. 37. The revisional application fails, being without any merits. 38. While exercising power of revision under Article 227 of the Constitution of India in the given set facts, it would be most improper to pass any order directing secured creditor/bank to deliver possession of the property, sold in auction, to the auction purchaser/O.P. No.3 after executing a deed of conveyance responding to the CAN application filed by the auction purchaser/O.P. No.3. 39. With the disposal of this revisional application, the CAN application being No. 3794 of 2019 thus stand automatically disposed of. 40. Urgent certified copy of this order and judgment, if applied for, be given to the appearing parties as expeditiously as possible upon compliance with the all necessary formalities.