Calcutta High Court (Appellete Side)
Central Bank Of India & Another vs Maya Sarkar & Others on 23 December, 2024
In The High Court At Calcutta
Civil Appellate Jurisdiction
Appellate Side
Present:
The Hon'ble Justice Md. Shabbar Rashidi
C.O. No. 1767 Of 2018
Central Bank of India & Another
Vs
Maya Sarkar & Others
For The Petitioner : Mr.Bishwambher Jha, Adv.
Mr. Harshwardhan Jha, Adv.
Ms. Munmun Mishra, Adv.
For The Opposite Party No. 1 : Mr., Prabal Kr. Mukherjee,
Sr. Adv.
Mr. Asit Kumar De, Adv.
Mr. Shantanu Datta, Adv.
Ms. Shebatee Datta, Adv.
Ms. Sushmita Senapati, Adv.
Heard On : December 13, 2024
Judgment On : December 23, 2024
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Md. Shabbar Rashidi, J.
1. Order dated April 6, 2018 passed by the Debts Recovery
Appellate Tribunal, Kolkata in Appeal No. 33 of 2017 filed by the
opposite party, is under challenge in the present proceedingat
the behest of the petitioner Bank.
2. By the impugned judgment and order, the Debts
Recovery Appellate Tribunal, allowing the appeal, set aside the
judgment and order dated March 3, 2014 passed by Debts
Recovery Tribunal in claim petition being SA 413 of 2012. The
Debts Recovery Appellate Tribunal, in the impugned order,
declared the entire proceeding undertaken in terms of SARFAESI
Act, 2002 including notice issued under Section 13 (2) of the said
Act as invalid. The appellate tribunal also directed handing over
of the possession of the property sold in auction, to the appellant
therein (Opposite party herein), forthwith and to return the sale
proceeds of such auction sale to the purchaser with interest.
3. Learned advocate for the petitioner bank submitted that the
learned appellate tribunal, while passing the impugned order, did
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not take into consideration the fact that the loan availed by the
opposite party was restructured on the prayer of the borrower.
4. Relying upon (2018) 15 Supreme Court Cases 99(ITC
Ltd., Vs. Blue Coast Hotels Ltd., and Anr.), it has been
submitted on behalf of the petitioner that the opposite party
borrower was defaulter in the repayment of loan, availed by her
and she has the only intention of getting an extension of time.
5. Learned advocate for the petitioner further submitted
that by her conduct, the opposite party borrower has waived the
notice required to be served under Rule 8(6). In support of such
contention learned advocate for the petitioner relied upon (2013)
10 Supreme Court Cases 83 (Sri Siddeshwara Cooperative
Bank Ltd. v. Ikbal and Others).
6. Leaned Advocate for the petitioner also submitted that
the sale notice was issued several times and it was never
challenged by the borrower that such notice was not served.
7. On the other hand, learned senior advocate appearing for
the opposite party borrower, has challenged the classification of
the loan account of the opposite party as Non-Performing Assets
(NPA). It was submitted that the opposite party prayed for
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restructuring of her loan account which was allowed by the
petitioner bank and her account was restructured. With such
restructuring the earlier classification of the loan account as NPA
vanished. The time period for making payment of the first
instalment after restructuring of the account was fixed on a
future date. Petitioner bank ought to have waited until such date
and upon failure of opposite party in making the payment of
restructured debt; the bank could have classified the account as
NPA.
8. It was further stated that since the account of the
opposite party was not classified as NPA, the petitioner bank was
not justified in taking recourse to Section 13 of SARFAESI Act,
2002.
9. For such reasons, according to the opposite party
borrower, the Learned Debt Recovery Appellate Tribunal was
quite justified in passing the impugned order setting aside the
entire proceedings taken up by the petitioner bank under Section
13 of the SARFAESI Act, 2002.
10. Opposite party no. 1 along with her partners were
running a business under the name and style of M/s M.R.S. &
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Company. Upon an application by the opposite party, a term
loan of ₹. 78, 44,000/- was sanctioned by the petitioner bank on
October 11, 2008. Opposite party no. 1 and her partners
executed loan documents with regard to such loan on October
21, 2008 in favour of the bank. As per the terms of loan, the
opposite party no. 1 and her partners also created an equitable
mortgage in respect of immoveable property by deposit of title
deeds. A term loan account and a cash credit account was
opened in relevant branch of the petitioner bank in the name of
opposite party no. 1 holding the borrowers liable for liquidating
the outstanding amount. An acknowledgement, in respect of the
loans/facilities was also executed by opposite party no. 1 and her
partners on March 31, 2010.
11. Later on, opposite party no. 1 and her partners applied for
restructuring of the loans/facilities before the petitioner bank. In
pursuance of such request, the Regional Office of the petitioner
bank, by sanctioned letter dated October 30, 2010, restructured
the loan account.
12. The opposite party availed loan facilities since the date
when the credit facilities were extended by the petitioner bank
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but failed to pay the dues/services interests as per the terms and
conditions of sanction. The opposite party failed to comply the
terms of the sanction letter of restructured loan dated October
30, 2010 as well. The outstanding dues as stood on March 30,
2011 were ₹. 150.19 Lakh.Assuch, the loan account of the
opposite party was classified as NPA on March 31, 2011.
13. Following the classification of the loan account as NPA on
March 31, 2011, the petitioner bank issued notice under Section
13(2) of SARFAESI Act on December 16, 2011. The notice was
served upon the partnership firm M/s M.R.S. & Company as well
as all the partners/guarantors including opposite party no. 1.
Inspite of such notice, opposite party no. 1 and her partners and
guarantors failed to discharge their liability as demanded in the
notice and also did not prefer any objection or representation
against such notice under Section 13(2) of the SARFAESI Act,
2002. Consequently, the petitioner bank served a notice under
Section 13(4)(a) of the SARFAESI Actupon the company, its
partners and guarantors at their registered addresses, through
post. Such notices however returned undelivered with postal
endorsement as”address not available hence return”.
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14. Thereafter, the petitioner bank took physical possession
of the mortgaged properties on March 5, 2012. Possession notice
was served upon opposite party no. 1 and her partners. Itwas
received by the husband of opposite party no. 1 on her behalf.
Possession notice was also published in two leading newspapers
on March 10, 2012. A copy of notice was also affixed at the
mortgaged property.
15. After taking such possession of the mortgaged properties,
petitioner bank published auction sale notices on several dates,
however, the auction on such dates failed on account of non-
availability of bidders. Finally, an auction sale notice was
published on March 10, 2013 again, in two leading newspapers
fixing the date of auction sale on April 12, 2013.
16. A 30 days notice dated November 14, 2012, was sent at
the registered addresses of the mortgagors on November 17,
2012, intimating the proposed sale. Such notice was
accompanied by the copies of paper publication of sale notice
dated October 19, 2012. However, such notice also returned
unserved with postal endorsement “incomplete address”.
Ultimately, a sale was conducted on April 12, 2013 with reserve
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price of ₹. 121.00 lakhs. Opposite party no. 3 M/s Sarkar
Products and Trading Pvt. Ltd. emerged as the highest bidder
with a bid value of ₹. 128.35 lakhs. Upon compliance of all
necessary formalities, a sale certificate was issued in favour of
the auction purchasers M/s Sarkar Products and Trading Pvt.
Ltd.
17. Since the opposite party partnership firm including the
opposite party no. 1 and her partners failed to make payment of
credit facilities, the petitioner bank undertook proceedings under
SARFAESI Act, 2002. Challenging such proceeding, opposite
party no.1 approached Debts Recovery Tribunal through a claim
case being SA No. 413 of 2012. The said proceeding was however,
dismissed.
18. Challenging the order of dismissal of SA No. 413 of 2012,
opposite party no.1 carried an appeal to theDebts Recovery
Appellate Tribunal by way of Appeal No. 33 of 2017. The said
appeal filed by opposite party no. 1 was allowed in by the
impugned order setting aside the entire proceeding in terms of
the provisions of SARFAESI Act, 2002. The petitioner bank was
directed to restore possession of the mortgaged property to
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opposite party. Auction sale of the mortgaged property was also
cancelled and the petitioner was directed to return the sale
proceeds thereof to the purchasers with interest.
19. In the instant case, it is evident that the loan account of
opposite party no. 1 was restructured on her prayer on March
31, 2011. Such prayer for restructuring was approved by the
Regional Office of the petitioner bank, whereby, the term loan of
₹. 78,44,000/- was renewed and the cash credit limit of ₹. 70,
00,000/- was funded as fresh term loan. The due date of
payment of first instalment against such restructured loan was
provided as November 30, 2011.
20. However, the account was declared as NPA on March 31,
2011 itself. Such restructuring of the account of the opposite
party no. 1 sanctioned by the Regional Office of the petitioner
bank coupled with renewal of the loan account and conversion of
cash credit limit into a fresh loan indicates that the bank still
had enough faith in the borrower and visualised fair chances of
the recovery of the loan.
21. The Learned Tribunal has held that the classification of
the loan account of opposite party no. 1 as NPA on March 31,
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2011 i.e., the date of restructuring itself, was not justified as the
date for depositing the first instalment of the loan account was
on November 30, 2011. The Learned Tribunal also held that
without waiting for the due date of payment, the petitioner bank
could not have come to the conclusion that the loan account was
irregular.
22. In the facts of the case at hand, since the due date for
making payment of the instalment was on a future date, the
petitioner bank could have waited until such date for issuance of
a notice under Section 13(2) of the SARFAESI Act, 2002.
23. Learned Appellate Tribunal also held in the impugned
order that the notice of sale required under Rule 8(6) of the Rule
of 2002was not served upon the borrowers. According to the
Learned Appellate Tribunal, such notice of at least 30 days was
mandatory in terms of the Rules. Nothing has been brought to
the notice of this Court that such notice was specifically waived
by opposite party no. 1 and her partners.
24. It would be convenient to reproduce Rule 8(6) of the
Security Interest (Enforcement) Rules, 2002 which reads as
follows:-
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8. Sale of immovable secured assets.-
…………………………………………………………………
………………………………………………………………
(6) The Authorised Officer shall serve to the borrower
a notice 30 days for the sale of the immovable
secured asset under sub-rule (v).
Provided that if the sale of such secured asset is
being effected by either inviting tenders from the
public or by holding public auction, the secured
creditor shall cause a public notice into leading
newspapers one in vernacular language having
sufficient circulation in the locality by setting out the
terms of sale which shall be :-
(a)…………………….
25. A plaint reading of Rule 8(6) of the Security Interest
(Enforcement) Rules, 2002 goes to show that the notice of 30
days upon the borrower is mandatory. In addition, publication
in at least two daily newspapers with required information
detailed in the proviso attached to Rule 8(6) is required to be
made. This provision gives an understanding that publication in
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the newspaper is complimentary to the provisions of Rules 8(6)
and not supplementary. The averments made on behalf of the
petitioner bank in the petition under Article 227 of the
Constitution of India discloses that after issuance of notice under
Section 13(2) of the SARFAESI Act, 2002, the petitioner bank
published several sale notices dated May 30, 2012, July 11,
2012, October 19, 2012 and on March 10, 2013. In the last
publication dated March 10, 2013, the date of sale was fixed on
April 12, 2013.
26. It has been averred on behalf of the petitioner bank that
in order to comply the provision of Rule 8(6) and Rule 9 of the
Rule of 2002, the petitioner banks served a 30 days notice of sale
on November 14, 2012 which enclosed copy of publication of the
sale notice dated October 19, 2012. However, such notice is
admitted to have returned undelivered with postal endorsement
“incomplete address”.
27. The petitioner bank has not been able to give explanation
as to why the last sale notice published on March 10, 2013 was
not sent for service upon the borrowers/mortgagors. According
to the petitioner bank the last notice was sent to the borrower on
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November 14, 2012 with the copy of publication of sale notice
dated October 19, 2012. The sale was actually held on April 12,
2013. Apparently no notice with regard to such sale was sent to
the borrower. That too, the earlier notice of sale sent returned
undelivered, nevertheless, the petitioner bank proceeded with the
sale proceeding on the basis of publication, notice of which was
not sent for service upon the borrowers/mortgagors.
28. Under the aforesaid circumstances, I find no reason to
disagree with the finding of the Appellate Tribunal holding that
no sale notice was served upon the borrower in terms of Rule 8(6)
of the Rule of 2002.
29. It has also been submitted on behalf of the petitioner
bank that the opposite party borrower did not raise any objection
as to the sale notice published in the newspapers. Such
omission on the part of the borrower amounted to waiver of
mandatory notice. In Ikbal (supra) it was observed by Hon’ble
Supreme Court that,
“19. There is no doubt that Rule 9(1) is mandatory
but this provision is definitely for the benefit of the
borrower. Similarly, Rule 9(3) and Rule 9(4) are for
the benefit of the secured creditor (or in any case for
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the benefit of the borrower). It is settled position in
law that even if a provision is mandatory, it can
always be waived by a party (or parties) for whose
benefit such provision has been made. The provision
in Rule 9(1) being for the benefit of the borrower and
the provisions contained in Rule 9(3) and Rule 9(4)
being for the benefit of the secured creditor (or for
that matter for the benefit of the borrower), the
secured creditor and the borrower can lawfully waive
their right. These provisions neither expressly nor
contextually indicate otherwise. Obviously, the
question whether there is waiver or not depends on
the facts of each case and no hard-and-fast rule can
be laid down in this regard.”
30. In the instant case, however, the materials on record
disclose that sale notice in terms of Rule 8(6) of the Rule of 2002
was actually not served upon the borrower. The said provisions
are to be construed beneficial to the borrower. The opposite
party borrower has challenged the service of such notice. If that
be so, no question of its waiver does arise at all. In the aforesaid
case it was noted by the Hon’ble Supreme Court that the
question whether there is waiver or not depends on the facts of
each case and no hard and fast rule can be laid down in this
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regard. In such circumstances I am not in a position to return a
finding that the opposite party borrower wilfully waived the
service of notice as contemplated under Rule 8(6) of Security
Interest (Enforcement) Rules, 2002.
31. The ITC Limited (supra) has been cited by learned advocate
for the petitioner bank. In the aforesaid case it was laid down by
the Hon’ble Supreme Court that powers under Article 226 of the
Constitution of India should be sparingly used on the
touchstones of judiciousness and reasonableness. It has also
been held that allegation of infringement of legal right has to be
seen coupled with the conduct of the petitioner in getting a relief.
The powers of the Supreme Court under Article 226 of the
Constitution of India is a discretionary one and a relief sought by
a person who approaches the Court with unclean hands or
blameworthy conduct should not be granted.
32. In the present proceeding, however, I am not exercising a
jurisdiction under Article 226 of the Constitution of India, rather,
a jurisdiction under Article 227 of the Constitution of India has
been invoked. Therefore, the ratio laid down in the case of ITC
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Limited (supra) cannot be applied in the facts and
circumstances of the present case.
33. It is settled position of law that interference under Article
227 of the Constitution of India can be made only on limited
grounds i.e., if the order suffer from any jurisdictional error or if
there is palpable procedural impropriety or the impugned order
suffers from manifest perversity. I am afraid, the petitioner has
not been able to bring the impugned order of the Debt Recovery
Appellate Tribunal under any of the aforesaid categories, in order
to justify an interference under Article 227 of the Constitution of
India. If two plausible views are possible in the facts and
circumstances of a case and a particular view has been taken by
the court in passing the impugned order, it would not be proper
to substitute another view by the revisional Court. Upon
consideration of the facts and circumstances of the present case,
I am of the opinion that the impugned order does not warrant
any interference under the jurisdiction of Article 227 of the
Constitution of India.
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34. Accordingly, the revisional application being C. O. No.
1767 of 2018 is hereby dismissed without any order as to cost
and thus, disposed of.
35. With the disposal of the main matter nothing survives.
Connected applications if any shall also stand disposed of.
36. Urgent photostat certified copy of this order, if applied
for, be supplied to the parties on priority basis upon compliance
of all formalities.
[MD. SHABBAR RASHIDI, J.]