Decided on March 19,2014

India Sme Asset Reconstruction Company Ltd. Appellant


Ranjit Singh, J. - (1.) THE contest in this appeal is primarily between two banks. Respondent No.1 Corporation Bank had challenged the action of appellant Punjab National Bank, whereby it had exercised its rights and power conferred upon it by section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESl Act).
(2.) THE facts giving rise to the present appeal may be noticed in brief. Respondent No.1, Corporation Bank, had filed an S.A under section 17(1) of the SARFAESI Act for quashing the notices issued by the appellant Punjab National Bank under sections 13(2) and 13(4) of the Act. Corporation Bank had granted certain credit facilities to Smt. Rohina Kakaria, proprietor of M/s Tiberius. To secure this loan, respondent No. 2, Mr. Vivek Raj Kakaria, had mortgaged Flat No. 9, S -473, Greater Kallash -ll, New Delhi on 16.5.2001. The borrower and mortgagor failed to maintain the financial discipline and on account of this, their accounts were declared NPA. The Corporation Bank filed an O.A. under the RDDBFI Act in the year 2003 against the borrower and the guarantor for recovery of its dues amounting to Rs.38,99,079.11 together with pendente lite and future interest from the date of filing of the suit till realization of the amount. The O.A. was decided in favour of Corporation Bank on 4.1.2006. The Tribunal held that immovable property bearing No.9, S -473, Greater Kailash -II, New Delhi was validly mortgaged in favour of Corporation Bank. Recovery Officer was directed to recover the decretal amount within two months failing which the same was ordered to be recovered from the mortgaged property.
(3.) DURING the execution proceedings, the Corporation Bank exercised its power conferred under sections 13(2) and 13(4) of the SARFAESI Act on 5.8.2003 and issued notice to Mr. Vivek Raj Kakaria demanding a sum of Rs.39,04,232.11 with future interest at contractual rate. This was followed by notice under section 13(4) of the Act, which was published in three leading newspapers, namely, The Financial Express, Jansatta, and The Indian Express, all dated 31.1.2005. The possession of the property was then taken Corporation Bank, thereafter, initiated steps for sale of the property and published notices. It is stated that the property was sold for Rs. 21,03,000/ - and the auction purchaser had deposited the entire sale consideration with Corporation Bank. The bank, accordingly, confirmed the sale on 28.3.2005. Later, during the course of proceedings, it was discovered that appellant Punjab National Bank had also affixed some notice on the subject property for taking symbolic possession. Corporation Bank, therefore, wrote a letter to Punjab National Bank narrating all the facts and requesting it not to proceed further in respect of the subject property. Punjab National Bank, however, declined to hear to the request and through the letter dated 6.6.2006 threatened to hold auction of the subject property to recover its dues. Corporation Bank, therefore, filed S.A. before the Tribunal below challenging the action of Punjab National Bank to be illegal and void ab initio and liable to be quashed. The main plea raised by Corporation Bank was that the mortgage in respect of the property in favour of Corporation Bank had already been declared valid and legal, whereas, the claim of Punjab National Bank was yet to be adjudicated upon.;

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