- (1.) THESE two revisional applications under Article 227 of the Constitution are directed against the judgment and order dated February 18, 2011 passed by the Chairperson, Debts Recovery Appellate Tribunal, Calcutta (hereafter the appellate tribunal) dismissing Appeal Nos. 24 of 2010 and 38 of 2010 filed by the respective petitioners. The appeals were directed against judgment and order dated June 10, 2010 passed by the Presiding Officer, Debts Recovery Tribunal, Kolkata 1 (hereafter the tribunal), whereby the application filed by the opposite parties 1 to 2 under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter the Act) registered as O.A./Sarfaesi 4 of 2010 was allowed. By the impugned judgment and order, the appellate tribunal recorded a finding that sale of a residential flat, bearing no.1C, admeasuring super built-up area of 2,800 sq.ft. approx. with two car-parking spaces in the semi-basement area situated at premises no.7/1, Queens Park, Kolkata 700 019 in the name of the opposite parties 2 and 3 (hereafter the said property) by ING Vysya Bank (hereafter the bank) was tainted with fraud and material irregularity resulting in suffering of substantial injury by the opposite parties and, consequently, the decision of the tribunal setting aside the sale was affirmed and the appeals dismissed.
(2.) THE facts giving rise to O.A./Sarfaesi No.4 of 2010 before the tribunal are noted first. a. THE opposite parties 1 to 3 (hereafter the borrowers) were granted credit facilities by the bank. From time to time, the facilities were enhanced. However, the borrowers committed default and in due course of time, their account was classified as non-performing asset. THE bank issued notice under Section 13(2) of the Act on January 17, 2009 calling upon them to explain why measures in terms of Section 13(4) thereof shall not be taken. THEy responded thereto by submitting an objection dated March 20, 2009. Allegedly, without proper disposal thereof, possession notice dated August 10, 2009 was issued by the bank followed by taking of symbolic possession of the said property. b. THE authorized officer of the bank, thereafter, issued a notice dated November 10, 2009 inviting sealed bids from interested parties for sale of the said property. It was notified that the reserve price is Rs.1,48,00,000/- only and that 10% of the reserve price had been fixed as deposit on account of earnest money. It was further notified that the said property could be inspected between December 10, 2009 and December 17, 2009 from 11 A.M. to 4 P.M. THE date and time of opening of the bids/offers was fixed on December 18, 2009 at 12.30 P.M., in the regional office of the bank. c. Being desirous of purchasing the said property, the petitioner in C.O. 721 of 2011 (hereafter Oasis) submitted its bid with the bank together with a bankers cheque dated December 8, 2009 for a sum of Rs.14,80,000/- towards earnest money deposit. d. THE borrowers then approached the tribunal with an application under Section 17(1) of the Act on December 17, 2009, registered as O.A./Sarfaesi No. 92 of 2009. On December 17, 2009 itself, the tribunal passed an order of status quo subject to payment of a sum of Rs.15,00,000/- by the borrowers to the bank within December 26, 2009. e. THE representative of Oasis had been to the venue on the scheduled date and time for ascertaining the fate of its offer, when it was informed of the order dated December 17, 2009 passed by the tribunal. He was further informed that the bank would take a decision for sale of the said property on or after December 27, 2009 and the offer submitted on December 10, 2009 was returned to him. f. THE borrowers feeling aggrieved by the order of the tribunal dated December 17, 2009 questioned its propriety before this Court in an application under Article 227 of the Constitution, registered as C.O. 4036 of 2009. A learned Judge of this Court by order dated December 23, 2009 directed the petitioners before it (the borrowers) to furnish a bank guarantee of Rs.10,00,000/- on or before January 2, 2010. On January 4, 2010, C.O. 4036 of 2009 was taken up for consideration by the learned Judge once again. THE order passed on that date records adjournment of hearing for a week on the prayer of the learned advocate for the borrowers. It further records the submission of Mr. Aniruddha Roy, learned Advocate for the bank that bank guarantee for a sum of Rs.10,00,000/- had not been furnished by the borrowers with the tribunal in terms of the order passed on December 24, 2009. g. On that very day, the bank issued a further notice of sale in respect of the said property. It was published in the daily issues of THE Statesman and Aajkal on January 5, 2010. It was mentioned therein that the auction proposed to be conducted on December 18, 2009 had been postponed/deferred in view of the order of the tribunal dated December 17, 2009 and that since the borrowers had failed to comply with the order of the tribunal and the period for compliance had since expired, the said property was again put up on auction on as is where is and whatever there is basis. THE secured debt was Rs.42,75,878/- together with further interest and other charges from November 1, 2009. THE regional office of the bank was again the venue for opening of bids, the last date for submission of bids was January 6, 2010 before 11.30 A.M. and the bids were to be opened on the same date at 12.30 P.M. THE reserve price and the earnest money deposit as well as other terms and conditions were the same, as mentioned in the earlier sale notice dated November 10, 2009. h. Oasis submitted its bid (Rs.1,48,11,111/-) on January 6, 2010 for purchase of the said property together with deposit on account of earnest money. None else submitted its bid. Oasis being the sole bidder and its bid being more than the reserve price fixed by the bank in the sale notice, the same was accepted. After acceptance of the bid of Oasis, it was directed to deposit 25% of the bid amount in course of the day, which was duly complied with by it by depositing a bankers cheque for the sum of Rs.1,33,31,111/-. After receipt of the aforesaid cheque, the bank issued a letter dated January 6, 2010 acknowledging receipt of the entire consideration amount and assured to execute the sale certificate in favour of Oasis on realization of the bankers cheque. On January 9, 2010 sale certificate in terms of the provisions contained in Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 (hereafter the Rules) was issued in favour of Oasis by the bank in Appendix 5. i. In the meanwhile, O.A./Sarfaesi No. 92 of 2009 was taken up for consideration by the tribunal on January 7, 2010. None appeared for the borrowers. Submission made on behalf of the bank to the effect that the borrowers have defaulted in complying with the order of this Court dated December 24, 2009 and consequent action taken by the bank for sale of the said property under the provisions of the Act were recorded. THE bank was directed to file written objection and the application, for further consideration, was posted on March 4, 2010. j. This Court once again took up C.O. 4036 of 2009 for consideration on January 11, 2010. An accommodation was prayed for on behalf of the borrowers. THE learned Judge directed de-listing of the application for the time being but proceeded to record the submission of Mr. Roy that since no bank guarantee in terms of the earlier order had been furnished by the borrowers, the bank had sold the secured assets to Oasis. k. A petition by way of put up was filed by the borrowers on January 14, 2010 before the tribunal in connection with O.A./Sarfaesi No.92 of 2009 claiming relief in terms of prayers contained therein. Upon hearing learned advocates for the parties, the tribunal expressed the view that with the disposal of the said property by way of sale in favour of Oasis, O.A./Sarfaesi No.92 of 2009 had become infructuous. THE tribunal further expressed the view that the borrowers ought to file further application as per law if they intended to proceed further in the matter. Accepting the contention of the learned advocate for the bank, the put up petition was dismissed as not maintainable. These developments led the borrowers to file a further application under Section 17(1) of the Act on January 21, 2010, giving rise to O.A./Sarfaesi No. 4 of 2010. In such application the bank and its authorized officer were impleaded as defendants 1 and 3 respectively, while Oasis was defendant no.2. The borrowers challenged propriety, legality and validity of the sale conducted by the bank. The said application was heard on contest and by judgment and order dated June 10, 2010, it was ordered by the tribunal as follows: (a). The sale held on 6.1.2010 and the sale certificate issued on 9.1.2010 therefor by the 3rd defendant in favour of the 2nd defendant, are hereby set aside subject to the applicants payment of Rs.42,75,878/- (Rupees forty two lakh seventy five thousand eight hundred seventy eight only) to the first defendant bank within three weeks from the date of this order and in the event of Applicants defaulting the said payment, this Application shall stand dismissed. (b). In case of payment of the aforesaid amount to the 1st defendant bank by the Applicants, the 1st defendant bank or the 3rd defendant shall refund the purchase money of Rs. 1,48,11,111/- (Rupees one crore forty eight lakhs eleven thousand one hundred eleven only) together with 8% p.a. simple interest from 7.1.2010 till the date of payment to the Auction purchaser, i.e. the 2nd defendant within seven days after the receipt of the amount of Rs.42,75,378/- from the Applicants. (c). No order as to costs. Accordingly, the application is allowed. Paragraphs 31 and 38 of the judgment and order of the tribunal contained the reasons in support of the ultimate conclusion and, therefore, are reproduced below: 31. It appears that only the 2nd defendant had offered the bid and paid the entire balance amount of Rs.1,33,31,111/- immediately on very next date. It really wonders how the 2nd defendant had come to know that the sale would be struck in his favour and shall get ready with the entire balance sale consideration of more than Rs.1.33 crores on the same day. The bank should not have issued sale notice immediately on 4.1.2010 for publication in Newspapers on 5.1.2010, particularly when the matter was adjourned from 4.1.2010 to 11.1.2010 before the Honble High Court and without waiting for outcome of the same. The bank had published the notice in haste that too giving a days time both to public to participate in the auction and to the borrower to pay such huge dues which really strikes into ones heart. The manner in which the sale was conducted by the bank is regrettable and shall not receive stamp of approval. 38. In the aforesaid circumstances it is my considered opinion that the sale was not only held in contravention of the Rules but also the manner in which it was held suggests that it was done in a suspicious manner and that has caused wrongful loss to the applicants and ultimate wrongful gain to the defendant No.2.
(3.) IN the appeals filed against aforesaid judgment and order before the appellate tribunal, the bank and Oasis raised the following points: i) A second application under Section 17(1) of the Act is not maintainable while the first application under the same section is pending; ii) The bank had proceeded in accordance with law to effect sale of the said property; iii) The borrowers had lost their right of redemption; and iv) The tribunal had returned perverse findings. It appears on perusal of the appellate tribunals judgment and order that the point of maintainability was answered against the bank and Oasis by observing that measures taken by the bank under Section 13(4) of the Act could be challenged by filing separate applications and that O.A./Sarfaesi No.4 of 2010 having been filed within 16 days from the date of sale, the application was not barred by limitation.;