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2009(1) Bankmann 363 (DRAT)
DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI
T.V. Masilamani, Chairperson
V. Sridhar —Appellant
versus
Indian Overseas Bank and
Another —Respondents
M.A. No. 24 of 2008
Decided on 3.6.2008
Counsel for the Parties:
For the Appellant:Mr. R. Murari, Advocate.
For the Respondent No. 1:Mr. Y. Thyagarajan, Advocate.
IMPORTANT POINT
Non-disclosure of the pendency of civil suit in respect of the mortgaged property brought for auction by the Recovery Officer is a valid ground for granting the relief directing refund of the amount deposited by the appellant with accrued interest.
Headnote:Recovery of Debts Due to Banks and Financial Institution Act, 1993—Section 20—Application for refund of Rs. 8,35,650 with interest deposited towards 25% of bid amount in auction sale of mortgaged property held in recovery proceedings—Appellant came to know thereafter that tenant in property had filed civil suit and obtained interim injunction and appellant did not deposit balance amount—DRT dismissed the application—Appeal—Pendency of civil suit was not disclosed in sale proclamation published by Recovery Officer—Non-disclosure of pendency of civil suit in respect of mortgaged property brought for auction was a valid ground for granting relief directing refund of amount deposited by appellant with accrued interest. (Para 6 to 9)
Result: Appeal allowed.
T. V. Masilamani, Chairperson—This appeal is filed challenging the impugned order passed by the DRT, Visakhapatnam in appeal No.1 /2004 in R.P. No. 193/2002 in O.A.-820/1999 on 23.4.2007.
2. The appellant filed an application before the DRT to refund Rs. 8,35,650 together with interest at 17.5% from 10.1.2003 till the date of payment ground that the said amount was deposited by him in the said recovery proceedings before the Recovery Officer towards 25% of the bid amount and that after he was informed about the tenancy rights over the schedule property as the tenant filed a Civil Suit in OS2674/2002 on the file of 1st Junior Civil Judge at Vijayawada, he did not deposit the balance amount towards the auction price. Hence he sought for refund of the said amount with interest. Learned P.O. after hearing both sides dismissed the appeal filed by the appellant herein. Hence the appeal.
3. Heard both sides. Mr. R. Murari, learned counsel for the appellant has submitted the following in his argument advanced on the side of the appellant:
The DRT ought to have noted that the auction notice did not contain the claim of tenant over the mortgaged property made before the Civil Court by filing a suit and since the 1st respondent concealed the pendency of the civil suit in respect of the mortgaged property at the time of the auction, the principles of natural justice had been violated. Similarly in the event of the appellant becoming the successful bidder, the Recovery Officer should be in a position to hand over vacant possession of the property to the appellant. But on the other hand, vacant possession of the property could not be given in account of the claim of tenancy rights over the same. Further the forfeiture clause was not made part of the terms and conditions of the auction in the auction notice and the forfeiture of Rs. 1,00,000 was mentioned for the first time by the Recovery Officer only in the show cause notice issued on 19.2.2003 after the second auction. Similarly the DRT ought to have been put on notice that there was an injunction granted by the Civil Court in favour of the petitioner in the said civil suit filed before the Civil Court at Vijayawada, restraining the landlord from dispossessing the tenants and therefore the suppression of the pendency of a civil suit materially affected the conduct of auction sale of the mortgaged property. In the above circumstances, the appellant who was in fact a bona fide bidder in the auction has to be granted the relief as prayed for.
4. The 1st respondent filed a counter denying the contention of the appellant.
5. In the above circumstances, the points for consideration are as follows:
(1) Whether the appellant is entitled to the refund of the amount deposited by him toward 25% bid amount in the auction held by the Recovery Officer in the said recovery proceedings?
(2) Whether the impugned order has to be set aside as prayed for?
The Points
6. It is not in controversy that in the recovery proceedings initiated by the 1st respondent Bank against the 2nd respondent and others in the recovery proceedings in RP No. 193/2002 in O.A.820/1999, the appellant herein, who participated in the auction proceedings deposited Rs. 8,35,650 towards 25% of the bid amount being the Earnest Money Deposit as per the terms and conditions of the auction held by the Recovery Officer, Similarly it is not disputed that subsequently it was made known that the alleged tenant of the mortgaged property filed a Civil Suit in OS / 2674/2002 on the file of the 1st Junior Civil Judge at Vijayawada and obtained an order of interim injunction as per order in I.A.1196/2002 in the said proceedings against the mortgagor from dispossessing him from the mortgaged property. Further the pendency of the said civil suit was not disclosed in the sale proclamation published by the Recovery Officer, while he brought the mortgaged property for sale. In the above circumstances, the appellant was constrained to file t
