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HIGH COURT OF CALCUTTA
DIPANKAR DATTA, J.
Oasis Dealcomm Private Limited - Appellant
Versus
Khazana Dealcomm Private Limited - Respondent
C.O. 721 of 2011
Decided on : Aug 24, 2011
SECURED ASSETS SALE - FRAUD AND IRREGULARITY - [SECTION 13(2), 13(4) AND 17(1) OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002] - Sale of a flat by the bank tainted with fraud and material irregularity resulting in substantial injury to the borrowers, hence the decision of the tribunal setting aside the sale was affirmed and the appeals dismissed.
Fact of the Case:
The borrowers defaulted on their credit facilities, and the bank issued a notice under Section 13(2) of the Act. The borrowers submitted an objection, but without proper disposal, the bank issued a possession notice followed by taking symbolic possession of the property. The bank invited sealed bids for the sale of the property, and Oasis submitted its bid with the bank. The borrowers approached the tribunal with an application under Section 17(1) of the Act, and the tribunal passed an order of status quo subject to payment of a sum by the borrowers to the bank. The bank issued a further notice of sale, and Oasis submitted its bid again. The bid was accepted, and the sale certificate was issued in favor of Oasis. The borrowers filed a further application under Section 17(1) of the Act, challenging the sale. The tribunal allowed the application and set aside the sale.
Finding of the Court:
The court found that the sale of the property was tainted with fraud and material irregularity. The court held that the bank did not comply with the statutory requirements while taking possession of the secured assets and that the sale was not conducted in a bona fide exercise of power by the bank. The court also held that the notice of sale was not issued in continuation of the previous notice and that the bank did not maintain the hiatus of 30 days between the date of publication of the notice and the date of sale.
Issues: 1. Whether the second application under Section 17(1) of the Act is maintainable while the first application under the same section is pending? 2. Whether the bank had proceeded in accordance with law to effect sale of the said property? 3. Whether the borrowers had lost their right of redemption? 4. Whether the tribunal had returned perverse findings?
Ratio Decidendi: 1. A second application under Section 17(1) of the Act is maintainable while the first application under the same section is pending if the measures taken by the bank under Section 13(4) of the Act are challenged by filing separate applications. 2. The bank did not proceed in accordance with law to effect sale of the said property as it did not comply with the statutory requirements while taking possession of the secured assets and that the sale was not conducted in a bona fide exercise of power by the bank. 3. The borrowers had not lost their right of redemption as the sale was not conducted in accordance with law. 4. The tribunal did not return perverse findings as the findings of fact reached by the Tribunal were accepted, and resultantly the appeals stood dismissed.
Final Decision: The court dismissed the revisional applications and upheld the judgment of the tribunal setting aside the impugned sale.
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 ord
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