Failure to provide statutory notice as mandated by rule 8(6) of the Security Interest (Enforcement) Rules, 2002 vitiates the auction of mortgaged property.

JUDGMENT

Vipin Sanghi, J. (Oral)--The present petition preferred by the auction purchaser assails the order dated 13.03.2020, passed by the Debts Recover Appellate Tribunal, Delhi (DRAT). Under the impugned order, the DRAT has - while allowing the appeal preferred by the mortgager Mr.Atul Gupta being Appeal No. 498/2018, set aside the auction sale of the mortgaged property in favour of the petitioner held on 21.07.2015.

2. The mortgager i.e. Mr.Atul Gupta had preferred a securitisation application being S.A. No. 73/2015 before the Debts Recovery Tribunal (DRT) to challenge the auction sale of the mortgaged property under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

3. The DRT vide its order dated 08.05.2018 in I.A. No. 1846/2015 rejected the mortgagor's plea that the auction was vitiated and liable to be set aside as the requisite notice required under rule 8(6) of the Security Interest (Enforcement) Rules, 2002 was never served upon him.

4. The learned DRAT vide its impugned order has reversed the said order passed by the DRT and has agreed with the contention of the mortgagor that no notice under rule 8(6) regarding the auction sale held on 21.07.2015 was served on him and, therefore, the auction was vitiated. While coming to the said conclusion, the DRAT has relied upon the decision of the Supreme Court in Mathew Varghese vs. M. Amritha Kumar & Ors., [(2014) 5 SCC 610].

5. The DRAT while allowing the appeal has set out the relevant extract of the DRT's order dated 08.05.2018, which reads as under:

"31. Heard and the arguments have been heard on behalf of all the respective counsels of the parties at length and the record has been perused thoroughly. So far as, the issue of notice is concerned, it is admitted fact that the auction/sale was conducted on 21.07.2015 and 30 days' notice under Rule 8(6) of Rules, 2002 was duly served on 05.03.2015 by the respondent bank and publication was also affected on 19.06.2016 in the newspapers Hindustan Times and Amar Ujala. The notice dated 15.05.2015 was also duly addressed to the applicant/director/borrower/guarantor/mortgagor as apparently seen from the letter as well as registered postal receipt placed on record.

32. In this context, it is worthwhile to be mentioned that the purpose of giving 30 days' notice under Rule 8(6) of Rules, 2002 is to get aware the borrower/guarantor/mortgagor about conducting the sale to enable them to clear the dues of the secured creditors and also acknowledge the proposed bidder to verify the status of the property during this period. Apparently, the due notice was given to the applicant/borrower/guarantor/mortgagor/director and even otherwise, the applicants were well aware of the facts that the sale of the property in question was being conducted by the respondent bank, which stands fortified from the application being I.A. no.506 of 2015 moved by Ms. Ritesh Gupta - one of the director the applicant company on 02.03.2015 for restraining the respondent bank from taking measures in terms of sale notice dated 24.01.2015 and another application moved in the month of April, 2015 for quashing the sale notice dated 21.03.2015. Accordingly, the Ld. Predecessor of this Tribunal, vide order dated 24.04.2015, clearly held that the sale will be subject to outcome of this S.A. and in the said order, it was also mentioned that it was fourth time, they were putting the property on auction. Hence, the present applicants were continuously observing and knew about the auction proceedings, which was being held from time to time by the respondent bank.

33. Though, Ld. Counsels for the respective parties have relied upon the citation of Mathew