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2021 Supreme(Guj) 953

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, J.
PANDIAN NALLAKANNU NAIDU – APPELLANT
Versus
THE AUTHORISED OFFICER, PUNJAB NATIONAL BANK – ARMB – RESPONDENT
SPECIAL CIVIL APPLICATION NO. 14232 of 2021 With CIVIL APPLICATION (FOR VACATING STAY) NO. 1 of 2021
Decided on : 26-10-2021

Advocates Appeared:
For the Appellant : MR MB GOHIL
For the Respondent: MR DIGANT B KAKKAD, MR. VN SEVAK

Point of Law - Rule 15 of Schedule II Part I of the Income Tax Act, 1961, in the first place it will have to be stated that a reading of the said Rule does not in any way conflict with either Section 13(8) of the Sarfaesi Act or Rules 8 and 9 of the 2002 Rules. As far as sub-rule (1) of Rule 15 is concerned, it only deals with the discretion of the Tax Recovery Officer to adjourn the sale by recording his reasons for such adjournment.

Headnote:
Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 - Section 13(2) , 14, 13(3), 13(8), 17, 2(zc), 2(zf), 13(1) and (8), 31 and 37 - Transfer of Property Act, 1882 - Section 69, 69-A , 60, 54, 69(3) - Registration Act, - Section 17 - Income Tax Act, 1961 – Recovery of Debts and Bankruptcy Act, 1993 - Section 29 - Security Interest (Enforcement) Rules, 2002 - Rules 8(5), 8(6), 8(7) and 9(1) 15 - Secured asset - Security interest - Enforcement of security interest - Time of sale, issue of sale certificate and delivery of possession - Sale of immovable secured assets - Whether provisions of Sub-section 8 of Section 13 of SARFAESI Act, 2002, can be invoked or not - Whether interim relief granted by this Court should be continued during pendency of petition as well as appeal filed by petitioners before DRAT or not.
Findings of the court - Court though auction notice was given in the year 2007, no new notice was given to borrower as required under Rules 8 and 9 of Rules of 2002 and on that ground alone, though, sale deed was executed in favour of auction purchaser Court held in favour of borrowers, granting them benefit of Section 13(8) of Act of 2002 - Respondent-Bank issued requisite notice under Rules 8 and 9 of Rules of 2002 to hold auction on 11th March, 2020, which was challenged by petitioners before Tribunal and therefore it cannot be said that no notice was issued by respondent-Bank in compliance of Rules 8 and 9 of Rules of 2002 - Even, Tribunal also found that relevant rules of Rules of 2002 are duly complied with by respondent-Bank and accordingly, Securitization Application was dismissed - Civil Application filed by applicant-auction purchaser deserves to be allowed and same is allowed- Ad-interim-relief granted by Court vide order are hereby stands vacated - Petitioners are directed to remove their belongings from property in question within period of four weeks from today and possession of property be handed over to applicant auction purchaser during pendency of appeal before DRAT, physical possession whereof has already been taken over by respondent-Bank.
Result - Petition stands disposed of.

JUDGMENT :

1. Heard, learned Advocate Mr. M.B. Gohil, for the petitioners, Mr. Digant B. Kakkad learned Advocate for the applicant-auction purchaser, and learned Advocate Mr. V.N. Sevak for the Respondent-Bank.

2. By way of Civil Application No.1 of 2021, the applicant-auction purchaser has prayed to vacate the interim relief granted by this Court vide order dated 27th September, 2021, while admitting Special Civil Application No. 14232 of

2021.

3. The brief facts of the case are as under:

3.1 The applicant is the auction purchaser of the residential property of the petitioners. The applicant has paid the amount of Rs.1,16,56,000/- for purchasing the residential property, out of which 25% amount was paid in March, 2020, whereas, the remaining 75% was paid on 1st January, 2021.

3.1.1 The respondent-Bank has sanctioned overdraft limit of Rs.97,00,000/- in favour of M/ s. S.R. Construction Company, wherein the petitioners are guarantors and the credit facility provided by the respondent-Bank was secured by mortgage of the immovable property / the residential house of the petitioners.

3.2 The respondent bank issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 (herein after, ‘Act of 2002’), calling upon the petitioners to pay Rs.1,14,00,405/-, as they were the guarantors for the financial assistance advanced by the Respondent-Bank to M/s. S.R. Construction Company.

3.3 It appears that another notice was issued on 29th December, 2018 under Section 13(2) of the Act of 2002 by the respondent-Bank and thereafter symbolic possession of the residential property of the petitioners was taken by order dated 11th March, 2019.

3.4 The Chief Metropolitan Magistrate passed an order under Section 14 of the Act of 2002 on 3rd September, 2019 in favour of the Respondent-Bank.

3.5 The petitioners challenged the action of the respondent-Bank of taking symbolic possession of the residential property of the petitioners as well as the order dated 3rd September, 2019 before this Court by preferring Special Civil Application No. 23285 of 2019, seeking interim relief on the ground that the Presiding Officer of the Debts Recovery Tribunal (in short, ‘the Tribunal’) was on leave from 23rd December, 2019 to 30th December, 2019.

3.5.1 This Court on 27th December, 2019, passed the following order in Special Civil Application No. 23284 of 2019 and gave breathing time to the petitioners to approach the Tribunal on or before 6th January, 2020;

“1. This petition, under Articles 226 and 227 of the Constitution of India, is filed by the petitioners praying to quash and set aside the demand notice issued under Section 13(2) of the SARFAESI Act.

2. Mr. Patadia, learned advocate for the petitioner states that the notice under Section 13(2) of the Act was issued against a dead person and in fact was not even issued to the legal heirs of the deceased. A statement is made in the petition that the Presiding Officer of the DRT is on leave from 23.12.2019 to 30.12.2019. He is likely to resume his duties on 31.12.2019.

3. Considering the circumstances as stated above, the respondent – Bank is restrained from taking possession of the property in question till 8.1.2020. In the meantime, the petitioners shall approach the Tribunal by way of an appropriate application on or before 06.01.2020. In the event the petitioners do not approach the Tribunal by 06.01.2020, the interim relief shall stand vacated automatically.

4. With the above observations and directions, this petition stands disposed of. Direct Service is permitted today.”

3.6 The petitioners thereafter preferred Securitization Application No. 5 of 2020 on 1st January, 2020, challenging the action of the respondent-Bank of taking physical possession as well as the order passed under Section 14 of the SARFAESI Act on the ground that no notice was issued by the respondent-Bank on the borrowers and instead the notice under Section 13(3) of the Act of 20

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2021 Supreme(Guj) 953

IN THE HIGH COURT OF GUJARAT AT AHMEDABADBHARGAV D. KARIA, J.PANDIAN NALLAKANNU NAIDU – APPELLANTVersusTHE AUTHORISED OFFICER, PUNJAB NATIONAL BANK – ARMB – RESPONDENTSPECIAL CIVIL APPLICATION NO. 14232 of 2021 With CIVIL APPLICATION (FOR VACATING STAY) NO. 1 of 2021Decided on : 26-10-2021

Cases Referred (1)