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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sonia Gokani, J.
Vijaya Bank Thro Authorized Officer Madana Mohan Naik V R - Applicant
Versus
State of Gujarat & Others - Respondents
Criminal Misc. Application (Direction) No. 1 of 2021 In R/Special Criminal Application No. 9594 of 2018
Decided On : 23-02-2023
Securitisation and Reconstruction of Financial Assets and Enforcement Of Security Interest Act, 2002 – Rules 9(3) and 9(4) – Case of retrenchment – Departmental proceedings – Debt Recovery Tribunal – Liberty to approach – Recovery action against mortgaged property – Held, Court cannot be oblivious of pandemic and dire need of mandatory requirements of parties – Applicant vacated premises after time period of 07 days was over – However, even if from date of acknowledgment, if it is not disputed, she was not aware, request on part of applicant to refund amount to bank and her difficulty to move without that amount, when has been duly explained, this refund of amount ought to have been regarded – However, considering period of pandemic, which had disturbed various financial equations, Court is of opinion that amount should be refunded by Bank – Bank being a public sector undertaking ought to have regarded difficulties narrated by its customer – Application allowed.
ORDER :
1. Present applicant preferred Special Civil Application No.18299 of 2017 before this Court to restrain respondent No.4-original petitioner (“the bank” for short) from taking any recovery action against mortgaged property, wherein, by order dated 28.09.2018, the applicant withdrew the application with a liberty to approach the Debt Recovery Tribunal (“the DRT”). The order dated 28.09.2018 deserves reproduction as under :-
2. The bank has filed Special Criminal Application No. 9594 of 2018, wherein it has sought police protection for taking physical possession of the property that was in occupancy of the applicant. The bank being third party bona fide purchaser, the applicant made submissions before this Court to deposit the amount of Rs.10,00,000/- ( Rupees Ten Lakhs) with the bank for further negotiation and the same was recorded in the order dated 30.11.2018. The applicant deposited Rs. 10,00,000/- (Rupees Ten Lakhs only) bearing Cheque No.0011725 of Saraswat Co-Operative Bank Ltd., Branch Maninagar in favour of Authorised Officer, Vijaya Bank.
3. SA No.213 of 2018 was filed by the applicant against the bank in the DRT, which came to be disposed of with the observation that “the applicant shall vacate the premises within 07 days if any other auction purchaser provides a higher bid.” This was the order passed on 11.01.2019 by the DRT.
4. There was an unsuccessful auction and no bidder participated in the said auction dated 11.01.2019. The applicant informed the same to the bank vide letter dated 14.03.2019 and sought refund of amount of Rs.10,00,000/-, which was deposited on 30.11.2018. The Bank did not reply and did not refund the amount.
5. On 19.01.2020 the Bank took the physical possession of the property and failed to repay the amount of Rs.10,00,000/-. On 12.10.2020, the bank issued notice for removal of movable articles lying on the mortgaged property and the bank also stated that as per order dated 11.01.2019 of the DRT, it shall have the right to claim Rs.1,00,000/- per day and deduct the same for illegal occupation. The auction became successful only on 22.09.2020 after four failures of public auction.
6. On 20.10.2020 the applicant replied to the bank and pointed out how illegally it has retained Rs.10 lakhs. On 07.04.2021 the applicant requested seven days’ time for removing the movable articles lying in the mortgaged property. The bank issued notice on 15.04.2021 which the applicant had responded to on 14.04.2021. The notice was issued for removing the articles and the same was replied to on 15.05.2021 and 17.05.2021 as the amount was not given. The applicant is before this Court seeking following reliefs:
(A) The Hon’ble Court may be pleased to issue an appropriate writ, order or direction by directing the respondent bank to refund back the money of Rs.10,00,000/- as deposited by the applicant by the virtue of order dated 30.11.2018 passed in Special Criminal Application No. 9594 of 2018 by this Hon’ble High Court of Gujarat;
(B) This Hon’ble Court may be pleased to directing the respondent bank to refund back the money of Rs.10,00,000/- along with Fix Deposit interest from the date of application till the date of realization be passed against the defendants and in favour of the plaintiff.
(C) This Hon’ble Court may be pleased to grant such other an further relief and/or order in the interest of justice in favour of the petitioners.”
7. Affidavit-in-reply is filed by Chief Manager of respondent No.4
The bank retains the right to recover debts through mortgaged properties even if the borrower sells the property to a third party, as established under the SARFAESI Act, 2002.
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
The main legal point established in the judgment is the court's directive to handle the deposited amount, consider an early hearing of the Securitization Application, and not execute the sale-deed wi....
Point of Law : Records produced, explicitly show the absence of any bonafide or real disputed questions of fact, this Court must step in to aid enforcement of rule of law.
The court upheld the bank's actions under the Act, confirming that due process was followed in the recovery of the loan, dismissing the petition for lack of diligent prosecution by the applicant.
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....
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