IMPORTANT POINT
The Tribunal must consider merits and apply due diligence in SARFAESI Act proceedings, treating them like civil suits, to ensure fair adjudication.

JUDGMENT :

1. This original petition has been filed challenging Ext.P13 order dated 07.02.2025 in S.A.No. 462 of 2023 issued by the Debts Recovery Tribunal-II, Ernakulam.

The brief facts:-

2. The petitioners availed credit facilities from the respondent bank. On default being committed, proceedings were initiated against the petitioners under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act’). The property of the petitioners which was mortgaged to secure the repayment to the respondent bank was brought to sale. The sale was scheduled to be held on 22.11.2023. The petitioners had filed S.A.No. 462 of 2023 challenging the proceedings of taking physical possession of the secured assets and thereafter, the Securitization Application was amended impugning the sale proposed to be held on 22.11.2023. Ext.P7 interim order was issued by the Tribunal on 22.11.2023 and that order to the extent relevant reads thus;

“2. The learned counsel for the applicants submitted that sale is scheduled to be held on today. If the stay is not granted the applicants would face hardship. Hence stay of the Annexure A6 sale notice as well as the Annexure A8 order passed by the Chief Judicial Magistrate may be stayed. On the other hand learned counsel for the defendants submitted that there are bidders for the sale. There is absolutely no defect or illegalities in the sale proceeding. Hence sale scheduled to be held today may not be stayed.

3. It is seen from the sale notice that the sale is scheduled to be held at 11.30 AM today. No prima-facie material illegality or irregularity is pointed out by the learned counsel for the applicants. Keeping in view of the quantum of amount due and in absence of any prima-facie illegality in the sale proceeding, I am not inclined to stay the sale at this moment. The defendants may proceed with the sale of the secured asset, but for the interest of justice sale certificate shall not be issued in favour of the bidder before hearing of the IA on merit and also shall not take any coercive step in respect of the secured asset till next date subject to condition that the applicants shall deposit 25% of the total outstanding with the defendants in two equal installments i.e. the 1^st installment shall be deposited on or before 01.12.2023 and 2nd installment shall be deposited on or before 01.01.2024 which shall be kept in a separate no-lien account. It is further clarified that by depositing the said amount, no right will be accrued in favour of the applicants in staying further measure in securitization proceeding. In case of non compliance of the order the defendants may proceed in issuing sale certificate in favour of the auction purchaser and may also proceed for further measure in the securitization proceeding. List the case on 01.01.2024 for filing the amended SA and for hearing of the IA.3706/2023.”

Since the Tribunal did not grant any stay of sale, the bank conducted the sale on 22.11.2023. However, the sale certificate was not issued to the auction purchaser. It is not disputed that the auction purchaser had remitted the bid amount by remitting a sum of Rs.37,28,200/- on 22.11.2023 (as EMD), Rs.51,21,800/- on the same day after the bid was confirmed and the balance amount of Rs.2,80,50,000/- on 22.01.2024 after an extension of time was granted by the Authorized Officer. In terms of the directions contained in Ext.P7 order, the petitioners also remitted amounts to comply with the condition imposed for the grant of the interim order. Though the learned counsel appearing for the respondent bank has a case that the amounts directed to be paid in terms of Ext.P7 order were not remitted within the time permitted by the Tribunal, the fact remains that the interim order was not vacated by the Tribunal. It appears that thereafter the petitioners remitted further amounts and including the amounts paid to comply with