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2012 Supreme(Ori) 310

ORISSA HIGH COURT
L. MOHAPATRA, C. R. DASH, JJ.
Uma Sankar Mishra and another
Vs.
Chief Manager, Bank of India, Cuttack and another
W.P. (C) No. 9810 of 2012
Decided on : 10/10/2012

Headnote:SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - Sec. 17(3), 13(4) - Extent of jurisdiction of the DRT - In an appeal filed under Sec. 17 of the Act, the Tribunal has to adjudicate as to whether steps taken by the secured creditor under Sub-section (4) of Section 13 of the Act are in accordance with provisions contained in Act and Rules made therein or not - Tribunal can also examine as to whether the action taken under Sec. 13(4) of the Act by the secured creditor against the secured assets is valid or not - In the present case held, observation of the Tribunal that in the said provision it can only examine the steps taken by the secured creditor under Sec. 13(4) of the Act in terms of the provisions contained in the Act and Rules made therein or not, does not appear to be correct.

        It is the specific case of the petitioners that they had paid the entire dues of the opposite party-Bank and on the other hand, they were entitled to be refund of more than Rs.3,00,000/-. If such contention of the petitioner’s is correct, sale of the mortgaged property was neither justified nor valid and validity of such sale at the instance of the Bank was required to be looked into by the Tribunal in the appeal filed under Section 17 of the SARFESI Act.

        The Tribunal has not addressed any one of the issues solely on the ground that under Section 17 of the SARFAESI Act, it can only examine as to whether the opposite party-Bank has followed the procedure laid down in the Act and the Rules made thereunder. As stated earlier, if the petitioners’ case that they had paid the entire dues of the Bank prior to sale of the mortgaged property is accepted, such sale of the mortgaged property becomes invalid in the eye of law and the Bank had no authority to sale the mortgaged property having received its entire dues. In order to examine the above, it was necessary on the part of the Tribunal to adjudicate the three issues raised before it in the appeal and it is well within the competency of the Tribunal to adjudicate such issues. These issues were also raised in the written statement filed in the Original Application by the Bank before the Tribunal, but could not be adjudicated as the Bank withdrew the Original Application having realized its dues by putting the mortgaged property in a public auction. Accordingly the issues raised by the petitioners remained unanswered in both the proceedings.

JUDGMENT

L. MOHAPATRA, J.

This writ application is directed against the order dated 30-4-2011 passed by the Debts Recovery Tribunal, Cuttack in S. A. No. 37 of 2011 as well as the order dated 30-4-2012 passed by the Tribunal in O. A. No. 224 of 2010.

2. Case of petitioners is that they had taken loan from different Banks and all these loans were taken over by the opposite party-Bank and an amount of Rs. 1,46,17,562.00 was the only debit at one time but the account was treated as C. C. Account. The petitioners had already paid Rs.2,05,81,750.25 by 9-9-2011. In spite of the same, the opposite party Bank had made a demand of Rs. 39,87,933.25 in the notice under Section 13(2) of the SARFAESI Act and the petitioners had paid a sum of Rs. 30.75 lakhs against the payment made inclusive in Rs. 2,05,81,750.25. However, the Bank without taking the note of the same took step under Section 13(4) of the SARFAESI Act showing a demand of Rs. 9,12,933.25. According to the petitioners, the aforesaid amount of Rs. 9,12,933.25 was to be adjusted against Rs. 13,11,734.75 already paid and the balance amount of Rs. 3,98,801.11 should have been returned by the Bank to the petitioners. However, when the Bank filed Original Application No. 224 of 2010 for recovery of its dues before Debts Recovery Tribunal, petitioners filed written statement taking all these grounds. Had the original Application been adjudicated with reference to the records of the Bank, it could have been found that all the dues of the Bank had been paid and the petitioners were entitled to get return of Rs. 3,98,801.00. Without proceeding in the Original Application, the Bank took step under Section 13(4) of the SARFAESI Act, sold the mortgaged property in public auction, realized the so-called dues and ultimately approached the Tribunal praying for withdrawal of the Original Application on the ground that the entire dues of the Bank have been recovered through auction sale. Challenging the action taken by the Bank under Section 13(4) of the SARFAESI Act, the petitioners had filed S. A. No. 37 of 2011. The said SARFAESI Appeal was dismissed on 30-4-2011 on the ground that the grounds taken by the petitioners in the said appeal did not come within the scope of Section 17 of the SARFAESI Act and no illegality having been found in the procedure adopted by the opposite party-Bank, the Tribunal cannot adjudicate the dispute raised before it by the petitioners.

The opposite party-Bank appeared in the SARFAESI Appeal and filed counter affidavit stating therein that the account of the petitioners was declared N. P. A. on 30-11-2008 and notice under Section 13(2) of the SARFAESI Act was issued on 4-12-2008 demanding a sum of Rs. 39,87,933.25 as on 3-12-2008. The petitioners did not file any objection nor paid the demanded amount and, accordingly, notice under Section 13(4) of the SARFAESI Act, was published on 11-8-2009. After publication of the said notice, the petitioners requested the Bank not to proceed under the SARFAESI Act as they were willing to pay the dues of the Bank and, accordingly, time was granted to them. Petitioners having failed to pay the amount, the Bank intimated them that it would proceed under Section 13(4) of the SARFAESI Act. In compliance of the said letter, petitioners requested the Bank on 21-9-2010 for settlement of account at Rs. 20.00 lakhs under O. T. S. Scheme and grant three months time, but the demand made by the Bank was not disputed. The petitioners also filed W. P. (C) No. 16394 of 2010 with a prayer to direct the Bank to consider their O. T. S. proposal and not to proceed under the SARFAESI Act. By order dated 24-9-2010, this Court directed the petitioners to deposit a sum of Rs. 9.00 lakhs within one month, but due to non-compliance of the said order, the writ application was dismissed on 9-11-2010 and the interim order of stay was vacated. After dismissal of the writ application, the Bank proceeded under the SARFAESI Act and took over possession of t
























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