IMPORTANT POINTS
Recovery of debt – Mortgaged property cannot be put to auction sale without affording 30 days’ time to petitioner to clear demand.

JUDGMENT

Sanjeev Kumar, J.—The petitioner is a borrower in default of the J&K Bank and is aggrieved by the proceedings initiated for recovery of loan amount in terms of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [“SARFAESI Act”], in particular, notice dated 13th April 2023 issued by the Authorised Officer of the Respondent Bank under Section 13 (4) of the SARFAESI Act 2002, read with Rule 8(1) of the Security (Enforcement) Interest Rules, 2002 [“Rules of 2002”], auction notice dated 22nd August 2023, confirmation of auction vide communication dated 14th September 2023 and a Sale Certificate dated 15th December 2023 issued by Respondent-Bank in favour of Respondent No. 10, the auction purchaser. There is also a challenge laid by the petitioner to a criminal complaint dated 9th October 2023 made against the petitioner to the police.

2. Before we advert to the grounds of challenge urged by the learned counsel appearing for the petitioner, we deem it appropriate to state few facts as are germane to the disposal of this petition.

3. The petitioner initially approached Respondent Bank and availed Cash Credit Facility of Rs. 1,10,00,000 (Rs. One Crore and ten lacs only). Later, on the request of the petitioner, the aforementioned credit facility was enhanced to Rupees 1,45,00,000 (Rs. One Crore and forty-five lacs only). The aforesaid credit facilities were granted to the petitioner by Respondent Bank inter alia against following securities:

4. It seems that after some time, the loan account became irregular on account of failure of the petitioner to repay the credit interest on time. Despite repeated requests and reminders by the bank, the petitioner failed to get his loan account regularised. The petitioner also failed to make payment of outstanding amount under the Loan Account despite having received several demands from the bank. The petitioner neither got his loan account regularised by making the requisite payment nor did he square his debt. This constrained the Respondent Bank to declare the loan account of the petitioner as Non-Performing Asset (NPA) on 31st of March 2019. The petitioner was called upon to pay outstanding amount, which he failed to pay. Faced with failure of the petitioner to clear its outstanding amount and liability towards the bank, proceedings under the SARFAESI Act, 2002 were set in motion by the Respondent Bank. Composite Demand Notice dated 27th of June 2019 under Section 13 (2) of SARFAESI 2002 was served upon the petitioner requesting him to discharge his liability in full within 60 days from the date of notice. Despite having received the demand notice dated 27th of June 2019, the petitioner did not bother to come forward and clear his outstanding dues.

5. The process of recovery was taken further. The Respondent Bank issued Possession Notice dated 13th of April 2023 in terms of Rule 8(1) and (2) and Appendix IV of the Rules of 2002 with respect to the property which was mortgaged by the petitioner by way of collateral security. After taking over the possession, Respondent Bank issued e-Auction/Sale Notice dated 6th June 2023 putting the mortgaged properties to auction. In terms of