A party cannot challenge measures taken by a bank after failing to do so within the prescribed time, and procedural irregularities must cause substantial injury to invalidate a sale.

ORDER

1. This appeal is filed under Section 18 of the SARFAESI Act, challenging the order dated 23.11.2012 passed in SA 113/2010 by Learned Presiding Officer, DRT-III, Chennai.

2. SA 113/2010 was filed by respondents 1 to 5. First respondent died during the pendency of the SA and legal representatives of deceased first respondent were impleded as Respondents 3 to 5. Second respondent Mr. B. Devadoss is the husband of deceased first respondent B. Nirmala. After contest, the said SA was allowed on the ground that there was no proper service of Possession Notice through paper publication and affixture and also there was no service of sale notice through proper paper publication and affixture. Primarily, on these two grounds, SA was allowed. Challenging the order allowing the SA, this appeal is filed by the appellant bank.

3. Learned Counsel for appellant bank submitted that every measure taken gives rise to a separate cause of action for challenge. However, in this case, first and second respondents had not challenged either the possession notice or the sale notice issued by the appellant bank. Even as per the order of the Learned Presiding Officer, possession notice was served through post. Same is the case with the service of sale notice. It is further submitted that finding was only with reference to non service of possession notice and sale notice through proper publication and by affixture. When there are enough material available to show that personal service of possession notice and sale notice was served and when it was not challenged, a composite challenge of all the measures including taking possession, cannot be challenged in the SA. This aspect was lost sight of by Learned Presiding Officer of DRT-III, Chennai. Therefore, Learned Counsel prayed for setting aside the order of the Learned Presiding Officer and allow the appeal.

4. In support of his submission, Learned Counsel for the appellant relied on the judgment of Hon’ble Supreme Court of India in re Celir LLP Vs. Sumati Prasad Bafna and others reported in 2024 SCC Online SC 3727 for the proposition that once the sale by auction is confirmed or concluded ought not to be set aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity.”

5. In reply, Learned Counsel for Respondents 2 to 5 submitted that second respondent was only a co-applicant. The subject property belongs to his wife, viz. deceased first appellant B. Nirmala. Notice was not served on the deceased first respondent. That apart, both possession notice and sale notice were not properly served by publication in newspapers and by affixture and that was the reason why SA was allowed. Thus contending, Learned Counsel prayed for confirmation of the order of Learned Presiding Officer and dismiss the appeal.

6. Learned Counsel appearing for the seventh respondent, who is subsequent purchaser from the Auction Purchaser opposed the order of the Learned Presiding Officer and adopted the submission Learned Counsel for appellant bank.

7. I have considered the rival submissions and perused the records.

8. From the order of Learned Presiding Officer, it is seen that the point raised on limitation was negatived. He pointed out that Section 13(2) notice demanding debt due was properly served. There was a finding to the effect that possession notice dated 12.3.2004 was served on second respondent, Mr. Devadoss and sale notice was served to respondents on 13.9.2004.