ORDER

1. This Appeal is filed challenging the Order dated 03.01.2024 passed by Learned Presiding Officer, DRT-II, Ernakulam in IA 3067/2023 in SA 474/2023.

2. Interim Application IA 3067/2023 was filed by Respondents herein seeking stay of all further proceedings pursuant to Annexure-VI Notice issued by the Advocate Commissioner appointed by the CJM, Pathanamthitta.

3. Learned Counsel for Appellant Bank submitted that Appellant Bank has followed Rule 3 of the Security Interest (Enforcement) Rules, 2002, (hereinafter referred to as Enforcement Rules, 2002) in strict compliance, in serving Section 13 (2) of SARFAESI Act, 2002, notice to Respondents through registered post with acknowledgement due, and when it was returned because of non-service, paper publication was effected; thus, Notice was served as mandated in Rule 3 of Enforcement Rules, 2002. Despite of the fact of compliance of mandated service of Notice, Learned Presiding Officer has ordered stay of all further proceeding on the ground that Respondent Nos. 2 to 4 herein were in jail custody during the relevant period, and there was no proper service. It is further submitted that Bank was not aware of the fact that Respondent Nos. 2 to 4 were lodged in Jail. Respondents were served as mandated by Rule 3 of Enforcement Rules, 2002, and in the said circumstance, grant of stay in IA is not correct. Hence, this Appeal.

4. In response to this, Learned Counsel for Respondents submitted that, Respondents were remanded to judicial custody on 09.11.2022, and they were released on bail only on 02.08.2023. Respondents were not aware of the fact of service of Notice through registered post or through newspaper publication or affixture. Respondents were not served notice as required under law. Therefore, Tribunal below has rightly granted stay.

5. Considered the rival submissions. Certain dates are relevant in this case. As seen from para 4 of impugned Order, it is recorded that the Respondent Nos. 2 to 4 were remanded to judicial custody on 09.11.2022, and they were released on bail only on 02.08.2023. This fact is not disputed by Learned Counsel for Appellant Bank.

6. Admittedly, Demand Notice under Section 13(2) of SARFAESI Act, 2002, was issued on 14.12.2022, followed by its publication on 30.12.2022 and affixture on 29.12.2022, and Possession Notice was issued on 02.03.2023, followed by its publication on 02.03.2023 and affixture on 02.03.2023. It is pertinent to note that, during this period, Respondent Nos. 2 to 4 were in judicial custody. It is true that Rule 3 of Enforcement Rules, 2002, mandates service by registered post with acknowledgement due, or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service; In case of non service through these means, service shall be effected by affixing Demand Notice on the outer door or some other conspicuous part of the house or building in which the Borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.

7. No doubt, Appellant Bank has followed all these procedures without fail. But, the point to be considered is whether these steps are sufficient in case of Borrowers, who were lodged in Jail. This Tribunal is of the considered view that these measures are not sufficient. The scope of Rule 3 of Enforcement Rules, 2002, is that, there must be proper and effective service of Notice to Borrowers putting them on notice of the measures taken by the Bank. What is use of sending Notice by Registered Post or by effecting service by affixture or publishing in newspapers, when Borrowers are lodged in Jail. They may not be aware of Notice taken by Registered Post and effecting of service by affixture and newspaper publication by Bank.

8. Further, in ITA No. 77/2022, in the case of Principal Com