Date of Decision: 03.01.2024

JUSTICE R. D. KHARE, CHAIRPERSON

1.

The present appeal has been filed under section 18 of the

SARFAESI Act, 2002 against

the judgment dated

01.11.2021 passed by the DRT, Allahabad, whereby the

S.A. No. 496/2019 filed by the borrowers was allowed.

2.

The brief facts of the case are that the respondents no. 1

was granted some financial assistance by the appellant-

Bank. In order to secure the said facility, the respondent

No. 2 stood as guarantor and created equitable mortgage

over his property with the Bank. The borrower did not

maintain the financial discipline, therefore, the account

was classified as NPA on 28.06.2018 and demand notice

dated 31.08.2018 under section 13(2) of the SARFAESI

Act, 2002 was issued for a sum of Rs. 13,13,294/-. Since

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the borrower did not pay any heed to the demand raised

by the Bank, hence possession notice dated 28.12.2018

was issued under section 13(4) of the SARFAESI Act.

Thereafter, the appellant-Bank issued sale notice dated

14.06.2019 scheduling auction of the property on

24.07.2019. The respondents No. 1 and 2 challenged the

sale notice dated 14.06.2019 alleging that the possession

notice and the sale notice have never been served upon

them.

3.

During pendency of the S.A., the appellant-Bank obtained

an order dated 13.02.2020 from the concerned District

Magistrate, which was challenged by the S.A. applicants

by filing an I.A. No. 1377/2021, which was allowed and

the S.A. was amended accordingly.

4.

The Tribunal below has allowed the aforesaid S.A. setting

aside the e-auction sale notice dated 14.06.2019 and the

auction sale dated 24.07.2019 as well as the Bank has

been directed to return the auction amount to the auction

purchaser within 15 days. It has further been held that

the Bank had got the property valued prior to the

symbolic possession, which is illegal in view of Rule 8(5)

of the Security Interest (Enforcement) Rules, 2002. Being

aggrieved by the said order, the present appeal has been

filed by the appellant.

5.

Learned counsel for the appellant has drawn attention of

this Tribunal to Rule 5 of the Security Interest

(Enforcement) Rules, 2002 (hereinafter referred to as

“the Rules, 2002”) regarding valuation of movable

secured assets and has argued that for valuation of

movable secured assets, it is provided that after taking

possession under sub-rule (1) of Rule 4, in any case

before sale, the authorized officer shall obtain the

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estimated value of the movable secured assets and

thereafter, if considered necessary, fix in consultation

with the secured creditor, the reserve price of the assets

to be sold for realization of the dues of the secured

creditor, whereas Rule 8(5) of the said Rules provides for

immovable property and the said Rule says that “before

effecting sale of the immovable property referred to in

sub-rule (1) of Rule 9, the authorized officer shall obtain

valuation of the property from an approved valuer and in

consultation with the secured creditor, fix the reserve

price of the property”.

6.

It was contended on behalf of the appellant that the

securitization application filed by the borrower has been

allowed by the Tribunal below setting aside the sale solely

on the ground that the valuation was obtained before

taking symbolic possession of the secured assets,

whereas the said ground was never taken by the

borrowers before the Tribunal below. It was also

contended that the S.A. filed by the borrower was barred

by the limitation and the application for condonation of

delay was filed along with the S.A., but the Tribunal

below without deciding the delay condonation application

has decided the said S.A. on merits, hence order

impugned is not sustainable, therefore, the appeal may

be allowed and the case may be remanded back to the

Tribunal below to decide it afresh in accordance with law.

7.

Learned counsel for the respondents No. 1 and 2-

borrowers

submitted

that

the

S.A.

was

filed

on

26.08.2019 before the DRT, Allahab