Back
2025 Supreme(Online)(DRAT) 386
DEBT RECOVERY APPELLATE TRIBUNAL
Justice Anil Kumar Srivastava, CJ
H.M CONSTRUCTION & AGENCY – Appellant
Versus
INDIAN OVERSEAS BANK – Respondent
REGULAR APPEAL No. 113 of 2024|S.A. No. 29 of 2024
For the Appellants/Petitioners: Mr. Soumalya Ganguly, Ld. Adv., Ms. Ishita Ghosh, ld. Adv.
For the Respondents: Ms. Aparajita Ghosh, ld. adv. resp. no.1 and 2, Mr. Debjit Mukherjee, resp. no.3.
The authorized officer must obtain a proper valuation from an approved valuer and ensure compliance with statutory provisions before fixing a reserve price for auctioning secured assets.
Headnote:(A) SARFAESI Act, 2002 - Sections 13(2), 13(4) and 17 - Securitization application dismissed - Appellant challenged valuation and auction sale price, claiming it was inadequate and arbitrary - Fresh auction sale notice issued after cancellation of previous sale - DRT upheld reserve price based on valuation report. (Paras 1-25)
(B) Valuation Standards - The authorized officer is mandated to obtain a valuation from an approved valuer and fix the reserve price accordingly, ensuring compliance with statutory provisions. (Paras 11, 12, 14, 15)
(C) Legal Obligations - The authority must ensure that property is sold in a manner that fetches the best price, with a correct valuation report as a prerequisite. (Paras 12, 14, 15)
(D) Appeal Findings - The DRT found no irregularity in the auction process or valuation, dismissing the appeal as lacking merit. (Paras 24, 25)
| Table of Content |
|---|
| 1. factual background of the case. (Para 1 , 2) |
| 2. arguments regarding the auction process. (Para 3 , 4) |
| 3. court's analysis of the valuation process. (Para 5 , 9 , 11) |
| 4. conclusion and dismissal of the appeal. (Para 6 , 25) |
| 5. legal obligations in property valuation. (Para 12 , 14) |
The Appellate Tribunal
Instant appeal has arisen against the order dated 26.04.2024 passed by learned DRT Guwahati dismissing the S.A. No. 29 of 2024 [H. M. Construction & Agency Vs. Indian Overseas Bank & Anr].
2. As per pleadings of the parties, appellant is the borrower of the respondent Bank in favour of whom cash credit limit of Rs.24.00 lakhs and further Rs.111.00 lakhs was sanctionedvide letter dated 26.09.2017 which was covered by mortgage property mentioned in schedule ‘A’ and ‘B’. The loan account became irregular and it was classified as NPA on 31.05.2021, although appellant made an attempt to settle the loan amount, but failed. Notice u/s 13(2) of the SARFAESI Act, 2002 (hereinafter referred to as Act) was issued on 20.07.2021. Possession notice u/s 13(4) of the Act was issued on 08.10.2021, which was recalled by the bank on 21.10.2021 and issued a fresh notice on 22.10.2021. Auction sale notice was issued on 06.110.2021 fixing sale date on 07.12.2021. Demand of Rs.1,57,61,377.85 was made in the fresh possession notice dated 22.10.2021. Thereafter, an amount of Rs.35.00 lakhs was deposited by the appellant. It appears that schedule ‘A’ property was auctioned on 30.08.2022 for an amount of Rs.3,76,74,236.00 against reserve price of Rs.3,76,64,142.00. Outstanding debt amount then came to be Rs.1,51,05,100.00 and after recovering the same a surplus amount of Rs.2,25,69,136.00 remained as credit balance of the appellant. Notice for vacation of the schedule ‘A’ property was issued on 07.08.2023 and again issued eviction notice on 09.10.2023 u/s 14 of the Act. Writ Petion no. WP(C) 6068 of 2023 was filed by the appellant before Hon’ble High Court at Guwahati for stay of the auction sale of the schedule B property, which was stayed by the Hon’ble High Court on 30.08.2022. It is pertinent to note that schedule ‘B’ property was not auctioned. Subsequently, auction sale held on 30.08.2022 was cancelled and new auction sale notice dated 06.02.2024 was issued. Subsequently, appellant withdrew the writ petition with liberty to approach the DRT on 22.02.2024.
3. Learned counsel for the appellant argued that bank has sold the property at a throwaway price and in an arbitrary manner, which was challenged by the appellant by preferring securitization application u/s 17 of the Act.
4. Respondent bank filed response before the learned DRT wherein factum of issuance of 13(2) and 13(4) notice of the Act were admitted. Issuance of fresh possession notice u/s 13(4) was also admitted. Subsequently, auction sale was conducted on 30.08.2022, which was cancelled and the bid amount was refunded to the auction purchaser and was also communicated to the mortgager-cum-guarantor. Thereafter, a corrigendum was issued correcting the boundaries of schedule ‘A’ property, which was duly served upon the borrower-mortgager and published in the “Times of India” and the “Dainik Asom” newspapers on 13.01.2024, which was also admitted. Subsequently, sale conducted on 30.08.2022 was cancelled and bid amount was refunded to the auction purchaser and was also communicated to the mortgager-cum-guarantors. Thereafter, corrigendum was issued correcting the boundaries of schedule ‘A’ property which was duly served upon the borrower and published in the newspapers. Fresh sale notice was issued on 06.02.2024 fixing the sale date on 22.02.2024. Valuation report was obtained from the approved valuer by the bank on 20.12.2023 and reserve price was fixed on the basis of the valuation report as per guidelines of the RBI. Accordingly, bank has complied all the legal provisions.
5. Learned DRT after hearing the parties arrived at a conclusion that valuation was fixed on the basis of repo
