The right of a borrower to redeem secured assets is extinguished upon publication of the auction notice under amended Section 13(8) of the SARFAESI Act.

ORDER

Per: Justice Vivek Rusia

The petitioner has filed the present petition being aggrieved by an order dated 06.05.2013 passed by the Debt Recovery Appellate Tribunal (in short “DRAT”), whereby Appeal No.R-164/2012 filed by respondent No.2 has been allowed. The matter has been remanded back to the Debt Recovery Tribunal (in short “DRT”) for fresh adjudication.

The facts of the case in short are as follows:

02. M/s Ratlam Recycle Board Industries through its proprietor Miss Kiran Badera. Miss Kiran Badera took a loan of Rs.15 Lacs from respondent No.1 / UCO Bank by creating a property mortgaged on 31.03.2006. Respondent No.2 stood as a guarantor by mortgaging her property. Since the borrower could not repay the loan, therefore, the bank initiated the proceeding and declared the account as NPA. The bank issued a notice under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short “SARFAESI Act”) on 25.01.2011 to respondent No.2 who stood as guarantor, for recovery of Rs.37,25,778.15 as on 01.01.2011 along with interest, incidental expenses, costs, etc. The bank conducted an auction sale of the properties of respondent No.2 on 16.08.2011. Being aggrieved by the aforesaid auction sale, respondent No. 2 approached the DRT by way of S.A. No.136 of 2011 along with an application for interim relief. The learned Tribunal rejected the interim injunction thereafter, respondent No. 2 approached the DRAT by way of Appeal No.R-113 of 2011. The learned DRAT vide order dated 26.08.2011 directed respondent No.2 to deposit the amount of Rs.12 Lacs within 30 days and further Rs.8 Lacs within 3 days and in the meanwhile, directed the parties to maintain status quo. Finally, the DRAT disposed of the appeal with the direction to the DRT to decide the pending securitization application.

03. Vide order dated 07.02.2012, the learned DRT dismissed the securitization application on the ground that respondent No.2 failed to deposit the amount as directed by the learned DRAT, whereas respondent No.2 came up with the plea that she had handed over 7 demand drafts totalling Rs.34.75 Lacs to the bank and the rest of the amount given by way of demand draft of Rs.2.55 Lacs and despite that the learned DRT dismissed the securitization application.

04. Being aggrieved by the dismissal of the securitization application, respondent No.2 being a guarantor preferred an appeal on the ground that she extended the guarantee for a sum of Rs.15 Lacs + interest thereon, but the bank enhanced the loan facility upto 20 lakhs without her consent.

05. The learned DRAT found that no guarantee deed prior to or later than 18.01.2007 is available, and no detail or mortgage on 31.03.2006 is available to ascertain as to how much the amount was secured first time which was subjected to increase by Rs.5 Lacs on 18.01.2007, therefore, the learned DRT did not ascertain as to how much amount was secured by guarantee and mortgage. Neither the petitioner nor the bank submitted any document before the learned DRT and as per the bank guarantee dated 18.01.2007, the liability and the guarantee are only Rs.20 Lacs hence, the learned DRAT has set aside the impugned order and remanded the matter back to the DRT to decide the appeal afresh and also directed the bank to return the amount deposited by the auction purchaser together with the interest @ 10%. Being aggrieved by the aforesaid order, the present petitioner who is an auction purchaser filed the present writ petition. Vide order dated 15.07.2023, this Court stayed the proceedings of the DRT.

06. Respondents No.1 & 2 both have been served but did not file any reply or application f