Next > IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF NOVEMBER 2019 PRESENT THE HON’BLE MR. JUSTICE ARAVIND KUMAR AND THE HON’BLE MR. JUSTICE N.S. SANJAY GOWDA W.P. NOs.19361-19362/2019 (GM-DRT) BETWEEN:
1 . M/S RAI SHAKTHI STEEL INDUSTRIES PVT. LTD., PLOT NO.37/A, SY. NO.S 136 & 130 JIGANI INDUSTRIAL AREA ROAD NO.3, BANGALORE – 560 105 REP BY ITS DIRECTOR SRI. RADHESHYAM RAI.
2 . SRI. RADHESHYAM RAI AGED ABOUT 42 YEARS NO.686/2, 16TH MAIN HAL 2ND STAGE (NEAR ROTARY CLUB) INDIRA NAGAR BANGALORE – 560 008.
...PETITIONERS (BY SRI. NANJUNDAPPA A.S, ADVOCATE) AND:
1 . AUTHORISED OFFICER UNITED BANK OF INDIA NO.40, 2ND FLOOR, GEETHA MANSION, KEMPEGOWDA ROAD BANGALORE - 560 009.
2 . MR. M. ZABULON ATHISAYAM (AUCTION BIDDER) NO.134, 3RD CROSS, DOLLARS COLONY, J.P. NAGAR, 4TH PHASE BANGALORE – 560 078.
…RESPONDENTS (BY SRI. SHASHIKIRAN SHETTY, SR. COUNSEL A/W SRI. VIGNESH SHETTY, ADVOCATE FOR R-1;
SRI. SATHEESH S. KUDTARKAR, ADVOCATE FOR R-2) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED:02.04.2019 PASSED IN R.A.(S.A) 34/2018, PASSED BY THE HON’BLE APPELLATE TRIBUNAL, CHENNAI, AS PER ANNEXURE-U.
THESE PETITIONS COMING ON FOR ORDERS THIS DAY, ARAVIND KUMAR J, MADE THE FOLLOWING:
O R D E R In this writ petition, correctness and legality of the order dated 02.04.2019 passed in R.A.(S.A) 34/2018 by the Debt Recovery Appellate Tribunal, Chennai (for short ‘Appellate Tribunal) has been challenged, whereunder Appellate Tribunal has allowed the appeal filed by first respondent-Bank by setting aside the order dated 08.05.2017 passed in S.A.83/2016 by Debt Recovery Tribunal-I, Karnataka (for short ‘Tribunal), whereunder e-
auction sale notice dated 08.01.2016 issued by first respondent had been set aside.
2. We have heard the arguments of Sriyuths A.S.Nanjundappa, learned Advocate appearing for petitioner, Sri Shashikiran Shetty, learned Senior Advocate appearing for respondent-1 and Sri Sateesh S Kudtarkar, learned Advocate appearing for respondent-2. Perused the records.
3. Petitioner had borrowed loan from first respondent-Bank which account became Non- Performing Asset resulting in several steps being taken by first respondent-Bank to recover the loan amount. After having resorted to initiate proceedings under Section 13(2) of Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘SARFAESI Act’), impugned sale notice dated 08.01.2016 (Annexure-E) came to be issued, whereunder the mortgaged property was sought to be brought for sale by e-auction. Being aggrieved by said notice, an application came to be filed before Tribunal in SA No.83/2016 and first respondent – Bank on being notified of the applications, appeared and filed its statement of objections. On consideration of rival contentions raised at the bar, Tribunal by its order dated 08.05.2017 (Annexure-K) allowed the application and set aside the e-auction sale notice primarily on two grounds namely, (i) There was no proof of service of notice of sale notice on petitioners as required under Rule 8(6) of Security Interest (Enforcement) Rules, 2002 (‘Rules’ for short) and Bank having failed to produce proof of such service of notice;
(ii) Proof of affixture of sale notice on the property as required under Rule 8(7) of the Rules having not been placed or complied with by the Bank.
4. Being aggrieved by the said order, first respondent - Bank preferred appeal before the Debt Recovery Appellate Tribunal for setting aside the order dated 08.05.2017 passed by Tribunal on the ground that sale notice had been affixed on the premises namely, gate of the factory premises and it was published in the newspaper, knowledge of which petitioners had and as such it can be inferred that petitioners had knowledge of sale of property mortgaged to the Bank. Tribunal by order dated 02.04.2019 (Annexure-U) allowed the appeal filed by Bank and upheld the sale notice. Being aggrieved by said order of the Appellate Tribunal, petitioner is before this court.
5. It is the contention of Sri.A.S.Nanjundappa, learned Advocate appearing for petitioner that Appellate Tribunal committed a serious error in upsetting the finding of fact recorded by tribunal particularly after having held that there is no due service of notice as required under Rule 6 of the Rules. He would elaborate his submission by contending that Rule 8(6) is mandatory and non-adherence to the mandate of said rule would vitiate the auction or sale conducted. By relying upon following judgments, he seeks for allowing the writ petition and prays for setting aside the order passed by Appellate Tribunal. He would pray for quashing e-auction sale notice.
(i) 2014(2) D.R.T.C 27 (S.C) MATHEW VARGHESE vs AMRITHA KUMARI (ii) III (2016) BC 607 (DB) (T&AP) BHUVANA KISAN SEVA KENDRA & OTHERS vs BANK OF BARODA (iii) 2014(2) D.R.T.C. 166 (S.C) J.RAJIV SUBRAMANIYAN & ANOTHER vs PANDIYAS & OTHERS 6. Per contra, Sri Shashikiran Shetty, learned Senior Advocate appearing on behalf of first respondent-Bank would submit that very fact that petitioner had challenged the impugned notice dated 08.01.2016 by filing an application before Debt Recovery Tribunal would indicate that petitioner had knowledge of the auction sale of immovable property which was secured with the Bank and procedure adopted by Bank was in compliance with the mandatory requirement of sub- rule (6) of Rule 8 of the Rules. He would also submit that publication of sale notice in the newspaper is not only sufficient notice to the whole world but also to the borrower and as such, petitioner as a borrower cannot contend that sale notice is bad in law on account of notice having not been served on him.
In support of his contentions, he has relied on the following judgments:
(i) 2005 SCC ONLINE UTT 50 POORAN LAL ARYA & OTHERS vs STATE OF UTTARANCHAL & OTHERS (ii) 2010 SCC ONLINE DRAT 37 MAYUNK INDUSTRIES, INDORE vs UNION BANK OF INDIA & OTHERS (iii) JUDGMENT OF DELHI HIGH COURT IN W.P.(C)Nos.9090 & 9100/2009, Next >