D. Ramanathan Vs. The Authorised Officer, City Union Bank Ltd. – DRAT Chennai Bench

I. Case Reference Case Citation : (2020) ibclaw.in 53 DRAT Case Name : D. Ramanathan Vs. The Authorised Officer, City […]


I. Case Reference

Case Citation : (2020) ibclaw.in 53 DRAT
Case Name : D. Ramanathan Vs. The Authorised Officer, City Union Bank Ltd.
Appeal No. : MA(SA)-70/2019 (I.A.No.1429/2019 in S.A.No.395/2019 on the file DRT, Madurai)
Judgment Date : 05-Mar-20
Court/Bench : DRAT Chennai Bench
Act : SARFAESI Act 2002
Present for Appellant(s) : M/s. K.Mahendran, R.Chitraputhiran & M.Gopi
Present for Respondent(s) : M/s. R.Sivaraman & Hasmukh S.Surana, M/s. K. J. Parthasarathy, V. P. Parivallal, B.Rajesh,  R. Siva & V. V. Uthra
Chairperson : Mr. Justice Tarun Kumar Kaushal

II. Full text of the judgment


1. Appellant has challenged the order dated 9.8.2019 of DRT, Madurai, passed in I.A.No.1429/2019 in S.A.No.395/2019 by which relief of stay of proceedings was denied.

2. According to Appellant, necessary facts in short are that on 17.2.2015, Appellant approached Respondent No.4 Bank (hereinafter referred as R4) for financial assistance and availed credit facility of Rs.10 lakhs against execution of various documents and mortgage of house property by deposit of title deeds. Due to financial crisis, Appellant committed defaults in repayment. On 11.11.2016, Respondent No.1 Bank (hereinafter referred as R1) issued a Demand Notice under Section-13(2) of the SARFAESI Act for recovery of a sum of Rs.10,32,984/-. On 22.2.2017, issued a Possession Notice in respect of the Schedule property. On 17.3.2017, Bank issued a Tender-Cum-Auction Sale Notice fixing the sale of the property on 28.4.2017. For want of bidders, sale was not materialised. On 2.6.2017, Bank issued Re Tender Cum Auction Sale Notice. On 28.6.2017, Bank auctioned the property in question to Respondent No.5 (hereinafter referred as R5) for a sum of Rs.43 lakhs and informed this fact to the Appellant on 28.6.2017 asking for handing over peaceful possession of the property at the earliest.

3. In this backdrop, Appellant preferred SARFAESI Appeal S.A.No.264/2017 before DRT to set aside the Re Tender Cum Auction Sale Notice dated 2.6.2017 and filed I.A.No.1331/2017 for stay of all proceedings pursuant to the sale dated 28.6.2017. The said I.A. was dismissed on 28.7.2017. Thereafter, Appellant preferred S.A.No. 395/2019 on 21.12.2018 before DRT, Madurai, seeking a relief to declare the proceedings under Section-14 of the SARFAESI Act to be invalid and prayed to stay all proceedings regarding dispossession of the Appellant. Simultaneously, moved I.A.No.1429/2019 seeking stay of proceedings and dispossession on the basis of the ground mentioned in main SARFAESI Appeal.

4. Vide impugned order, PO of DRT dismissed the I.A.No.1429/2019 and denied the relief of stay observing that R1 Bank had initiated proceedings under SARFAESI Act and particularly in order dated 30.5.2018 passed under Section-14, no procedural irregularity had been committed by the Magistrate, hence, such proceedings cannot be stayed.

5. Appellant has challenged the impugned order mainly on the grounds that Appellant remained in touch of Bank Officers and paid various amounts time to time to show that Appellant is not a wilful defaulter. R1 Bank had approached the Magistrate under Section-14 of the SARFAESI Act after auction of the property, which is illegal.

6. On the other hand, supporting the impugned order, Ld.Counsel for R1 and R4 Bank and Ld.Counsel for R5 Auction Purchaser both, submitted that Appellant is a chronic and wilful defaulter and Appellant is a habitual litigant. Appellant has used the litigation as a tool to delay and defer the recoveries. PO, DRT had considered the facts from all angles.

7. On careful perusal of pleadings of the parties, submissions of Ld.Counsel for the parties and record, it becomes clear that on 11.11.2016, R1 Bank issued a Demand Notice. On 17.3.2017, issued the first Sale Notice. Thereafter, on 2.6.2017, Bank issued second Sale Notice. In pursuance of it, on 28.6.2017, R5 purchased the property for a sum of Rs.43 lakhs. On 10.7.2017, in place of making a deposit of the entire dues, Appellant preferred S.A.No.264/2017 before DRT, Madurai. It is pertinent to note that on 23.10.2017, Sale Certificate was issued and under Section-14, District Collector and Magistrate passed order on 30.5.2018 for actual handing over of possession of the property.

8. In place of clearing the dues, Appellant indulged in litigation only and moved Writ Petitions, Miscellaneous Appeals etc. Matters moved by Appellant are as below :-

i) S.A.No.264/2017 before DRT, Madurai.

ii) W.P(MD). No.16325/2018 before Hon’ble High Court of Madras (Madurai Bench).

iii) M.A(AIR) No.504/2018 before DRAT, Chennai.

iv) W.P(MD). No.24022/2018 before Hon’ble High Court of Madras (Madurai Bench).

v) S.A.No.395/2019 before DRT, Madurai.

vi) W.P(MD). No.3131/2019 before Hon’ble High Court of Madras (Madurai Bench).

vii) W.P(MD). No.16983/2019 before Hon’ble High Court of Madras (Madurai Bench).

9. In so far as actual payment made by the Appellant is concerned, these are very nominal and casual. On 27.2.2017, Appellant made a deposit of Rs.33,000/-. On 28.3.2017, made a deposit of Rs.1 lakh. Ultimately, on 13.9.2019, in compliance of the order of this Tribunal, Appellant made a deposit of Rs.10 lakhs, i.e. equivalent to the entire dues. As on 11.11.2016, due amount was Rs.10,32,984/-. Thereafter, on 13.9.2019, Appellant furnished a Bank Draft of Rs.10 lakhs as a compliance of pre-deposit. Whereas, on 28.6.2017, R5 Auction Purchaser had spent a sum of Rs.43 lakhs and is still waiting for possession. In this backdrop, Sale Certificate was issued on 23.10.2017 and Magistrate passed order on 30.5.2018. Bank was looking for recovery of more than Rs.10 lakhs in November, 2016. In February/March, 2017, Appellant paid only Rs.1,33,000/-. Now, nothing much can be examined on the issue whether Bank should obtain order of Magistrate before actual auction or not ? There is no controversy in this matter. It appears that Appellant is a resourceful, over-informed person, who has indulged in litigation in the name of his right to fight.

10. But it is a thumb rule in recovery laws that only repayments will help a defaulter. If a defaulter will not pay the dues well in time, then, Bank will search for a third party, i.e. Auction Purchaser. Rights of Auction Purchaser also cannot be ignored. Accordingly, for the purpose of obtaining stay, Appellant failed to make out a case as a prima facie case. He had been lacking intention of repayment, rather he was having more confidence on litigation. Similarly, balance of convenience is also not in favour of the Appellant, because against the dues of about Rs.10 lakhs, Appellant made a deposit of Rs.1.33 lakhs. Rather, R5 Auction Purchaser had spent a sum of Rs.43 lakhs and definitely balance amount will be received by Appellant after adjusting the dues. Similarly, there would be no irreparable loss to the Appellant if he succeeds in SARFAESI Appeal in DRT. On merits, everything can be decided and status can be restored. PO, DRT has dealt with the matter elaborately and passed a balanced order. Relief of stay has rightly been declined by PO, DRT.

11. Appeal being devoid of substance is hereby dismissed. Consequently, pending IAs stand disposed of and closed. R4 Bank is directed to receive the pre-deposit amount lying with the Registrar of this Tribunal and to deal with it according to law.


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