Misc. Appeal No. 200 of 2011 with M.A. No. 910 of 2011. Case: Dhirubhai B. Patel Vs Invent Assets Securitisation and Reconstruction Pvt. Ltd.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberMisc. Appeal No. 200 of 2011 with M.A. No. 910 of 2011
Party NameDhirubhai B. Patel Vs Invent Assets Securitisation and Reconstruction Pvt. Ltd.
CounselFor Appellant: G.R. Kinkhabwala, Sonal Jain, holding for Apurva Vakil, Advocates and For Respondents: Rajesh Nagori, Uma Fadia and D.B. Raghani i/b Haridas and Co., Advocates
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueCode of Civil Procedure, 1908 (CPC) - Order I Rule 10, Order XXI Rule 16; Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 - Sections 20, 29, 30
CitationI (2014) BC 88 (DRAT)
Judgement DateAugust 06, 2013
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

Raj Mani Chauhan, J. (Chairperson)

  1. This Appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred as "RDDBFI Act") has been directed by the auction purchaser (for convenience hereinafter referred as the "appellant") against the common judgment and order dated 2nd November, 2011, passed by Mr. K.J. Paratwar, the then learned Presiding Officer, (learned Presiding Officer), Debts Recovery Tribunal-II, (DRT), Mumbai in Transferred Appeal (T.A.) No. 21/2011 filed by the Certificate Holder (C.H.) Bank i.e. Punjab and Sind Bank and Transfer Appeal (T.A.) No. 20/2011 filed by Invent Assets Securitisation and Reconstruction Pvt. Ltd. (in short "IAS and R (Pvt.) Ltd."), whereby the learned Presiding Officer has dismissed T.A. No. 21/011 as not maintainable and allowed T.A. No. 20/2011 and set aside the impugned order dated 24th March, 2010, passed by the Recovery Officer, DRT-II, Ahmedabad, whereby he had rejected the application (Ext. T/128) filed by the appellant IAS and R (Pvt.) Ltd. for postponing the auction sale to be conducted by him on the same date i.e. on 24th March, 2010. The learned Presiding Officer by the same order, held that the auction sale shall be deemed to have been postponed on that date. The learned Presiding Officer accordingly, set aside the auction sale conducted by the Recovery Officer on 24th March, 2011, whereby he had declared appellant as "successful bidder". The relevant facts giving rise to the present appeal may be briefly stated as under:

    The respondent No. 3, i.e. Dynamatic Forgings India Ltd., a company incorporated under the provisions of Companies Act, 1956, having its Office at New Shelter, 1st Road Chitrakar, Dhurandhar Marg, Khar (West), Mumbai-400 452 and also at Sterling 7-C, Parsi Panchayat Road, Andheri (East), Mumbai 400069, (at present in liquidation) had availed certain credit facilities sanctioned by respondent No. 2, the Punjab and Sind Bank. The respondent Nos. 5 to 9 stood guarantors to the credit facilities availed by the borrowers. The credit facilities availed by the borrowers were secured by creation of equitable mortgage of the following immovable properties:

    Plot Nos. 17, 55, 54/2, 56 shed type A1/1, 57 Shed type A1/2, 58-Shed type A1/3, 59 Shed type A1/4, C-5 open land situated at Aji Industrial Estate, Rajkot, admeasuring 11,63,221 sq. mtrs. or thereabout together with buildings constructed thereon, Lot No. 2, right, title and interest in immovable property, being plot Nos. 153, 154, 155, 156 (part) situated at Aji Industrial Estate, Rajkot, admeasuring 5,435.81 sq. mtrs or thereabout together with buildings constructed thereon, Lot No. 3, right, title and interest in immovable property being plot No. 197, Shed type A2, 198/1, 204, 205, 206 situated at Aji Industrial Estate, Rajkot, admeasuring 7,468.88 sq. mtrs. or thereabout together with buildings constructed thereon, Lot No. 4, right, title and interest in immovable property being plot Nos. 281 Shed type C-1 situated at Aji Industrial Estate, Rajkot, admeasuring 703.95 sq. mtrs. or thereabout together with buildings constructed thereon.

  2. Admittedly, the borrower could not repay the amount of credit facilities availed by it. Consequently, respondent No. 2 i.e. Punjab and Sind Bank filed Original Civil Suit No. 4565/1993 on the Original Side of the Hon'ble High Court of Bombay against the borrowers and guarantors, the respondent Nos. 3 to 9 for recovery of its dues, but on account of coming into force of the RDDBFI Act, the Suit referred above pending in the Hon'ble High Court stood transferred to the DRT-II, Mumbai, where it was registered as Original Application (Original Application) No. 2450/1999.

  3. The Original Application was contested by the respondents. The parties in support of their contentions, filed Claim affidavit and documentary evidence. The learned Presiding Officer on basis of documentary evidence adduced by the applicant/respondent No. 2, allowed the Original Application and vide order dated 29th May, 2011, issued Recovery Certificate for realization of the decretal amount. Since the mortgaged properties were situated in the State of Gujarat, within the territorial jurisdiction of DRT-II, Ahmedabad, therefore, the learned Presiding Officer transferred the Recovery Certificate to DRT-II, Ahmedabad for execution, where it was registered as Transferred Recovery Proceeding (TRP) No. 06/2003. The Recovery Officer during pending R.P. tried to sell the mortgaged properties, on so many dates fixing the date of auction sale, but every time, the auction sale failed, as no purchaser/buyer turned up to purchase the mortgaged properties. Lastly, the Recovery Officer vide order dated 4th February, 2010, again fixed the sale programme to sell the mortgaged properties, fixing 24th March, 2010, as the date of auction sale, classifying the properties to be sold in four lots, with the reserve price as follows:

  4. In the mean time, the Certificate Holder (C.H.) Bank i.e. Punjab and Sind Bank, the respondent No. 2, assigned the debt of the borrowers along with underlying securities in favour of respondent No. 1, the IAS and R (Pvt.) Ltd. The respondent No. 1 had paid the entire purchase price to respondent No. 2 on 22nd March, 2010. However, the Assignment Deed could not be executed by respondent No. 2 in favour of respondent No. 1 before 25th March, 2010.

  5. The C.H. Bank i.e. respondent No. 2 on 23rd March, 2010, moved an application, (Ext. H/123) before the Recovery Officer to postpone the auction sale scheduled on 24th March, 2010, on the ground that it had assigned the debt of, the borrowers alongwith the underlying securities in favour of respondent No. 1. It has finalized the assignment in favour of respondent No. 1 on 22nd March, 2010. Now it will be in the interest of justice to postpone the sale. The Recovery Officer rejected the aforesaid application filed by respondent No. 2, on the ground that it had not filed any documentary evidence to show that it had assigned the debt of the borrower along with the underlying securities in favour of respondent No. 1.

  6. On the scheduled date of auction sale i.e. on 24th March, 2010, the respondent No. 2, moved an application (Ext. H/129) before the Recovery Officer to stay the order passed by him in the first half session on the same day.

  7. On the same day, the respondent No. 1, IAS and R (Pvt.) Ltd. moved an application (Ext. T/128) before the Recovery Officer to postpone the sale, on the ground that respondent No. 2, Punjab and Sind Bank had assigned the debt of the borrowers along with the underlying securities in its favour and it has now got all the right, title and interest of the C.H. Bank to recover the debt recoverable under the Recovery Certificate, on the basis of the assignment. It has stepped into the shoes of the C.H. Bank, and it does not want to proceed with the auction sale scheduled on the very same date. The Recovery Officer heard the learned Counsel for the respondent No. 1 at length on the aforesaid application and reserved the same for order to be passed in due course. The Recovery Officer without passing any order on Ext. H/129 and Ext. T/128 filed by the respondent Nos. 2 and 1 respectively, proceeded to conduct the auction sale, as per the scheduled programme for the auction sale. As many as seven bidders participated in the auction sale. Mr. Dhirubhai B. Patel (Mr. Dhirajlal Babubhai Kavathiya), i.e. appellant was found to be the highest bidder, who offered to purchase the properties put to auction sale for Rs. 8.76 crores as against the reserve price of Rs. 8.67 crores. Consequently, the Recovery Officer declared him as the "successful bidder".

  8. The Recovery Officer after conducting the auction sale rejected the application (Ext. H/129) filed by respondent No. 2, the C.H. Bank, on the ground that he after conducting the sale he had become functuous officio. The Recovery Officer however, despite hearing the learned Counsel for respondent No. 1 at length on its application (Ext. T/128), did not pass any order, while he had kept the application for order to be passed in due course.

  9. The respondent No. 2, C.H. Bank being aggrieved by the order dated 23rd March, 2010, passed by the Recovery Officer on its application (Ext. H/123), declining not to postpone the auction sale dated 24th March, 2010, and further being aggrieved by the order dated 24th March, 2003, passed by the Recovery Officer, declining to stay the order passed by him in the first half session on the same day, filed Appeal under Section 30 of the RDDBFI Act before DRT-II, Ahmedabad.

  10. The respondent No. 1 being aggrieved by the order dated 24th March, 2010, passed by the Recovery Officer, declining to postpone the auction sale, too filed Appeal under Section 30 of the RDDBFI Act before DRT-II, Ahmedabad.

  11. Both the above Appeals were transferred by DRT-II, Ahmedabad to DRT, Mumbai for hearing and disposal, on the ground that the Recovery Certificate in Original Application No. 2450/1999 had been issued by DRT-II, Mumbai. The Appeal filed by respondent No. 1 was numbered as Transferred Application (T.A.) No. 20/2011 and the Appeal filed by respondent No. 2, the Punjab and Sind Bank was numbered as T.A. No. 21/2001 in the office of DRT-II, Mumbai. The respondent Nos. 1 and 2 in their...

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