Appeal No. 84 of 2010 and M.A. No. 336 of 2010. Case: Ritesh Oil Mills Pvt. Ltd. Vs Dena Bank. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 84 of 2010 and M.A. No. 336 of 2010
Party NameRitesh Oil Mills Pvt. Ltd. Vs Dena Bank
CounselFor Appellant: K.L. Shah, Advocate and For Respondents: A.R. Bamne, i/b A.R. Bamne & Co., Advocates and H.N. Dave, Advocate
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueConstitution Of India - Article 226; Income Tax Act, 1961 - Section 61; Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 - Sections 20, 25, 25, 26, 27, 28, 25(a), 29, 30
CitationIII (2014) BC 101 (DRAT)
Judgement DateNovember 29, 2013
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)


Raj Mani Chauhan, J. (Chairperson)

  1. The challenge under the present Appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the RDDBFI Act) is the judgment and order dated 29th March, 2010 passed by Mr. V.N. Lothey Patil, the then learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT) No. 1, Ahmedabad, in Appeal No. 14/2009, Ritesh Oil Mills Pvt. Ltd. v. Dena Bank, whereby the learned P.O. has dismissed the aforesaid Appeal filed by the appellants against order dated 22nd September, 2009 passed by the Recovery Officer (R.O.) in Recovery Proceeding (R.P.) No. 1304/2002, arising out of the Original Application (O.A.) No. 319/1998 whereby the learned R.O. has passed the following Order:

  2. The offer received for the above mentioned immovable property from Shri Gopalkrishna D. Patel for an amount of Rs. 21.05 lacs against the reserve price of Rs. 21.00 lacs is hereby accepted.

  3. Successful auction purchaser is hereby directed to deposit the balance amount of 25% on or before 23rd September, 2009 by Demand Draft/Pay Order in favour of the Recovery Officer, DRT-1, Ahmedabad.

  4. The successful bidder is further directed to deposit the remaining 75% of the offered amount on or before 6th October, 2009 by Demand Draft/Pay Order in favour of the Recovery Officer, DRT 1, Ahmedabad. The sale shall be confirmed in due course in accordance with, the prescribed terms and conditions.

  5. Further, the successful purchaser is directed to deposit the Poundage Fee (1% of the bid amount plus Rs. 10) as per Sub-rule (1) of the Income-tax (Certificate Proceedings) Rules, 1962, Appendix 28 in favour of the Registrar, Debts Recovery Tribunal, Ahmedabad.

  6. CH Bank is hereby directed to file FIR regarding the theft of the movable property. Further CH Bank is also directed to depute security with immediate effect and to ensure that no further theft takes place till confirmation of sale.

    The relevant facts giving rise to the present Appeal in nutshell may be stated as under.

  7. The appellant No. 1, Ritesh Oil Mills Pvt., had availed certain credit facilities sanctioned by the respondent No. 1, Dena Bank. The appellant No. 2 and the defendant Nos. 3 to 5 stood guarantors to the amount of credit facility availed by the borrower. The amount of credit facilities was secured by creation of mortgage of the following immovable property:

    Block No. 278, Village Gadhoda, Near Vitrag Foam Sabar Dairy Road, Taluka Himmatnagar, Gujarat" as well as hypothecation of plant and machineries, (hereinafter referred as the Suit property)

  8. It is indisputed that the appellant No. 1 committed default in repayment of the amount of the credit facilities availed by it. Consequentially the respondent No. 1 filed Original Application No. 319/1998 in DRT-1, Ahmedabad, against the borrower and the guarantors for recovery of its outstanding dues together with interest, costs and other charges.

  9. Daring pending O.A. the defendants settled the outstanding dues with the applicant Bank at Rs. 32 lacs. Consequently the parties filed consent terms (Exh. A-32) in the pending O.A. Account which was disposed of by the learned P.O. in view of the consent terms. As per the consent terms, the defendants were required to make a down payment of Rs. 4 lacs and remaining amount of Rs. 28 lacs in four equal quarterly instalments of Rs. 7 lacs each together with interest @ 12.5 p.a. commencing from 1st April, 2002. Admittedly, the defendants could not pay entire settled amount within the time frame provided in credit facilities agreement. Consequently the learned P.O., DRT, on the application of the applicant/certificate holder Bank issued Recovery Certificate (R.C.) No. 1304/2002 dated 5th August, 2002 for recovery of Rs. 56,39,015.51 + cost and interest of Rs. 92,170/- i.e. for Rs. 57,31,185.51 with further interest & 19.60% p.a. On the basis of the aforesaid R.C. the R.O. initiated R.P. No. 1304/2002.

  10. The R.O. on 21st July, 2003 issued demand notice to the certificate debtors calling upon them to pay the amount payable under the R.C. which was duly served on the certificate debtors. But they despite service of demand notice failed to make any payment. The CH Bank/the respondent No. 1 thereafter on 9th September, 2003 moved an application for attachment of the Suit properties. The Suit properties were accordingly attached by the Bank in pursuant to the attachment order passed by the R.O. The respondent No. 1 filed compliance report on 17th October, before the R.O.

  11. The R.O. thereafter made three attempts to sell the Suit properties. But all the attempt were failed as no bidder came forward to purchase the properties. The first auction was scheduled on 30th July, 2004, the second auction was scheduled on 12th March, 2009 and the third auction was scheduled on 31st March, 2009.

  12. The R.C. remained pending for a quite long time. Lastly, the R.O. on 2nd July, 2009 issued fresh notice for settling the terms of sale proclamation to sell the Suit properties. He directed CH Bank to serve the notice to the CDs by R.P.A.D. The R.O. thereafter vide order dated 10th August, 2009 settling the terms of the sale ordered to sell the Suit properties fixing 22nd September, 2009 at 2.30 p.m. for conducting the auction sale. He classified the immovable Suit property as lot No. 1 fixing reserve price of Rs. 21 lacs and hypothecated movable property lying on the aforesaid immovable property as lot No. 2 fixing reserve price of Rs. 60,000/-. The R.O. by the same order ordered for issuance of sale proclamation notice and appointed the branch manager of the respondent No. 1 as ex officio receiver and authorized him to issue proclamation of sale. He directed the receiver to affix the sale notice on conspicuous part of the Suit property at least 30 days before the public auction. He also ordered that the sale notice be published in two newspapers, one in English and one in vernacular language newspaper. The receiver accordingly on 2nd September, 2009 pasted sale notice on the Suit property.

  13. The R.O. as per scheduled date of the auction i.e. on 22nd September, 2009 conducted the auction sale of the Suit property. The respondent No. 2, Gopalkrishna Dahyabhai Patel, the only bidder participated in the auction sale who offered to purchase the immovable Suit property for Rs. 210.01 lacs as against reserve price of Rs. 21 lacs. But on persuasion the auction purchaser raised his offer from Rs. 21.00 lacs to Rs. 21.05 lacs. The R.O. accepting his offer passed the order which has already been extracted above. The R.O. by the same order directed the auction purchaser to deposit 25% of the sale price on or before 23rd September, 2009 and to deposit the balance amount of 75% of the sale price alongwith poundage fee @ 1% through Demand Draft/Pay Order drawn in favour of the Recovery Officer, DRT-1, Ahmedabad on or before 6th...

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