We have heard learned counsel for the appellant - Bombay
Mercantile Cooperative Bank Ltd.1, Saeedul Hasan Khan, the sole
proprietor of respondent no. 1 - M/s. U.P. Gun House2, who appears
in person and Mr. Shubhranshu Padhi, learned amicus curiae.
The facts of the present case are peculiar.
In 1996, Saeedul Hasan Khan, sole proprietor of the Gun House
took loan of Rs. 2,00,000/- (rupees two lakhs only) from the
Cooperative Bank to establish a firearms business. The loan was
secured by mortgaging immovable property3.
On 30.02.2002, the loan was declared a Non-Performing Asset,
as an amount of Rs.2,39,812.41 (rupees two lakhs thirty nine
thousand eight hundred twelve and forty one paisa only) was due and
payable.
One-time settlement offer did not materialise due to the
respondent’s failure to pay.
Verified Signature1 NotFor short, “Cooperative Bank” or “appellant”.
Deepak 2 GuglaniFor short, “Gun House” or “respondent”.
Khasra no. 419, Nagaria, Radhagram Yojna, Thakurganj, Lucknow,
Uttar Pradesh (for short, “the property”).
On 22.03.2006 notice in re the property was issued under
Section 13(2) of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 20024. By then,
the outstanding amount had increased to Rs.6,23,809/- (rupees six
lakhs twenty three thousand eight hundred nine only).
On 09.07.2009, upon the respondent’s failure to pay,
Cooperative Bank took symbolic possession of the property. On
22.07.2009, possession notice was published in the newspaper,
namely, Rashtriya Sahara.
The appellant approached the Court of District
Magistrate/Collector, at Lucknow by filing a petition5 under
Section 14 of the SARFAESI Act for taking physical possession.
Despite service, the respondent did not appear and an ex parte
order was passed on 02.12.2010. The respondent filed an
application6 for recall of this order, which was dismissed on
07.07.2011, observing that the respondent had been granted
sufficient time to make payment but had failed.
Pursuant to the respondent’s request letter dated 03.11.2011,
the appellant accepted the respondent’s One Time Settlement7
proposal of Rs.6,36,860/- (rupees six lakhs thirty six thousand
eight hundred sixty only). At that time, the total outstanding
amount was Rs.15,37,083.41 (rupees fifteen lakhs thirty seven
thousand eighty three and forty one paisa only). The respondent
4 For short, “SARFAESI Act”. 5 Petition No. 499/2010. 6 Petition No. 16/2011. 7 For short, “OTS”.
made initial payment of Rs.50,000/- (rupees fifty thousand only),
but failed to pay the balance amount of Rs.5,86,860/- (rupees five
lakhs eighty six thousand eight hundred sixty only), which was due
and payable on or before 29.03.2012.
On 07.04.2012, the appellant informed the respondent that
the OTS proposal stood revoked and the respondent was as on
31.03.2012 liable to pay Rs.15,91,424/- (rupees fifteen lakhs
ninety one thousand four hundred twenty four only).
On 14.07.2012, the appellant took possession of the property,
and inventory of the immovable assets was made.
A valuation report estimated the value of the property to be
Rs.29,70,000/- (rupees twenty nine lakhs seventy thousand only).
However, the forced sale value of the property was fixed at
Rs.22,28,000/- (rupees twenty two lakhs twenty eight thousand
only).
On 30.11.2012, the appellant states that they had sent an
auction notice to the respondent, indicating that an auction of the
property was scheduled to be held on 31.12.2012. On 30.11.2012
itself, auction sale notice was published in two newspapers.
On 14.12.2012, the respondent challenged the auction sale by
filing a writ petition8 before the Lucknow Bench of the High Court
of Judicature at Allahabad. The writ petition was dismissed vide
order dated 20.12.2012 as not maintainable.
At this stage, we must notice, that the respondent disputes
service of notice dated 30.11.2012 for the auction. The appellant
8 Writ Petition No. 10530 (M/B)/2012.
was unable to produce documents, showing actual service, though the
letter dated 30.11.2012 is available on their records.
We have also perused the writ petition filed by the
respondent before the Lucknow Bench of the High Court of Judicature
at Allahabad. We find that the averments made in the writ petition
on service of the notice dated 30.11.2012 are rather ambiguous and
unclear. However, it is obvious that the respondent knew about the
auction and had accepted having read the notice for sale published
in newspapers on 30.11.2012.
During the course of hearing, the respondent has stated that
he had entered into an agreement for sale of the property for Rs.
29,00,000/- (rupees twenty nine lakhs only) with the Respondent
No.3 in these appeals, namely, Abdul Haleem Siddiqui and had
received advance of Rs.1,00,000/- (rupees one lakh only).
Abdul Haleem Siddiqui despite service has not entered
appearance before this court and is accordingly proceeded ex parte.
Abdul Haleem Siddiqui had participated in the auction held on
31.12.2012 and was the highest bidder. His bid of Rs.42,00,000/-
(rupees forty two lakhs only) was accepted.9
The respondent accepts and admits that he was also present at
the auction.
After the auction, the respondent had written a letter to
the appellant expressing willingness to pay Rs.6,23,809/- (rupees
six lakhs twenty three thousand eight hundred nine only) and had
9 Abdul Haleem Siddiqui is referred to as “auction purchaser” or “Abdul Haleem Siddiqui”.
sent a cheque for the amount. The appellant returned the cheque and
the respondent was informed that the total amount due and payable
was Rs.19,30,995/- (rupees nineteen lakhs thirty thousand nine
hundred ninety five only).
Subsequently, the appellant handed over possession of the
property to the auction purchaser, and a sale deed was executed in
his favour on 21.03.2013. The auction purchaser had constructed
flats on the property, which have been sold and transferred to
third parties.
As noticed above, the respondent had challenged the service
of auction notice dated 30.11.2012, which plea has been accepted by
the Debts Recovery Tribunal at Lucknow, by quashing the auction
vide judgment and order dated 30.10.2017. This order has been
upheld by the Debts Recovery Appellate Tribunal at Allahabad and
the High Court.
In view of the facts of the present case, we are satisfied
that the respondent was fully aware of the auction notice dated
30.11.2012. He had, within 14 days thereafter, filed a writ
petition before the High Court and was aware of the auction notice
from before. He had also entered into an agreement with Abdul
Haleem Siddiqui, who later on became the auction purchaser. The
respondent was present at the time of the auction. The auction
purchaser, has constructed flats on the property and transferred
the same to various third parties, though it is stated that some
flats are yet to be sold. At the same-time as noticed above there
is no proof that notice dated 30.11.2012 was served by the
appellant on the respondent.
As per the appellant, after adjusting the amount due and
payable by the respondent, a sum of Rs.22,53,004/- (rupees twenty
two lakhs fifty three thousand and four only), is due and payable
and has been with them since 21.03.2013. By letter dated
21.03.2013, the appellant had sent a cheque of the aforesaid
balance amount to the respondent, which was not accepted.
The respondent has relied upon the decision of this Court in
Mathew Varghese v M. Amritha Kumar & Ors.10, which had interpreted
Rule 9(1) of the Security Interest (Enforcement) Rules, 200211, and
holds that service of notice in terms of Rules 8 and 9 of the 2002
Rules is mandatory. To us, it does appear that there is lapse on
the part of the appellant, as they did not maintain proper records
of the service of notice dated 30.11.2012. Parallelly, we cannot be
oblivious to the fact that the respondent was entirely aware of the
auction process in terms of the notice dated 30.11.2012. We are
also conscious that the auction purchaser had constructed flats,
which had been sold to various third parties.
In view of the aforesaid facts and exercising our power under
Article 142 of the Constitution of India, we direct that the
appellant – Cooperative Bank will pay an amount of Rs.54,00,000/-12
(rupees fifty four lakhs only) to the respondent in full and final
settlement of his claims. This payment will be made within a period
10 (2014) 5 SCC 610. 11 For short, “2002 Rules”. 12 The appellant will be entitled to deduct Tax At Source on this amount and will furnish certificate to this effect to the respondent.
of five weeks from the date when a copy of this order is received.
The amount may be transferred electronically to the bank account of
the respondent, details of which will be furnished to the counsel
for the appellant within a period of one week from today. In case,
payment is not made by the appellant within the aforesaid period,
they shall be liable to pay an interest on Rs.54,00,000/-, at the
rate of 12% (twelve percent) per annum, from the date of this order
till the date of actual payment.
The impugned order dated 02.07.2019 passed by the High Court
in Misc. Single no. 25784/2018 and the order dated 25.11.2019
passed in review application, C.M. Application no. 102770/2019, are
set aside. The sale by the appellant in favour of Abdul Haleem
Siddiqui is upheld and confirmed.
The appeals are allowed and disposed of in the above terms.
There shall be no order as to costs.
Pending application(s), if any, shall stand disposed of.
CIVIL APPEAL NOS. 6244-6245 OF 2021
BOMBAY MERCANTILE COOPERATIVE BANK LTD. THROUGH ITS AUTHORIZED SIGNATORY APPELLANT(S)
(IA No. 187153/2023 - EARLY HEARING APPLICATION, IA No. 159102/2023 - EARLY HEARING APPLICATION, IA No. 98567/2023 - EARLY HEARING APPLICATION, IA No. 82005/2020 - EXEMPTION FROM FILING O.T., IA No. 3628/2021 - PERMISSION TO APPEAR AND ARGUE IN PERSON, IA No. 114983/2020 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES and IA No. 82006/2020 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES)
Date : 22-01-2024 These matters were called on for hearing today.
For Appellant(s)
Mr. Talha Abdul Rahman, AOR
Mr. M. Shaz Khan, Adv.
Mr. Adnan Yousuf, Adv.
Mr. Waseem Ahmed, Adv. For Respondent(s)
Mr. Shubhranshu Padhi, Adv./A.C.
Respondent-in-person
UPON hearing the counsel the Court made the following
The appeals are allowed and disposed of in terms of the signed
non-reportable order.
Pending application(s), if any, shall stand disposed of.
(signed non-reportable order is placed on the file)