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ICICI Bank Ltd., Home Finance Co. Ltd v/s Pooja Shah & Others


Company & Directors' Information:- ICICI LIMITED [Amalgamated] CIN = U99999MH1955PLC009456

Company & Directors' Information:- ICICI BANK LIMITED [Active] CIN = L65190GJ1994PLC021012

Company & Directors' Information:- ICICI HOME FINANCE COMPANY LIMITED [Active] CIN = U65922MH1999PLC120106

Company & Directors' Information:- POOJA FINANCE LIMITED [Active] CIN = U55100AS1992PLC003739

Company & Directors' Information:- R J SHAH AND COMPANY LIMITED [Active] CIN = L45202MH1957PLC010986

Company & Directors' Information:- SHAH INDIA PVT LTD [Active] CIN = U51909WB1960PTC024535

Company & Directors' Information:- B. B. SHAH PRIVATE LIMITED [Active] CIN = U17117RJ1984PTC002922

Company & Directors' Information:- D M SHAH & COMPANY PVT LTD [Active] CIN = U29244WB1988PTC045183

Company & Directors' Information:- C. M. SHAH AND COMPANY PRIVATE LIMITED [Strike Off] CIN = U74140MH1971PTC015107

Company & Directors' Information:- D D SHAH FINANCE PRIVATE LIMITED [Strike Off] CIN = U65990MH1995PTC090963

Company & Directors' Information:- T M SHAH PRIVATE LIMITED [Strike Off] CIN = U10101UP1966PTC003139

Company & Directors' Information:- S B SHAH AND COMPANY PRIVATE LIMITED [Active] CIN = U51496DL1991PTC045040

Company & Directors' Information:- H B SHAH PRIVATE LIMITED [Active] CIN = U36100MH1947PTC005536

Company & Directors' Information:- M M SHAH PRIVATE LIMITED [Strike Off] CIN = U51311MH1962PTC012293

Company & Directors' Information:- D J SHAH AND CO PRIVATE LIMITED [Active] CIN = U74899DL1987PTC030169

Company & Directors' Information:- C C SHAH LTD. [Strike Off] CIN = U15421WB2000PLC007659

Company & Directors' Information:- A H SHAH AND CO PVT LTD [Active] CIN = U51311MH1949PTC007019

Company & Directors' Information:- SHAH AND SHAH PVT LTD [Strike Off] CIN = U33112WB1980PTC032838

Company & Directors' Information:- B SHAH FINANCE COMPANY PVT LTD [Strike Off] CIN = U65921PB1994PTC014700

Company & Directors' Information:- A D SHAH PVT LTD [Strike Off] CIN = U51909MH1972PTC015715

Company & Directors' Information:- B. SHAH AND COMPANY LIMITED [Dissolved] CIN = U99999MH1952PLC008789

Company & Directors' Information:- SHAH FINANCE PRIVATE LIMITED [Not available for efiling] CIN = U99999MH1967PLC010938

    Diary No. 107 of 2019

    Decided On, 10 July 2019

    At, Debts Recovery Appellate Tribunal at Kolkata

    By, THE HONOURABLE MR. JUSTICE R.S. KULHARI
    By, CHAIRPERSON

    For the Appellant: Avishek Guha, Advocate. For the Respondent: R1, N. Srinivas, Advocate.



Judgment Text


1. Learned Counsel for the appellant files affidavit-of-service. Mr. N. Srinivas, is present on behalf of respondent No. 1. None appears on behalf of respondent No. 3, auction-purchaser, despite service of notice. Learned Counsel for the respondent-borrower does not want to file affidavit-in-opposition, hence the Counsels were heard on merit at the admission stage with their consent.

2. It appears that the appellant-Bank granted certain credit facilities to the respondent No. 1 borrower which was not repaid in terms of the loan agreement, hence the Bank proceeded under SARFAESI Act for recovery of loan by sale of mortgage property. After issuing demand notice and possession notice, the sale notice was issued on 6th February, 2017 and the auction of the property was held on 28th February, 2017 as the earlier scheduled auction could not be materialized. The auction-purchaser, respondent No. 3 deposited 25% of the bid amount on 2nd March, 2017 and the remaining amount was paid through cheque.

3. The borrower challenged the sale alleging amongst others that compliance of Rules 9(3) and 9(4) of the SARFAESI Rules was not made. The Tribunal below observed that 25% of the bid amount was not deposited on the same day or the next day, rather it was deposited on the third day. Further the appellant-Bank has no discretion to extend the time for deposit of 25% of the sale price and accordingly quashed the sale vide order dated 25th March, 2013 giving liberty to the Bank to issue fresh auction sale notice, hence this appeal.

4. Learned Counsel for the appellant-Bank submits that the auction was held on 28th February, 2017 but the same could not be confirmed on the same day which was confirmed on 1st March, 2017 and, thereafter, the auction-purchaser had deposited the amount on the next day, i.e. 2nd March, 2017, so after confirmation of sale, the compliance of Rule 9(3) was made in accordance with the provisions of Rules. In support of this contention learned Counsel has relied upon the judgment of the Hon’ble Andhra Pradesh High Court in Writ Petition Nos. 10178 and batch, M/s. Knovus Steels and Infrastructure Limited, Hyderabad v. State Bank of India & Others, II (2016) BC 26 (DB) (AP), decided on 23rd July, 2015.

5. On the contrary, learned Counsel for the respondent-borrower contends that compliance of Rule 9(3) of the SARFAESI Rules is mandatory in nature. The auction-purchaser is required to pay 25% of the sale price on the same day but not later than next working day in any case. The amount was deposited on third day which is in violation of Rule 9(3) as laid down by the Hon’ble Gauhati High Court in WP(C) 4566 of 2017 (Union Bank of India & Anr. v. Pabitra Pran Saikia) decided on 10th April, 2018.

6. Having heard the Counsels for the parties and considering the materials available on record it is undisputed that the auction was held on 28th February, 2017 and 25% of the bid amount as required under Rule 9(3) of the SARFAESI Rules was deposited on 2nd March, 2017. It is also a matter of record that one letter dated 1st March, 2017 was issued by the Bank to the auction-purchaser indicating the confirmation of sale requiring him to deposit 25% within forty-eight hours and the remaining 75% within fifteen days from the date of receipt of the letter. Since the auction was conducted on 28th February, 2017, therefore, Rule 9(3), as amended with effect from 3rd November, 2016 is applicable which mandates as under:

“9(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty-five percent of the amount of the sale price, which is inclusive of earnest money deposit, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again”.

7. A bare perusal of the above provision reveals that on sale of immovable property, the purchaser is required to deposit 25% of the sale price on the same day but not later than the next working day. Thus, there is no room for doubt that such period can be extended by the Authorized Officer of the secured creditor as explicit and unambiguous provision to this effect is in place which can only be extended by consent of the purchaser and the secured creditor for the remaining 75% of the sale price in view of Rule 9(4) of the SARFAESI Rules. Confirmation of sale by the secured creditor as required under Rule 9(2) is in context to Rule 9(4) wherein the amount is required to be deposited on or before the fifteenth day of confirmation of sale. Thus, it cannot be said that the auction-purchaser was waiting for confirmation of sale and hence after letter dated 1st March, 2017, he deposited the amount in time. As soon as he was declared as the highest/successful bidder, he was required to deposit the amount on 28th February, 2017 itself or on 1st March, 2017. It is not the case of the auction-purchaser or the appellant-Bank that the bid of the auction-purchaser was not accepted on 28th February, 2017 or he was not declared as successful bidder on the same day.

8. Thus the Bank and the auction-purchaser have failed to comply the mandatory provisions of Rule 9(3) of the SARFAESI Rules. This view is fortified by the judgment delivered by Gauhati High Court in the case of Union Bank of India (supra).

9. I respectfully agree with the judgment passed by the Hon’ble Andhra Pradesh High Court in the case of M/s. Knovus Steels (supra), but the same is distinguishable on the facts, hence does not render any assistance to the appellant-Bank. In that matter the auction was held on 14th March, 2015. Thus the provision prior to the amendment in Rule 9(3) were applicable in which the term “on the same day or not later than the next working day” did not find place and only the word ‘immediately’ was there. So the same was interpreted in view of the facts of that matter. Moreover, the auction-purchaser was not declared successful bidder on the same day because two other participants complained about the auction and, thereafter, a decision was taken by the committee of secured creditors and ultimately the auction-purchaser was declar

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ed as successful bidder on 16th March, 2015 and the Bank informed him at 5.52 p.m. through e.mail on 16th March, 2015 itself. Under these circumstances, the amount deposited on 17th March, 2015 was treated to have been deposited in accordance with the provisions of Rule 9(3). But the facts are entirely different of the matter at hand. 10. In view of the aforesaid, there is no illegality or infirmity in the impugned order. Hence, no interference is called for. Accordingly, the appeal is dismissed without any order as to costs. Copy of the judgment/final order be uploaded in the Tribunal’s Website. File be consigned to Record room. Appeal dismissed.
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