Muneru Industries Pvt. Ltd. Vs Apsara Constructions (DRAT Kolkata)
The Debt Recovery Appellate Tribunal, Kolkata dismissed the appeal filed by the auction purchaser and upheld the order of DRT-II Hyderabad setting aside an e-auction sale and the consequent sale certificate due to non-compliance with mandatory provisions of the Security Interest (Enforcement) Rules, 2002. The dispute arose from SARFAESI proceedings initiated by the secured creditor after the borrower’s loan account was classified as NPA. The borrower challenged the measures taken under Section 13 of the SARFAESI Act, alleging multiple procedural violations in the possession and sale process.
The DRT found that although there was no violation of certain rules relating to reserve price and sale notice, the bank failed to prove affixation of the possession notice on the secured asset, amounting to violation of Rule 8(1). More significantly, the DRT held that Rule 9(4) was breached. While the auction purchaser deposited 25% of the bid amount within time, the remaining 75% was paid on 21 March 2020, well beyond 15 days from confirmation of sale. Though Rule 9(4) permits extension up to three months, such extension must be supported by a written agreement between the secured creditor and the auction purchaser.
