Canara Bank Vs Maruti Nandan Foods Products Pvt. Ltd (DRAT Allahabad)
The appeal was filed under Section 18 of the SARFAESI Act, 2002 against an order dated 02.03.2022 passed by the Tribunal, which had allowed an interim application filed by the borrower-respondents and directed the Recovery Officer to keep sale proceedings in abeyance. The appellant bank had extended credit facilities to the borrower company, secured by personal guarantees and collateral immovable properties. Due to failure in maintaining financial discipline, the accounts were classified as non-performing assets. The bank initiated recovery proceedings under the RDDBFI Act, 1993 by filing an original application, which was decreed, leading to issuance of a recovery certificate and commencement of recovery proceedings before the Recovery Officer.
Parallelly, the bank also initiated action under the SARFAESI Act by issuing a demand notice, followed by possession notices and a sale notice proposing auction of the secured properties. These measures were challenged by the borrowers through a securitisation application under Section 17 of the SARFAESI Act. During pendency of this application, the Tribunal granted a status quo order in respect of the secured properties.
Subsequently, the bank proceeded before the Recovery Officer in the recovery proceedings. The borrowers objected, contending that continuation of recovery proceedings would violate the status quo order passed in the SARFAESI proceedings. The Recovery Officer rejected the objection and ordered issuance of sale proclamation. Instead of filing an appeal against this order under Section 30 of the RDDBFI Act, the borrowers filed an interim application in the pending SARFAESI proceedings, alleging violation of the status quo order. The Tribunal allowed this interim application and directed the Recovery Officer to keep the sale proclamation in abeyance.
