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TMI Blog2024 (5) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... n/sale, the setting aside of the auction/sale cannot be faulted with. The same has to be approved - Once the sale is set aside, the status of the appellants as owners would automatically revert to that of tenants. The status of possession at best could have been altered from that of an owner to that of tenants but Bank would not have any right to claim actual physical possession from the appellants nor would the appellants be under any obligation to handover physical possession to the Bank. The DRT fell in error on the said issue. Therefore, the direction issued by the DRT that the Bank will first take possession and thereafter refund the auction money with interest applicable to fixed deposits, is not a correct direction. The entire contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court dismissing the Writ Petition of the appellants, confirming the orders passed by the Debt Recovery Tribunal DRT as also the Debt Recovery Appellate Tribunal DRAT , whereby the auction sale held in favour of the appellants had been set aside and the appeal was dismissed. Brief facts in nutshell are as follows: 3. The firm-respondent no.3, had taken a loan from the respondent no.1-Bank. However, as it went into default, the Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 SARFAESI Act . In the said recovery proceedings, the Recovery Officer conducted an open auction. The appellants were the highest bidder. Their bid was accepted and they made good th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove the alleged improvements in the property. The auction purchaser is enjoying this property since 2009 as such auction purchaser is not entitled to any extra compensation. However, Bank will be under obligation to refund the auction money with interest as applicable to fixed deposit. The sale is accordingly set aside and it is made clear that Bank will refund the auction money only after receiving possession of property from auction purchaser within 15 days from the delivery of auction purchaser to the Bank. The applicant is directed to pay the dues of the sic within 15 days with upto date interest, failing which Bank will be at liberty to proceed further under Securitization and Reconstruction of Financial Assets and Enforcement of Secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n developing the property and investment made therein. 9. On the other hand, learned counsel for the respondent-Bank submitted that although it had followed the procedure prescribed but could not substantiate with any material to rebut the findings recorded by the DRT, DRAT and the High Court that the Bank had failed to follow the statutory provisions of notice under Rules 8(6) and 8(7) of the 2002 Rules. It was further submitted that as the appellants have enjoyed the property as it was already in their possession, they cannot claim any additional compensation for the improvements made by them as they were well aware of the litigation initiated by the borrower by filing an application under Section 17 of the SARFAESI Act and whatever impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRT that the sale in question may be set aside and the Bank be granted liberty to proceed afresh; (v). The Bank has admitted that the auction money of Rs.12.40 lacs is lying in a separate fixed deposit and this amount is in addition to the outstanding amount deposited by the borrower after the auction sale. 12. Considering the above facts and circumstances and the arguments advanced, we proceed to deal with the same: (i). In view of the concurrent finding based on the admission by the Bank that mandatory notice of 30 days was not given to the Borrower before holding the auction/sale, the setting aside of the auction/sale cannot be faulted with. The same has to be approved. (ii). Once the sale is set aside, the status of the appellants as ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the money of the Bank is also public money, we feel that interest of justice would be best served if the auction money with 12 per cent per annum compound interest is returned to the appellants. Such interest be calculated from the date of deposit till the date it is actually paid. (v). There was some dispute between the Bank and the borrower that there could be minor adjustments still left. We are of the view that if any additional amount is lying with the Bank, the same would be returned to the borrower and if any amount is still due to be paid, the borrower would pay the said amount to the Bank. The Bank and the borrower have both agreed for making the said adjustments. 13. In view of the above discussion and analysis, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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