Debts Recovery Appellate Tribunal (DRAT), Allahabad Bench comprising Justice R.D. Khare, (Chairperson) observed that the appellant-Bank failed to comply with the statutory requirement of providing a clear 15-days notice to the borrowers before the auction of the property. This procedural irregularity was deemed substantial, and the DRT rightfully set aside the sale and consequential proceedings.
The Appellate Tribunal emphasized the importance of strictly adhering to the statutory provisions, rejecting the appellant's argument about the borrowers' intention to redeem the property. Additionally, the contention of the waiver of the borrowers' right to challenge the auction sale notice was deemed untenable. The appeal was dismissed for lacking merit.
In the present case, the appellant filed an appeal under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) against the judgment dated 27.08.2018 by the DRT, Dehradun. The DRT had partly allowed the securitization application filed by the appellant. The case involved financial assistance granted by the appellant-Bank to respondents 1 to 3, who stood as guarantors, leading to non-performing assets. The appellant initiated proceedings under the SARFAESI Act, including issuing demand notices and possession notices.
The borrowers challenged the actions before the DRT, which partly allowed their petition, setting aside the auction conducted on 31.08.2017. The DRT held that the auction violated mandatory provisions of Rules 8(6) and 9(1) of the Rules, 2002. The appellant appealed, arguing that the only point to consider was the legality of holding the auction on the 15th day from the date of publication of the sale notice.
The respondents contended that the auction was in violation of Rule 9(1) and referred to a Supreme Court judgment. The DRAT, after considering the arguments, ruled that the auction lacked a clear 15-days notice to the borrowers and, therefore, violated statutory requirements. The appeal was dismissed, stating it was devoid of merits, and no costs were awarded.