The Debts Recovery Tribunal - I, Chennai has set aside an auction sale held for recovery of bank dues, as it was not in compliance with provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act).
Crombest Precest Buildings Ltd, a company engaged in construction of commercial, residential, hospital and institutional buildings using pre-cast concrete technology, had availed of a term loan from Federal Bank and Bank of India in 2008. The banks had disbursed ₹38.22 crore. Later, the banks had declared the account as NPA and took possession of the assets of the company, which was assigned to Maximus Asset Reconstruction Company (ARC) Limited.
The banks approached the Debt Recovery Tribunal and the court to invoke the corporate guarantee and personal guarantee, for consideration by the ARC and for calling the company to settle the amount of ₹25.26 crore to Federal Bank and ₹31.01 crore to Bank of India.
Meanwhile, the ARC had initiated an auction sale of the assets of the company, and it was sold in March 2018. Against this, Crombest moved the Debt Tribunal, stating that a proper notice was not served as per norms.
In its response, the ARC said that the sale notice was served through registered post, however it was returned undelivered with the endorsement left.
The Tribunal noted that in the current case it was mandatory for the authorised officer to serve the sales notice by affixing a copy of the sale notice on the outer door or some other conspicuous part of the house or building in which the applicant/borrower or his agent ordinarily resides or carries on business or personally works for gain. It is also required to publish the contents of the sale notice in two leading newspapers, one in a vernacular language, having sufficient circulation in that locality, it noted.
However, the respondent bank did not take recourse to the aforesaid procedure mandated under the rules, the Tribunal noted and set aside the sale. The Tribunal directed the bank to forthwith return the sale price of about ₹2.07 crore to the auction purchaser with simple interest at 18% per annum from the date of deposit of the money till the date of payment and the purchaser shall not claim any right, title or interest over the property covered by the sale certificate.
