Agarwal Tracom Pvt. Ltd. vs Punjab National Bank

3. The controversy involved in the appeal centers around the short facts and is essentially a legal one. However, few relevant facts need mention, in brief, to appreciate the controversy.

4. Respondents-Punjab National Bank(hereinafter referred to as "PNB") is a Nationalised Bank. The PNB had given loan facility to a Company called "M/s India Iron & Steel Corporation Limited" (in short, "Borrower”) for their business, which they were carrying at a place called Noorpur Khirki, Village Farid Nagar, Tehsil Dhampur, District Bijnor (U.P.).

5. To secure the loan amount, the Borrower had secured their assets, which consisted of the land, factory building, plant and machinery situated at Dhampur. The Borrower, however, failed to clear their loan amount and became a defaulter in its 2 repayment. The PNB, therefore, invoked their powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) and issued a public sale notice in leading English newspapers for sale of the mortgaged assets of the Borrower in the public auction fixed for 17.06.2014 (Annexure-P-1). The appellant herein was one of the bidders, whose bid was declared the highest.

6. The appellant's bid was accordingly accepted by the PNB followed by execution of memorandum of understanding between the appellant and the PNB (Annexure P-4). The PNB also sent a letter to the appellant stating that the entire plant, machinery, land and the building is auctioned in favour of the appellant. The letter also authorized the appellant to dismantle and sell the scrap plant and the machinery which was lying at the 3 Borrower’s factory's premises after depositing the necessary installment of sale amount, as agreed upon between the parties in the memorandum of understanding.

7. The appellant, however, failed to pay the regular installments towards sale money in terms of memorandum of understanding to PNB and sought extension of time to pay and remove the scrap material from the site.

8. This gave rise to the disputes between the parties, namely, PNB, appellant (auction purchaser) and the Borrower before the Debt Recovery Tribunal (DRT), Lucknow being S.A. No 310 of 2014 wherein an order was passed on 03.07.2014 (Annexure-P-11) directing the appellant not to remove any material from the factory premises. The appellant then wrote a letter to PNB requesting them to refund their money with interest. This led to another dispute between the parties which was filed 4 in the DRT and then before the appellate authority- DRAT and finally, in the High Court at Allahabad in Writ Petition(c) No. 22246/2015 by the Borrower. This writ petition was disposed of finally on 29.05.2015 observing therein that since the appellant had failed to comply with the term of memorandum of understanding inasmuch as the appellant having failed to deposit the requisite installment of sale money, the PNB cannot proceed with the auction sale held on 17.06.2014 and nor can the appellant be permitted to remove the scrap material lying in the factory premises.

(a) to (d) and end with measures specified in Rule 9.

31. The auction purchaser (appellant herein) is one such person, who is aggrieved by the action of the secured creditor in forfeiting their money. The appellant, therefore, falls within the expression “any person” as specified under Section 17(1) and hence is entitled to challenge the action of the secured creditor (PNB) before the DRT by filing an application under Section 17(1) of the SARFAESI Act.

34. In the light of foregoing discussion, we are of the considered opinion that the Writ Court as also the Appellate Court were justified in dismissing the appellant's writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant's deposit under Rule 9(5). We find no ground to interfere with the impugned judgment of the High Court.

35. The appellant is, accordingly, granted liberty to file an application before the concerned Tribunal (DRT) under Section 17(1) of the SARFAESI Act, which has jurisdiction to entertain such application within 45 days from the date of this order. In case, if the appellant files any such application, the Tribunal shall decide the same on its merits in accordance with law uninfluenced by any of the 25 observations made by this Court and the High Court in the impugned judgment.

36. With these observations and liberty granted to the appellant, the appeal fails and is accordingly dismissed.

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