# Feroze Khan v. Punjab National Bank & Ors. 836 INDIAN LAW REPORTS ALLAHABAD SERIES

- **Citation:** (2016) 5 ILRA 835
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-05-31
- **Bench:** Krishna Murari, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/feroze-khan-v-punjab-national-bank-ors-836-indian-law-reports-allahabad-series-43946
- **Pages:** 5

## Headnote

Civil law - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 - Section 13 (2) - Section 13 (4) - Section 13 (8) - borrower - cash credit facility - security
interest - Non Performing Asset - recall of loan - notice under Section 13 (2) - auction of secured asset -
confirmation of bid - application under Section 14 - District Magistrate - tender of outstanding dues -
bank draft - tender after auction - "before the date fixed for sale or transfer" - restriction on sale or
transfer - benefit of Section 13 (8) - disentitled - writ petition dismissed.

 Petitioner, who is a borrower having availed cash credit facility from the respondent-Bank after pledging the
property in question as security for the same.Admittedly, the loan amount of the petitioner when became
irregular and unsatisfactory and despite various notices when was not regularsied, the same was classified as
Non Performing Asset on 16.05.2015. Thereafter, the respondent-Bank recalled the loan and in order to
enforce the security interest created in its favour by the petitioner-borrower, initiated proceedings under the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short
the 'Act'). A notice under Section 13 (2) of the Act was issued requiring the petitioner to clear the entire
outstanding liability along with further interest which may become due till payment in full within 60
days.(Paras 2,4)

Learned counsel for the petitioner contends that since an application dated 22.04.2016 was made before the
respondent-Bank to accept a demand draft for a sum of Rs.4,65,931/- towards outstanding dues and to
intimate the petitioner in respect of any other outstanding so that the petitioner may clear the same, but
neither any order has been passed on the application nor the bank draft tendered along with application has
been accepted by the Bank. It is further submitted that in view of Section 13 (8) of the Act, since the entire
outstanding dues have been tendered to the respondent-Bank, the secured asset is not liable to be sold or
transferred and no further step is liable to be taken by the Bank in respect of the secured asset.(Para 8)

Held:(Paras (11,12,14,15)

## Text

5 All. Feroze Khan Vs Punjab National Bank & Ors.

835

(ii) there exists fraud or collusion in obtaining thejudgment,

(iii) there has been a mistake of the courtprejudicing a party, or

(iv) a judgment was rendered in ignorance of thefact that a necessary party had not
been served at all or had died and the estate was not represented (Refer Budhia Swain and others
Vs. Gopinath Deb, ( 1999) 4 SCC 396, A.R. Antullay Vs. R.S. Nayak, ( 1988)2 SCC 602.

20. The power to recall a judgment will not be exercised when the ground for reopening the
proceedings or vacation the judgement was available to be pleaded in the original action but was
not done or where a proper remedy in some other proceeding such as by way of appeal or revision
was available but was not availed. The right to seek vacation of a judgment may be lost by waiver,
estoppel or acquiescence.

21. A distinction has to be drawn between lack of jurisdiction and a mere error in exercise
of jurisdiction. The former strikes at the very root of the exercise and want of jurisdiction may
vitiate the proceedings rendering them and the order passed therein a nullity. A mere error in
exercise of jurisdiction does not vitiate the legality and validity of the proceedings and the order
passed thereon unless set aside in the manner known to law by laying a challenge subject to the law
of limitation.

22. In view of above, the recall application fails to make out any of the essential
ingredients to recall the earlier order. The applicant under the garb of recall or modification
application cannot re-agitate the matter on merit by pressing a ground though raised was not
pressed or even if not raised cannot be permitted to be raised subsequently.

23 In my opinion the application is misconceived and has been filed to delay the trial,
which is accordingly dismissed with a cost assessed at Rs. 5,000/ to be deposited before the court
below which shall be paid to the complainant-opposite party no.2.
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ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABD 31.05.2016

BEFORE

THE HON'BLE KRISHNA MURARI, J.
THE HON'BLE PRASHANT KUMAR, J.

 Writ C No.- 26854 Of 2016

Feroze Khan ...Petitioner
Versus
Punjab National Bank & Ors. ...Respondents
836 INDIAN LAW REPORTS ALLAHABAD SERIES
Counsel for the Petitioner:
Ramendra Asthana

Counsel for the Respondents:
R.P. Pandey

Civil law - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 - Section 13 (2) - Section 13 (4) - Section 13 (8) - borrower - cash credit facility - security
interest - Non Performing Asset - recall of loan - notice under Section 13 (2) - auction of secured asset -
confirmation of bid - application under Section 14 - District Magistrate - tender of outstanding dues -
bank draft - tender after auction - "before the date fixed for sale or transfer" - restriction on sale or
transfer - benefit of Section 13 (8) - disentitled - writ petition dismissed.

 Petitioner, who is a borrower having availed cash credit facility from the respondent-Bank after pledging the
property in question as security for the same.Admittedly, the loan amount of the petitioner when became
irregular and unsatisfactory and despite various notices when was not regularsied, the same was classified as
Non Performing Asset on 16.05.2015. Thereafter, the respondent-Bank recalled the loan and in order to
enforce the security interest created in its favour by the petitioner-borrower, initiated proceedings under the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short
the 'Act'). A notice under Section 13 (2) of the Act was issued requiring the petitioner to clear the entire
outstanding liability along with further interest which may become due till payment in full within 60
days.(Paras 2,4)

Learned counsel for the petitioner contends that since an application dated 22.04.2016 was made before the
respondent-Bank to accept a demand draft for a sum of Rs.4,65,931/- towards outstanding dues and to
intimate the petitioner in respect of any other outstanding so that the petitioner may clear the same, but
neither any order has been passed on the application nor the bank draft tendered along with application has
been accepted by the Bank. It is further submitted that in view of Section 13 (8) of the Act, since the entire
outstanding dues have been tendered to the respondent-Bank, the secured asset is not liable to be sold or
transferred and no further step is liable to be taken by the Bank in respect of the secured asset.(Para 8)

Held:(Paras (11,12,14,15)

1. In the case in hand, admittedly, the respondent-Bank proceeded to auction the secured asset on
30.03.2016 for a sum of Rs.28.05 lacs in favour of Smt. Urmila Dixit and Smt. Manju Dixit. The bid offered by
the auction purchaser was confirmed by the respondent-Bank. From the pleadings in the writ petition itself, it
is clear that the application made by the petitioner before the respondent-Bank tendering a sum of
Rs.4,65,931/- by means of a bank draft was dated 22.04.2016.The application was made much after the
auction took place on 30.03.2016. It is also pertinent to note that petitioner-borrower in his application dated
22.04.2016 has referred the bank draft to be dated 13.04.2016, but photocopy of the same filed as Annexure
8 to the writ petition goes to show that it is dated 30th April, 2016, which in itself sufficient to indicate that
though the application is dated 22.04.2016, but it was submitted to the Bank on or after 30.04.2016 when the
bank draft was got prepared.

2. In view of the fact that since the petitioner tendered the outstanding dues to the respondent-Bank
subsequent to the holding of the auction on 30.03.2016, hence, he is disentitled to claim benefit of Section 13
(8) of the Act and, thus, the relief prayed for in the writ petition is not liable to be granted.Writ petition,
accordingly, fails and stands dismissed.

Case Law discussed:
5 All. Feroze Khan Vs Punjab National Bank & Ors.

837
(Delivered by Hon'ble Krishna Murari, J.
 &
Hon'ble Prashant Kumar, J.)

1. Heard Shri Ramendra Asthana for the petitioner and Shri R.P. Pandey appearing
for respondent nos. 1 and 2.

2. Petitioner, who is a borrower having availed cash credit facility from the respondentBank after pledging the property in question as security for the same, has approached this Court
seeking the following main relief.

"(a) issue a writ, order or direction in the nature of mandamus commanding the
respondent nos. 1 and 2 and their subordinates etc. to permit the petitioner to deposit Bank Draft
dated 13.04.2016 (Annexure No. 8 to the writ petition) for Rs.4,65,931.00 drawn on Canara Bank
in favour of Punjab National Bank Branch Kachcha Katra, Shahjahanpur and such other sums that
may be found to be due from him."

3. The aforesaid relief is being claimed in the background of the following facts.

4. Admittedly, the loan amount of the petitioner when became irregular and unsatisfactory
and despite various notices when was not regularsied, the same was classified as Non Performing
Asset on 16.05.2015. Thereafter, the respondent-Bank recalled the loan and in order to enforce the
security interest created in its favour by the petitioner-borrower, initiated proceedings under the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (for short the 'Act'). A notice under Section 13 (2) of the Act was issued requiring the
petitioner to clear the entire outstanding liability along with further interest which may become due
till payment in full within 60 days.

5. Aggrieved by the notice under Section 13 (2) of the Act, petitioner approached this
Court by filing Writ Petition No. 40196 of 2015 making a prayer to permit repayment of entire
outstanding dues in easy instalments. The said writ petition was dismissed on 22.07.2015 by
making the following observations.

"After hearing learned counsel for the parties, in our view, the Court cannot order
rescheduling of instalments of the loan. The petitioner himself has breached the contract and not
deposited regular instalments of loan in time. However, a sympathetic view can be taken by the
bank by rescheduling the instalments of loan if the petitioner approaches the Bank and comply with
any terms and conditions to show his bonafide as may be imposed by the bank.

For the aforesaid reasons, we are not inclined to interfere with the matter in
exercise of extra ordinary powers under Art. 226 of the Constitution.

The writ petition is accordingly dismissed."
838 INDIAN LAW REPORTS ALLAHABAD SERIES
6. Thereafter, respondent-Bank issued a notice dated 23.12.2015 under Section 13 (4) of
the Act read with Rule 8 of the Rules for auction of the secured asset, namely, commercial plot
standing in the name of the petitioner situate at Near Jali Kothi, Mohalla Khalil Garbi, District
Shahjahanpur. The secured asset was auctioned by the respondent-Bank in favour of Smt. Urmila
Dixit and Smt. Manju Dixit on 30.03.2016. A bid of Rs.28.05 lacs offered by the auction purchaser
was confirmed by the respondent-Bank. Thereafter, the Bank made an application under Section 14
of the Act seeking assistance of the District Magistrate for taking possession/control of the secured
asset. The proceedings were transferred by the Collector to be decided by Additional District
Magistrate, who vide order dated 12.04.2016 rejected the application on the ground that since
auction of the property was made during the pendency of the proceedings under Section 14, as
such, the same is illegal.

7. Order dated 12.04.2016 was challenged by the respondent-Bank by filing Writ Petition
No. 26145 of 2016, which has been allowed vide order dated 30.05.2016 holding that the view
taken by the authority that the auction of the property during the pendency of the proceedings under
Section 14 of the Act without taking possession is illegal, was not sustainable and was set aside and
the District Magistrate was directed to decide the application under Section 14 of the Act made by
the respondent-Bank afresh in accordance with law.

8. Learned counsel for the petitioner contends that since an application dated 22.04.2016
was made before the respondent-Bank to accept a demand draft for a sum of Rs.4,65,931/- towards
outstanding dues and to intimate the petitioner in respect of any other outstanding so that the
petitioner may clear the same, but neither any order has been passed on the application nor the bank
draft tendered along with application has been accepted by the Bank. It is further submitted that in
view of Section 13 (8) of the Act, since the entire outstanding dues have been tendered to the
respondent-Bank, the secured asset is not liable to be sold or transferred and no further step is liable
to be taken by the Bank in respect of the secured asset.

9. The thrust of the argument of the learned counsel for the petitioner is that since the
petitioner had already tendered the total outstanding dues by means of a bank draft, the creditor
Bank cannot now proceed any further with the sale or transfer of the secured asset and the liability
of the petitioner is to be written off in view of the Section 13 (8) of the Act.

10. Section 13 (8) of the Act reads as under.

"13. (8) If the dues of the secured creditor together with all costs, charges and
expenses incurred by him are tendered to the secured creditor at any time before the date fixed for
sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no
further step shall be taken by him for transfer or sale of that secured asset."

11. A bare reading of the aforesaid provision goes to show that requirement is, actual
tender of the outstanding dues including all costs, charges and expenses by the debtor to the
secured creditor at any time, before the date fixed for sale or transfer. It is only when the actual
5 All. Raksha Ram (Jail Appeal ) Vs State Of U.P.

839
 tender is made to the secured creditor before the date fixed for sale or transfer, the provision places a
restriction on the right of the secured creditor to proceed with sale or transfer of the secured asset and further
prohibits the secured creditor to take any step for transfer or sale of the secured asset. The language of the
Section is very clear that tender to the secured creditor should be made at any time before the date fixed for
sale or transfer.

12. In the case in hand, admittedly, the respondent-Bank proceeded to auction the secured asset on
30.03.2016 for a sum of Rs.28.05 lacs in favour of Smt. Urmila Dixit and Smt. Manju Dixit. The bid offered
by the auction purchaser was confirmed by the respondent-Bank. From the pleadings in the writ petition
itself, it is clear that the application made by the petitioner before the respondent-Bank tendering a sum of
Rs.4,65,931/- by means of a bank draft was dated 22.04.2016.

13. Admittedly, the application was made much after the auction took place on 30.03.2016. It is also
pertinent to note that petitioner-borrower in his application dated 22.04.2016 has referred the bank draft to be
dated 13.04.2016, but photocopy of the same filed as Annexure 8 to the writ petition goes to show that it is
dated 30th April, 2016, which in itself sufficient to indicate that though the application is dated 22.04.2016,
but it was submitted to the Bank on or after 30.04.2016 when the bank draft was got prepared.

14. Since the tender of the outstanding dues has been made by the petitioner on or after the auction
sale of the secured asset held on 30.03.2016, the same does not confirm to the conditions prescribed by subSection (8) of the Act that tender should be made at any time before the date fixed for sale or transfer.

15. In view of the fact that since the petitioner tendered the outstanding dues
to the respondent-Bank subsequent to the holding of the auction on 30.03.2016, hence, he is
disentitled to claim benefit of Section 13 (8) of the Act and, thus, the relief prayed for in the writ petition is
not liable to be granted.

16. Writ petition, accordingly, fails and stands dismissed.

17. However, in the facts and circumstances, we do not make any order as to costs.
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APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 30.05.2016

BEFORE

THE HON'BLE ARVIND KUMAR MISHRA-I, J.

Criminal Appeal No.- 267 Of 2012

Raksha Ram (Jail Appeal ) ...Appellant
Versus
State Of U.P. ...Respondent