Mr. Justice J.M. Malik, Chairperson

1. This appeal preferred by Kotak Mahindra Bank is against the order dated 22.3.2010 passed by the learned DRT.

2. The facts of the case are these. A company known as M/s. Megnostar Telecommunications Pvt. Ltd. through its Directors Mr. Ashwani Nayar and Mr. Venu Nayar availed of certain credit facilities from the appellant Bank. In order to secure these credit facilities, they created equitable mortgage on 4.7.2008 in respect of the entire second floor of the property bearing Municipal No. 2/1/90 admeasuring 123.97 sq. mts. situated in Punjabi Colony, Tehsil Hapur, U.P. along with the present and future superstructure constructed thereon.

3. The said company failed to maintain financial discipline and its account became bad and as a result of which the Bank issued notice under Section 13(2) of the SRFAESI Act to the company, directors and guarantors on 18.12.2008. An O.A. was also filed by the Bank on 5.2.2009 against the company, its directors and the guarantors, which is still pending. The Bank proceeded further under the SRFAESI Act and took over the possession of the property in dispute on 7.2.2010.

4. Mr. Gaurav Vasudeva, the 1 st respondent filed S.A. before the learned DRT and the DRT vide its impugned order directed the 1st respondent to deposit Rs. 7 lakh. Aggrieved by the said order, the appellant Bank has preferred this appeal.

5. I have heard the Counsel for the parties. The Counsel for the appellant has invited my attention towards the copy of the sale deed which was deposited with the appellant Bank vide memorandum of deposit of the title deed dated 4.7.2008. The said sale deed is dated 16.7.2007. It shows that Mrs. Veenu Nayar had purchased the property from Mr. Gaurav Vasudeva for a sum of Rs. 19,32,000/-. It is, thus, clear that the above said two borrowers had created equitable mortgage in favour of the Bank.

6. On the other hand, the Counsel for the 1st respondent, Mr. Gaurav Vasudev, argues that the 1st respondent is in continuous possession of the property in dispute since 12.3.1998 and that the appellant Bank had taken over the possession of the property on Sunday. There is Vodafone installed on the roof of the premises in dispute and he is collecting rental income from the above said tenants, though the main possession of the premises is with the Bank.

7. Ultimately, both the parties agreed that the Bank is not precluded from auctioning the property in question. However, it was submitted that the Bank would first of all get a fresh valuation report in respect of the said property. The 1st respondent would be given a chance to purchase the property in question for the said value. In case he is ready to pay the said amount, the Bank would sell the property to him, keeping in view the provisions of Section 13(4)(d) of the SRFAESI Act. In case the respondent Mr. Gaurav Vasudeva is not ready to pay that much amount, the Bank can auction the property in question, but nothing will debar Mr. Gaurav Vasudeva from bidding in the auction. He will be free to participate and offer his bid.

8. It must be noted that the property in dispute was sold in favour of Mrs. Veenu Nayar for a sum of Rs. 19,32,000/- as back as on 16.7.2007. The valuer will keep this fact in mind while assessing the value of the property in dispute.

9. It ust be kept in mind that the respondent has already deposited Rs. 7 lakh. In case he fails to pay to the Bank as per the valuation or does not want to purchase the property in dispute from the Bank, the said amount of Rs. 7 lakh would be returned to him with simple interest @ 8% p.a. immediately on receipt of money from the auction purchaser. Kotak Mahindra Bank Ltd. is directed to complete all these proceedings within four-and-a-half months from today.

10. Appeal stands disposed of.

11. Copies of this order be furnished to the parties as per law and another copy along with lower Court record be sent to the learned DRT forthwith.