Recovery proceedings and the auction against a dead person are bad in law. : Allahabad High Court

Allahabad High Court in Authorized Officer, Sbi Vs Rakesh Singh and Another (WRIT – C No.- 23199 of 2020) learned bench led by HONOURABLE JUSTICE SIDDHARTHA VERMA held that Recovery proceedings and the auction against a dead person are bad in law.

FACTS OF THE CASE: The respondent, Rakesh Singh along with his father and mother Kanti took a housing loan from the petitioner-Bank. The mother pledged her property as collateral security. When they failed to pay the loan, the Bank issued a demand notice and demanded a sum of Rs.16,34,145.77. Thereafter a notice for possession was issued and the property was taken. The mother along with the Rakesh and the wife filed a writ petition for the quashing of the recovery notice. It was also prayed that the Bank may not take actual physical possession of the property. This writ petition was dismissed on 10.7.2018 as being premature. After this, the respondents filed another writ petition which got dismissed because Kanti Devi died. The Bank issued a sale notice and scheduled the auction. Since the borrower Kanti Devi who was also a person who had kept her personal property as collateral security had expired, Rakesh informed the Bank to defer the auction. The Bank did not defer the auction and the property of Kanti was auctioned.

COURT’S OBSERVATION:  Hon’ble court opined that the owner of the property Kanti Devi had died and since the legal heirs and representatives had not been brought on record, the auction was definitely erroneously done and so was the sale certificate issued erroneously. The proceeding conducted against a dead person is bad in law.

Further, the borrower/guarantor always had the right to get the dues paid off before the auction of the property was done as till the auction, no third party right had been created. Under such circumstances, no interference is warranted in the writ petition.

JUDGEMENT: Stating the aforementioned observations the court dismissed the petition filed by the Petitioner-Bank.



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