2021 (1) TMI 1308 - SC - Indian Laws

Failure of the Appellant-M/s. Esjayee Impex Pvt. Ltd. to repay a Loan to Canara Bank and the consequent proceedings initiated by the Bank under the SARFAESI Act, 2002 - handing over possession of Secured Assets to Canara Bank in respect of an immovable property - HELD THAT - The aspect of possession by the Auction Purchaser was already taken care of by our Order, dated 11.9.2020 recording that possession was handed over to the Auction Purchaser in pursuance to a Letter, dated 6.11.2019 but the backside portion was being used to store goods of the original Owners preventing full enjoyment of the property - It is also noticed that in case the Auction Purchaser was to continue to enjoy the property and the Petitioner(s) defaulted, one week's time would be granted to remove what has been stored in the back portion. Thus, the Bank will ensure that those Goods are removed within one week from today to facilitate unhindered enjoyment of the possession by the Auction Purchaser. Learned Counsel for the Bank agreed that the Sale Certificate has to be further validated and assured that the needful will be done within two weeks. However, a submission was made that the Sale Certificate was then to be handed over to the Registering Authority for registration and payment of Stamp Duty. The mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the Authorised Officer of the Bank under the SARFAESI Act to hand over the duly validated Sale Certificate to the Auction Purchaser with a copy forwarded to the Registering Authorities to be filed in Book I as per Section 89 of the Registration Act - SLP dismissed.

Summary

Issues:
1. Failure to repay a loan to Canara Bank under the SARFAESI Act.
2. Appellant's challenge to the order regarding possession of secured assets.
3. Auction purchaser seeking refund and possession of the property.
4. Appellant's non-compliance with court orders regarding deposit of amount.
5. Validity and perfection of the sale certificate for the auction purchaser.

Analysis:
1. The case involved the failure of the Appellant to repay a loan to Canara Bank under the SARFAESI Act, leading to proceedings for possession of secured assets. The Chief Metropolitan Magistrate ordered the handover of possession of the property to the Bank on 24.2.2019.

2. The Appellant challenged this order by filing S.A. No. 139 of 2019 before the Debt Recovery Tribunal-1 in Chennai, resulting in a status quo order dated 28.5.2019. The matter escalated to the Madras High Court through a writ petition filed by Canara Bank due to the status quo hindering the transfer of possession to the Auction Purchaser.

3. The Bank had sold the secured assets to the Auction Purchaser, who paid a portion of the auction price. The Auction Purchaser sought a refund of the deposit with interest and requested time to pay the balance amount due to ongoing criminal proceedings by the borrower.

4. The court issued interim directions for the Auction Purchaser to deposit the balance auction amount, with a stipulation for police aid if necessary. The Appellant challenged this order, leading to subsequent orders for depositing the amount, with deadlines extended due to COVID-19 issues. However, the Appellant failed to comply with the orders, resulting in the dismissal of the Special Leave Petitions.

5. The court addressed the issue of validating the sale certificate for the Auction Purchaser to perfect their title. It was clarified that the bank's authorized officer must hand over the validated sale certificate to the Auction Purchaser, with a copy forwarded to the registering authorities for registration as per the Registration Act.

In conclusion, the Supreme Court dismissed the Special Leave Petitions due to the Appellant's non-compliance with court orders and failure to deposit the required amount. The court also provided directions regarding the validation and registration of the sale certificate for the Auction Purchaser to perfect their title to the property.