2024 (6) TMI 381 - SC - Indian Laws

Service of auction sale notice - auction sale - Default in repayment of loan - HELD THAT - The respondent was fully aware of the auction notice dated 30.11.2012. He had, within 14 days thereafter, filed a writ petition before the High Court and was aware of the auction notice from before. He had also entered into an agreement with Abdul Haleem Siddiqui, who later on became the auction purchaser. The respondent was present at the time of the auction. The auction purchaser, has constructed flats on the property and transferred the same to various third parties, though it is stated that some flats are yet to be sold. At the same-time, there is no proof that notice dated 30.11.2012 was served by the appellant on the respondent. As per the appellant, after adjusting the amount due and payable by the respondent, a sum of Rs.22,53,004/- (rupees twenty two lakhs fifty three thousand and four only), is due and payable and has been with them since 21.03.2013. By letter dated 21.03.2013, the appellant had sent a cheque of the aforesaid balance amount to the respondent, which was not accepted - we cannot be oblivious to the fact that the respondent was entirely aware of the auction process in terms of the notice dated 30.11.2012. The auction purchaser had constructed flats, which had been sold to various third parties. The impugned order dated 02.07.2019 passed by the High Court and the order passed in review application are set aside. The sale by the appellant in favour of Abdul Haleem Siddiqui is upheld and confirmed. Appeal allowed.

Summary

Issues involved: Loan default, SARFAESI Act proceedings, auction sale challenge, service of auction notice, possession of property, settlement offer, auction purchaser's actions, legal interpretation of rules.

Loan default and SARFAESI Act proceedings: In 1996, the respondent took a loan from the Cooperative Bank for a firearms business, which later turned into a Non-Performing Asset. Despite various attempts at settlement, the respondent failed to pay the outstanding amount, leading to possession of the property by the bank under SARFAESI Act provisions.

Challenge to auction sale: The respondent challenged the auction sale of the property, claiming lack of proper notice service. However, the court noted that the respondent was aware of the auction and had even participated in it, along with entering into an agreement with the eventual auction purchaser.

Possession and auction proceedings: The bank took possession of the property and conducted an auction where the highest bidder, Abdul Haleem Siddiqui, acquired the property. Subsequently, the respondent expressed willingness to pay a partial amount, which was rejected by the bank.

Legal interpretation and settlement: The respondent relied on a legal precedent regarding the mandatory nature of notice service rules. The court acknowledged the lapse in record-keeping by the bank but also noted the respondent's awareness of the auction process. In a final settlement, the court directed the bank to pay a specified amount to the respondent, considering all circumstances.

Conclusion: The court set aside previous orders, confirmed the sale to the auction purchaser, and directed the bank to make a payment to the respondent in settlement. The judgment highlighted the need for proper notice service while balancing the respondent's awareness of the auction proceedings.