9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (10) TMI 1457 - HC - Indian LawsAttachment of the properties on default of return of deposits - Prayer for quashing and setting aside the auction process in respect of sale of the subject property - challenge to auction in which the Petitioner itself is declared as successful auction purchaser - alleged suppression of material facts in contravention of section 55 (1) (a) of the Transfer Of Property Act, 1882 - HELD THAT - The attachment of the properties on default of return of deposits u/s. 4 of the MPID Act starts with a non-obstante clause and it provides that when the Government is satisfied that any Financial Establishment has failed to return the deposit after maturity or on demand by the depositor, or to pay interest or other assured benefit, or to provide the service promised against such deposit, or where the Government has reason to believe that any Financial Establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them and if the Government is further satisfied that such financial Establishment is not likely to return the deposits or pay the interest or other benefits assured, the Government may in order to protect the interest of the depositors, issue an order in the Official Gazette attaching the money or other property believed to have been acquired by such Financial Establishment either in its own name or in the name of any other person from out of the deposits collected by such Financial Establishment. In the present case, Respondent No. 3 is duly constituted Competent Authority and it has exercised power u/s. 5(3) by applying to the designated Court and subject property was attached. The Designated Court u/s. 6 of the MPID Act has passed an order after investigation, to release the subject property from attachment u/s. 7(6) of the MPID Act - It is therefore clear that the subject property was first vested in the Competent Authority by operation of law and thereafter sold through the auction under process of law and the attachment of ED has been lifted by the Designated Court u/s. 7(6) of the MPID Act. It is therefore clear that the enforcement of right of the secured creditor flows from an agreement / instrument / document and secured asset means property on which security interest is created. Security interest means right, title or interest of any kind upon the property created in favour of the secured creditor including mortgage, charge, hypothecation, assignment or any right, title or interest of any kind on tangible asset retained by the secured creditor etc. The very basis of the Petitioner s case seeking refund of the purchase price paid, is that the subject property cannot be utilized by the Petitioner. This argument is based on the alleged non-availability of the title deeds. Once the subject property vested in the Competent Authority and is sold to the Petitioner under due process of law and once the attachment of ED is lifted by the order of designated MPID Court, nothing more is required, for the Petitioner to enjoy the subject property. Having held that the Petitioner is not entitled to refund of the principal amount (purchase price paid), it is not necessary to labour any further about grant of interest as claimed by the Petitioner or otherwise. For the same reason, even the Petitioner s prayer for damages / compensation is only stated to be rejected. There are no merits in the Petition and the same is accordingly dismissed.
Issues Involved:
1. Quashing of the auction process and setting aside the sale of the subject property. 2. Alleged suppression of material facts and contravention of Section 55(1)(a) of the Transfer of Property Act, 1882. 3. Claim for damages and refund of the purchase price with interest. 4. Applicability of the principle of "caveat emptor" and "caveat venditor." 5. Availability of an alternate remedy under Section 11 of the MPID Act. Detailed Analysis: 1. Quashing of the Auction Process: The Petitioner, a private limited company, sought to quash the auction process for the sale of a property in New Delhi, claiming that the auction was flawed due to suppression of material facts. The Petitioner was declared the successful bidder and paid the full purchase price. However, the Petitioner later discovered that the property was under attachment by the Enforcement Directorate (ED) and the Economic Offences Wing (EOW). The Court noted that the subject property was vested in the Competent Authority by operation of law and sold through auction following due process. The attachment by the ED was lifted by the Designated Court, and the property was sold with all claims, liabilities, and encumbrances, as per the auction terms. 2. Alleged Suppression of Material Facts: The Petitioner alleged that the Respondent failed to disclose material defects in the property, violating Section 55(1)(a) of the Transfer of Property Act. However, the Court observed that the auction notice contained explicit caution and inspection clauses, advising bidders to conduct due diligence regarding the property's title and encumbrances. The auction was conducted on an "as is where is" basis, and the Petitioner was deemed to have accepted these terms by participating in the auction. 3. Claim for Damages and Refund: The Petitioner sought damages of Rs. 5 crore and a refund of the purchase price with interest, arguing that the property could not be utilized due to the lack of title documents. The Court dismissed this claim, noting that the Petitioner had voluntarily participated in the auction with full knowledge of the property's encumbrances. The sale certificate and possession receipt were issued to the Petitioner, and the attachment by the ED was lifted, allowing the Petitioner to enjoy the property. 4. Principle of "Caveat Emptor" and "Caveat Venditor": The Court emphasized the principle of "caveat emptor" (buyer beware) in the context of the auction. The Petitioner was bound by the auction terms, which required independent verification of the property's title and encumbrances. The Court rejected the application of "caveat venditor" (seller beware), as the Competent Authority, a statutory body, conducted the auction transparently and in accordance with the law. 5. Availability of Alternate Remedy: The Respondent argued that the Petition was not maintainable due to the availability of an alternate remedy under Section 11 of the MPID Act. The Court agreed, noting that the Petitioner had not pursued an appeal against the designated MPID Court's order, which had attained finality. The Court found no grounds to exercise its writ jurisdiction under Article 226 of the Constitution. Conclusion: The Court dismissed the Petition, finding no merit in the claims for quashing the auction, refund, or damages. The Petitioner was held to be bound by the auction's terms and conditions, and the principle of "caveat emptor" was applicable. The Court also noted the availability of an alternate remedy under the MPID Act, which the Petitioner had not pursued. No order as to costs was made.
|
