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2014 (1) TMI 1342 - HC - Companies LawValidity of auction sale - Auction of mortgaged property of loan guranter - Petitioner has also prayed to declare the auction in question as nullity. Since auction took place during the pendency of the review application - during the pendency of the case before the Tribunal the auction took place, the petitioner raised finger over the several illegalities committed in the auction proceeding - Tribunal rejected petitioner s application holding that auction had already taken place before passing the final impugned judgement and as such the irregularities in auction is not a new fact on which basis impugned order be reviewed - Held that - Tribunal has not appreciated the petitioner s claim of impleadment and amendment of application correctly as the material information provided to the petitioner regarding irregularities happened in the auction are the relevant and necessary facts which could have been taken on record and since, if the auction is set-aside the same shall prejudice the right of the auction purchaser. I am of the view that the application for impleadment of auction purchaser could have also been allowed. The several irregularities in auction which has been pointed out before this Court require adjudication by the tribunal itself. Order dated 29.11.2010 passed on the application for review is quashed and Review application is allowed and the order dated 03.01.2008 passed in S.A. No. 98 of 2007 is reviewed with the direction that the petitioner s application for impleadment and amendment shall stand allowed to make necessary amendment in S.A. No. 98 of 2007 and thereafter it shall be heard and decided a fresh by the Debt Recovery Tribunal, Lucknow after providing opportunity of hearing to the parties concerned - Since the property auctioned is a dwelling house of the petitioner and the stay order passed by this Court is operating till date, I hereby provide that meanwhile the petitioner shall not be dispossessed from the house in question - Decided in favour of petitioner.
Issues Involved:
1. Legality of the auction process conducted by Canara Bank. 2. Maintainability of the writ petition in light of alternative remedies. 3. Alleged irregularities in the auction process. 4. Petitioner's right to amend and implead the auction purchaser in the review application. Detailed Analysis: 1. Legality of the Auction Process Conducted by Canara Bank: The petitioner challenged the order dated 29.11.2010 by the Debt Recovery Tribunal (DRT), Lucknow, and the sale certificate dated 18.1.2008 issued by Canara Bank. The petitioner argued that the auction process was flawed and did not comply with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Security Interest (Enforcement) Rules, 2003. Specifically, the petitioner claimed that the bank did not deliver a possession notice to the borrower or publish it in newspapers as required under Rule 8. Furthermore, the petitioner alleged that the auction purchaser did not deposit 25% of the bid amount immediately after the auction, nor did they deposit the remaining 75% within the stipulated fifteen days, thereby violating Rules 9 (3), (4), and (5) of the Rules. 2. Maintainability of the Writ Petition in Light of Alternative Remedies: The respondent-Bank and auction purchaser objected to the maintainability of the writ petition, arguing that the petitioner had an alternative remedy under Section 17 of the SARFAESI Act. They cited precedents, including the Supreme Court's decision in United Bank of India Vs. Satyawati Tondon, which emphasized that the High Court should not entertain a writ petition if an effective alternative remedy is available. The petitioner countered that the High Court had already considered and rejected this objection at the admission stage, and the Supreme Court had affirmed the High Court's interim order, thus the issue of maintainability should not be re-litigated. 3. Alleged Irregularities in the Auction Process: The petitioner pointed out several irregularities in the auction process, including the delayed deposit of the bid amounts by the auction purchaser and the lack of proper notice under Rule 8. The petitioner obtained information under the Right to Information Act, 2005, which indicated that the auction purchaser did not comply with the mandatory requirements for depositing the bid amounts. The petitioner argued that these irregularities rendered the auction null and void and requested that the auction be declared a nullity. 4. Petitioner's Right to Amend and Implead the Auction Purchaser in the Review Application: The petitioner sought to amend the review application and implead the auction purchaser, but the DRT rejected these requests. The Tribunal held that the description of the auction was already provided in the counter affidavit, and the irregularities were not new facts warranting a review. However, the High Court found that the Tribunal had not correctly appreciated the petitioner's claims and that the information obtained under the RTI Act was relevant. The High Court quashed the DRT's order dated 29.11.2010, allowed the review application, and directed the DRT to permit the petitioner to amend the application and implead the auction purchaser. The DRT was instructed to hear and decide the matter afresh, providing an opportunity for all parties to be heard. Conclusion: The High Court allowed the writ petition, quashed the DRT's order, and directed a fresh hearing by the DRT after allowing the petitioner to amend the application and implead the auction purchaser. The petitioner was also protected from dispossession from the auctioned property until the matter was resolved.
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