9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 86 - HC - Indian LawsAuction Sale - whether the Fourth Respondent/Appellate Tribunal should have held that the First Respondent/Borrower does not have any right to challenge the Auction Sale and the so-called third party purchaser is only vested with the Equitable Right of Redemption of the said property? - Held that - In the instant case, the auction sale notice was published on 09.07.2004 and in Tamil Daily Dina Thanthi it was published on 10.07.2004. On 26.09.2008, the fresh auction sale notice was published in Indian Express. As such, there were no irregularities in conducting the sale by the Third Respondent/Bank. Also, it is to be noted that sale notice was sent to all the partners of the First Respondent Firm by the Third Respondent Bank through registered post and that apart, notice was affixed in the premises of the First Respondent and published in newspapers. Dealing with the plea that the properties were sold by the Third Respondent/Bank without obtaining the valuation of the property from the Approved valuer , the plea of the Third Respondent/Bank is that it had taken the valuation from the Approved valuer and on that basis only the Upset Price was fixed. Therefore, the contra stand taken on behalf of the First Respondent/Borrower is not accepted by this Court. Insofar as the stand of the First Respondent/Borrower (Firm) is that the Third Respondent/Bank had published the Possession notice only in English Daily and not in Vernacular Language, hence, there is violation of Rule (6) of the Rules, it is to be pointed out that the Third Respondent/Bank in S.A.120 of 2009 before the Debts Recovery Tribunal-III, Chennai, in its order on 09.12.2011 in para 10.12 had stated that the possession notice thus issued by the First Respondent (bank) was served, affixed on the secured assets and also published in two daily newspapers as mandatorily required under Rules 8(1) and (2). It is to be pertinently recalled the words of Robert Frost who said a bank is a place where they would lend you an umbrella in a fair weather and ask for it back when it begins to rain . At this stage, one cannot ignore a very vital fact that unless loans are repaid promptly, Money will not be under circulation and in fact the Banks/Financial Institutions be in great difficulties. Recently, the members of the Public Accounts Committee of Parliament (Panel) were informed that public sector banks are dealing with 2.55 lakhs crores Non Performing Assets or bad loans which means to 5.2% of total gross advances and the members wanted quick action against defaulters. Also, it is represented on behalf of the Third Respondent/Bank, inspite of sale of properties, the First Respondent/Borrower still owe a sum of ₹ 1,56,72,131.19/-. In the present case, after the confirmation of sale, in favour of the Writ Petitioners and issuance of sale certificates, in Law, the Right of Redemption in favour of the First Respondent/Borrower is completely erased. Further, the third party bona fide auction purchasers for valuable consideration in the eye of law are to be protected because of the primordial reason that they should not fall a prey to the vicissitudes of fortunes of the numerous proceedings initiated by the First Respondent/Borrower at all forums. As such, the sale of secured assets by the Authorised Officer of the Bank on 13.08.2004 and 09.04.2009, consequent to the issuance of sale notice dated 09.07.2004 and 26.09.2008 are held legally valid by this Court. Instead, the contrary views taken by the Fourth Respondent/Debts Recovery Appellate Tribunal by allowing the said Appeal through its order dated 22.08.2014 are not just, valid and legally tenable one as held by this Court and the same are set aside by this Court to prevent an aberration of justice and to promote substantial cause of justice. Consequently, all the Writ Petitions succeeds.
Issues Involved:
1. Legality of the auction sale conducted on 13.08.2004. 2. Right of Redemption of the Borrower. 3. Compliance with SARFAESI Act and Rules. 4. Validity of the sale certificates issued to the auction purchasers. 5. Procedural irregularities alleged by the Borrower. Detailed Analysis: 1. Legality of the Auction Sale Conducted on 13.08.2004: The Petitioners argued that the auction sale conducted on 13.08.2004 was valid as the status quo order was not in force on that date. The Court found that the sale conducted on 13.08.2004 was valid since the status quo order was set aside by the Debts Recovery Appellate Tribunal (DRAT) on 12.08.2004, and no specific direction was obtained from the Court to halt the sale. The Court concluded that the sale conducted by the Bank on 13.08.2004 was legally valid. 2. Right of Redemption of the Borrower: The Borrower contended that they retained the right of redemption, which should have been considered. However, the Court noted that the Borrower had not exercised the right of redemption under Section 13(8) of the SARFAESI Act after the issuance of the sale notice dated 09.07.2004. The Court held that the Borrower lost the right of redemption due to their failure to settle the dues and redeem the mortgaged properties. 3. Compliance with SARFAESI Act and Rules: The Borrower alleged non-compliance with the SARFAESI Act and Rules, including non-publication of possession notice in vernacular language and failure to obtain valuation from an approved valuer. The Court found that the Bank had complied with the mandatory requirements under the SARFAESI Act and Rules, including publication of possession notices in newspapers and obtaining valuation from an approved valuer. The Court rejected the Borrower's allegations of procedural irregularities. 4. Validity of the Sale Certificates Issued to the Auction Purchasers: The Petitioners argued that the sale certificates issued to them were valid and made them absolute owners of the properties. The Court held that the sale certificates issued after the confirmation of sale were legally valid. The Court emphasized that the rights of bona fide auction purchasers for valuable consideration should be protected, and the Borrower's right of redemption was extinguished after the confirmation of sale. 5. Procedural Irregularities Alleged by the Borrower: The Borrower claimed that the auction sale was conducted without proper notice and in violation of the status quo order. The Court found that the status quo order was not in force on the date of the auction sale, and the Borrower had failed to challenge the sale notice within the stipulated time. The Court concluded that there were no procedural irregularities in conducting the auction sale and issuing the sale certificates. Conclusion: The Court allowed the Writ Petitions, setting aside the order dated 22.08.2014 passed by the Debts Recovery Appellate Tribunal in RA (SA) No.132 of 2012. The Court held that the auction sales conducted on 13.08.2004 and 09.04.2009 were legally valid, and the sale certificates issued to the auction purchasers were valid. The Borrower's right of redemption was extinguished, and the allegations of procedural irregularities were rejected. The Court emphasized the protection of bona fide auction purchasers and the compliance with the SARFAESI Act and Rules.
|
