9911796707
TMI Blog2007 (11) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered opinion that positive directions as prayed for normally cannot be issued by a writ Court, especially when the Banking Institution had taken such a stand in the counter affidavit filed specifying the Rules and also the conditions made in the publication in this regard. Hence, this Court is thoroughly satisfied that the writ petition is devoid of merit. - W.P. No.2755 of 2007 - - - Dated:- 29-11-2007 - P.S. Narayana, J. C. Kodanda Ram for the Petitioner . C H Shiva Reddy and C.V. Rajeeva Reddy for the Respondent . ORDER This Court issued Rule nisi on 19.02.2007. 2. Heard Sri C. Kodandaram, learned counsel representing the writ petitioner, and Sri Ch. Shiva Reddy representing Sri C.V. Rajeeva Reddy, learned counsel representing the respondents. 3. Sri C. Kondaram, learned counsel representing the writ petitioner, had taken this Court through the respective pleadings of the parties and also had drawn the attention of this Court to the relevant rules governing the field and would maintain that even in the light of Section 64 of the Sale of Goods Act, 1930 since the process of putting and process of sale had been completed, a right had acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Siva Kumar, Smt. K. Pankaja Valli, Sri K. Rama Mohan Rao and Miss P. Radha, all residents of Vijayawada, who were guarantors to M/s. Saswat Agencies, M/s. Rithvik Enterprises and M/s. Prakrit Motors to repay the loan amount. As neither the borrower nor the guarantors paid the amounts, the 2 nd respondent took possession of the secured asset in Plot No.198, 199, 198/1 and 199/1 in R.S. No.153 and 154, Jawahar Autonagar, Patamata, Vijayawada in an extent of 1997 sq. yards. Subsequently, the 2 nd respondent again in exercise of the power under section 13(4) of the Act read with Rule 8 issued a notice giving 30 days time to the borrower to clear the liabilities and redeem the property mortgaged to the Bank. Further, it is averred that since none of the borrower or guarantors came forward to pay the amounts within the time prescribed under the Act, the 2 nd respondent having obtained the estimated value of the mortgaged property proposed to sell the same in exercise of powers under Rule 8(5) of the Rules. Accordingly, the 2 nd respondent issued public notice on 10.12.2006 in Hindu and Eenadu Newspapers calling for tenders. The terms and conditions of sale as can be seen from the Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of his higher authorities accepting the bid does not arise. The 2 nd respondent is alone vested with the power to confirm the auction sale and having once confirmed the auction in favour of the petitioner, the 2 nd respondent is precluded in stating that the same has to be again confirmed by his higher authorities. Even otherwise, the discretion given to the 2 nd respondent under the Act to reject the auction price is also very limited. The proviso to Rule 9(2) of the Rules specify the circumstances under which a sale can be rejected and admittedly, the present case does not fall under the exceptions carved out in the proviso. It is stated that the respondents having confirmed the auction under Rule 9(2) of the Rules should have proceeded under Rule 9(6) of the Rules for issuance of Sale Certificate after receiving the balance Bid Price. There is no reason why the confirmed sale should be stopped at the concluding stage, as such, the action of the respondents in not acting upon the auction confirmation letter dated 10.01.2007 is arbitrary, illegal and contrary to the terms and conditions of Tender and ultravirus the provisions of the Act and in violation of Article 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision not to confirm the sale. Further, it is averred that as per Rule 9(2) of the Rules, the sale shall be confirmed in favour of the purchaser who has offered highest sale price in his sale bid to the authorized officer and shall be subject to confirmation by Secured Creditor. Further, as per Rule 9(6) of the Rules, on confirmation of sale by the secured creditor and if the terms of payment are complied with, the authorized officer shall issue a certificate of sale. The authorized officer and secured creditor are not one and the same authority. Therefore, it has been stipulated in the notice of sale published in the newspapers on 10.12.2006 that the sale is subject to confirmation by the Bank (Secured creditor). The 2 nd respondent by letter dated 09.02.2007 brought to the notice of the petitioner that the higher authorities of the Bank have not confirmed the sale, which is in accordance with the notice of sale published in newspapers on 10.12.2006 that the sale is subject to confirmation by the Bank. A copy of the said letter was marked to Sri B.V. Sivachandra Rao, who is the joint bidder. It is also stated that the public notice for sale of the impugned property was published ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k has also offered to refund the amount deposited by both of them. Further, it is stated that the respondent Bank has got every right to reject the tender or cancel the auction at any stage without assigning the reasons as per sale notice dated 10.12.2006 published in newspapers. Further, it is stated that the Secured Creditor i.e., Zonal Office of the Bank is the ultimate authority to decide and confirm the sale through the authorized officer. The authorized officer is only the authority to initiate and proceed under the Act as per the directions of the Secured Creditor i.e., Zonal Office of the Bank. As per the Sub-Rule (2) of Rule 9 of the Rules, it is categorically stated that the offer of the highest bidder to purchase the secured asset shall be subject to the confirmation by the Secured creditor. Therefore, since Zonal Office of the bank is the highest authority who is the secured creditor, the respondent has informed that the sale is not confirmed by them. Unless the sale is confirmed by the secured creditor, the auction purchaser has no right to make any claim for sale of the Secured assets and for issuance of the sale certificate in his favour under the Act and the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include, - ( a )the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; ( b )the secured debt for recovery of which the property is to be sold; ( c )reserve price, below which the property may not be sold; ( d )time and place of public auction or the time after which sale by any other mode shall be completed; ( e )depositing earnest money as may be stipulated by the secured creditor; ( f )any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property. (7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorized officer deems it fit, put on the web-site of the secured creditor on the Internet. (8) Sale by any method other than public auction or public tender, shall be on such terms as may be settled between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. (8) On such deposit of money for discharge of the encumbrances, the authorized officer may issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly. (9) The authorized officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not." Section 64 of the Sale of Goods Act reads as hereunder : "In the case of sale by auction (1) where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale; (2) the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) LEARNED counsel for the respondents laid such emphasis on the fact that none of the bid-sheets contains signatures of the D.F.O. at the appropriate bottom portion of the sheet. The contention is that the sales may be completed only the D.F.O. signing the bid-sheet in token of acceptance of the bids. The above contention, in our opinion, has no legal force and gets no support from the terms of the auction conditions. The auction-conditions nowhere provide that signing of bid-sheet by the highest bidder is a formality to be observed so as to bind him at his bid, after acceptance of the bid by the auctioneer. Postponement of signing or non-signing of bid-sheet by the auctioneer, after closures of the auction, is of no legal consequence and the sale is completed on signing of the bid-sheet by the bidder, as provided in Section 64 of the Act. The Division Bench case of Darshan Singh v. State of M.P., M.P.No.2881, decided on 30-3-81, is on converse facts. There, the sales were held complete, although the bidders, who were willing to sign the bid-sheet, had not signed them. See the following observations in Darshan Singh's Case ( supra ) : "the learned Government Advocate submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, by the D.F.O. was inconsequential in law and, therefore, did not permit the D.F.O. to repudiate the sales on his second thought. Even it, as contended by the respondents, the facts pleaded by them are accepted as true that the D.F.O. found that the petitioners had formed a "ring" in mutual benefit to avoid competition, the stage to withdraw the lots from sale or to reject the bids, was before making formal announcement of closure of auction and permitting signing of bid-sheets by the successful bidders. Once the bid was knocked down, the auction was announced as closed and bid-sheets were signed by the successful bidders, the sales were completed. The D.F.O. was thereafter powerless to retrace his step and repudiate the sale for good or bad reason. This is the clear effect of the provisions of Section 64 of the Act and the contents of the auction conditions. Another interpretation, as sought to be placed on behalf of the respondents, on the terms of auction-conditions, will result in loss of credibility of public-auctioning-authorities, more so where the highest bidder is compelled to stand by the bid offered and to incur obligation with risk of forfeiture of his earnest ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
