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TMI Blog2014 (4) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... sure, that such sale of the asset provides maximum benefit to the borrower by the sale of such asset. Therefore, the secured creditors are expected to take bonafide measures to ensure that there is maximum yield from such secured assets for the borrowers. Sale consideration is only ₹ 10,000/- over the reserve price whereas the property was worth much more. It is not necessary for us to go into this question as, in our opinion, the sale is null and void being in violation of the provision of Section 13 of the SARFAESI Act, 2002 and Rules 8 and 9 of the Rules, 2002. letter dated 13.11.2006 sent by the borrower to the Bank clearly depicted that the borrower had waived his right under Rule 9 (1) and the provisions contained in Rule 9(3) and Rule 9(4) as well. It was also found that at the time of auction sale on 11.1.2006, the borrower was present but did not object to the auction being held before expiry of 30 days from the date of which public notice of sale was published. Not only this, he agreed that the bid given by the auction purchaser, which was the highest bid, be accepted as the auction purchaser happened to be his known person. Another important feature which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. - Civil Appeal No. 4679 of 2014 [Arising out of Special Leave Petition (CIVIL) No. 35168 OF 2011], C.A.No.4680/2014 (@ SLP(C) No. 6226 of 2012) - - - Dated:- 22-4-2014 - Surinder Singh Nijjar And A. K. Sikri,JJ. JUDGMENT A. K. Sikri,J. 1. Leave granted. 2.Respondent No. 1 herein had taken loan from Syndicate Bank (hereinafter to be referred as the 'Bank'). Because of its default in repaying the said loan, the bank took action under the provisions of the Securitization and Re-construction of Financial Asset and Enforcement of Security Interest Act, 2002 (SARFAESI Act). After taking formal possession of the mortgaged property which was given as a surety for due discharge of the loan, the said property was put to sale. The appellant herein was the highest bidder whose bid was accepted resulting into issuance of the sale certificate. Respondent No. 1 (hereinafter referred to as the 'borrower') challenged the said sale by filing application before the Debt Recovery Tribunal (DRT). This application was dismissed. The borrower filed Writ Petition before the High Court of Karnataka against the order of DRT. The learned Single Judge dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 fixing the auction date as 15.10.2004. Reserve Price was fixed at Rs. 3.50 crores. This notice, admittedly, was for more than 30 days. At that stage, the borrower filed the Writ Petition in the High Court challenging the said notice 3 days before the proposed sale i.e. on 12.10.2004. Though the High Court did not grant stay against the scheduled auction, it granted stay against confirmation of sale. As per the appellant, in view of the said partial stay order, nobody came forward to participate in the auction and the exercise went into futility. 6.The Writ Petition filed by the borrower was dismissed by the High Court on 28.2.2005 upholding notice dated 27.7.2004 issued under Section 13(4) of the SARFAESI Act. In the meantime, it came to the notice of the Authorised Officer of the bank that there were encumbrances in the form of statutory liabilities to the tune of Rs. 43,01,100/- payable by the borrower and, therefore, the Reserve Price fixed at Rs. 3.50 crores had to be reduced. The borrower was informed about it. The Bank issued fresh notice on 9.3.2005 for auction of the property fixing date of auction as 21.3.2005 with reduced Reserve Price at Rs. 2.39 crores. 7.In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was in the sum of Rs. 49.91 lakhs. In this way the appellant made total payment of Rs. 283,39,735/-. On receiving the full consideration as per the auction, sale deed conveying the property was executed in favour of the appellant on 26.5.2006 followed by issue of the sale certificate. 10.It would be relevant to mention here that the borrower had filed the Writ Petition 6471/2006 challenging the auction notice. However, it withdrew this Writ Petition on 1.6.2006 with liberty to avail alternate remedy to challenge the auction that is provided under SARFAESI Act. Thereafter, it filed the appeal under Section 18 of the SARFAESI Act before the DRT. This appeal was dismissed by the DRT on 5.7.2007 with the observations that the borrower was only adopting dilatory tactics. This order was challenged by the borrower in the form of writ petition filed before the High Court of Karnataka, Circuit Bench, Dharwad. The learned Single Judge echoed the reasoning given by the DRT and dismissed the Writ Petition vide orders dated 19.9.2011. Against this order, the borrower approached the Division Bench by filing intra court appeal which has been allowed by the High Court. The sale in question is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authorised Officer and shall be subject to confirmation by the secured creditor. Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of Rule 9. Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. (3) On every sale of immovable property, the purchaser shall immediately pay a deposit of 25 percent of the amount of the sale price, to the property shall forthwith be sold again. (4) The balance amount of purchase price payable shall paid by the purchaser to the Authorised Officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agree upon in writing between the parties. (5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold. (6) On confirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not Marathi. (iv)As per the sale notice, the appellant was required to deposit entire sale consideration within 15 days from the date of confirmation of the sale. In the counter, the Bank has stated that the appellant has made the payment within the time allowed by the Authorised Officer. When the sale consideration is Rs. 2.16 crores, the bank was required to give details of the payment made by the appellant in order to hold whether the payment was made within the time stipulated in the sale and whether the time was extended by the Officer by accepting the reasonable cause shown by the purchaser and whether the purchaser is bonafide purchaser or not. Unfortunately, the bank has failed to produce these documents. 13. We may point out, at the outset, that the opinion of the High Court on the interpretation of sub-Rules (5)and (6)of Rule 8 of the Rules is flawless. In this behalf it would be pertinent to mention that there is an imprimatur of this court as identical meaning is assigned to these provisions. In the case of Mathew Varghese v. M. Amritha Kumarr Ors.; 2014 (2) SCALE 331. The aforesaid judgment has been followed by this very Bench of the Court in C.A. No. 3865 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary to ensure that the process of sale will ensure that the secured assets will be sold to provide maximum benefit to the borrowers. The notice is also necessary to ensure that the secured creditor or any one on its behalf is not allowed to exploit the situation by virtue of proceedings initiated under the SARFAESI Act, 2002. Thereafter, in Paragraph 27, this Court observed as follows:- 27. Therefore, by virtue of the stipulations contained under the provisions of the SARFAESI Act, in particular, Section 13(8), any sale or transfer of a SECURED ASSET, cannot take place without duly informing the borrower of the time and date of such sale or transfer in order to enable the borrower to tender the dues of the SECURED CREDITOR with all costs, charges and expenses and any such sale or transfer effected without complying with the said statutory requirement would be a constitutional violation and nullify the ultimate sale. 14.As noticed above, this Court also examined Rules 8 and 9 of the Rules, 2002. On a detailed analysis of Rules 8 and 9(1), it has been held that any sale effected without complying with the same would be unconstitutional and, therefore, null and void. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale cannot be voided. 15. After recapitulating the facts which have already been narrated above, his submission in this behalf was that the borrower had, in the present case, delayed the sale of the property and he was not entitled to take advantage of its own wrong. He dilated this submission by pointing out that first notice for auction which was published on 11.9.2004, clear 30 days notice was provided therein as the date of auction was fixed as 15.10.2004. However, conduct of the borrower in filing frivolous Writ Petition and obtaining interim order therein, desisted any intending purchaser from coming forward and participating in the auction. Further, even when second notice for auction sale was published on 28.2.2005 and notice of less than 30 days was given therein fixing the date of auction as 23.1.2005, the borrower never challenged the validity of this notice. Instead, at that stage the borrower expressed its intention to settle the matter by offering OTS proposal. The bank succumbed to this request of the borrower treating the same to be a bonafide offer and even accepted the OTS proposal of the borrower. Here again the borrower committed default and never remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. The Single Judge of the High Court quashed the sale certificate issued in favour of the auctionpurchaser on the ground that the mandatory requirements of Rule 9 of the 2002 Rules were not followed and, therefore, despite the remedy of appeal to the borrower provided under Section 17 of the SARFAESI Act, a case was made out for interference under Article 226 of the Constitution, which was affirmed by the Division Bench of the High Court. The Bank and the auction-purchaser had filed the appeals challenging the judgments of the High Court. 17.This Court, after interpreting the provisions of Rule 9, returned a categorical opinion that the said provision is mandatory in nature. It was further held that even though this Rule is mandatory, that provision is for the benefit of the borrower. The Court held that it is a settled position in law that even if a provision is mandatory, it can always be waived by a party (or parties) for whose benefit such provision has been made. The provision in Rule 9(1) being for the benefit of the borrower and the provisions contained in Rule 9(3) and Rule 9(4) being for the benefit of the secured creditor (or for the benefit of the borrower), the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments. Therefore, we see no force in the contention of the learned Senior Counsel of the appellant that judgment in Mathew Varghese (supra) goes contrary to the law laid down in Ikbal's case. 20. The only question, therefore, is as to whether it can be held that the borrower in the present case had also waived the mandatory provisions of Rules 8 and 9 of the Rules. We may remark that it is expressly clarified in Ikbal's case itself that the question whether there is a waiver or not depends on the facts of the each case and no hard and fast rule can be laid down in this regard. 21. We would like to point out at the outset that the argument of waiver was not raised by the appellant in the High Court. In fact, this ground is not even raised in the Special Leave Petition. The appellant's case rested with hammering the blameworthy conduct of the borrower by relying upon the observations of the DRT to the effect that the borrower had been adopting dilatory tactics and delaying the recovery of amounts due to the bank somehow or the other. It was also argued that the appellant is a bonafide purchaser and equities are in favour of the appellants which should be balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant . 40. Inaction in every case does not lead to an inference of implied consent or acquiescence as has been held by this Court in P. John Chandy Co. (P) Ltd. v. John P. Thomas. Thus, the Court has to examine the facts and circumstances in an individual case. 41. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. (Vide Dawsons Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha, Basheshar Nath v. CIT, Mademsetty Satyanarayana v. G. Yelloji Rao, Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh, Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn., Sikkim Subba Associates v. State of Sikkim and Krishna Bahadur v. Purna Theatre.) 42. This Court in Municipal Corpn. of Greater Bombay v. Dr Hakimwadi Tenants Assn. considered the issue of waiver/acquiescence by the non-parties to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted by the borrower in respect of first two auctions, whether that conduct of the borrower would amount to waiving the mandatory requirement of publishing subsequent notice dated 27.4.2006 fixing the date of auction as 8.5.2006? Our answer has to be in the negative. The aforesaid conduct cannot be taken as waiver to the mandatory condition of 30 days notice for auction as well as other requirements. For examining the plea of waiver, we will have to see as to whether by implied or express actions, the borrower has waived the aforesaid mandatory requirement when the property was put to sale. We do not find, nor it is suggested, even the slightest move on the part of the borrower in this regard which may amount to waiver either express or implied. On the contrary, when notice dated 27.4.2006 was published, the borrower immediately filed the Writ Petition 6471 of 2006 challenging the auction notice. Thus, its conduct, far from waiving the aforesaid requirement, was to confront the bank by questioning its validity. It is a different matter that it had to withdraw the said writ petition in view of availability of alternate remedy. Immediately, it filed application under Section 18 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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