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TMI Blog2016 (1) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.08.2014 in R. A.(SA) No.132 of 2012 passed by the Fourth Respondent/Debts Recovery Appellate Tribunal, Chennai in setting aside the dismissal order dated 09.12.2011 made in S.A. No.120 of 2009 and the Auction Sale conducted on 13.08.2004 and the Sale Certificates dated 09.04.2009 are erroneous one, since it was passed without appreciation of the facts and circumstances of the case. 3. It is the contention of the Learned counsel for the Petitioners that the Fourth Respondent/Appellate Tribunal by virtue of the impugned order dated 22.08.2014 had caused serious prejudice insofar as the sale in favour of the Petitioners which had become absolute, had been set aside without properly considering the evidence on record, documents and pleadings projected by the parties. 4. According to the Learned counsel for the Petitioners, the Petitioners being the successful auction purchasers, do have right to the property and the said right had become absolute on execution of the sale certificates and delivery of possession of the property under the provisions of the SARFAESI Act. Also that, the First Respondent/Borrower had lost its Right of Redemption of the property which was the secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly construed that there were orders of Status Quo when the auction sale was completed on 13.08.2004, holding that the orders of the Debts Recovery Appellate Tribunal, Mumbai was later set aside by this Court in the Writ Petition and hence, status quo continues. 10. Yet another stand of the Petitioners is that the Fourth Respondent/Appellate Tribunal ought to have considered the fact that a Status Quo Order was obtained by the First Respondent/Borrower on 29.07.2004 which was set aside by the Appellate Tribunal through an order dated 12.08.2004 and therefore, the auction was proceeded with on 13.08.2004 as there was no status quo order in operation on that date. Apart from that, this Court while entertaining the Writ Petition against the order of the Debts Recovery Appellate Tribunal had in fact remanded back the matter to the Debts Recovery Tribunal for consideration after setting aside the order dated 12.08.2004 without granting any relief to set aside the sale. 11. The Learned counsel for the Petitioners project an argument that the Appellate Tribunal should have considered the relief sought for in the Writ Petition in W.P. No.24814 of 2004 was only to set aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal held that it was conducted subject to the orders as well as the proceedings and had attained finality on the dismissal of the SA by the Debts Recovery Tribunal-III, Chennai. 15. The Learned counsel for the Petitioners submits that the Petitioners are the successful bidders with the highest bid offer of sale of the properties in regard to item Nos.2, 4 and 1 respectively of the sale notices. All the Petitioners were issued with the necessary sale certificate dated 13.05.2008 by the Second Respondent/Bank and the same were duly registered as document Nos.5379, 5378 and 5380 of 2008 on the file of the District Registrar, Vellore. 16. The Learned counsel for the Petitioners in support of the contentions that the interim order merges with the final order and for all purposes, only the final order would operate referred to the following Hon ble Supreme Court decisions: a) Commissioner of Excise of Delhi V. World Trunks Ltd., [2010 (11) SCC 153] b) Om Prakash Verma Others V. State of Andhra Pradesh Others [2010 (13) SCC 158] c) Dharam Dutt Others V. Union of India Others [2004 (1) SCC 712] d) Gojer Bros. Pvt. Ltd., V. Ratan Lal Singh [1974 (2) SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, pending Writ Petition, the First Respondent approached the Bank and gave a proposal to pay a sum of ₹ 45 lakhs towards full and final settlement and this proposal was considered by the Petitioners Bank and agreed to receive the said sum within 90 days from the date of communication of the sanction ticket. Even for this sanction also, the First Respondent/Borrower had failed to comply with the same and therefore, this one time settlement also failed. 22. The Learned counsel for the Petitioners/Bank draws the attention of this Court that after disposal of W.P. No.8929 of 2003, the Bank invoked Section 13(4) of the SARFAESI Act by taking symbolic possession of the properties by issuance of Possession Notice dated 01.07.2004 and after taking possession, the Bank through its Authorised Officer issued Sale Notice by inviting bids from the public for sale of the mortgaged properties. 23. Continuing further, the Learned counsel for the Petitioners Bank states that the First Respondent/borrower challenged the sale notice by filing S.A. No.20 of 2004 before the Debts Recovery Tribunal-I, Chennai and the Debts Recovery Tribunal had granted an interim order of status quo dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of dismissal dated 09.05.2008 in S.A. No.15 of 2007 passed by the Debts Recovery Tribunal-III, Chennai, the First Respondent/Borrower filed an Appeal under Section 18 of the SARFAESI Act before the Debts Recovery Appellate Tribunal, Chennai in RA(SA) No.60 0f 2008 and the same was dismissed on merits on 08.04.2009. 28. It is contended on behalf of the Petitioners/Bank that bank initiated SARFAESI proceedings by issuing Demand Notice in respect of second set of properties on 16.12.2006 against which W.P. No.2431 of 2007 was filed and it was decided in favour of the Bank on 05.12.2007. Thereafter, Bank issued Sale Notice dated 26.09.2008, fixing sale on 05.11.2008 and thereafter, IA No.1995 of 2008 was filed by the First Respondent/Borrower in RA(SA) No.60 of 2008 instead of filing separate SA. In fact, the Second Respondent/Debts Recovery Appellate Tribunal, Chennai through an order dated 23.10.2008, stayed the auction stating that status quo is ordered to be maintained and tenders, if any received are directed to be kept in abeyance till 07.11.2008. Therefore, the bids were not opened. Subsequently, bids were opened and auction was conducted on 09.04.2009 after dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the Petitioners/Bank vehemently takes a stand that the Second Respondent/Debts Recovery Appellate Tribunal should have seen that the second set of properties was put in Auction and the bids are received by the Bank and after the dismissal of the appeal, the same was confirmed after calling all the bidders. There are no irregularities in conducting and confirming the sale. In fact, the bids were received on or before 05.11.2008 with the Bank as per order dated 23.10.2008 of the Debts Recovery Appellate Tribunal in I. A.1995 of 2008 in RA(SA) No.60 of 2008 and after dismissal of R. A.(SA) No.60 of 2008 on 08.04.2009, the sale process was completed. Thereafter, tenders were opened and auction was taken on 09.04.2009. As such, the observations made of the Debts Recovery Appellate Tribunal in the order in R. A.(SA) 132 of 2012 on 22.08.2014, that sale had not taken place on the notified date and thereafter, issuance of sale certificate to be processed on 09.04.2009 was improper and were unsustainable since sale was not cancelled/set aside but only deferred owing to judicial intervention. Contentions of the Petitioners/Auction Purchasers in W.P.17203 of 2015: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Second Respondent/Bank, it could be seen that notice under Section 13(2) was issued on 21.10.2002 and on 27.05.2008, possession in respect to the properties purchased by the Petitioners was taken under Section 13(4) of the Act. 38. The Learned counsel for the Petitioners/Auction purchasers contends that after issuance of Possession notice and/or after taking possession i.e., on 27.05.2008, the First Respondent/borrower had not exercised its right of redemption under Section 13(8) of the Act and that the sale notice mentioned that the property would be sold by tender cum auction and that sale shall be confirmed on the person making highest offer. In fact, the date of auction was 05.11.2008 and the last date of accepting of tender was 04.11.2008 by 5.00 p.m. 39. At this juncture, it is the stand of the Petitioners that in respect of the Properties purchased by them, the borrower had not questioned the same under the provisions of Section 13(4) of the Act or publication notice under the SARFAESI Act. 40. The Learned counsel for the Petitioners submits that the First Respondent/Borrower filed I. A. No.1995 of 2008 in S.A.446 of 2008 before the Debts Recovery App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44. The Learned counsel for the Petitioners submits that the Debts Recovery Tribunal on 09.12.2011 had passed final order in S.A.120 of 2009 by holding that the Authorised Officer had meticulously followed the mandatory procedure under the Act and Rules made thereunder and further, they acquired the sale of secured assets on 13.08.2004 and 09.04.2009, pursuant to the sale notices dated 09.07.2004 on 26.09.2008 was valid and conducted in accordance with the provisions of the Act and Rules made there under. 45. The Learned counsel for the Petitioners states that the First Respondent/borrower filed an appeal before the Debts Recovery Appellate Tribunal in R. A.(SA).132 of 2012 and on 22.08.2014, the Appellate Tribunal allowed the Appeal without assailing reasons as to how the order of DRT-III, Chennai in S.A. No.120 of 2009 was wrong. 46. The Learned counsel for the Petitioners contends that the sale certificate was issued only when the sale became absolute and that the sale certificate was not compulsorily registerable one. Furthermore, the Authorised Officer had sold the four items of mortgaged properties on 13.08.2004 when the order of status quo dated 29.04.2004 was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entitled to have the sale certificate . 51. The Learned counsel for the Petitioners cites the order of the Division Bench of this Court dated 10.07.2008 in W.P. Nos.570 2656 of 2008 in CDJ 2008 MHC 3004 [Adhimoolam others V. Indian Bank others] wherein it was inter-alia held that the third respondent being a stranger and auction purchaser, having purchased the property in the recovery proceedings by paying a sum of ₹ 23.05 crores, is entitled to the confirmation of sale in his favour . 52. Apart from the above, the Learned counsel for the Petitioners cites the judgment of the Division Bench of this Court in W. A. Nos.1222 1223 of 2005 in CDJ 2005 MHC 1328 [K.Kandasamy another V. The Authorised Officer, State Bank of India and another] wherein in para 9 among other things it was held that the provisions of Tamil Nadu Transparency in Tenders Act are not applicable to the sale of secured assets of both movable and immovable under the provisions of the Securisation Act . 53. The Learned counsel for the Petitioners relies on the order of the Division Bench of this Court dated 03.02.2015 in W.P. No.31904 of 2014 between Mohd. Ismail Harron and The Debts Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the duty of the court as a policy to set the wrong right and not allow the perpetuation of the wrong doing. In our view, the inherent power will not only be available in such a case, but it is bound to be exercised in that manner in the interests of justice. Even apart from Section 151, we should observe that as a matter of judicial policy, the court should guard against itself being stultified in circumstances like this by holding that it is powerless to undo a wrong done in disobedience of the court s orders. Bit in this case it is not necessary to go to that extent as we hold that the power is available under Section 151, C.P. C.... 2) In the decision of Keshrimal Jivji Shah and another V. Bank of Maharashtra and others reported in 2004(3) Mh.L.J at Page 893 and at Special Page 902 wherein in paragraphs 24 and 25, it is observed and held as follows:- ...24. We cannot be unmindful and ignorant of the importance of this aspect, which has been repeatedly emphasised by the Supreme Court. We would be failing in our duty if, we do not abide by the ratio laid down in the aforesaid decisions. That part, in the case of Ramchandra Ganpat Shinde v. State of Maharashtra and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rb the state of things as they then stood. It would amount to violation of the order. The principle contained in the maxim: Actus Curiae Neminem Gravabit has no application at all to the facts of this case when in violation of status quo order a subtenancy has been created. Equally, the contention that even a trespasser cannot be evicted without recourse to law is without merit, because the state of affairs in relation to property as on 15-9-1988 is what the Court is concerned with. Such an order cannot be circumvented by parties with impunity and expect the Court to confer its blessings. It does not matter that to the contempt proceedings Somani Builders was not a party. It cannot gain an advantage in derogation of the rights of the parties, who were litigating originally. If the right of subtenancy is recognised, how is status quo as of 15-9-1988 maintained? Hence, the grant of sub-lease contrary to the order of status quo is clearly illegal. All actions including the grant of sub-lease are clearly illegal. 25. In our view, therefore, if the facts in the present case are appreciated in the light of the decisions of the Supreme Court (supra), it is clear that during the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the question of jurisdiction in the first instance but that does not mean that pending the decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case. A mere objection to jurisdiction does not instantly disable the court from passing any interim orders. It can yet pass appropriate orders. At the same time, it should also decide the question of jurisdiction at the earliest possible time. The interim orders so passed are orders within jurisdiction when passed and effective till the court decides that it has no jurisdiction to entertain the suit. These interim orders undoubtedly come to an end with the decision that this Court had no jurisdiction. It is open to the court to modify these orders while holding that it has no jurisdiction to try the suit. Indeed, in certain situations, it would be its duty to modify such orders or make appropriate directions. For example, take a case, where a party has been dispossessed from the suit property by appointing a receiver or otherwise; in such a case, the Court should, while holding that it has no jurisdiction to entertain the suit, put back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to the borrower, on 09.04.2009, the sale took place even without any auction and sale certificates were issued to the Petitioners and the same was clearly in violation of Rule 8(5) of the SARFAESI Rules and further, the same was covered by the decision of the Hon ble Supreme Court in Mathew Varghese V. M. Amritha Kumar and Others reported in 2014 (5) SCC 610 wherein it was held that no sale or transfer of secured asset to be made on any subsequent date without notifying borrower afresh with 30 days clear individual notice of the fresh date of sale or any sale or transfer of secured assets under SARFAESI Act in violation to any of the above mandatory requirements would be invalid . In short, the Hon ble Supreme Court had observed that the provisions of Rule (8) of 2002 Rules and Rule 15, Schedule II Pt. I of Income Tax Act, 1961 by virtue of Section 29 of RDDB Act, 1993 and Section 37 of SARFAESI Act, 2002 are to be strictly followed in sale of secured assets under SARFAESI Act, 2002. 60. The Learned counsel for the First Respondent contends that in the present case, 13(2) notice under SARFAESI Act was not served on all the guarantors/mortgagors and in fact, Section 2(f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rection of the Reserve Bank of India and the same offer had been repeatedly extended upto five to six times in respect of many other borrowers. 65. The Learned counsel for the First Respondent/Borrower refers to the Division Bench of this Court in Hanu Reddy Realty India Pvt. Ltd., rep. by its Director, Mr. C.Suresh Reddy, New No.18, Bishop Wallers Avenue East, Mylapore, Chennai-4 others V. Jignesh and others reported in 2008 (1) CTC 721 wherein it was inter-alia observed that the Recovery Officer should give enough publicity to get better offers and for attracting more purchasers etc. Discussions and Findings: 66. At the outset, it is to be pointed out that the First Respondent/Borrower is a registered partnership firm, engaged in the manufacture and distribution of tobacco and allied products had took a loan of ₹ 7.5 lakhs during the year 1990 and cash credit and guaranty facility of ₹ 30 lakhs from the year 1990-92, aggregating to ₹ 37.5 lakhs. In fact, the First Respondent was unable to repay the loan and resultantly, its account was classified as Non Performing Asset from 1995. The Third Respondent/Bank caused a notice under Section 13(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, an Ex-parte Order of Status Quo was ordered, which was communicated to the Bank and the same being received on 31.07.2004. At this stage, it is to be relevantly pointed out that the First Respondent/Borrower caused a public notice on 06.08.2004 in Tamil daily viz., Dina Thanthi intimating the orders passed by the Tribunal and being aggrieved about the same, the Third Respondent/Bank filed M. A.(SA)No.120 of 2004 on the file of the Fourth Respondent/DRAT assailing the Ex-parte Interim Order passed by the DRT-I, Chennai in S.A. No.20 of 2004. The DRAT (in-charge) Mumbai allowed the S.A. No.20 of 2004 on 12.08.2004 by setting aside the order of status quo passed by the DRT, Chennai. Moreover, the DRAT (in-charge) Mumbai also permitted the Third Respondent/Bank to proceed with the sale but stayed the confirmation of sale. 72. Added further, the Third Respondent/Bank proceeded further in regard to the sale of items of properties on 13.08.2004, the First Respondent/Borrower as an aggrieved person against the order dated 12.08.2004 in M. A. No.120 of 2004 passed by the DRAT, filed W.P. No.24814 of 2004 before this Court and this Court while setting aside the order of DRAT, remit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k conducted the sale on 13.08.2004 pursuant to the sale notice dated 09.07.2004. Moreover, when the third respondent/Bank sold four mortgage properties pursuant to the sale notice dated 09.07.2004 the order of status quo was not in existence. Besides the First Respondent/Borrower had not obtained any pinpointed direction from this Court in W.P. No.24814 of 2004 as regards the sale of the said properties on 13.08.2004. Likewise, the DRAT also had not dislodged the sale conducted by the Third Respondent/Bank on 13.08.2004 at the time of passing final orders in M. A.(SA) No.120 of 2004 dated 14.10.2004. Viewed in that perspective, this Court comes to an inescapable conclusion that the sale of four mortgaged properties on 13.08.2004 when the order of status quo is not in existence is a valid one in the eye of law. 77. In the case on hand, the First Respondent/Borrower had not repudiated the possession notice dated 27.05.2008. As a matter of fact, the First Respondent/Borrower projected the I. A. No.1995 of 2008 in S.A. No.446 of 2008 before the Fourth Respondent/DRAT, Chennai soon after receipt of sale notice dated 26.09.2008, seeking the order of stay proceedings pursuant to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tingly holds that no infirmities relating to the opening of bids on 09.04.2009 and selling the properties to the concerned parties. Consequently, the contra plea taken on behalf of the First Respondent/Borrower is outrightly rejected by this Court. 80. In the instant case, one cannot remain silent to the fact that the First Respondent/Borrower pending mortgage, disposed of the properties to one Ramesh and not bringing this fact to the fore, has projected the S.A. 120 of 2009. When the First Respondent/Borrower had sold some of the properties to the aforesaid individual, it had lost its right of redemption in the considered opinion of this Court. In this regard, the Third Respondent/Bank rightly brought the mortgaged properties to sale by issuing the sale notice thereby, enforcing security in accordance with law. When the First Respondent/Borrower (Firm) had approached the Tribunal/DRAT/this Court with unclean hands, then, it is not entitled to seek equity and to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. Also that, it was issued with the demand notice under Section 13 (8) of the SARFAESI Act on 21.10.2002 and again on 16.12.2006. Indeed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debt of the firm has been incurred on his personal liability as per decision of the Hon ble Supreme Court in Ashutosh V. State of Rajasthan reported in 2005 (7) SCC 308. Moreover, while the firm is incurring a liability and so the partners remain liable jointly or severally for all the acts of the firm as per decision of Dena Bank V. Bhikhabhai Prabhudas Parekh and Company [2000 (5) SCC page 694]. 85. It is to be noted that in case whether all partners of the firm are capable of being sued and of being adjudged as judgment debtors, a suit may be filed and a decree may be obtained against a firm under Order 30 of the Civil Procedure Code. Further, such a decree may be executed against the property of partnership and against all the partners by following the procedure of Order 21 Rule 50 of the Civil Procedure Code. 86. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lla 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/-. 92. Be that as it may, 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 numer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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