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TMI Blog2016 (6) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... es has been captured very well by the learned DRT with reference to the post tender submission and bid opening date, when the bidders were requested to increase the bid offer and they informed that they cannot do so because infrastructure in the industrial area was not conducive and additionally the highest bidder would have to pay to the government authorities, before the title would be transferred in their name, and they estimated the final costs to the highest bidder to be within the range of 2.25 to 2.5 crores. X X X X Extracts X X X X X X X X Extracts X X X X ..... offer as per tender documents and as would be noted hereinafter certain disclaimer were put and certain cautioned were incorporated in the tender documents. 5. The petitioner was the highest bidder and deposited 25% of the bid amount. Bid amount being ₹ 2 crores, ₹ 50 lacs were deposited on June 24, 2011. Bid was accepted on June 27, 2011 and within the time stipulated balance ₹ 1.5 crores was paid by the petitioner on July 11, 2011. On July 13, 2011 the petitioner asked for a sale certificate to be issued and possession handed over to it. 6. The lessee company filed SA No.311/2011 raising a grievance to the valuation report, the notice inviting bids and questioning the sale. The said petition was listed before DRT-III on July 14, 2011 when, in the presence of counsel for SIDBI a consent order was passed noting that counsel for the lessor stated that the lessor had a buyer who would pay a better amount. Re-notifying the matter on August 11, 2011 SIDBI was directed to maintain status-quo concerning the property and ultimately SA No.311/2011 was dismissed because no defect was found in the sale or in the valuation thereof and no higher bid by any willing purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Area had very few working units and the industrial environment was bleak. They also said that about ₹ 12 lacs have to be paid to the competent authority for change of ownership and ultimately the final price which the bidders would have to pay would be in the range of ₹ 2.25 to ₹ 2.5 crores. Highlighting that when a sale is on 'As is Where is Basis' it was the duty of a bidder to ascertain title to the property, whether there were encumbrances thereon as also the physical measurements and the site condition, the application was dismissed by learned DRT vide order dated April 30, 2012. 10. Petitioner's appeal was dismissed vide impugned order dated December 10, 2014 by learned DRAT holding that the application filed before learned DRT was not maintainable because remedy was to take resort to substantive proceedings. No merit was found in the order passed by learned DRAT with the opinion that it was a well reasoned order. 11. The petitioner has accordingly filed the writ petition and the fulcrum is the proviso to sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, which reads as under:- "(6) The authorised officer shall serve to the borrowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title is not an encumbrance. To encumber means to impede or burden. Stroud's Judicial Dictionary of Words and Phrases in the 5th Edition defines encumbrance as : a claim, lien or liability attached to a property'. A lease-hold tenure is a title as is a free-hold tenure. The only difference is that the latter gives the freedom to deal with the immovable property and the former gives a restricted right to deal with the immovable property. Thus, by not informing the bidders that the title to be transferred would be a lease-hold tenure, there is no violation of the proviso to sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002. It needs to be highlighted that it was not conveyed to the intending bidders that the property put up for auction is a free-hold property. The advertisement remained neutral. It neither informed that the property is free-hold nor informed that the property is lease-hold. But, the prospective bidders were clearly informed that property being sold is on 'As is Where is Basis'; the bidders were clearly informed, vide term 8 and 14 of the tender documents, that the purchaser shall have to pay the statutory/government/other dues, if any, in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the position of law concerning the obligation of a purchaser when a property is put up for sale on As is Where is Basis coupled with the various clauses of the tender documents which we have noted hereinabove no case is made out to interfere with the impugned order dated October 12, 2014 as regards the final destination reached by the order on this issue. 19. The other argument advanced was that the perpetual lease-deed in favour of the lessee had a negative covenant of no sale being permissible without the consent of the lessor and since consent of the lessor was not obtained, the sale is vitiated. 20. As we have noted in paragraph 2 above, the lessor granted the permission to mortgage the property but with a condition that it cannot be sold without its permission. Now, a mortgage creates a lien on the property which is enforceable if the debt is not repaid and thus if a lessor grants permission to mortgage a lease-hold property inherent in it would be the consent that the mortgage can be enforced by the sale of the property. It is apparent that some bureaucrat, who did not understand the law, inserted the condition while granting permission for the plot to be mortgaged. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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