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TMI Blog2022 (11) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 in place of 12-3-39 and this question about the alleged error in the door number of the mortgaged property was available to the borrowers in the first round of litigation before the Tribunal, if at all, it has any material bearing in reference to the proceedings initiated by the respondent Bank (secured creditor), but the proceedings initiated at the instance of the respondent borrowers before the Tribunal came to be dismissed by a judgment dated 12th December, 2014 and no further appeal was preferred and accordingly it has attained finality. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of predeposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrowers was only to frustrate the auction sale by one reason or the other, which they could not succeed. The finding returned by the Tribunal was well reasoned and duly supported with the material on record and the interference made by the High Court under the impugned judgment while recording a finding that it was in breach of Rule 9(4) of the Rules, 2002 is not legally sustainable in law and deserves to be set aside - Appeal allowed. - CIVIL APPEAL NO(s). 8470 OF 2022 (Arising out of Special Leave Petition (C) No(s).30038 of 2019) - - - Dated:- 16-11-2022 - AJAY RASTOGI And C. T. RAVIKUMAR , JJ. JUDGMENT Rastogi, J. 1. Leave granted. 2. The instant appeal has been preferred at the instance of the auction purchaser (appellant herein) assailing the impugned judgment and order dated 20th November, 2019 passed by the High Court for the State of Telangana at Hyderabad setting aside the e-auction sale held by the respondent Bank (secured creditor) under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter being referred to as the SARFAESI Act, 2002 ). 3. The relevant facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding loan amount as demanded. When the respondent borrowers/guarantor failed to respond, the respondent bank proceeded further and issued e-auction sale notice dated 25th February, 2015 fixing the date of auction of the schedule property on 28th March, 2015 and the said notice was widely published in Indian Express (English) and Eenadu (Telugu) daily newspapers dated 26th February, 2015. 7. That the aforesaid e-auction sale notice came to be challenged by the respondent borrowers before the Debts Recovery Tribunal and by an interim order dated 26th March, 2015, the Tribunal directed the respondent Bank (secured creditor) to proceed with the auction sale of the secured asset scheduled on 28th March, 2015 with a further direction not to issue the sale certificate provided the respondent borrowers deposits Rs.6 lakhs within 15 days from the date of the said order. It was made clear that in the event of respondent borrowers fail to deposit the said amount, the respondent Bank will be at liberty to issue the sale certificate in favour of the highest bidder. It is not disputed that in terms of the interim order passed by the Tribunal, the respondent borrowers had to deposit Rs.6 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty put to auction, that property could not have fetched the value which it ought to have fetched in the course of business. 11. In addition, further objection raised by the respondent borrowers was that in terms of Rule 9(4) of the Rules, 2002, the auction price was to be deposited by the auction purchaser within 15 days which expired on 10th April, 2015 but it was admittedly deposited by the auction purchaser (appellant) on 15th April, 2015 which is in clear breach of Rule 9(4) of the Rules 2002, in consequence thereof, the e-auction sale notice and all further proceedings initiated pursuant thereto deserve to be declared null and void. 12. The contentions were repelled by the Tribunal and the Tribunal dismissed the applications filed by the respondent borrowers. Although it was an appealable order before the Debts Recovery Appellate Tribunal, still the respondent borrowers approached the High Court under Article 226 of the Constitution and the Division Bench of the High Court reversed the findings returned by the Tribunal on the premise that there was an error in the description of the scheduled property in e-auction sale notice dated 25th February, 2015 and that was consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spapers dated 26th February, 2015 and this process was initiated after giving full opportunity and notice to the respondent borrowers in compliance of Rule 8(6) of Rules, 2002 and the appellant was held to be the highest bidder and auction bid was much higher than the reserve price indicated in the e-auction sale notice which was Rs.64,23,000/and he has complied with all the conditions of e-auction sale notice. 15. Learned counsel submits that the appellant was ready and willing to deposit the balance of 75% of auction bid before 11th April, 2015 but because of the intervention made by the Tribunal that created confusion in the mind of the appellant and for the aforesaid reason, delay of four days was caused in depositing the balance 75% of the bid amount which was deposited on 15th April, 2015 and the time under Rule 9(4) of Rules, 2002 is not that sacrosanct. This fact has not been noticed by the High Court and in the given circumstances, the finding recorded by the High Court in the impugned judgment, is not sustainable in law and deserves to be set aside. 16. Learned counsel further submits that the conduct of the respondent borrowers is equally to be looked into for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing between the parties. The period of fifteen days in Rule 9(4) is not that sacrosanct and it is extendable if there is a written agreement between the parties for such extension. What is the meaning of the expression written agreement between the parties in Rule 9(4)? The 2002 Rules do not prescribe any particular form for such agreement except that it must be in writing. The use of the term written agreement means a mutual understanding or an arrangement about relative rights and duties by the parties. For the purposes of Rule 9(4), the expression written agreement means nothing more than a manifestation of mutual assent in writing. The word parties for the purposes of Rule 9(4) we think must mean the secured creditor, borrower and auctionpurchaser. 18. Learned counsel for the respondent borrowers further submits that description of the scheduled property has also created a confusion in the minds of the participants in the e-auction sale notice and in support thereof, submits that when the property was mortgaged and security interest was created, the value of the property assessed was much higher in value than what being indicated as the reserve price by the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale certificate was issued and possession was later transferred to the auction purchaser (appellant herein). In the given facts and circumstances, interference made by the High court was not valid and deserves to be interfered by this Court. 21. To complete the facts, learned counsel for the respondent Bank further submits that on 15th April, 2015 after receiving the complete bid amount of Rs.64,23,000/the value of property under e-auction and after adjustments of the outstanding loan accounts and other ancillary charges, the surplus amount remain payable to the borrowers of Rs.16,30,000/which was offered to the respondent borrowers and since they failed to accept the balance amount, it was accordingly kept in FDR and at present, the aforesaid amount is lying in FDR and with accumulation of interest, the said amount has come to approximately Rs.18.80 lakhs, which is due and payable to the respondent borrowers and it can be transferred to the borrowers/guarantor in compliance of the order of this Court. 22. We have heard the learned counsel for the parties and with their assistance perused the material available on record. 23. The indisputed facts which manifest from the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23rd June, 2013. 25. At this stage, the proceedings initiated by the respondent bank came to be assailed by the respondent borrowers before the Debts Recovery Tribunal of Andhra Pradesh at Hyderabad under Section 17(1) of the Act. It may be relevant to note that in the description of the property under Sections 13(2) and 13(4) of the Act, door number indicated was 12-3-393 in place of 12-3-39 and this question about the alleged error in the door number of the mortgaged property was available to the borrowers in the first round of litigation before the Tribunal, if at all, it has any material bearing in reference to the proceedings initiated by the respondent Bank (secured creditor), but the proceedings initiated at the instance of the respondent borrowers before the Tribunal came to be dismissed by a judgment dated 12th December, 2014 and no further appeal was preferred and accordingly it has attained finality. 26. The e-auction notice came to be published by the respondent Bank on 25th February, 2015 fixing the date of auction as 28th March, 2015 with a reserve price of Rs.55,33,000/and e-auction notice was widely published in Indian Express (English) and Eenadu (Telu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,54,000/for participating in the proposed e-auction sale on 26th March, 2015 and after the auction purchaser was declared as the highest bidder with the offer of Rs.64,23,000/, further sum of Rs.10,51,750/totalling Rs.16,05,750/was deposited (25% of Rs.64,23,000/) on 28th March, 2015. 30. In terms of Rule 9(4) of the Rules, 2002, the balance 75% of the bid amount being Rs.48,17,250/was to be deposited by the appellant auction purchaser on or before 11th April, 2015, but prior thereto, an application was filed by the respondent borrowers on 9th April, 2015 seeking extension of time and as the matter was subjudice before the Tribunal, the balance 75% of the bid amount could not have been deposited on 11th April, 2015, but it was deposited by the appellant on 15th April, 2015 and the sale certificate was issued in favour of auction purchasers and as there was factual error in the door number of the subject property, which was indicated as 12-3-393 instead of 12-3-39 , rectification deed dated 21st April, 2015 was executed with the correct description of the scheduled property. 31. That since the respondent borrowers failed to deposit a sum of Rs.6 lakhs in the extended perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasijudicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the description of door number of the property is concerned, which admittedly indicated throughout as 12-3-393 instead of 12-3-39 , but the fact is that the description of the mortgaged property from the commencement of the proceedings under Section 13(2) of the SARFAESI Act, 2002, due to human error instead of 12-3-39 , door number was indicated as 12-3-393 , but admittedly the fact is that there is no such property available in the locality/vicinity with Door no. 12-3-393 and as full description of the mortgaged property was mentioned/indicated, although there was a typographical error, but the respondent borrowers failed to demonstrate any prejudice being caused on account of the inadvertent error being caused in description of the mortgaged property. At the same time, the borrower failed to demonstrate that because of a typographical inadvertent error in door number, as indicated above, the property could not have fetched the value as it ought to have fetched and that apart, there was no documentary evidence placed on record to substantiate the kind of prejudice, if any, being caused. 37. It is true that the secured creditor is under an obligation to undertake the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months]. (5) In default of payment within the period mentioned in subrule (4), the deposit shall be forfeited [to the secured creditor] 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. .. . 40. It clearly manifests that the preamended Rule 9(4) refers to the period of 15 days for confirmation of sale or such extended period, but the outer limit has not been defined and that appears to be not as sacrosanct and the period can be extended, as agreed upon in writing between the parties. In sequel thereto, if the time stands extended, the auction purchaser would not be considered to be a defaulter as referred to under Rule 9(5) of the Rules and if the amended provisions are being taken note of, of which reference has been made, effective from 4th November, 2016, however, may not be relevant as the auction in the instant case was held in March 2015, but the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount was deposited on 15th April, 2015 and the interregnum period was in incomplete phase of flux as to what will be the fate of the auction purchaser pending proceedings before the Tribunal, more so when the application was filed by the respondent borrowers on 9th April, 2015 seeking extension of time and that being the situation, 75% of the bid amount was deposited on 15th April, 2015 and sale certificate was issued and still thereafter when the Tribunal granted extension of 15 days of time to the respondent borrowers by an order dated 17th April, 2015 to deposit the sum of Rs.6 lakhs, the respondent borrowers failed to deposit the aforesaid amount and as it reveals from the record, a further time was granted to the respondent borrowers to deposit a sum of Rs.6 lakhs by an order dated 1st May, 2015 and much before that, the auction proceedings were finalised and even the rectification deed came to be executed on 21st April, 2015. 44. In the given facts and circumstances, the four days delay which was caused in terms of the original auction notice, in no manner, would frustrate or annul the auction proceedings and the Debts Recovery Tribunal has rightly held that because in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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