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TMI Blog2018 (12) TMI 1982X X X X Extracts X X X X X X X X Extracts X X X X ..... s Recovery Tribunal by way of appeal challenging the first notice of sale dated 10-7-2017. The petitioner did not challenge the first notice of sale. He did not challenge even the subsequent 6 notices of sale. He came to Court only after the sale was effected on the 7th occasion. Therefore, a person who took advantage of the failure of 6 auctions, cannot come to Court after the completion of a successful auction on the 7th occasion, complaining that the first auction was defective. The impugned sale did not take place pursuant to the first auction notice, but took place pursuant to the 7th notice. Therefore, the defect, even if any, in the first notice, got wiped out. Hence, the first contention deserves to be rejected. Whether the mortgaged property is an agricultural land and that therefore Section 31(i) of the Securitisation Act, 2002, prohibits the invocation of the provisions of the Act, for the enforcement of security interest in an agricultural land? - HELD THAT:- A person who made a representation of a crucial fact in the form of a Sworn Affidavit and thereby induced a Bank to sanction a term loan, cannot go back on the representation made by him in his Affidavit. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 2. We have heard Mr. C.B. Ram Mohan Reddy, learned counsel for the petitioners, Mr. Vedula Venkata Ramana, learned Senior Counsel appearing for the 1st respondent-bank and Mr. Aadesh Varma, learned counsel appearing for the 2nd respondent. 3. The case on hand has a checkered history, as can be seen from the following: a) The 1st petitioner was sanctioned a term loan, way-back in May 2011, for the establishment of a Readymix Concrete Unit. He was also sanctioned a cash credit limit. b) The 1st petitioner committed default in repayment and the account was classified as NPA on 31.10.2016. c) Therefore, a demand notice dated 07.11.2016 was issued under Section 13(2). A possession notice was issued on 24.03.2017. d) Thereafter, a sale notice under Rule 8(6) was issued on 10.07.2017. It was actually a notice under Rule 8(6) as well as notice under Rule 9(1). However, the date of auction was fixed as 18.08.2017, which was beyond 30 days of the date of the notice. e) Since the auction failed, a fresh notice dated 23.08.2017 was issued fixing the date of auction as 15.09.2017. Since the same also failed, a fresh notice dated 21.09.2017 was issued fixing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 6,80,43,555/-, the Bank fixed the reserve price at Rs. 3,09,38,000/- thereby violating the law laid down by the Supreme Court in J. Rajiv Subrahmaniyam v. Pandiyas AIR 2014 SC 1710. 5. The Tribunal rejected the first contention on the basis of the judgment of the Supreme Court in Canara Bank v. M. Amarender Reddy (2017) 4 SCC 735. The second contention was rejected by the Tribunal on the basis of an affidavit of the second petitioner himself, submitted at the time of sanction of the loan, that the property was not being used any more as agricultural land and that he will have no objection for proceeding against the property under the SARFAESI Act, 2002. The third contention was rejected on the ground that the Bank had obtained a fresh valuation. 6. In other words, all the three contentions raised by the petitioners to the auction sale, were dealt with by the Tribunal and were rejected for reasons recorded. Once it is found that a quasi judicial Tribunal created under a special enactment has considered all the issues and arrived at a conclusion for reasons recorded in the order, the role of this Court in writ jurisdiction is extremely circumscribed. It must be remembere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or private treaty for transfer by way of lease, assignment or sale of the secured assets,-- (i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. 10. The first distinction between the unamended and amended sub-section (8) of Section 13 is that before amendment, the facility of repayment of the entire dues along with the costs, charges and expenses, was available to the debtor at any time before the date fixed for the sale or transfer. But after the amendment, the facility is available upto the time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty. The second distinction is that the unamended sub-section (8) did not provide for the contingency when the dues are tendered by the borrower before the date of completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the decision of the Supreme Court in Mathew Varghese that the Supreme Court took note of Section 60 of the Transfer of Property Act and the combined effect of Section 54 of the Transfer of Property Act and Section 17 of the Registration Act to come to the conclusion that the extinction of the right of redemption comes much later than the sale notice. Therefore, we should first understand that the right of redemption is not lost immediately upon the highest bid made by a purchaser in an auction being accepted. 14. Perhaps the Courts were tempted to think that Section 13(8) speaks about redemption, only on account of what is found in Rule 3(5) of the Security Interest (Enforcement) Rules, 2002. Rule 3(5) inserted by way of amendment with effect from 04-11-2016 states that the demand notice issued under Section 13(2) should invite the attention of the borrower to the provisions of Section 13(8), in respect of the time available to the borrower to redeem the secured assets. Today, it may be convenient for one borrower to contend that the right of redemption will be lost immediately upon the issue of notice under Rule 9(1). But if it is held so, the same would tantamount to annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner as to oblige a secured creditor to issue one more notice apart from the notice under Rule 8(6), the first sale will be preceded by 2 notices and the subsequent sales will be preceded by one notice each. The correct way of looking at the rules is to say that in respect of the first auction, there has to be only one notice under Rule 8(6). But the date of the auction should fall beyond 30 days from the date of publication of sale. If no sale takes place on the first occasion, a second notice is mandated only under the proviso to sub-rule (1) of Rule 9 and this second notice shall be of a duration of 15 days. If the second attempt also fails, a third notice may be issued under the proviso to sub-rule (1) of Rule 9, of a duration of not less than 15 days for the third auction. 19. We think that some Courts have been tempted to think that Rule 9(1) requires another notice of sale in addition to the notice of sale served on the borrower under Rule 8(6), due to a mix up. This can be appreciated if we again have a look at Rule 9(1) once more: 9(1). No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me may fall foul of judicial discipline without a reference to a Larger Bench. For the purpose of this case, let us proceed on the footing that a second notice is required under Rule 9(1) in addition to the notice under Rule 8(6). Even then the petitioner in this case will not pass the muster. As we have pointed out earlier, the Bank made as many attempts, little less than the number of attempts made by Ghazni Muhammad. Every time an auction failed, the Bank served a fresh notice on the borrower and these notices were clearly of a duration not less than the one prescribed in the proviso to Rule 9(1). This can be demonstrated by the dates of notices and dates of sale in a tabular column: 25. While the main part of Rule 9(1) is focussed on the sale in the first instance the proviso focuses on subsequent sales. Therefore, assuming that there was no compliance of the prescription requiring a second notice under Rule 9(1), the same was more than compensated by subsequent notices of sufficient duration. 26. The theme of the song of almost all the borrowers, relying upon the decision in Mathew Varghese is that if the notice of sale is of a duration of less than 30 days, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the question as to whether the mortgaged property is an agricultural land or not, is actually a question of fact. Therefore, the representations held out by the petitioner at the time when the loan was sanctioned, are material for a decision on the question. 30. It is seen from the legal opinion that the Bank took from their panel lawyer way back on 07-4-2011, while processing the application of the petitioner for sanction of a loan that the question as to whether the property was an agricultural land or not was addressed. The relevant portion of the legal opinion taken by the Bank on 07-4-2011 from their panel lawyer reads as follows: Note: The Revenue records and the documents referred above goes to show that the land is agricultural land. However, it appears that there is no agricultural activity and the land is used for non-agricultural purpose. In part of the land, sheds were constructed and the same is assessed to property tax. However, to avoid any future complications, an Affidavit may be obtained from Ms. Sunitha Reddy stating that she is using the land for non-agricultural purpose and she has no objection, if the Bank proceeds under the Securitisati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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