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TMI Blog2021 (2) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... and T. Vinod Kumar, JJ. For the Appellant : T. Vijaya Kumar, Advocate For the Respondents : M. Srikanth Reddy, Advocate ORDER A. Rajasekhar Reddy, J. 1. The respondent No. 2-company is the borrower of term loan from the 1st respondent-Bank, which is the secured creditor. The petitioners herein are the guarantors. As the 2nd respondent-company defaulted in payment of loan installments, its loan account was declared as NPA, and recovery proceedings were initiated under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act'). The 2nd respondent and the petitioners were issued with demand notice dated 07.10.2014 under Section 13(2) of the SARFAESI Act, and thereafter, as the amount remained unpaid, possession notice dated 11.02.2015 under Section 13(4) was issued. However, the petitioners have disputed the issuance of possession notice, and they also stated that procedure prescribed under sub-rules 1 and 2 of Rule 8 of the Security Interest (Enforcement) Rules, 2002 (for short 'the Rules of 2002') was not followed by the Bank. The same is denied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantors, and the 30 days time fixed there under was not given to them to clear the loan before the sale. Prima facie this appears to be correct. Therefore, the respondent shall not confirm the sale in favour of the highest bidder pursuant to the sale conducted on 12.12.2019 and shall not dispossess the petitioners from the subject property until further orders. 4. The 1st respondent-Bank filed counter affidavit and additional counter affidavit seeking to vacate the interim order, disputing the averments made by the petitioners with regard to disbursement of amount under the loan agreement, and also the service of sale notice under Rule 8(6) of the Rules of 2002. It is stated that since there is alternative remedy of filing securitization application under Section 17 of the SARFAESI Act, the present writ petition is not maintainable. 5. Adverting to the allegations of the petitioners with regard to not issuing possession notice, it is stated that 1st petitioner is the Director of the 2nd respondent-Company, and the said company is represented by its Managing Director. After classifying the loan account of the 2nd respondent-company as NPA, demand notice dated 07.10.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuritization applications were dismissed on 26.07.2018. The 2nd respondent again filed S.A. No. 262 on the file of Debts Recovery Tribunal at Visakhapatnam, challenging the proceedings initiated by the Bank under Section 14 of the SARFAESI Act, 2002, and obtained conditional interim stay on 15.07.2019, but failed to comply with the said condition, and the said application is pending disposal. 8. That prior to publication of the sale notice dated 30.10.2019, the respondent No. 1-Bank issued notice dated 03.03.2015 under Rule 8(6) of the Rules of 2002 to the petitioners, and to the 2nd respondent-company/borrower, through registered post, and the said notices were served. Further, the respondent-Bank also issued notice dated 06.08.2019 under Rule 8(6) of the said Rules to the petitioners and the 2nd respondent through registered post. But the said notices were returned un-served with endorsements 'unclaimed', 'intimation served', 'door lock' etc. Therefore, the case of the 1st respondent-Bank, is that they followed the due procedure under Rules 8(6) of the Rules of 2002, before publication of sale notice dated 30.10.2019. 9. In the counter affidavit it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main grievance of the petitioners is that they were not served with sale notice under Rule 8(6) of the Rules of 2002, and that they were also not given 30 days period envisaged under the said provision, for clearing the dues, and there is also no separate gap of 30 days between the sale notice and the publication of sale notice as envisaged under Rule 9(1) of the Rules of 2002. 16. To consider the above contention of the petitioners, it is necessary to consider Rule 8(6) and Rule 9(1) of the Rules of 2002, and also Section 13(8) of the SARFAESI Act, and the said provisions, to the extent relevant, are extracted as under, for ready reference: The Security Interest (Enforcement) Rules, 2002 8. Sale of immovable secured assets: . . . (6) The authorized officer shall served to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5); provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the date of publication of notice for public auction, the secured asset shall not be sold or transferred by the modes mentioned in the said provision. 19. The Apex Court in J. RAJIV SUBRAMANIYAN vs. PANDIYAS (2014)5 SCC 651, while referring to its decision in MATHEW VARGHESE vs. M. AMRITHA KUMAR (2014)5 SCC 610 (supra), observed as under: 13. This court in Mathew v. Varghese case further observed that the provision contained in Section 13(8) of the SARFAESI Act, 2002 is specifically for the protection of the borrowers inasmuch as, ownership of the secured assets is a constitution right vested in the borrowers and the protected under Article 300-A of the Constitution of India. Therefore, the secured creditor as a trustee of the secured asset cannot deal with the same in any manner it likes and such an asset can be disposed of only in the manner prescribed in the SARFAESI Act, 2002. Therefore, the creditor should ensure that the borrower was clearly put on notice of the date and time by which either the sale or transfer will be effected in order to provide the required opportunity to the borrower to take all possible steps for retrieving his property. Such a notice is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, after expiry of said period of 30 days, the secured creditor is entitled to issue publication of sale notice under Rule 9(1), and that on publication of such notice, the right of the borrower to redeem the property stands extinguished. 22. In the present case, the allegation of the petitioners is that they were not served with sale notice as envisaged under Rule 8(6) of the Rules of 2002 giving 30 days notice period to clear the loan and to redeem the property before sale. This allegation is denied by the respondent No. 1- Bank. In the additional counter affidavit, it is categorically stated that the prior to publication of sale notice dated 30.10.2019, the respondent-Bank issued sale notice dated 03.03.2015 under Rule 8(6), to the petitioners and the 2nd respondent-company, through registered post, and the same were served. It is further stated that the Bank also issued sale notices dated 06.08.2019 under Rule 8(6) through registered post, but the same were returned un-served with endorsements 'unclaimed', 'intimation served' 'door lock' etc. The copies of the returned postal covers with the above stated endorsements, are filed along with the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly avoiding the notice. 26. Thus, when a notice is returned by the sendee as unclaimed such date would be the commencing date in reckoning the period of 15 days contemplated in clause (c) to the proviso of Section 138 of the Act. of course such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address. In the present case the accused did not even attempt to discharge the burden to rebut the aforesaid presumption. 27. In the present case, the learned Standing Counsel for the respondent-Bank submits that demand notice under Section 13(2) of the SARFAESI Act and the earlier sale notice dated 3.3.2015 were sent to the addresses mentioned in the loan agreement, and they were served, but the subsequent notices dated 06.08.2019 issued under Rule 8(6) of the Rules of 2002, to the same addresses, were returned un-served with postal endorsements 'unclaimed' 'door locked' etc., and hence it amounts to service. 28. As per the judgment of the Apex Court referred to above (2 supra), since the respondent-Bank sent notices to the correct addresses of the petitioners as mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings initiated under the provisions of the SARFAESI Act. These facts have been conveniently omitted in the averments made in the affidavit filed in support of the writ petition, and the petitioners have camouflaged the grievance by merely stating that they were not served with sale notice under Rule 8(6) of the Rules of 2002 and that they were not provided with 30 days time fixed under the said provision to clear the loan and to redeem the property, to give an impression to this court, the action of the respondent-bank being in violation of principles of natural justice. Thus there is clear suppression of material facts with regard to filing of securitization applications. 31. The Apex Court in K.D. SHARMA v. SAIL (2008)12 SCC 481, while dealing with power and duty of the writ court held that where petitioner makes false statement or conceals material facts or misleads the court, the court may dismiss the writ petition at the threshold without considering the merits of the claim and that the court would be failing in its duty if it does not reject the petition on the said ground. The Apex Court further held that petitioner in such a case is also required to be dealt wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y object as highlighted in Kensington Income Tax Commrs. {(1917)1 KB 486: 86 LJKB 257: 116 LT 136 (CA)} is kept in mind, an applicant who does not come with candid facts and clean breast cannot hold a writ of the court with soiled hands . Suppression or concealment of material facts is not an advocacy. It is a jugglery, manipulation, manoeuvring or misrepresentation, which has no place in equitable and prerogative jurisdiction. If the applicant does not disclose all the material facts fairly and truly but states them in a distorted manner and misleads the court, the court has inherent power in order to protect itself and to prevent the abuse of its process to discharge the rule nisi and refuse to proceed further with the examination of the case on merits. If the court does not reject the petition on that ground, the court would be failing in its duty. In fact, such an applicant requires to be dealt with for contempt of court for abusing the process of the court. 32. Having regard to the facts and circumstances of the case, it is clear that the grounds urged by the petitioners that they were not served with sale notice under Rule 8(6), and 30 day notice period fixed there un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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