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TMI Blog2022 (8) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... payment 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 of the sale or lease but after the issue of notice. But the amended sub-section (8) takes care of the contingency where steps have already been taken by the secured creditor for the transfer of the secured asset, before the payment was made. Except these two distinctions, there is no other distinction. After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale if the dues are paid before issuance of notice for public auction. Thereafter it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of respondent Nos. 1 and 2 in accepting the higher OTS amount of the third respondent though after publication of notice for public auction and auction is justified and cannot be faulted. The writ petition fails and is accordingly dismissed. - Hon'ble Judges Ujjal Bhuyan, C.J. and A. Venkateshwara Reddy, J. For the Appellant : Vedula Srinivas, Learned Senior Counsel for Vedula Chitralekha For the Respondents : Sethu Madhav and Murali Manohar DECISION Ujjal Bhuyan, C.J. 1. Heard Mr. Vedula Srinivas, learned Senior Counsel appearing on behalf of Ms. Vedula Chitralekha, learned counsel for the petitioner; Mr. Sethu Madhav, learned counsel for respondent Nos. 1 and 2; and Mr. Murali Manohar, learned counsel for respondent No. 3. 2. By filing this petition under Article 226 of the Constitution of India petitioner seeks quashing of sale/e-auction conducted on 16.03.2021 in respect of plot Nos. A11 to A15, survey No. 302, Maheshwaram Revenue Village and Mandal, Ranga Reddy District, under letter No. 7860/45/111 dated 31.03.2021. 3. Case of the petitioner as projected in the writ petition is that third respondent M/s. Mycon Realtors Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already concluded in favour of the petitioner. First respondent informed the petitioner on 08.04.2021 that the matter was settled with the borrower i.e., third respondent under OTS and hence cancellation of e-auction was justified. Earlier letter dated 31.03.2021 was reiterated. 8. Petitioner has contended that Section 13(8) of the SARFAESI Act has undergone amendment in the year 2016. Post amendment the borrower can redeem the property only upto the date of sale notice but not beyond that. In this connection, reliance has been placed on the decision of the Supreme Court in Shakeena v. Union of India MANU/SC/1119/2019. 9. With the above grievance, the present writ petition came to be filed. 10. This Court by the order dated 28.04.2021 had issued notice and passed an interim order to the effect that no third party rights should be created against the subject property. 11. Respondent Nos. 1 and 2 have filed common counter affidavit. Respondent Nos. 1 and 2 have stated that four properties were put up for auction sale on 16.03.2021. The details of the above properties have been furnished as under: S.No. Brief description of the property R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total OTS amount should be paid on or before 08.04.2021. Accordingly, the OTS amount was paid within the aforesaid period. 14. Keeping in view the apparent tangible benefit to respondent Nos. 1 and 2, the e-auction conducted on 16.03.2021 was cancelled and it was decided to refund the amounts to the successful bidders. 15. Respondent Nos. 1 and 2 have relied upon clause 27 of the terms and conditions of the sale notice to contend that the authorised officer of the Bank (Union Bank of India) was vested with the right to cancel or postpone the sale at any point of time without assigning any reasons, which decision was final, binding and unquestionable. Petitioner had accepted such condition. 16. In view of the approval of OTS on 31.03.2021, respondent Nos. 1 and 2 immediately wrote letter dated 31.03.2021 to the petitioner informing that the outstanding dues was settled under OTS for which the competent authority had decided to cancel the e-auction conducted on 16.03.2021. Rs. 57.00 lakhs deposited by the petitioner was remitted back to account No. 123110027000236 of the petitioner maintained with Union Bank of India, Kothur Branch. 17. It is further contended that the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13(8) of the SARFAESI Act, post amendment in the year 2016 that the borrower can have no opportunity of paying the outstanding dues once auction notice is issued. Adverting to Section 60 of the Transfer of Property Act, 1882, it is asserted that the right of redemption is available to the third respondent till the sale certificate is registered and physical possession delivered to the auction purchaser. 22. Thereafter averments have been made on merit. However, it is contended that as against the bid amount of Rs. 57.00 lakhs offered by the petitioner, the loan account was settled under OTS for Rs. 5.10 crores which amount was completely paid. Therefore, the law cannot be invoked or interpreted in a manner which would cause pecuniary loss to the Bank which had undertaken a financial transaction. 23. Mr. Vedula Srinivas, learned Senior Counsel for the petitioner has referred to Section 13(8) of the SARFAESI Act. Section 13 deals with Enforcement of Security Interest. Prior to 01.09.2016, sub-section (8) of Section 13 provided that if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y respondent Nos. 1 and 2 as being taken in the best interest of the Bank. In support of his submission, leaned counsel for respondent Nos. 1 and 2 has relied upon the following decisions: (1) Concern Readymix v. Authorised Officer, Corporation Bank 2019 (3) ALD 384; (2) S. Karthik v. N. Subhash Chand Jain AIR 2021 SC 4559; and (3) Pal Alloys Metal India Private Limited v. Allahabad Bank AIR 2022 P H 23. 25. Mr. Murali Manohar, learned counsel for respondent No. 3 has adopted the arguments advanced by learned counsel for respondent Nos. 1 and 2. In addition he submits that petitioner had tried to purchase the subject property at a throw away price of Rs. 57.00 lakhs whereas the third respondent had settled the loan account for Rs. 5.10 crores which is about nine times more than the amount offered by the petitioner. It is in the interest of the Bank that the challenge made by the petitioner should be rejected. In support of his submissions, learned counsel for the third respondent has referred to the following decision: Sushen Medicamentos Private Limited v. Ashok Enterprises AIR 2012 Guj 26. 26. Submissions made by learned counsel for the parties have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public 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. 32. The instant public auction as well as OTS had taken place in the year 2021. Therefore sub-section (8) of Section 13 as substituted with effect from 01.09.2016 would be applicable. Section 13(8) as it stands today says that where the amount of dues of the secured creditor together with all costs etc., is tendered to the secured creditor at any time before the date of publication of notice for public auction etc., f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the sale or lease but after the issue of notice. But the amended sub-section (8) takes care of the contingency where steps have already been taken by the secured creditor for the transfer of the secured asset, before the payment was made. Except these two distinctions, there is no other distinction. 38. After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 13(8) of the SARFAESI Act prior to amendment. In this case, the appellants failed to exercise their right of redemption until registration of the sale certificate; therefore, relief was declined. While coming to the above conclusion, the Division Bench of the Supreme Court adverted to the amended Section 13(8) of the SARFAESI Act observing by way of obiter that tender of dues to the secured creditor with all costs, charges and expenses incurred by him shall be at any time before the date of publication of notice for public auction etc. 43. The decision in Shakeena (supra) was rendered by a two-Judge Bench of the Supreme Court on 20.08.2019. On the other hand, the decision in S. Karthik (supra) was rendered by a three-Judge Bench of the Supreme Court much later i.e., on 23.09.2021. The decision in S. Karthik (supra) being a later judgment and by a larger bench therefore will be binding on us and this decision says that the right of redemption stands extinguished only on the sale certificate getting registered. 44. Before we revert back to the facts of the present case, we may also refer to Sections 35 and 37 of the SARFAESI Act. While Section 35 says that the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on 20.03.2021 and was accepted by first respondent on 31.03.2021 for an amount of Rs. 5.10 crores, which has been paid by the borrower i.e., third respondent. On the one hand petitioner's amount was Rs. 57.00 lakhs which the petitioner had paid but on the other hand third respondent has paid Rs. 5.10 crores as per the OTS. Lending of money, recovery of dues and entering into OTS are all commercial decisions which are taken by the banks/financial institutions in their best interest, subject of course within the statutory framework. In this case, we have already come to the conclusion that third respondent had not lost the right of redemption upon publication of notice for auction sale. If that be the position, then it should be left to the discretion of the secured creditor as to which course of action would be more beneficial to it. Evidently, the OTS with the third respondent is much more beneficial to the secured creditors i.e., respondent Nos. 1 and 2 and as has been explained above such a course of action is not restricted or extinguished by Section 13(8) of the SARFAESI Act. 48. Respondent Nos. 1 and 2 had exhibited great alertness in repaying back Rs. 57.00 lakhs t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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