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TMI Blog2018 (12) TMI 1987X X X X Extracts X X X X X X X X Extracts X X X X ..... finds any infraction by the secured creditor. There is no dispute between the auction-purchaser and the Bank with regard to any of the measures under section 13 (4) of the SARFAESI Act read with rule 8 and 9 of the Rules, 2002. Here, the petitioner, who is a auctionpurchaser has deposited the entire amount of bid and the Bank has issued a sale certificate dated 15/07/2017, wherein it has been recorded that the undersigned acknowledges the receipt of the sale price of Rs. 60 lakhs in full and handed over the delivery in possession of the schedule property . The said sale certificate issued under rule 9(6) has been signed by Authorised Officer, Allahabad bank. The Bank has stated that though the sale certificate has not been received by the petitioner, but the Bank is ready to hand over the sale certificate to the petitioner. In view of the the judgment of the Hon ble apex court in the case of Agarwal Tracom Pvt Ltd vs Punjab National Bank and Others [ 2017 (11) TMI 1523 - SUPREME COURT ] is clearly distinguishable on facts, and in the peculiar set of facts and circumstances of this case, the petitioner does not have any efficacious alternative remedy under the SARFAESI Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the property ought to have been handed over to the auction purchaser at least within a period of six months from the date of the auction. This writ petition is allowed with the direction to the respondent bank to refund Rs. 60 lakhs, which was deposited by the petitioner being the auction-purchaser of the aforesaid property, to the petitioner within a period of one month, along with interest @ 9 percent. - Hon'ble Dr. Devendra Kumar Arora And Hon'ble Alok Mathur, JJ. For the Petitioner :- Surya Mani Pandey. For the Respondent :- C.S.C., Prashant Kumar, Srivastava, Vinay Shanker. ORDER DELIVERED BY HON'BLE ALOK MATHUR, J. 1. Heard Sri Surya Mani Pandey, learned counsel for the petitioner and Sri Prashant Kumar Srivastava, learned counsel appearing for respondent no. 2. 2. Petitioner by means of this writ petition under Article 226 of the Constitution has sought indulgence of this court for a direction to the respondent no. 2 (Authorised officer/Chief Manager, Allahabad Bank, Sultanpur Branch, to refund the entire amount of Rs. 60,00,000/- (Rupees 60 Lacs) with 18% interest and Rs. 15 lakhs (rupees fifteen lakh) as damage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion price amounting Rs. 60 lakhs well within time to opposite party no. 2 as required under rule 9 (4) of the Rules 2002. 6. Despite deposit of the entire amount of Rs. 60 lakhs well within time, the respondent no.2 neither confirmed the sale nor handed over the sale certificate to the petitioner and only false assurances were extended by the respondent no. 2 that the possession of the said schedule property would be handed over to the petitioner very soon. 7. The petitioner brought to the notice of the Bank that he has got information from reliable sources that the property is in possession of other persons, and it is for this reason, the possession of the property could not be taken by the opposite party no.2 and handed over to the petitioner. 8. The main plank of the petitioner's argument is that there was defect in the title of the aforesaid property, which was never disclosed by the respondent bank at any stage of the proceedings under the SARFAESI Act, and even after lapse of more than one and a half year, the possession of the property has not been handed over to him, which entitles him for refund of the entire amount paid by him to the respondent Bank along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the basis as is where is, as it is where it is and the assertion of the petitioner about the nondisclosure of the physical possession of the secured assets, is totally false and baseless as the petitioner had knowledge regarding the physical possession or actual position of the property. He further pointed out that in the e-auction notice dated 25/05/2017 it was mentioned in explicit words that the interested bidders can inspect the property if they want to ascertain the location and nature of the property to be auctioned and also the interested bidders can also approach the Bank in between 17th June 2017 to 22nd June, 17. Therefore, it is not open for him to demand the refund of the amount as it would amount to cancellation of the entire proceedings initiated under the SARFAESI Act, without there being any fault on part of the respondent-Bank. 14. It has also been urged by the learned Counsel for the Bank that the Bank is always ready to hand over the physical possession of the property in question to the petitioner. They have also asserted that they have already confirmed the sale by issuing a sale certificate on 15/07/2017 after closing the loan account of the borro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r obligation to hand over vacant physical possession of the secured assets to the auction purchaser? iii. Whether the secured creditor is bound to hand over the physical possession of the secured asset to the auction purchaser, who has fulfilled all the conditions and paid the entire sale consideration as per the terms of the bid, and to what relief the petitioner/auction purchaser is entitled to in the circumstances of the case? 17. A perusal of section 17 of the SARFAESI Act, 2002 reveals that it gives a right of filing an appeal to any person aggrieved by any of the measures referred to in sub-sections (4) of Section 13 taken by the secured creditor or his authorised officer under this chapter, may make an application along with such fee which may be prescribed to the Debt Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measure has been taken. 18. In the present peculiar set of circumstances, where the petitioner being the auction purchaser has deposited the entire amount of the bid-money to the full satisfaction of the respondent bank, and the bank in turn has duly accepted the same and has also issued sale certificate ack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,- (a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and (b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and (c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. (4) If, the Debts Recovery Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal. (7) Save as otherwise provided in this Act, the Debt Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder. 20. A careful scrutiny of the aforesaid provisions would indicate that the Debt Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 of SARFAESI Act taken by the secured creditor for enforcement of security, are in accordance with the provisions of this Act and the Rules made there under, and sub-section (3) provides that the DRT after examining the facts and circumstance of the case and evidence produced by the parties comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13 of SARFAESI Act, taken by the secured creditor are not in accordance with the provisions of the SARFAESI Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets; or (b) by inviting tenders from the public; (c) by holding public auction; or (d) by private treaty. (6) The authorised officer shall serve 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 setting out the terms of sale, which shall include, (a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; (b) the secured debt for recovery of which the property is to be sold; (c) reserve price, below which the property may not be sold; (d) time and place of public auction or the time after which sale by any other mode shall be completed; (e) depositing earnest money as may be stipulated by the secured creditor; (f) any other thing which the authorised officer considers it material for a purchaser to know in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property in favour of the purchaser in the form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if the thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. (8) On such deposit of money for discharge of the encumbrances, the authorised officer may issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly. (9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) `The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not. 22. The aforesaid provisions enjoins tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bidder. 26. The entire gamut of remedies provided under Section 17 of the SARFAESI Act is to oversee that the statutory provisions of Section 13(4) read with Rule 8 and 9 of the Rules, 2002 are adhered to, and the Debt Recovery Tribunal would immediately step in, whenever it finds any infraction by the secured creditor. 27. The respondent Bank in paragraph 8 of its short counter affidavit has stated that they have moved an application under Section 14 of the SARFAESI Act on 08/05/2017, which was supposed to be disposed of by 7th June 2017, but the District Magistrate has failed to pass the order even till date i.e. 26.11.2018 despite the case being fixed on fifty nine occasions. It is for this reason that the physical possession could not be handed over to the petitioner and the Bank is eventually pursuing the matter before the District Magistrate Sultanpur. They have also stated that the Field General Manager of the Bank has also written a letter dated 09/08/2018 to the Director General, Directorate of Institutional Finance, Uttar Pradesh for early disposal of various application moved by the Bank under Section 14 of the SARFAESI Act where the property in question is also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would be of any use to redress the grievance of the petitioner, and therefore the plea of alternate remedy raised by the respondent bank is misconceived and is rejected. 32. It may be clarified here that the District Magistrate has not passed any order in excise of powers conferred upon him under Section 14 of the SARFAESI Act, despite 59 dates having been fixed in this regard, and we, therefore, record our strong disapproval in the manner in which the District Magistrate has not taken any action on the application of the bank. It has further been brought out on record that a list of 47 properties is being enclosed wherein application under Section 14 of SARFAESI Act have been moved before the various District Magistrates in Uttar Pradesh, which are pending for more than 60 days without any order. The inaction on part of the District Magistrates will have a detrimental effect in securing the possession of the properties and therefore effective mechanism must be taken by respondent no.1 in this regard. 33. The 2nd issue which arises for our consideration is with regard to the clause contained in the advertisement for e-auction, which provides that the property was being sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... getting stronger in good governance. Transparency is built on the basis of free flow of information and the whole process of government, institutions and information needs to be accessible to the interested parties, as well as the information provided should be sufficient to be understood. 37. The undisputed fact in the case at hand is that when notice under section 13(4) of the SARFAESI Act was issued by the Bank, the physical possession of the mortgaged property was not taken. There is a duty cast upon the Bank under clause (9) of rule 9 of the Rules, 2002 to deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub rule (7). In the writ petition it has rightly been asserted by the petitioner that he was shocked when he came to know that there were some defects in title of the aforesaid property and the same is defective, which was not disclosed by the Bank at any stage, rather it suppressed the material information. 38. It may be noted that when a person participates in auction to purchase a property, he relies on the auction notice and the documents shown to him by the secured creditor, as he is und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case, the Bank has not given any details of any encumbrances, or charge on the property or any such fact which would deny the auction purchaser from the physical possession of the property, and therefore, just by inserting a clause as is where is as is what is it would not dis-entitle the successful auction purchaser from claiming the physical possession of the secured asset after paying the bid price to the satisfaction of the secured creditor. 43. In the case at hand, the petitioner has written number of applications, which have been brought on record, but for some reason the bank had chosen not to respond any of the letter written by the petitioner. It seems that the Bank woke up from deep slumber when the petitioner gave a representation dated 8.5.2018 to the Governor, Reserve Bank of India, which was responded vide letter dated 18/06/18 and the petitioner was informed that they had not assured that they would give possession within 15 days of the sale, and are pursuing the matter regarding obtaining of possession in the court of Additional District Magistrate, who is not cooperating with the proceedings due to which the matter is pending. However, they are hopeful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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