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TMI Blog2022 (9) TMI 1553X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Act, the Writ Petition can be entertained by this Court, and it is not necessary to relegate the parties to avail alternative remedy. Though counsel for respondents have placed reliance on the decision of the Supreme Court in the case of Aggarwal Tracom Pvt. Ltd. v. Punjab National Bank [ 2017 (11) TMI 1523 - SUPREME COURT] to contend that the Writ Petitions under Article 226 of the Constitution of India cannot be entertained when effective statutory remedy is available to the aggrieved person, in a later judgment rendered in the case of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT ], the Supreme Court held that there are well defined exceptions to the rule of exhaustion of alternative remedy as laid down in decision of COMMISSIONER OF INCOME TAX OTHERS VERSUS CHHABIL DASS AGARWAL [ 2013 (8) TMI 458 - SUPREME COURT ] and one of such exceptions mentioned in Para 15 of the said judgment is where the statutory authority has not acted in accordance with the provisions of the enactment in question. - the plea of the respondent that the Writ Petition ought to be dismissed in view of existence of alternative remedy und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 3 are directed to refund within 4 weeks Rs. 16,08,250/- to the petitioner with interest @ 7% per annum from the date such deposit(s) were made till the date of refund - petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted an contempt. It was also stated that this order was in the knowledge of the Bank and as per the provisions of the Transfer of the Property Act, 1882 (hereinafter referred to as "the Act of 1882") and allied laws/rules, the seller has to disclose the details of litigation even if there is no stay pending before any Court of law having competent jurisdiction, but the Bank had not disclosed the same in the advertisement it got published. It was also pointed out that earlier the Bank, on 31.12.2021, had conducted e-auction of the very same asset to someone else, by name Smt. Jaswinder Kaur, who had also deposited Earnest Money Deposit (EMD) of Rs. 15.91 Lakhs; in the meantime, the borrower's Writ Petition had been filed on the very same day of the auction; that notice of motion was issued and the Bank counsel appeared and accepted notice; and when the said Auction Purchaser came to know that the asset purchased by her in the auction was under litigation, she submitted a representation on 11.01.2021 for refund of her earnest money as the Bank had concealed in the advertisement about the litigation; and the Bank admitted its fault and refunded the earnest money back to the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the Bank that as per the sale notice dt.07.11.2021 for the auction to be held on 25.11.2021, a bidder like the petitioner should deposit 10% as EMD, and thereafter the balance payment making the amount of 25% of the bid amount should be deposited within 24 hours after being declared as a successful bidder, and the rest of 75% of the bid amount should be deposited within 15 days as per Rule 9(2) and 9(4) of the Rules. 17. It is contended that the petitioner participated in the e-auction and deposited the earnest money in terms of the sale notice and also deposited the 25% amount after being declared as a successful Auction Purchaser in terms of the Rule 9(3), but did not deposit the rest of 75% of the balance amount in 15 days as per the Rules. 18. It is contended that the petitioner requested for further time, invoking Rule 9(4) of the Rules, and the Bank granted the extension till 10.12.2021 for depositing of the balance of 75% sale consideration. It is stated that the petitioner having failed to deposit the same, the Bank was within its rights to forfeit the earnest money. 19. It is stated that the property was sold on 'as is where is basis', 'as is what is basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Writ Petitions under Article 226 of the Constitution of India cannot be entertained when effective statutory remedy is available to the aggrieved person, in a later judgment rendered in the case of Authorized Officer, State Bank of Travancore v. Mathew K.C (2018) 3 SCC 85, the Supreme Court held that there are well defined exceptions to the rule of exhaustion of alternative remedy as laid down in decision of Commissioner of Income Tax v. Chhabil Dass Agarwal (2014) 1 SCC 603 and one of such exceptions mentioned in Para 15 of the said judgment is "where the statutory authority has not acted in accordance with the provisions of the enactment in question." 29. Similar view has been taken by this Court also in the case of Skytone Electricals (India) Limited v. Canara Bank Passed in CWP No. 12301 of 2020 on 14.07.2020 and Joginder singh v. Punjab National Bank CWP No. 22743-2019 dt. 19.7.2022 of Division Bench of Punjab and Haryana High Court in which one of us was a member (M.S. Ramachandra Rao, J.). 30. Therefore we reject the plea of the respondent that the Writ Petition ought to be dismissed in view of existence of alternative remedy under Sec.17 of the Act. 31. From the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext question which arise for consideration in this Writ petition is: "Whether it was proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it?" 42. Under the Act of 2002, any security interest created in favour of a secured creditor being enforced without the intervention of the Court or Tribunal by such creditor has to be in accordance with the provisions of the Act as per Sub-Section (1) of Section 13 thereof. Therefore, it is necessary that the secured creditor must enforce its security interest only in the manner provided in the Act. 43. The manner in which the security interest is to be enforced is set out in the Rules. 44. Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 directs the Authorized Officer to serve to the borrower a notice of 30 days for sale of the immovable secured assets under Sub-Rule (5). Proviso to Sub-Rule (5) of Rule 8 thereto states that if the sale of such secured asset is effected by either inviting tenders from the public or by holding publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and another (1996) 50. In the case of Gowrishankar v. Joshi Amba Shankar Family Trust (1996) 3 SCC 310, the respondent-Trust was created by a deed of declaration dt. 15.01.1934 by one Amba Shankar Joshi in relation to his three immovable properties for the benefit of his poor relations and for charitable and pious purposes. As the trustees were finding it difficult to carry out the purposes of the trust for paucity of funds, they moved High Court in the year 1979 for modification of the terms of the trust deed so as to empower them to sell the above properties. By order dt.28.11.1983, the High Court granted such power subject to the condition that it would be exercised only with the permission of the Court and the concurrence of 3/4 of the total number of trustees in office. 51. After the said order was passed, the trustees invited offers for purchase of property, and on receipt of some offers, sought permission of the High Court to sell the same at the highest price offered. Such permission was also granted on 09.02.1984. 52. Thereafter, they entered into an agreement for sale with respondents No. 10 to 15 on 15.12.1989 agreeing to sell the property for Rs. 9 Lakhs after rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed the Supreme Court. 60. The Supreme Court held that the Trustees in their application dt.10.03.1990 seeking permission to sell the property did not disclose the offer made by the appellants on 23.01.1990; that the Trustees had informed the appellants on 26.02.1990 that the offer of the appellants would be placed before the meeting of the Trustees, and they would also inform the appellants about the decision of the Trustees, but instead of informing the appellants about the decision, if any, taken as promised, the Trustees filed, within fortnight of the above reply, an application for seeking permission to sell the property without disclosing the appellants' offer. 61. It held that the Trustees had not acted bona fide because it was expected from them to first disclose the offer of the appellants, and then plead their inability, if any, to accept the same by giving detailed reasons, but they did not do so. 62. Therefore, the Supreme Court confirmed the findings of the learned Single Judge, and set aside the order of the Division Bench on the ground that the Trustees has played a fraud upon the Court, and obtain permission to sell the asset in favour of respondents No. 10 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unit; and having visited the site, the respondent was aware of the exact nature of the land being purchased by him as required by Section 55 of the Act of 1882, and so the Corporation could forfeit the security amount in view of Clause 5 of the terms and conditions for the sale of the property as contained in the advertisement as well as under Section 29 of the State Financial Corporations Act, 1951. 70. The Supreme Court rejected these contentions. It held that without any independent passage, the plot of land would be not more than an agricultural plot and not suitable for development as a manufacturing unit, and the Corporation had acted unfairly by insisting that there was a clear cut passage when there was none, and it cannot be allowed to take advantage of its own wrong. 71. It held that in view of the Sections 55 (1)(a) and (b) of the Act of 1882, it was incumbent upon the Corporation to disclose to the respondent about the non-existence of an independent passage to the Unit, and it was also the duty of the Corporation to inform the respondent that the passage mentioned in the revenue record was not fit for the movement of vehicles. 72. It also held that the Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ought to be denied to petitioner also cannot be accepted because the material placed on record shows that he came to know of the said fact after the auction was held on 25.11.2021. No evidence was placed on record by the Bank that the petitioner is aware of the same prior to the said date. 79. Since the borrower in the instant case had sought to retain the secured asset by offering an OTS by filing CWP No. 22761 of 2020, such a claim made by the borrower amounts to an encumbrance on the secured asset. The same has, therefore, to be disclosed by the Bank which is aware of the same as per Clause (a) of the proviso to Rule 8(6). 80. Since, the Supreme Court in Tarsem Singh ( (2001) 8 SCC 104 Supra) has also held that an encumbrance would diminish the value of the property under Clause (f) of the proviso to Rule 8 (6), pendency of litigation would be a thing which the purchaser needs to know because it has effect on the value of the secured asset which he is offering to purchase. 81. We are also of the view that the absence of a stay order in the said CWP No. 22761 of 2020 or it's subsequent dismissal on 21.2.2022 are wholly irrelevant. 82. In view of the suppression about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the Bank had refunded the earnest money deposited by Smt. Jaswinder Kaur, who had participated in the e-auction conducted by the Bank for the same subject secured asset on 31.12.2020, when she complained that the pendency of the litigation was not disclosed by the Bank. 87. Since, the petitioner is also placed in a similar situation, on parity, the Bank ought to have granted the refund of the earnest money deposited by the petitioner and ought not to have forfeited it. By doing so, it has discriminated against the petitioner and has acted arbitrarily in violation of Articles 14 and 300 A of the Constitution of India. 88. So we hold that it was not proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it; and that it ought to have refunded the amount deposited by petitioner, instead of forfeiting it. CONCLUSION and RELIEF 89. Therefore, the Writ Petition is allowed; email dt.15.12.2021 (Annexure P-16) issued by respondent No. 2 to the petitioner is set aside; and respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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