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TMI Blog2022 (1) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... erve price. No doubt, the purpose of holding a public auction/ tender to sell an immovable asset is to secure the highest and best price since that would inure to the benefit of not only the borrower but also the secured creditor. The word such price appearing in second proviso to rule 9(2) means the highest bid price, which is lesser than the reserve price. If the property could be sold at the reserve price, only with the consent of the Borrower, the said condition will make first proviso absolutely nugatory and meaningless. There are no merit in the present petition and the same is dismissed. - HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE JASMEET SINGH For the Petitioner: Mr. Amarjeet Singh Rakhra, Adv For the Respondents: Mr. Samarendra Kumar, Adv. for Union Bank of India JUDGMENT OF THE COURT 1. The present writ petition has been filed by the petitioner assailing the order dated 13.12.2021 passed by the Debt Recovery Tribunal (DRT), Jaipur, where by the learned DRT has rejected the Interim Relief Application filed by the petitioner in pending Securitisation Application (S.A.) No. 22 of 2019 renumbered as T.S.A. application 50 of 2021. In addition, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SARFAESI Act was not paid by the Borrower, the respondent Bank on 03.07.2018 issued a notice under Section 13(4) of the SARFAESI Act in respect of the mortgaged property. The respondent Bank issued another notice dated 04.07.2018 under Section 13(2) of the Act, and on 09.09.2018, the petitioner received a notice dated 03.08.2018, informing the petitioner about the sale of the subject property. 8. Since the petitioner felt that the notice was violative of Rule 6(2), 8(5) and 8(6) of the Security Interest (Enforcement) Rules, 2002, the petitioner filed a Securitisation Application under Section 17 of the SARFAESI Act, 2002 before DRT-I, Delhi being S.A. No. 22 of 2019., The respondent Bank filed its reply. 9. Since the auction, which was proposed to be conducted pursuant to the notice dated 03.08.2018 could not materialise, the property was again put to auction by issuing 15 days e-auction notice on 19.08.2021, stating that the property would be auctioned on 15.09.2021 at a reserve price of Rs. 2,65,00,000/-. 10. It is the case of the petitioner that the petitioner throughout has been requesting the respondent Bank to accept the amount of Rs. 2.65 crores, being the reserve price f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the auction determined by the respondent bank. He submits that the said ground was specifically raised before the DRT, but was not dealt by the DRT. 16. It is the case of the petitioner that as per the second proviso to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, when the sale is sought to be confirmed at the reserve price, prior consent of the Borrower is a must, and any sale confirmed without the consent of the Borrower is violative of Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, and hence is liable to be set aside. learned counsel for the petitioner has placed reliance on the decisions of the Division Bench of Madras High Court in K. Raamaselvam and Others vs Indian Overseas Bank and Another, 2009 SCC OnLine MAD 1230 and A. Varalakshmi v. The Chief Manager Punjab National Bank Asset Recovery Management Branch (ARMB) Khivraj Buildings, First Floor 634, Anna Salai Chennai 600006 Another 2012 SCC OnLine Mad 2366. 17. Per contra Mr. Samarendra Kumar has submitted that no consent of the Borrower is required, in case the property /secured asset is sought to be sold at the reserve price. The consent of the Borrower is required, only in case the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) (12) of the SARFAESI Act. The Rules provide the procedure which the banks and financial institutions - who are entitled to invoke the provisions of the SARFAESI Act, should adopt in the matter of liquidation of the secured assets. Insofar as they are relevant for our purpose, we make take note of Rules 8 9. 22. Rule 8 deals with the aspect of sale of immovable secured assets. The authorised officer as defined in the Rules shall take, or cause to be taken, possession, by delivering of the prescribed notice to the borrower and by affixing the possession notice on the outer door or at a conspicuous place of the property. Rule 8(5) is relevant, and the same reads as follows: 8. Sale of immovable secured assets. x x x x x x x x x (5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods: (a) by obtaining quotations from the persons dealing with similar secured assets or otherwise int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which is also clear from the reading of Clause (c) of the proviso to Rule 8(6). 26. We may now turn to Rule 9 of the aforesaid Rules. Rule 9(2) has been set out hereinabove. It provides that the sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid, or tender, or quotation of offer to the authorised officer, and shall be subject to confirmation by the secured creditor. 27. The first proviso to Rule 9(2) mandates that any sale made under Rule 9 shall not be confirmed, if the amount offered towards sale price is less than the reserve price specified under sub-Rule (5) of Rule . Thus, the embargo is against confirmation of the sale price, which is less than the reserve price. The sequitur is that there is no embargo against confirmation of a sale, where the highest offered price is equal to, or more than the reserve price. Once a reserve price is fixed, the Borrower, as well as the world at large, are aware that it is the bare minimum price at which the mortgaged property could be sold. The reserve price is put in public domain, and the bidders are free to offer their bid at the reserve price, or above. 28. The second proviso is relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction/ tender is equal to the reserve price, and not higher. To read the second proviso to Rule 9(2) to mean that even for confirmation of a sale on the reserve price (being the highest received bid price), the consent of the borrower is must, would go against the concept of fixation of a reserve price. As is clear from a reading of Rule 8 aforesaid, reserve price is the price below which the property may not be sold. The second proviso to Rule 9(2) would become relevant and be attracted, only if the case is not covered by the first proviso, namely, where the amount offered towards sale price is equal to, or more than the reserve price specified under sub-Rule (5) of Rule 8. It is only when the offered sale price is lower than the reserve price, that the second proviso comes into play, and in such a situation, without the consent of the borrower and the secured creditor, the authorised officer cannot confirm the sale. 32. The insertion of the second proviso to Rule 9(2) is to provide greater flexibility, so that the endeavour to sell the secured asset is not defeated. There may be a situation where the highest bid received in the tender/ auction process may be even below the reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be confirmed as contemplated under the first Proviso to Rule 9(2). The Second Proviso makes it clear that if the Authorised Officer fails to obtain a price higher than the reserve price, the sale can be confirmed only with the consent of the borrower and the Secured Creditor. It is thus obvious that if the price offered is same as the reserve price, it cannot be said that the Authorised Officer has obtained a price higher than the reserve price. A combined reading of all the provisions contained in Rule 9(2) makes it clear that if the price offered is higher than the reserve price, it shall be confirmed by the Authorised Officer, but such confirmation is subject to the further confirmation by the Secured Creditor. If however, price offered is not higher than the reserve price, which means it may be on par with the reserve price or less than the reserve price, the auction can be confirmed only with the consent of the borrower and the Secured Creditor and not otherwise. Learned counsel for the Bank by relying upon the decision of the Supreme Court, has submitted that in normal circumstances, reserve price is fixed to indicate the minimum price at which property can be sold. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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