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TMI Blog2025 (4) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate directions to Respondent No. 1 to remove the freeze marked by Respondent No. 1 on the savings account number 4103172000004607 which the Petitioner maintains with the said bank; e. Pass appropriate directions in the nature of writ to Respondent no. 2, thereby directing Respondent no. 2/ Reserve Bank of India for taking appropriate action against the arbitrary and unconscionable actions of Respondent no.1; and/or f. Pass such other/further orders in favor of the Petitioner as this Hon'ble Court deems fit and proper in view of the aforesaid facts and circumstances." BRIEF FACTS 2. Shorn of unnecessary details, the respondent No. 1 had published an Auction Sale Notice on 30.10.2013 for conducting an E-auction on 10.12.2013, wherein the petitioner was the auction purchaser regarding the property bearing No. 53, Second Floor, Pocket-9, Sector 21, Rohini, Delhi - 110085 (Subject property). It is averred that as per the Auction Sale Notice, the reserve price for the property in question was Rs. 28,42,000/- and to participate in the auction sale, the interested persons had to make an EMD (Earnest Money Deposit) of Rs. 3,00,000 on or before 10.12.2013 by 11:30 am, by way of De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued to charge EMIs and impose interest, despite the fact that it was the fault of respondent No. 1 for auctioning a property that had already been sold, which resulted in the petitioner not receiving a clear title. Under these circumstances, it was unreasonable for respondent No. 1 to demand EMIs, leaving the petitioner with no option but to cease payment of the EMIs. 8. According to the petitioner, respondent No. 1 filed a Securitization Application ["S.A."] in April 2014, titled as "Karur Vysya Bank v. Oriental Bank of Commerce & Anr. (Diary No. 182/2014)", dated 11.04.2014, before the learned DRT-III, New Delhi. In the said S.A., respondent No. 1 asserted that it held valid security interest/mortgage in respect of the property in question, while Oriental Bank of Commerce had already taken action, and Syndicate Bank and Bank of India were also taking measures under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) Act, concerning the same property. The respondent No. 1 sought a declaration that the sale of the property to the petitioner was valid and legal and a declaration that the actions of the other ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 to respondent No. 1, requesting an expeditious response to his earlier request, but no reply was received. 13. The S.A. filed on behalf of the respondent No. 1 which was dismissed for non-prosecution on 16.07.2014 was restored by the learned DRT as S.A. No. 194/2014 and was taken up on 10.11.2014. For the sake of convenience, the gist of proceedings which took place in the S.A. No. 194/2014 is reproduced below: - Date Proceedings 10.11.2014 Respondent No. 1 directed to supply copy of SA No. 194/2014 to all parties. Matter got adjourned to 23.01.2015 23.01.2015 Respondent no. 1 again sought time to supply copies. Matter got adjourned to 27.03.2015. 27.03.2015 Respondent no. 1 directed to ensure that copies are supplied to all parties. Syndicate Bank sought more time to file reply. Matter got adjourned to 29.06.2015. 29.06.2015 Syndicate Bank sought more time to file reply. No appearance by Oriental Bank of Commerce (Respondent no. 1 therein). Respondent no.1 herein was directed to file rejoinder thereto and evidence before next date. Matter got adjourned to 13.08.2015. 13.08.2015 Respondent no. 1 again sought time to file rejoinder. Matter got adjourned to 14.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest (Enforcement) Rules, 2002, the Authorized Officer is required to include any material information in the sale notice that could affect the purchaser's judgment of the property's nature and value. The fact that the property in question was occupied by a third party due to a prior auction was crucial for the petitioner's decision-making. Had the respondent No. 1 disclosed this critical information, the petitioner would not have participated in the auction or made any payments. 16. The petitioner further avers that even in cases where an asset is sold under the SARFAESI Act, 2002, on an "as is where is" or "as is what is" basis, the seller remains obligated to disclose any material defects in the property or defects in the seller's title. The law requires the authorized officer of the bank to disclose any such defects to the auction purchaser, and failure to do so will be considered as misleading the purchaser. Furthermore, the sale certificate issued by the secured creditor must also reveal any encumbrances known to exist on the property. Disclaimers such as "as is where is" and "as is what is" do not absolve the seller (secured creditor) from responsibility; the secured cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from his own sources and further took a home loan of Rs. 20 Lacs from the respondent No.1 in terms of the home loan agreement dated 24.12.2013. It is also a matter of record that when the petitioner went to occupy the subject property, one Ms. Ranju Kumari was found in possession of the subject property, who claimed herself to having purchased the property on 06.06.2013 through auction conducted by the learned DRT from Oriental Bank of Commerce. 22. It is also a matter of record that the petitioner immediately informed the respondent No.1 about such shocking revelation about the status of the property vide letter dated 13.01.20104. The trail of emails exchanged between the petitioner and the respondent No. 1 (Annexure P-12) would show that Mr. A. Vishwanadham, Manager (Law), Delhi for respondent no. 1 vide email dated 28.01.2014 apprised the petitioner that the matter has been taken up with the Central Officer. The petitioner being not satisfied sent another email letter on 24.07.2014 upon which he received a reply from the same officer of respondent No.1 on 26.01.2014 requesting the petitioner to bear with them as the decision by the Central Office was awaited and on the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged or pledged by him with the bank initially. The home loan agreement between the petitioner and the respondent No.1, arising from the agreement dated 24.12.2013, came into effect after the sale of the scheduled property though an auction under the SARFAESI Act. The schedule property was declared a secured asset11 by respondent No.1 in the notification inviting tender and auction. 27. In other words, respondent No.1 claimed the schedule property as a 'security interest' for the realization of its debts from the primary borrowers viz., due in account of M/s. Dass Brothers and M/s. Simran Traders, whose accounts had become non-performing assets. Consequently, respondent No. 1 proposed to sell the property by inviting tenders and conducting an auction. The home loan agreement executed by the petitioner on 24.12.2013 is not the subject matter of the proceedings before the learned DRT. Instead, the proceedings concern the competing rights and claims of two different financial institutions/banks over the scheduled property, with each asserting it as its 'security interest.' 28. Evidently, the proceedings against the present petitioner are not in the nature of Section 13 of the SARFAE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public; (c) [by holding public auction including through e-auction mode; or] [Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] (d) by private treaty. (6) the authorized 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 the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.] [Substituted by Notification No. G.S.R. 1040(E), dated 17.10.2018 (w.e.f. 20.9.2002).] (7) [every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again;] [Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months] [Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).]. (5) In default of payment within the period mentioned in sub- rule (4), the deposit shall be forfeited [to the secured creditor] [Inserted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold. (6) On confirmation of sale by the secured creditor and if the terms of payment h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LLP v. Bafna Motors (Mumbai) Private Limited ((2024) 2 SCC 1) wherein it was held as under: "101. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226 of the Constitution. Even after, the decision of this Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260], it appears that the High Courts have continued to exercise its writ jurisdiction under Article 226 ignoring the statutory remedies under the RDBFI Act and the SARFAESI Act." 31. At the same time, it was also observed that there are certain exceptions carved out when a petition under Article 226 could be entertained in spite of availability of an alternate remedy, some of which were spelled out as under: (i) where the statutory authority has not acted in accordance with the provisions of the enactment in question; (ii) it has acted in defiance of the fundamental principles of judicial procedure; (iii) it has resorted to invoke the provisions which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainant has received the reply from the Regulated Entity to the complaint or, where no reply is received, within one year and 30 days from the date of the complaint. (b) the complaint is not in respect of the same cause of action which is already- (i) pending before an Ombudsman or settled or dealt with on merits, by an Ombudsman, whether or not received from the same complainant or along with one or more complainants, or one or more of the parties concerned; (ii) pending before any Court, Tribunal or Arbitrator or any other Forum or Authority; or, settled or dealt with on merits, by any Court, Tribunal or Arbitrator or any other Forum or Authority, whether or not received from the same complainant or along with one or more of the complainants/parties concerned; (c) the complaint is not abusive or frivolous or vexatious in nature; (d) the complaint to the Regulated Entity was made before the expiry of the period of limitation prescribed under the Limitation Act, 1963, for such claims; (e) the complainant provides complete information as specified in clause 11 of the Scheme; (f) the complaint is lodged by the complainant personally or through an authorised representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be 'null & void'; B. A writ of mandamus is issued thereby, directing the respondent No.1 to refund the amount of Rs. 9,93,752.94 Paisa along with interest @ 12% per annum from 2013 till actual payment to the petitioner; C. A writ of mandamus is further issued to respondent No.1 thereby foreclosing the loan account bearing No. 4103753000000457 and return the amount of installments, if any, paid by the petitioner to the respondent No.1 with interest @12% per annum from the date of each payment till actual realization; D. Further, a writ of mandamus is issued to the respondent No.1 to remove the freeze marked by respondent No.1 on the savings account No. 4103172000004607 of the petitioner with the bank; E. The respondent No.2 is directed to initiate inquiry and take appropriate action for the arbitrary and unconscionable action on the part of respondent No.1 and take appropriate corrective measures by issuing appropriate guidelines in situations like the present cases; F. Lastly, for the trial and travails suffered by the petitioner in this long 11 years of litigation, this is a fit case where respondent No.1 should be burdened with exemplary cost and pay the same to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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