High Court affirms Appellate Tribunal, voids sale for non-compliance with Enforcement Rules. Guarantor rights upheld.

The High Court upheld the Appellate Tribunal's findings, invalidating the sale due to non-compliance with Rule 8(6) of the Enforcement Rules. The right to redemption by the guarantor/mortgagor was recognized, and the petitioners were entitled to a refund of the sale consideration with interest. The Court emphasized the importance of following prescribed procedures to protect property holders' rights and ensure fair recovery of dues.

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Issues Involved:
1. Validity of the sale notice and its publication under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002.
2. Compliance with the procedural requirements of the SARFAESI Act.
3. Right to redemption by the guarantor/mortgagor.
4. Entitlement to refund of sale consideration with interest.

Issue-wise Detailed Analysis:

1. Validity of the Sale Notice and Its Publication:
The primary issue was whether the sale notice was published in compliance with Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. The rule mandates that the sale notice must be published in two leading newspapers, one in vernacular language, having sufficient circulation in the locality where the property is situated. The Appellate Tribunal found that the "Rashtriya Sahara" newspaper, used for the sale notice, did not have sufficient circulation in Faridabad where the property was located. The Tribunal noted that "Rashtriya Sahara" had a separate edition for Haryana, and the publication in the Delhi edition, particularly on a page meant for East Delhi, did not meet the requirement of sufficient circulation in Faridabad. The High Court agreed with this finding, emphasizing that the intent of the rule is to ensure maximum coverage to secure the best price for the property.

2. Compliance with Procedural Requirements of the SARFAESI Act:
The High Court upheld the Appellate Tribunal's finding that the sale process did not comply with the procedural requirements of the SARFAESI Act. Specifically, the publication of the sale notice did not meet the criteria set out in Rule 8(6) of the Enforcement Rules. The Court referenced the Supreme Court's decision in Mathew Varghese v. M. Amritha Kumar, which underscored the necessity of following the prescribed procedure to protect the constitutional and human rights of property holders.

3. Right to Redemption by the Guarantor/Mortgagor:
The respondent (guarantor/mortgagor) had offered Rs. 95 lakhs to redeem the mortgage, which was higher than the auction price of Rs. 84.2 lakhs. The Appellate Tribunal and the High Court recognized this right to redemption, noting that the respondent had deposited the amount within the stipulated time. The Court found that the bank's refusal to accept this higher amount and its failure to comply with the procedural requirements invalidated the sale.

4. Entitlement to Refund of Sale Consideration with Interest:
Given the invalidation of the sale, the Appellate Tribunal directed that the auction purchasers (petitioners) be refunded their sale consideration of Rs. 84.2 lakhs with interest at 9% per annum from the date of deposit until the date of payment. The High Court upheld this direction, ensuring that the petitioners were compensated for the invalidated sale.

Conclusion:
The High Court dismissed the writ petition, agreeing with the Appellate Tribunal's findings and conclusions. The sale was invalidated due to non-compliance with Rule 8(6) of the Enforcement Rules, and the right to redemption by the guarantor/mortgagor was upheld. The petitioners were entitled to a refund of their sale consideration with interest, and the procedural safeguards under the SARFAESI Act were reinforced. The Court emphasized that the prescribed procedure must be followed to protect the rights of property holders and ensure fair recovery of dues.

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