2015 (6) TMI 1215 - HC - Indian Laws

Court dismisses application challenging purchaser's liability under SARFAESI Act, emphasizing no obligation to debtor's debts.

The court dismissed the application for review of the judgment and order dated 18th February 2014, affirming that the purchaser, Amrit Fresh Private Ltd., ... Review application - error apparent on the face of record or not - alleged failure and/or refusal of the Judgment-debtor, to clear the bills raised by the applicant respondent No. 1 on the Judgment-debtor - whether the movable properties of the Judgment debtor could have been sold to the appellant, Amrit Fresh Private Ltd. under the provisions of the SARFAESI Act? - HELD THAT:- An application for review on the ground of discovery of fresh evidence is also to be refused, unless it can be shown that such evidence could not have been produced at the time of hearing, in spite of diligence. It is well-settled that an apparent error on the face of the record may be a ground for review. However, it is to be shown that the error is so manifest and clear that no Court would permit such an error to remain on record. It is true that the error is not limited only to facts but may also include errors of law, but the law must be definite and capable of ascertainment. An erroneous view of the law on a debatable point or a wrong exposition of law or a wrong application of the law or a failure to apply the proper law cannot be considered a mistake or error apparent on the face of the record. Thus, an order may be reviewed where the Court has failed to consider important facts on record, or provisions of law, which go to the root of the jurisdiction of the Court, or where the Court fails to consider an important plea or issue, or where the case is an exceptional one, as the point involved is one of general importance. The seller, that is, Indian Bank, would not accept any claim or responsibility on this account, and would not be held accountable or be asked to reimburse any amount in this regard. Clause 13 covers claims, disputes or litigation relating to the property and not money claims against the owner of the property. The contention that the appellant, Amrit Fresh Pvt. Ltd. was liable to satisfy the dues of the Judgment-debtor in terms of the award, cannot therefore be sustained. The sale may have been made on 'as is where is and as is what is basis' as observed by the learned Single Bench. However, the Hon'ble Appeal Court very rightly found that there was no basis for the finding of the Single Bench that the properties of the Judgment-debtor purchased by the appellant Amrit Fresh Pvt. Ltd. under the SARFAESI Act were encumbered. The Hon'ble Appeal Court rightly held that the appellant, Amrit Fresh Pvt. Ltd., the purchaser in an auction sale, for valuable consideration had no liability to discharge the debts of the Judgment-debtor. The application for review is dismissed. Issues Involved:1. Review of the judgment and order dated 18th February 2014.2. Execution of an arbitral award against the purchaser of judgment-debtor's properties under the SARFAESI Act.3. Applicability of Section 31(b) of the SARFAESI Act.4. Grounds for review under Order 47 Rule 1 of the Code of Civil Procedure, 1908.Issue-wise Detailed Analysis:1. Review of the Judgment and Order dated 18th February 2014:The application for review was filed by respondent No. 1 against the judgment and order dated 18th February 2014, which allowed the appeal (APO No. 307 of 2013) against the order dated 11th September 2013. The Division Bench had set aside the Single Bench order that held the appellant, Amrit Fresh Private Ltd., liable for the dues of the judgment-debtor.2. Execution of an Arbitral Award Against the Purchaser of Judgment-debtor's Properties under the SARFAESI Act:The Single Bench had allowed the execution of an arbitral award dated 7th October 2011 against the appellant, Amrit Fresh Private Ltd., the purchaser of the judgment-debtor's properties sold under the SARFAESI Act. The Division Bench, however, held that there was no charge created on the property and that the purchaser could not be held liable for the judgment-debtor's debts.3. Applicability of Section 31(b) of the SARFAESI Act:The argument presented was that the hypothecated movable properties of the judgment-debtor could not have been sold under the SARFAESI Act, as they did not constitute 'security interest' due to Section 31(b). However, the court clarified that the movable properties were not pledged within the meaning of Section 172 of the Contract Act, and thus, Section 31(b) was not applicable.4. Grounds for Review under Order 47 Rule 1 of the Code of Civil Procedure, 1908:The court examined whether there were grounds for review under Order 47 Rule 1, which allows for review upon the discovery of new and important matter or evidence, or an apparent error on the face of the record. The court found no new evidence or apparent error that would justify a review. It emphasized that the review is not meant for re-hearing the case or correcting an erroneous judgment unless a grave and material error was overlooked.Conclusion:The court concluded that there were no grounds for review of the judgment and order dated 18th February 2014. The application for review was dismissed, affirming that the purchaser, Amrit Fresh Private Ltd., was not liable for the judgment-debtor's debts under the SARFAESI Act. The court reiterated that the properties purchased were not encumbered and that the purchaser had no liability to discharge the debts of the judgment-debtor.