2018 (12) TMI 1982 - HC - Indian Laws

High Court upholds Tribunal decision on notice requirements, property classification, & valuation. Petition dismissed under Article 226.

Concern Readymix and Ors. Versus The Authorised Officer, Corporation Bank and Ors.

Concern Readymix and Ors. Versus The Authorised Officer, Corporation Bank and Ors. - TMI Issues Involved:1. Non-compliance with the 30-day notice requirement between Rule 8(6) and Rule 9(1) under SARFAESI Act.2. Classification of the mortgaged property as agricultural land under Section 31(i) of the SARFAESI Act.3. Adequacy of the valuation and reserve price set for the auctioned property.Detailed Analysis:Issue 1: Non-compliance with the 30-day notice requirement between Rule 8(6) and Rule 9(1) under SARFAESI ActThe petitioners challenged the auction sale on the ground that the Authorized Officer did not provide a 30-day period between the notice under Rule 8(6) and the sale notice under Rule 9(1), violating the mandate of law. The Tribunal rejected this contention based on the Supreme Court judgment in Canara Bank v. M. Amarender Reddy, which clarified that the rules do not require separate notices for Rule 8(6) and Rule 9(1). The Tribunal noted that the Bank issued multiple notices due to failed auctions, and the subsequent notices were of sufficient duration as prescribed by the proviso to Rule 9(1). The Court emphasized that the jurisdiction under Article 226 is supervisory and not appellate, and found no perversity in the Tribunal's findings. Therefore, the first contention was rejected.Issue 2: Classification of the mortgaged property as agricultural land under Section 31(i) of the SARFAESI ActThe petitioners argued that the mortgaged property was agricultural land, thus invoking Section 31(i) of the SARFAESI Act, which prohibits the enforcement of security interest on agricultural land. The Tribunal rejected this argument, relying on an affidavit submitted by the second petitioner at the time of loan sanction, which stated that the land was not used for agricultural purposes and consented to proceed under the SARFAESI Act. The Court held that the representations made by the petitioners at the time of loan sanction were material and binding. The Court also noted that the petitioners could not now claim the property as agricultural land to avoid repayment. Therefore, the second contention was rejected.Issue 3: Adequacy of the valuation and reserve price set for the auctioned propertyThe petitioners contended that the reserve price set for the auction was significantly lower than the market value, violating the law laid down by the Supreme Court in J. Rajiv Subrahmaniyam v. Pandiyas, which mandates securing the best possible price for the secured asset. The Tribunal found that the Bank had obtained a fresh valuation before the last auction, which was considered adequate. The Court acknowledged that while the best possible price is ideal, practical challenges in auction sales often prevent achieving the highest valuation. The Bank's multiple failed auction attempts and eventual success in the seventh attempt were noted. Therefore, the third contention was also rejected.Conclusion:The High Court dismissed the writ petition, upholding the Tribunal's decision. The Court found that all three contentions raised by the petitioners were adequately addressed and rejected by the Tribunal. The Court emphasized the limited scope of its jurisdiction under Article 226 and found no error of law or perversity in the Tribunal's findings. The writ petition was dismissed, and no costs were awarded. Pending applications were also closed.