2021 (2) TMI 1361 - HC - Indian Laws

Court dismisses writ petition in favor of Bank under SARFAESI Act. Petitioners ordered to pay costs.

The court dismissed the writ petition, ruling in favor of the Bank. The court found that the Bank had complied with legal procedures, including issuance ... Possession notice under Section 13(4) - service of notice under Rule 8(6) - publication under Rule 9(1) - right of redemption under Section 13(8) - presumption of service by registered post - suppression of material facts and abuse of writ jurisdiction - dismissal of writ petition with costsPossession notice under Section 13(4) - procedure under Rule 8(1) and (2) - Whether the Bank issued possession notice under Section 13(4) and complied with the procedural requirements of Rule 8(1) and (2) of the Rules of 2002. - HELD THAT: - The Bank averred that possession notice dated 11.02.2015 was issued, affixed on the secured assets on 11-13.02.2015 as per the three different dates specified, and published in newspapers on 15.02.2015. Those averments were not disputed by the petitioners by filing any reply affidavit. In these circumstances the allegation that no possession notice was issued and that the procedures under the Rules of 2002 were not followed is found to be without basis. [Paras 14]Allegation that possession notice under Section 13(4) and prescribed procedure were not followed is rejected; Bank complied with possession notice requirements.Service of notice under Rule 8(6) - publication under Rule 9(1) - right of redemption under Section 13(8) - presumption of service by registered post - Whether the petitioners were served with the thirty days sale notice under Rule 8(6), and whether publication of sale under Rule 9(1) complied with the requirement so as to affect the right of redemption under Section 13(8). - HELD THAT: - The Bank produced evidence that prior sale notice dated 03.03.2015 was served and that a subsequent notice dated 06.08.2019 sent by registered post was returned with endorsements such as 'unclaimed', 'intimation served' and 'door locked'. Applying the principle that service by registered post is to be presumed where correctly addressed and posted unless rebutted, and in the absence of any reply by the petitioners to displace that presumption, the court held that the notices under Rule 8(6) must be taken to have been served. The impugned sale notice dated 30.10.2019 was published for auction on 12.12.2019, which the court found to be in conformity with the statutory scheme including the thirty day notice requirement and the effect on the redemption right under Section 13(8). [Paras 22, 28, 29]Notices under Rule 8(6) are to be presumed served; publication under Rule 9(1) complied with the statutory notice requirement and the right of redemption was accordingly affected as per law.Suppression of material facts and abuse of writ jurisdiction - dismissal of writ petition with costs - Whether the petitioners suppressed material facts (filing of securitisation applications and interim orders) and whether such suppression warranted dismissal of the writ petition with exemplary costs. - HELD THAT: - The record shows that securitisation applications and proceedings before the Debts Recovery Tribunal and this Court were filed by the borrower and that interim/conditional orders were obtained but not complied with; these facts were not disclosed in the petitioners' affidavit. The court relied on settled principles that a petitioner invoking extraordinary jurisdiction must disclose all material facts and that suppression or distortion of material facts may justify dismissal at the threshold. Applying those principles to the undisputed record, the court concluded that the petitioners had concealed material facts and were resorting to dilatory tactics to frustrate recovery proceedings. [Paras 30, 31, 32]Writ petition dismissed on account of suppression of material facts and abuse of writ jurisdiction; petitioners to pay exemplary costs.Final Conclusion: Writ petition dismissed; petitioners found to have been served with required notices and to have suppressed material facts, and are directed to pay costs of Rs. 20,000 to the Telangana State Legal Services Authority within eight weeks; interlocutory applications closed. Issues Involved:1. Issuance of possession notice under Section 13(4) of the SARFAESI Act.2. Compliance with Rule 8(6) and Rule 9(1) of the Security Interest (Enforcement) Rules, 2002.3. Service of sale notice and the right to redeem under Section 13(8) of the SARFAESI Act.4. Allegations of suppression of material facts by the petitioners.5. Maintainability of the writ petition due to the availability of alternative remedies.Issue-wise Detailed Analysis:1. Issuance of Possession Notice under Section 13(4) of the SARFAESI Act:The petitioners alleged that no possession notice under Section 13(4) was issued and that the procedure under sub-rules 1 and 2 of Rule 8 was not followed. The Bank, however, provided evidence that possession notices dated 11.02.2015 were issued and affixed on the secured assets, and published in Indian Express and Andhra Jyothi newspapers on 15.02.2015. The court noted that the petitioners did not file a reply affidavit to deny these assertions, leading to the conclusion that the allegation was baseless.2. Compliance with Rule 8(6) and Rule 9(1) of the Security Interest (Enforcement) Rules, 2002:The petitioners contended that they were not served with a sale notice under Rule 8(6) and were not given the 30-day notice period to clear the loan. The Bank countered that notices dated 03.03.2015 and 06.08.2019 were issued, with the latter returned un-served with endorsements like 'unclaimed' and 'door locked'. The court referenced precedents, including K. Bhaskaran vs. Sankaran Vaidhyan Balan, to establish that unclaimed notices are deemed served. Thus, the court presumed that the sale notice was served, and the Bank complied with the necessary rules.3. Service of Sale Notice and Right to Redeem under Section 13(8) of the SARFAESI Act:The court examined the provisions of Section 13(8) and Rule 8(6), emphasizing the borrower's right to a 30-day notice period for redeeming the property. It cited judgments like J. Rajiv Subramaniyan vs. Pandiyas and Sri Sai Annadatha Polymers v. Canara Bank, which underscored the necessity of this notice period. The court found that the Bank had indeed followed the procedure, and the petitioners' right to redeem was not violated.4. Allegations of Suppression of Material Facts by the Petitioners:The court found that the petitioners had suppressed material facts, including the filing of securitization applications and obtaining interim orders from the Debts Recovery Tribunal. The court cited K.D. Sharma v. SAIL, emphasizing that suppression of facts warrants dismissal of the writ petition. The court concluded that the petitioners' actions were intended to mislead the court and delay the recovery process.5. Maintainability of the Writ Petition Due to the Availability of Alternative Remedies:The Bank argued that the writ petition was not maintainable due to the availability of alternative remedies under Section 17 of the SARFAESI Act. The court did not explicitly address this argument in detail, but the dismissal of the petition on other grounds rendered this issue moot.Conclusion:The court dismissed the writ petition with costs, finding that the Bank had complied with the necessary legal procedures and that the petitioners had suppressed material facts. The petitioners were ordered to pay Rs. 20,000 to the Telangana State Legal Services Authority within eight weeks.