AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2007 (11) TMI 423
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....placed reliance on certain decisions. 4. On the contrary, Sri Shiva Reddy, learned counsel representing Sri C.V. Rajeeva Reddy, learned counsel for the respondents, had taken this Court through the relevant provisions of the Rules and would explain that the Forest Officer had conducted the sale, but on verification, it was found by the concerned Committee that all the guarantors were not served and in the light of the same, the Banking Institution had taken such a decision, even otherwise, the directions prayed for in the writ petition cannot be granted and the writ petition is liable to be dismissed. 5. Heard the counsel. 6. Sri Shabbir Ahmed Khan, the writ petitioner, filed the present writ petition for a Writ of Mandamus declaring the action of the respondents in not issuing sale certificate in terms of Rule 9 (6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter in short referred to as "the Rules" for the purpose of convenience) after accepting the balance bid price in terms of the auction sale confirmation letter dated 10.01.2007 issued by the 2nd respondent with respect to the land in Plot No. 198, 199, 198/1 and 199/1 in R.s.No.153 and 154 situated at Jawaha....
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....0 p.m. by the 2nd respondent. The terms further specify that the highest bidder shall be declared as successful tender who should immediately deposit 25% of the bid amount by way of advance inclusive of the EMD amount on the sale being confirmed in his favour and balance of the bid amount to be paid within 15 days thereafter. 8. Further, the petitioner, in his affidavit, averred that he along with Sri B.V. Siva Chandra Rao jointly participated in the auction on 10.01.2007 and offered Rs. 1,42,50,000/- as his tender. On opening of the tenders, the 2nd respondent declared the offer given by the petitioner as highest and accordingly, confirmed the auction in his favour vide letter dated 10.01.2007. On confirmation of the auction, the petitioner was called upon to pay the 25% of the bid amount inclusive of EMD amount. Accordingly, the petitioner paid Rs. 27,00,000/- towards balance 25% of the bid amount. The 2nd respondent in letter dated 10.01.2007 called upon the petitioner to pay the balance 75% bid amount on or before 24.01.2007. The petitioner on 24.01.2007 approached the 2nd respondent and requested to receive the balance bid amount vide letter dated 24.01.2007. However, to the ....
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....e auction is conducted, the highest bidder shall deposit one fourth of the bid amount inclusive of the EMD immediately and the balance 75% of the bid amount shall be paid within 15 days. Further, as per the aforesaid Rules, on confirmation of sale by the secured creditor and if the terms of sale have been complied with, the Authorised Officer shall issue a Certificate of sale. Therefore, it has been stipulated in the notice of sale published in the newpapers on 10.10.2006 that the sale is subject to confirmation by the Bank (Secured creditor). In this case, the petitioner and Sri D. Siva Chandra Rao participated jointly and their joint bid is the highest bid. Since they are the highest bidders, the Branch Manager of Governorpet Branch addressed a letter dated 10.01.2007 to the petitioner and Sri D. Siva Chandra Rao jointly stating that they are the highest bidders and brought to their notice about the payments to be made as per the terms of the tender sale. The said letter cannot be termed as auction confirmation letter and the sale has not yet been confirmed by the secured creditor in accordance with the Rules. Further, it is stated that the notice, dated 23.08.2004, was issued to....
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....eserves the right to accept or reject any tender without assigning any reason. Knowing fully well the terms and conditions of the notice for sale, the writ petitioner and Sri B.V. Sivachandra Rao jointly participated and offered Rs.1,42,50,000/-as their bid amount. Since the amount offered by the writ petitioner and the said Sri B.V. Sivachandra Rao jointly is the highest bid, they were informed to deposit 25% of the bid amount including EMD amount. They have jointly paid the said amount of 25% of the bid amount. As the writ petitioner and the said Sri B.V. Sivachandra Rao are the highest bidders jointly, both of them were informed jointly to pay the remaining 75% of bid amount before 24.01.2007 by a letter dated 10.01.2007 issued by the Branch Manager, Governorpet Branch, Vijayawada. But, at no point of time, the secured creditor has confirmed the auction sale as alleged by the petitioner in the affidavit. In the meantime, one of the joint bidders namely Sri B.V. Sivachandra Rao has informed the respondents on 11.01.2007 that he was dropping from the bid in favour of the petitioner. It is also stated that the higher authorities of the respondents have considered the letter, dated ....
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..... In the light of the same, it is stated that there is an effective alternative remedy and the writ petition is liable to be dismissed. Rule 8 of the Rules dealing with sale of immovable secured assets reads as hereunder : "(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. (2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newpapers, one in vernacular language having sufficient circulation in that locality, by the authorized officer. (3) In the event of possession of immovable property is actually taken by the authorized officer, such property shall be kept in his own custody or in the custody of any person authorized or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property. (4) The authorized officer shall take steps for preservation and....
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....of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9: Provided further that if the authorized officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. (3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty-five percent of the amount of the sale price, to the authorized officer conducting the sale and in default of such deposit, the property shall forthwith be sold again. (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....
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....ght to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer; (5) the sale may be notified to be subject to a reserved or upset price. (6) if the seller makes use of pretended bidding to raise the price the sale is voidable at the option of the buyer." 10. Emphasis was laid on Rule 8(6) and Rule 9(2) of the Rules specified above. Further, strong reliance was placed on the decision of JAI BHAWANI TIMBER V. STATE OF MADHRA PRADESH1, wherein, the Division Bench of Madhya Pradesh High Court observed as hereunder : "(10) It is not in dispute that the D.F.O. in respect of all the lots had fixed a reserve price and he alone was competent to accept or reject the bid. It is also not in dispute that the relation to teak lots, on the relevant date of auction, he was competent even to accept the bid below 10% of the upset price. On a conjoint reading of the above quoted auction-conditions, it is clear to us that the auction sales were complete on accouncement....
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....tance of the bids. This is also not one of the reasons mentioned in the return for refusing to give effect to the sales made in favour of the petitioners. "11a. Learned counsel for the respondents in support of his contention laid much stress on the contents of condition No. 11 of the auction notice, to contend that it is only on signing of bid-sheets by the D.F.O. that the sales should be held as complete. Interpretation placed on condition No.11 by the respondents does not appeal to us at all and the contention cannot be accepted. Condition No. 11 cannot be read in isolation of other conditions and should be read conjointly with those preceding and following it. Particularly, condition No.11 has to be read in conjunction with condition No. 10, which immediately precedes it. Two conditions Nos.10 and 11 use the words 'competent authority', which is an authority other than the D.F.O., who is the auctioneer in every auction sales. The above two conditions lay down that where the D.F.O. is incompetent to accept the bid, being beyond his pecuniary powers, acceptance of bid by him, will be subject to the sanction and eventual acceptance by the competent authority. It is in respect of s....
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....ntained in section 64 of the Act to lend credibility and fairness to the sales effected by public auction." 11. The principal contention advanced by the writ petition is that since the condition of deposit of amount had been complied with in accordance with the Rules, the legal right had accrued to the writ petitioner to get the confirmation of sale and the stand taken by the Bank that the authorized Officer is different from the secured creditor and subject to the confirmation of the secured creditor only, the sale had been conducted cannot be said to be a sustainable contention. The relevant portions of the decisions specified supra had been emphasized. It is no doubt true that the Banking Institution after the conduct of sale normally cannot go back, but there may be several circumstances under which the Banking Institution on verification may come to the conclusion that there are certain defects, which may result in some further consequences or some litigation. It is also equally true that when the bidder or auction purchaser is prepared to take the property with such defects, if any, may be the Banking Institution may have to confirm the same, but it cannot be laid down as a ....