TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 216
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.... repayment of the said housing loan. Despite several reminders when the borrower failed to make payment of the loan amount, the Bank issued a notice on 16.02.2005 calling upon him to repay the outstanding loan amount of Rs. 10,43,000/- with interest and costs failing which it was stated in the notice that the mortgaged property will be sold according to law. 4. The borrower failed to make payment of the outstanding loan amount as demanded in the notice dated 16.02.2005. The Bank then issued a notice to him on 30.06.2005 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "SARFAESI Act"). In that notice borrower was informed that if he failed to discharge the outstanding dues within 60 days, the Bank may exercise action under Section 13(4) of the SARFAESI Act and the mortgaged property shall be sold. 5. On 09.12.2005, the Bank got the mortgaged property valued which was fixed at Rs. 9,00,000/-. 6. On 18.12.2005, the Bank published the auction notice in the local newspapers. The conditions of the public notice were also mentioned in the auction notice. 7. Bashir Ahmed (appellant in two appeals....
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.... a case was made out for interference. 13. We have heard Mr. S.N. Bhat, learned counsel for the Bank (appellants in the appeals arising from SLP(C) No.17704-17705/2012), Mr. Raja Venkatappa Naik, learned counsel for the auction purchaser (appellants in the appeals arising from SLP(C) Nos.12106-12107/2012) and Mr. Rajesh Mahale, learned counsel for the borrower. 14. SARFAESI Act lays down the detailed and comprehensive procedure for enforcement of security interest created in favour of a secured creditor without intervention of the court or tribunal. Section 13(2) requires the secured creditor to issue notice to the borrower in writing to discharge his liabilities within 60 days from the date of the notice. Such notice must indicate that if the borrower fails to discharge his liabilities, the secured creditor shall be entitled to exercise its rights in terms of Section 13(4). 15. There is no dispute that a notice in terms of Section 13(2) was given by the Bank to the borrower on 30.06.2005. That the Bank proceeded for the enforcement of security interest in one of the modes provided under Section 13(4) is also not in dispute. The borrower in the writ petitions filed before the Ka....
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....of sale shall issue a certificate of sale of the immoveable property in favour of the purchaser in the form given in Appendix V to the 2002 Rules. 18. A reading of sub-rule (1) of Rule 9 makes it manifest that the provision is mandatory. The plain language of Rule 9(1) suggests this. Similarly, Rule 9(3) which provides that the purchaser shall pay a deposit of 25% of the amount of the sale price on the sale of immovable property also indicates that the said provision is mandatory in nature. As regards balance amount of purchase price, sub-rule (4) provides that the said amount shall be paid by the purchaser on or before the fifteenth day of confirmation of sale of immovable property or such extended period as may be agreed upon in writing between the parties. The period of fifteen days in Rule 9(4) is not that sacrosanct and it is extendable if there is a written agreement between the parties for such extension. What is the meaning of the expression 'written agreement between the parties' in Rule 9(4)? 2002 Rules do not prescribe any particular form for such agreement except that it must be in writing. The use of term 'written agreement' means a mutual understandin....
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....I.B. Mallad) Signature of G.M. And Seal of the Bank. Sd/- General Manager Shri. Shiddheshwar Co-op. Bank Ltd., Bijapur" 22. Two things clearly emerge from the above letter. First, at the time of auction sale on 11.01.2006 the borrower was present. He did not object to the auction being held before expiry of 30 days from the date on which the public notice of sale was published. He also agreed that bid given by the auction purchaser for Rs. 8,50,000/- which was highest bid be accepted as the auction purchaser happened to be his known person. Second, and equally important, the borrower expressly gave consent in writing that the balance sale price may be accepted from the auction purchaser now and sale certificate be issued to him. The above letter sent by the borrower to the Bank has been accepted by the Bank. Thus, there is a written agreement between the borrower and the Bank for extension of time up to 13.11.2006. The auction purchaser made the payment of the balance purchase price forthwith on that day, i.e., 13.11.2006. This indicates that he was impliedly a party to the written agreement between the Bank and the borrower. In the circumstances, there is no reason wh....
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....f the SARFAESI Act, the borrower had a remedy of appeal to the Debts Recovery Tribunal (DRT) under Section 17. The remedy provided under Section 17 is an efficacious remedy. The borrower did not avail of that remedy and further remedies from that order and instead directly approached the High Court in extraordinary jurisdiction under Article 226 of the Constitution of India. 28. The learned Single Judge brushed aside the argument of alternative remedy by holding as follows : "16. As regards alternate remedy submitted by the learned counsel for respondents II to IV, in the decision cited supra, the Supreme Court has held that the rule of exhaustion of alternate remedy is a rule of discretion and not a rule of compulsion. The court has to assign reasons for entertaining writ petition without exhausting alternate remedy. The petitioner has been victimized by fraudulent acts of respondents III and IV. The III respondent had misused his official position and petitioner has been deprived of his property in the manner not known to law. There is violation of Article 21 of the Constitution of India. The petitioner has been deprived of his shelter. The right to livelihood is an integral f....
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....such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative rem....
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....self for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge. 33. Before we close, one more fact may be noted. The auction- purchaser over and above the sale price of Rs. 8,50,000/-, has discharged the entire liability of the borrower towards the bank by making further payment of more than Rs. 2,37,000/-. 34. We are, thus, satisfied that impugned orders cannot be sustained. Appeals are, accordingly, allowed. The impugned orders are set aside. The writ petitions filed by the borrower before the High Court are dismissed with no order as to costs. FOOTNOTE *9. Time of sale, Issue of sale certificate and delivery of possession, etc.- (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice 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 ....