TaxTMI 
TaxTMI 
TaxTMI 
2010 (10) TMI 947
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....l bidder for an offer of Rs. 1,00,95,000. Pursuant to the same, the petitioner has paid a sum of Rs. 17,18,352 towards 25 per cent of the sale consideration and the time was given to the petitioner for paying the balance sale consideration of Rs. 75,75,000 on or before March 26, 2010. In the meanwhile, the petitioner applied for encumbrance certificate in respect of the property on March 18, 2010 and the encumbrance certificate was obtained on the same date, which reveals the subsistence of order of attachment upon the property by sales tax authorities for the tax arrears due from the third respondent which compelled the petitioner to apply to the authorised officer of the second respondent-bank on March 26, 2010 seeking further time to clear the doubts arising due to the order of attachment regarding the validity of auction sale. The second respondent-bank on receipt of the representation dated March 26, 2010 replied the petitioner on March 27, 2010 in and under which, the petitioner was advised to remit the balance amount immediately. The petitioner has instead of making further payment, come forward with this writ petition for the relief as stated supra. The writ petition was ....
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....issue except to postpone the payment of balance sale consideration within the prescribed time, in order to avoid cancellation of bid and the same lacks bona fide on merits. I have considered the rival submissions made on both sides and perused the materials available on record. Before going into the claim of the petitioner on facts, the first aspect to be considered is about the maintainability of this writ petition. The relief sought for herein is admittedly for directing the second respondent-bank to refund the sale advance of Rs. 25,20,000 to the petitioner. The property is brought for sale through public auction invoking the relevant provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter shortly referred to as, "the SARFAESI Act"). The second respondent-bank has on the failure of the third respondent to make payment, invoked section 13 of the Act which deals with "enforcement of security interest" and has under section 13(4)(a), taken possession of the secured assets and obtained orders. In so far as this writ petition is concerned, it is not against the action of the second respondent-bank in bri....
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....onstitution of India which have serious adverse impact on the right of banks and other financial institutions to recover their dues. The Supreme Court has at the end of its judgment cautioned the High Courts to exercise their discretion in future in such matters with greater caution, care and circumspection. Though this court is bound to follow the observation of the Supreme Court, the same is in my considered view, inapplicable to the facts of the present case. Unlike the case dealt with by the Supreme Court, the relief sought for herein is not against the measure taken under section 13(4). In so far as the petitioner herein is concerned, he is only the third party, who participated in the auction held in pursuance of the action taken under section 13(4) of the SARFAESI Act and is not the person aggrieved against the action taken under section 13(4) of the Act. Further, what is challenged before this court is the procedural violation in the manner of auction so held, not the auction itself. As a matter of fact, our High Court in the judgment reported in Sheeba Philominal Merlin v. Repatriates Co-op. Finance and Development Bank Ltd., Chennai-17 [2010] 5 CTC 449, has after discuss....
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....tender in full after complying with all formalities and has been declared as the successful bidder and paid the advance amount. However, the petitioner thought fit not to proceed with the purchase of the property by raising the issue that the property was under attachment by the Sales Tax Department. The petitioner has come forward with such contention for the first time in his letter dated March 26, 2010, wherein, it is specifically stated that he came to know about the order of attachment only after obtaining encumbrance certificate on March 18, 2010. In the reply dated March 27, 2010, the second respondent did not mention anything about the encumbrance but advised the petitioner to pay the balance amount of Rs. 75,75,000 on or before March 26, 2010, as per the tender condition. There is absolutely no whisper in the reply notice as to whether the document containing encumbrance was made available on March 5, 2010 in the course of verification of the documents by the participants. It is throughout the stand taken by the petitioner that he came to know about the attachment of the property by the sales tax authority only after March 11, 2010 and only after obtaining encumbrance cert....
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....rs it material for a purchaser to know in order to judge the nature and value of the property." A reading of rule 8(6) makes it very clear as to what are the relevant particulars to be furnished in the sale notice, as per which the description of the property to be sold among other particulars including the details of the encumbrances and any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property shall be known to the secured creditor by setting out the same in the public notice. As rightly argued by the learned senior counsel for the petitioner, the very purpose of inspection of the documents is to enable the intending purchaser to know the nature, condition and value of the property and also other encumbrances or burden upon the property. Though the learned counsel for the second respondent has attempted to argue that as the attachment is not an encumbrance as referred to under rule 8(6)(a), and the same was not one of the material factors which the bank is bound to disclose under rule 8(6)(f) of the Rules, such contention certainly deserves no consideration. It cannot be disputed that the or....
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.... or under section 14 of the SARFAESI Act, whenever the secured creditor contemplates a sale of immovable property, they will have to follow rule 8 of the Security Interest (Enforcement) Rules, 2002. Rule 8(6)(f) mandates the secured creditors to set out in the terms of sale notice any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property. A reading of the said rule, in our opinion, would also include the encumbrance relating to the property. We are inclined to read the rule in that way keeping in mind the interest of the intending purchaser to be put on notice as to the encumbrance, as otherwise he/she will be purchasing the property and simultaneously buying the litigation as well and an intending purchaser may not bid in the event he/she came to know of any encumbrance over the property. That is why the rule specifically contemplates a provision for the authorised officer, while notifying the sale, to specifically state as to the encumbrance. It will be a different issue in the event the auction notice indicated that it is the duty of the intending purchaser to verify not only the encumbrance ....