TaxTMI 
TaxTMI 
2015 (3) TMI 622
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.... Due to default made by the borrower, proceedings under The Securitization and Reconstruction of Financial Assests and Enforcement of Security Interest Act, 2002 (SARFAESI, for short) were initiated and the secured asset i.e properties in question were put to sale. The petitioner/auction bidder had given highest bid of Rs. 16,30,20,000/- in the auction held on 9th July, 2011 for purchase of the mortgaged property against the reserved price of Rs. 12 crores. The petitioner had also deposited earnest money of Rs. 1,40,00,000/-. By letter dated 11th July, 2011, the petitioner was duly informed by the bank that they had been declared the highest bidder and should comply with the terms and conditions of the notice inviting the bids. The petitioner deposited the balance 25% of the bid amount within 2 days and remaining 75% within 15 days i.e. on 25th July, 2011. 3. During the course of hearing, it was specifically put to and the petitioner was asked to clarify, whether any confirmation of the bid was received by them. It was accepted that except for letter dated 11th July, 2011, no other communication or letter was received by them from the bank. It was urged that this letter dated 11....
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....nfirmed, when the payments were made. 8. SA 31/2010 filed by the borrower and the guarantor, was dismissed by order dated 29th January, 2013. The primary ground and contention raised in the said petition was that the property in question was agricultural land governed by Delhi Land Reforms Act, 1958 and consequently protected under Section 31(1) of the aforesaid Act. The reserved price of Rs. 12 crores was questioned as low, for the property was earlier valued in 1996 at Rs. 10 crores and in the earlier auctions the reserve price as fixed was Rs. 14.77 crores and Rs. 15.83 crores. The borrower had claimed that the value of the property had gone up. The bank had contested the petition on multiple grounds including earlier rejection of the plea relying on the Delhi Land Reforms Act and affirmation of the said decision till the Supreme Court. This plea was accepted. The DRT observed and justified reduction of the reserve price to Rs. 12 crores for the property had been put to sale twice, vide notices dated 4th April, 2008 and 19th September, 2009 at the reserve price Rs. 1477 lacs and Rs. 1583.50 lacs, but no bids were received. Pertinently, the DRT observed that if the borrower fe....
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.... 12. The grievance raised by petitioner is that the bank did not inform them about the offer from the fourth respondent at the behest of the borrower. Aggrieved, they claim that they came to know about the rejection of their bid only on 25th February, 2013, when the letter dated 19th February, 2013 of the bank was received by them. By this letter the petitioner was informed that their bid had not been accepted or confirmed. By the same letter, the bank refunded Rs. 16,30,20,000/- by way of a demand draft. Before we examine the said contentions, other relevant facts may be noticed. 13. The petitioner on receipt of the letter dated 19th February, 2013 had filed an application in SA No. 31/2010, stating, inter alia, that they had not encashed bank draft and that the bank had violated mandate of the DRT's final order dated 29th January, 2013. Prayer of issuance of sale certificate was made. Initially, the DRT directed the parties to maintain status quo vide order 13th March, 2013, but the direction was subsequently vacated and interim relief declined vide order dated 15th April, 2013. In addition, the petitioner had also filed a separate and substantive SA being SA No. 40/2013 ....
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....the contention of the petitioner that the sale consideration of Rs. 28 crores paid by the fourth respondent was less than the market value or did not represent the fair market value of the property. Noticeably, the petitioner had offered only Rs. 16,30,20,000/- and is insisting on sale of the property at the said price. The impugned order correctly records and highlights the difference of Rs. 11.30 crores in the bid amount of Rs. 16,30,20,000 and the price of Rs. 28,00,0000/- paid by the fourth respondent. The price difference is substantial and huge. The total dues of the borrower were to the tune Rs. 60/65 crores and Rs. 28 crores would only partially reduce the amount due. The borrower was and is fully supporting the fourth respondent. In fact, the submission of the petitioner would constitute a good and sufficient cause for the bank not to accept or confirm the petitioner's bid due to changed circumstances as propounded by the petitioner themselves. Rejection of the bid given by the petitioner would, therefore, is in accord with the submission made by the petitioner. 16. The petitioner had drawn our attention to Section 13(1) of the Act and Rules 8 and 9 of the Rules, to sup....
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....of property Act and the judgment in Narandas Karsondas v. S.A. Kamtam (1977) 3 SCC 247 was held applicable to the proceedings under the Act, recording the following reasoning: "37. Mr Shyam Divan, learned Senior Counsel relied upon the decision inNarandas Karsondas [(1977) 3 SCC 247] , in which the right of a mortgagor as prescribed under Section 60 of the TP Act has been spelt out. Under Section 60 of the TP Act, at any time after the principal money fell due, there is a right in the mortgagor on payment or tender at a proper time and place of the mortgage money, to require a mortgagee to restore the property to the mortgagor with all rights prescribed as it stood prior to the mortgage. Under the proviso, the only impediment would be that if such a right of a mortgagor stood extinguished by the act of the parties or by the decree of a court. Certain other conditions are also stipulated in the said provision for the mortgagor to seek for redemption of the mortgaged property. Dealing with the said provision, this Court held as under in paras 34 and 35. Paras 34 and 35 are as under: (SCC p. 254) "34. The right of redemption which is embodied in Section 60 of the Transfer of Pro....
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....power to sell should not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. The above proposition of law of course was laid down by this Court inNarandas Karsondas [(1977) 3 SCC 247] while construing Section 60 of the TP Act. But as rightly contended by Mr Shyam Divan, we fail to note any distinction to be drawn while applying the abovesaid principles, even in respect of the sale of secured assets created by way of a secured interest in favour of the secured creditor under the provisions of the SARFAESI Act, read along with the relevant Rules. We say so, inasmuch as, we find that even while setting out the principles in respect of the redemption of a mortgage by applying Section 60 of the TP Act, this Court has envisaged the situation where such mortgage deed providing for resorting to the sale of the mortgage property without the intervention of the Court. Keeping the said situation in mind, it was held that the right of redemption will not get extinguished merely at the expiry of the period mentioned in the mortgage deed. It was also stated that the equity of redemption is not extinguished by mere contract fo....
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....and the sale was subject to confirmation by authorized officer. In Divya Manufacturing Co. Ltd. vs. Union Bank of India (2000) 6 SCC 69, a confirmed sale was set aside but before possession was delivered to the auction purchaser as another party had offered a higher price. The Supreme court in Divya Pharamceuticals Co. Ltd. (supra) followed two earlier decisions in LICA (P) Ltd. vs. Official Liquidator (2000) 6 SCC 79 and LICA (P) Ltd. vs. Official Liquidator (2000) 6 SCC 82. These decisions were followed by the Supreme Court subsequently in FCS Software Solutions Ltd. vs. LA Medical Devices Ltd. and Ors. (2008) 10 SCC 440. Relying on these decisions, in D.J. Enterprises Ltd. & Anr. Vs. IFCI Ltd. & Ors., Writ Petition (Civil) No. 10219/2009 decided on 4th May, 2010 and M/s Hari Kripa Towers Pvt. Ltd. vs. M/s IFCI Ltd. W.P (C) No. 4166/2010 decided on 5th July, 2010, it has been held by this High Court that the principles or ratio relating to sales made by the company court would be equally applicable. Thus, the highest bidder cannot have any vested right to claim confirmation of his bid or quotation. Of course, if the bid is wrongly rejected in a capricious and arbitrary manner, th....