TaxTMI 
TaxTMI 
2016 (9) TMI 713
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....No.107, Block No.46, T.S.No.1035, CBM Compound, Visakhapatnam. The 7th respondent herein was the auction purchaser in the said sale. Further directions are sought to the bank not to confirm this sale and issue a sale certificate, register the same or deliver possession to the 7th respondent. By order dated 12.10.2015, this Court directed the bank not to register the sale certificate in favour of the auction purchaser till 28.10.2015. The said order was extended thereafter from time to time. On 02.12.2015, this Court took note of the petitioners allegation that though the auction was conducted on 15.07.2015, the 7th respondent/auction purchaser did not deposit 25% of the bid amount on the day of the auction and also failed to deposit the balance 75% of the bid amount within 15 days as required, and directed the Chief Manager and Authorised Officer of the bank to file an additional affidavit indicating the date when the bid of the 7th respondent/auction purchaser was confirmed and also the details of its payment of 25% and the balance 75% of the bid amount. The interim order granted on 12.10.2015 also stood extended and is operative as on date. The impugned order dated 15.09.20....
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....t failed to deposit 25% of the bid amount on the day of the auction and also failed to deposit the balance 75% within fifteen days. He further contended that the sale was contrary to the mandate of the SARFAESI Act and the Rules of 2002. Significantly, the petitioner raised the issue of postponement of the sale from 01.07.2015 to 15.07.2015 in S.A.No.201 of 2015, but the same was brushed aside on the ground that the petitioner, being the applicant therein, was fully aware of the extension of the date of auction and the Tribunal held that the sale could not be set aside on this ground. The Tribunal seems to have been of the opinion that as the petitioner and his family members were not coming forward to pay the banks dues, the technical issue as to extension of the date of auction did not warrant quashing of the sale. Before this Court, the petitioner again contended that the bank had no power or authority to postpone the sale from 01.07.2015 to 15.07.2015 without issuing a fresh sale notice. In its counter-affidavit, the bank stated that after issuance of the auction sale notice dated 29.05.2015 to the borrowers under Rule 8(6) of the Rules of 2002, it published the same in the ....
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....borrower is put on notice of the date and time by which the sale would be effected in order to provide him the required opportunity to take all possible steps for retrieving his property or at least ensure that in the process of sale, the secured asset derives the maximum benefit and the secured creditor, or any one on its behalf, is not allowed to exploit the situation. Apropos the statutory procedural prescriptions in Rules 8 and 9 of the Rules of 2002, the Supreme Court opined that the requirement under Rule 8(6) and Rule 9(1) contemplates a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspapers. In other words, per the Supreme Court, while the publication in a newspaper should provide 30 days clear notice, as Rule 9(1) also states that such notice of sale is to be in accordance with the proviso to sub-rule (6) of Rule 8, 30 days clear notice to the borrower should be ensured as stipulated under Rule 8(6) as well. It was therefore held that the use of the expression or in Rule 9(1) should be read as and as that alone would be in consonance with Section 13(8) of the SARFAESI Act. This, according to the Supreme Court, was i....
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....ls with the discretion of the Tax Recovery Officer to adjourn the sale by recording his reasons for such adjournment. The said Rule does not in any way conflict with either Rules 8 or 9 or Section 13, in particular sub-section (1) or sub-section (8) of the SARFAESI Act. Therefore, to that extent there is no difficulty in applying Rule 15. As far as sub- rule (2) is concerned, the same is clear to the effect that a sale of immovable property once adjourned under sub-rule (1) for a longer period than one calendar month, a fresh proclamation of sale should be made unless the defaulter consents to waive it. The said sub-rule also does not conflict with any of the provisions of the SARFAESI Act, in particular Section 13 or Rules 8 and 9. In fact there is no provision relating to grant of adjournment or issuance of a fresh proclamation for effecting the sale after the earlier date of sale was not adhered to in the SARFAESI Act. In such circumstances going by the prescription contained in Section 37 of the SARFAESI Act, as we have reached a conclusion that the provision contained in Section 29 of the RDDB Act will be in addition to and not in derogation of the provisions of the SARF....
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....and (8) of the said Act. (emphasis is ours) To some extent, there seems to be a contradiction between the aforestated two paragraphs. While holding, on the one hand, that Rule 15 of Schedule-II, Part-1 of the Income Tax Act, 1961, is also applicable to sale proceedings under the SARFAESI Act and that the same should be followed in a situation where a sale notified as per Rules 8 and 9(1) of the Rules of 2002 gets postponed, the Supreme Court however held in para 53 that if any sale, properly notified after giving 30 days clear notice to the borrower, did not take place as scheduled for reasons which cannot be solely attributed to the borrower, the secured creditor cannot effect the sale or transfer of the secured asset on any subsequent date by relying upon the notification issued earlier. This aspect was further clarified by the observations in para 55 of the judgment wherein, while dealing with the facts of that case, the Supreme Court observed that the bank in the said case should have issued fresh notice in accordance with Rules 8(6) and 9(1) of the Rules of 2002 once the sale notified earlier did not take place on the scheduled date. Given the clear mandate of the afores....
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.... As to whether the petitioner, being the borrower, was required to be taken into confidence while granting such extension is not open to question. The provision itself stipulates that the extended period has to be agreed upon in writing between the parties. In GENERAL MANAGER, SRI SIDDESHWARA COOPERATIVE BANK LTD. V/s. IKBAL , the Supreme Court dealt with the connotation of the word parties used in the Rules of 2002 and held that it would include not only the secured creditor and the auction purchaser but also the borrower. Therefore, if the bank wanted to extend time for deposit of the balance sale consideration, it could have done so only by taking the petitioner, the borrower, into confidence and after obtaining his consent. Admittedly, this procedure was not followed. On the above analysis, we are of the opinion that the Tribunal erred in brushing aside the statutory mandate of Rules 8 and 9 of the Rules of 2002, and passing the order dated 15.09.2015. However, we are conscious of the fact that the 7th respondent/auction purchaser is put to loss owing to a lapse primarily attributable to the bank in following the mandatory procedure stipulated in the Rules of 2002. Be it ....