TaxTMI 
TaxTMI 
2016 (10) TMI 204
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....ficer as sole respondent originally and later as per orders in W.P.M.P.No.15879 of 2016 dated 20.04.2016, the auction purchaser is impleaded as 2nd respondent. 2-a. It is the factual matrix in nutshell that, the writ petitioner having availed house loan of Rs. 16,88,000/- on 01.10.2008, for purchase of built up area of 1250 Sq.ft., with common area along with undivisible 1/15th share equal to 26 Sq.yards out of 390 Sq.yards site all consisting of Flat No.401, IV Floor, V.C.Homes, Survey No.151/A situated in Sankhal Bagh, N.R.Peta, Kurnool; paid installments regularly upto the year, 2011 and later committed default. For the defaults committed, it is her version that her husband left his job and was doing business all and sundry and wherein he incurred debts and he left the city without disclosing whereabouts and some of the creditor Banks also filed criminal cases against them and after he was traced in the year, 2014 arrested in a criminal case of 2011 and later was released on bail. According to her, taking advantage of the things, the so called auction petitioner (2nd respondent), Smt.V.Prameela Reddy and one V.S.Reddy having an eye over her property supra colluded with the Ba....
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....of all further proceedings pursuant to the E-auction sale dated 14.03.2016 pending disposal of the writ petition. 2-e. Among above contentions, it is the main contention that said auction sale dated 14.03.2016 is even contrary to the mandate of Rules 8(5) r/w 8(6) and 9(1) of the Rules, 2002 for no clear 30 days time gap from date of publication in Eenadu Telugu Daily of Kurnool Edition dated 13.02.2016 to the date of auction conducted on 14.03.2016. 3-a. The counter-affidavit filed by the 1st respondent-Bank through its Chief Manager is with the contentions that from availability of statutory remedies under SARFAESI Act, 2002 to approach the Debt Recovery Tribunal under Section 17 of the Act, to impugn the auction sale, the writ petition is not maintainable to prevent the Bank from recovering the dues and thereby the writ petition is liable to be dismissed, vide, Union Bank of India v. Satyawati Tondon 2010(8) SCC 110, Kanaiyalal Lalchand Sachdev v. State of Maharashtra 2011(2) SCC 782, K.Balakrishna v. Debt Recovery Tribunal, Hyderabad 2006(6) ALT 695 and V.K.Shekhar v. Indian Bank 2006(6) ALD 778 and submitted from the expression in Director of Settlements, A.P. and others....
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.... between notices under Rule 8(6) to 9(1) of the Act and even the suit O.S.No.79 of 2011 decreed on 21.04.2014, the decree no way restrains the secured creditor Bank from proceedings under the Act, 2002 and thereby there are no merits in the writ petition and same is liable to be dismissed. 3-d. The contest of auction purchaser is besides bonafide purchaser for value in public auction, in the same lines of the Bank and thereby it no way requires repetition. 4. Heard the learned counsel for the writ petitioner, the learned counsel for the 1st respondent creditor Bank, represented by the Authorized Officer and the learned counsel for the 2nd respondentauction purchaser. Perused the material on record. 5-a. The facts not in dispute from the above are that publication of the sale notice was on 13.02.2016 in Saakshi Telugu Newspaper and Hans India English Daily for the auction that was to be held on 14.03.2016 and accordingly the auction was conducted on 14.03.2016. 5-b. It is the case of the writ petitioner that there was no clear 30 days notice from the date of publication to the date of sale and the 30 days clear notice is mandatorily required to conduct the sale and on that ....
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....ourt would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment." The Apex Court in Union of India v. Guwahati Carbon Ltd., (2012) 11 SCC 651 at para-4 observed that under Article 226 of the Constitution of India, High Courts have vast powers, as the Apex Court has under Article 32 of the Constitution of India, but such powers can be exercised in those cases where the statutory authority has not acted in accordance with the provisions of the enactment in question or in defiance of the fundamental principles of judicial procedure or as resorted to invoke the provisions which are repelled or when an order has been passed in total violation of the principles of natural justice. It was observed further by referring to the expression in Whirlpool Corporation v Registrar Of Trade Marks, Mumbai 1998(8) SCC 1 at para-15 that under Article 226 of the Constitution of India, the High Court having regard to the facts of the case, has a discretion to entertain a writ petition or not, but the High Court has imposed upon itself certain restrictions and one of which normally is wh....
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....d what is the date of sale with reserve price etc. contents, which are material. For that, Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002(for short, 'the Rules 2002') and Section 13 of the SARFAESI Act, read as under: Rule 8: Sale of immovable secured assets- (1) Where the secured asset is an immovable property, the authorised 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 newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. (3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised 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, t....
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....elivery 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/(and) The word (or) is interpreted in Mathew Varghese by the Apex Court as (and) 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 authorised 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 authorised 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 per cent of the amount of the sale price, to the authorised officer conducting the....
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.... provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. 1[(3A) If, on receipt of the notice under sub‑section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week o....
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....d creditor or by the manager on behalf of the secured creditors shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. (7) Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests. (8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor,....
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....representing not less than three-fourth in value of the amount outstanding on such date; (b) "amount outstanding" shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor. (10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower. (11) Without prejudice to the rights conferred on the secured creditor under or by this section, the secured creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first taking any of the measures specified in clauses (a) to (d) of sub-section (4) in relation to the secured assets under this Act. (12) The rights of a secured creditor under this Act may be exercised by one or more of his officers authorised in this behalf in such manner as may be prescribed. (13) No bo....
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....s in deprivation of a person's constitutional and human right to property. The Apex Court in regard to law and equity way back held in Raghunatharai Bareja Vs. Panjab National Bank (2007) 2 SCC 230 that law is law and same is different from equity and in case of conflict between the two, it is the law which must prevail over equity in accordance with the Latin maxim- Dura Lex Sed Lex. In this regard the Apex Court in Afcons Infrastructure Ltd. Vs. Cherian Varkey Construction Company(P) Ltd. (2010) 8 SCC 24 held that interpretative tools could be used by the Courts to set right the situation by adding or substituting the words in the statute when plain and grammatical construction would lead to confusion, absurdity and repugnancy and otherwise not. In fact the Apex Court in its latest expression in Narayan Vs. Babasaheb 2016 (6) SCC 725 held that when language of the provision is very clear, it should be interpreted in same sense and hardship or inconvenience is not a determining factor from the Latin Maxim- Dura Lex Sed Lex. 12. From the above, coming back to Rule 9(1), it clearly speaks that no sale of immovable property under these rules shall take place before the expiry of t....
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...., coming to Section 9 of the General Clauses Act and Section 12 of the Indian Limitation Act: Section 9 of the General Clauses Act reads as under: 9. Commencement and termination of time- (1) In any [Central Act] or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word "from", and, for the purpose of including the last in a series of days or any other period of time, to use the word "to". (2) This section applies also to all [Central Acts] made after the third day of January, 1868, and to all Regulations made on or after the fourteenth day of January, 1887. Section 12 in The Limitation Act, 1963, reads as under: 12. Exclusion of time in legal proceedings- (1) In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded. (2) In computing the period of limitation for an appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the ti....
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....ing the notice in the format in which such notice of possession is to be issued to the borrower is stipulated. Under Sub-rule (2) of Rule 8 again, it is stated as to how the secured creditor should publish the notice of possession as prescribed under Sub-rule (1) to be made in two leading newspapers, one of which should be in the vernacular language having sufficient circulation in the locality and also such publication should have been made seven days prior to the intention of taking possession. Sub-rule (3) of Rule 8 really casts much more onerous responsibility on the secured creditor once possession is actually taken by its authorised officer. Under Sub-rule (3) of Rule 8, the property taken possession of by the secured creditor should be kept in its custody or in the custody of a person authorized or appointed by it and it is stipulated that such person holding possession should take as much care of the property in its custody as a owner of ordinary prudence would under similar circumstances take care of such property. The underlining purport of such a requirement is to ensure that under no circumstances, the rights of the owner till such right is transferred in the manner kno....
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....in selling the property. [39] ......[52]. [53] We, therefore, hold that unless and until a clear 30 days notice is given to the borrower, no sale or transfer can be resorted to by a secured creditor. In the event of any such sale properly notified after giving 30 days clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable 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. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that respect, the only other provision to be noted is Sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as Sub-rule (8) is concerned, the parties referred to can only ....