TaxTMI 
TaxTMI 
2017 (3) TMI 251
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....set on sale, which is mandatory. The relevant portion of the High Court decision, which is impugned in this appeal reads thus: ".. . . . . . . . . . The Supreme Court has clearly enunciated that a reading of sub-rule (6) of Rule 8 and sub-rule (1) of Rule 9 of the Rules together, the service of individual notice to the borrower specifying a clear 30 days time gap for effecting sale of immovable secured asset is a Statutory mandate. Hence, use of the expression 'or' found in Rule 9(1) of the Rules is only appropriate to be read as 'and', as that alone would be in consonance with sub-section (8) of Section 13 of the Act. We may also add that a notice of intended sale by providing a clear 30 days time to the borrower preceding any decision to sell away the secured asset would, in fact, be in consonance with the mandate of the provision contained in sub-section (8) of Section 13 of the Act, as it is too well known that the Rules made under a Statute are only essentially intended to secure effective implementation of the provisions contained in the Statute. In our opinion, therefore, putting the borrower on notice of 30 days duration by the secured creditor conveying the intention t....
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....action. The respondent no.1 had offered his immovable property as security, bearing Plot No. 70, admeasuring 278 square yards situated in Survey No.66/6, Ward No. 3, Block No.7 in Mansoorabad village, Saroornagar Mandal, L.B. Nagar Municipality, which has now become part of Greater Hyderabad Municipal Corporation. 4. As the principal borrower committed default, the appellant bank issued a demand notice dated 25.01.2014 to it under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "2002 Act"). The appellant bank then issued possession notice under Section 13 (4) of 2002 Act on 24.06.2014. The possession notice was published in two leading newspapers. After taking symbolic possession of the secured asset, the upset price at Rs. 69,75,000/- thereof was determined, as per the valuation report of the approved valuer. That upset price was accepted by the appellant bank. Whereafter, a notice of sale (e-auction notice) was issued on 15.10.2015. Notice in terms of Rule 8(6) was also given to the principal borrower and both the guarantors, including the respondent no.1, to give them one last and final opportu....
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....is should precede the issuance of a public notice for sale. 6. In spite of notice, the respondent no.1 has not chosen to appear. 7. Mr. Dhruv Mehta, Learned Senior Counsel appearing for the appellant, in all fairness submitted that the auction sale conducted in the present case on 21.11.2015 has not materialized as the auction purchaser has backed out. In that sense, the appellant in any case may have to issue a fresh auction notice, in view of the liberty given by the High Court in the operative part of the impugned judgment. He submits that, however, as the observations made in the impugned judgment, as highlighted hereinbefore, may come in the way of the appellant and other banks or secured creditors, it is appropriate to examine the correctness of (2014) 5 SCC 610. the view taken by the High Court. Considering the above, we thought it appropriate to examine the issue on hand. 8. The purport and interplay of the provisions of the said Rules had come up for consideration before this Court in Mathew Varghese (Supra). On analyzing the gamut of the provisions, this Court opined that the important feature of the provisions is that a free hand is given to the secured creditor for t....
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....the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,- (a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; (b) The secured debt for recovery of which the property is to be sold; (c) Reserve price, below which the property may not be sold; (d) Time and place of public auction or the time after which sale by any other mode shall be completed; (e) Depositing earnest money as may be stipulated by the secured creditor; (f) Any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property. (7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorized officer deems if fit, put on the web-site of the secured creditor on the Internet. (8) Sale by any method other than public auction or public tender....
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....l amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him: [Provided that if after meeting the cost of removing encumbrances and contingencies there is any surplus available out of the money deposited by the purchaser such surplus shall be paid to the purchaser within fifteen days from the date of finalization of the sale.] (8) On such deposit of money for discharge of the encumbrances, the authorized officer [shall] issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly. (9) The authorized officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not." 10. Reverting to the decision in Mathew Varghese (supra), in paragraphs 30, 31 and 33 of the said decision, the court observed thus: "30.....
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.... 32. ....................................... 33. Such a detailed procedure while resorting to a sale of an immovable secured asset is prescribed under Rules 8 and 9(1). In our considered opinion, it has got a twin objective to be achieved: 33.1. In the first place, as already stated by us, by virtue of the stipulation contained in Section 13(8) read along with Rules 8(6) and 9(1), the owner/borrower should have clear notice of 30 days before the date and time when the sale or transfer of the secured asset would be made, as that alone would enable the owner/borrower to take all efforts to retain his or her ownership by tendering the dues of the secured creditor before that date and time. 33.2. Secondly, when such a secured asset of an immovable property is brought for sale, the intending purchasers should know the nature of the property, the extent of liability pertaining to the said property, any other encumbrances pertaining to the said property, the minimum price below which one cannot make a bid and the total liability of the borrower to the secured creditor. Since, the proviso to sub-rule (6) also mentions that any other material aspect should also be made known when ef....
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.... 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 effective 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 relate to the secured creditor and the borrower. It is, therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under Rule 8 read along with Rule 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Sections 13(1)....