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TaxTMI 
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TaxTMI 
2022 (11) TMI 921
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....erein stood as guarantor and created equitable mortgage over her immovable property as security for due repayment of the said loan amount. 4. After availing the above loan facilities, the respondent borrowers have committed default in repaying the outstanding loan amount and have also failed to pay the interest accrued to the loan accounts from time to time. Finally, the loan accounts have been classified as NonPerforming Assets (NPAs) on 30th September, 2012 and in furtherance, the respondent Bank initiated recovery proceedings under the provisions of the SARFAESI Act, 2002 and issued demand notice dated 15th November, 2012 calling upon the respondent borrowers/guarantor to repay and discharge the outstanding loan amount with interest and costs within 60 days. After following the procedure as contemplated under the provisions of the SARFAESI Act, 2002 and Rules made thereunder, on 14th February, 2013, the respondent Bank published a possession notice in the daily newspapers under Section 13(4) of the SARFAESI Act, 2002 and obtained the order from the District Collector on 23rd June, 2013 to take physical possession of the scheduled property from the respondent borrowers/ guaranto....
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....xtension of 15 days' time to deposit the sum of Rs.6 lakhs with direction to the respondent Bank (secured creditor) and the respondent borrowers to maintain statusquo. 8. The fact to be noticed at this stage is that since the dispute was ongoing before the Tribunal and the respondent borrowers have failed to comply with the interim order of the Tribunal dated 26th March, 2015 to deposit Rs.6 lakhs within 15 days from the date of passing of the order by 10th April, 2015, the respondent Bank (secured creditor) proceeded with the auction sale pursuant to the e-auction sale notice dated 25th February, 2015 in terms of liberty granted by the Tribunal. 9. The present appellant had initially deposited the earnest money of Rs.5,54,000/on 26th March, 2015 and after being declared the highest bidder with an offer of Rs.64,23,000/, further deposited a sum of Rs.10,51,750/which comes to Rs.16,05,750/ i.e. 25% of the total auction price and the balance 75% of the bid amount i.e. Rs.48,17,250/was deposited by the appellant on 15th April, 2015 and sale certificate was issued in favour of the appellant (auction purchaser). It is to be noticed that the day when the order came to be passed by the ....
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....ed by him on 15th April, 2015, is in clear breach of Rule 9(4) of the Rules, 2002 and accordingly, set aside all the proceedings initiated from the stage of Section 13(2) of the SARFAESI Act, 2002 till the delivery of physical possession of the scheduled property to the auction purchaser (appellant) by the respondent Bank by an order dated 23rd November, 2018, which is the subject matter of challenge before us. 13. Learned counsel for the appellant submits that so far as the description of the scheduled property put to auction is concerned, from the stage when the initial notice was issued by the respondent Bank (secured creditor) under Section 13(2) of the SARFAESI Act, 2002, the mortgaged property was described as "Door No.12-3-393" instead of "Door No.12-3-39", but it was never the case of the respondent borrowers either before the Tribunal or before the High Court that the description in the e-auction sale notice indicating the boundaries, measurement, ward number, block number, TS number and extent of land, etc. left any ambiguity or confusion in the minds of the participants in the e-auction bid and it was also not the case of the respondent borrowers that there is some othe....
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....ted to deposit Rs.6 lakhs within 15 days from the date of order but admittedly, the respondent borrowers have failed to deposit with the respondent Bank and sought further time to deposit, on which order came to be passed on 17th April, 2015 and they are only interested to nullify the e-auction proceedings initiated by the respondent Bank either by taking legal recourse or by any other mechanism, which is possible under the law and after failed to deposit the amount as directed by the Tribunal at least, they are not entitled to seek any indulgence from the High Court in the writ jurisdiction filed at their instance under Article 226 of the Constitution. 17. Per contra, learned counsel for the respondents, while supporting the finding returned by the High Court submits that once the appellant has failed to deposit the balance 75% of the bid amount by 11th April, 2015, which was the deadline in terms of e-auction sale notice published by the respondent Bank and admittedly 75% of the bid amount was deposited by the appellant on 15th April, 2015 which is in violation of Rule 9(4) of Rules, 2002 and that itself is sufficient to nullify the e-auction sale initiated by the respondent Ban....
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.... set aside the notice under Section 13(2) of the SARFAESI Act, 2002 and all other consequential proceedings initiated by the respondent Bank, and therefore, needs no further interference of this Court. 19. Learned counsel for the respondent Bank (secured creditor) has raised an objection that order of the Tribunal was appealable order before the Debts Recovery Appellate Tribunal under Section 18 of the SARFAESI Act, 2002 and the petition filed by the respondent borrowers directly before the High Court against the order of the Tribunal was not maintainable and for the delay in depositing the balance 75% of the bid amount, respondent Bank has tendered a reasonable justification and also filed a counter affidavit before this Court wherein, it has specifically stated that though the auction purchaser was ready to pay the balance of 75% of the bid amount on time, it is the respondent Bank who requested the auction purchaser to wait for some time because the respondent borrowers were negotiating with the Bank at that point of time in light of the interim order dated 26th March, 2015 passed by the Tribunal and that was the reason for which the delay of four days was caused in depositing ....
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....perty is a residential building of 266 sq. yards of land. The description of the property mortgaged can be identified from the notice issued in the first instance under Section 13(2) of the Act as follows: Borrowers Names & Addresses (1) Properties under Mortgage (2) Guarantors Name & Addresses (3) Outstanding amount due 1)Sri Bandi Srinivasulu, S/o Late B. Narasimhulu 2) Smt. Bandi Swarna Latha, W/o B. Srinivasulu, D.No.12-3-393, 3rd Cross, Sai Nagar, Anantapur A/C. Nos.31758622533; 32344540051; 31684374998 Property situated in the RD and SRD of Anantapur and within the Anantapur Municipal Limits. Ward No.4, Block No.18, T.S. No.2005,Paiki Ac. 0.05 Cents, Plot No.65. Present Door No.12-3-393, Assessment No.1001035935 Measurements: East West: 33 Ft and North South:66 Ft.; Boundaries: East: Plot of Pushpavathamma; West: House of Yaganti; North: Road; South: Plot of Pushpavathamma. Smt. Bandi Jaya Lakshmamma, W/o Late B. Narasimhulu, D.No.12-3-393, 3rd Cross, Sai Nagar, Anantapur. 24,87,616.00 as on 08.11.2012 + future interest & expenses. Place: Anantapur Date: 05-12-2012 Sd/Authorised Officer, State Bank of India, Gandhi Bazar Branch 24. On ....
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....tted to proceed with the auction sale of the schedule property on 28.03.2015 in pursuance of the Auction Notice dt. 25.02.2015 and however the Respondent Bank is hereby directed not to issue the sale certificate in favour of the highest bidder in the auction subject to the condition that the Applicant shall deposit a sum of Rs.6.00 lakhs directly with the Respondent Bank within 15 days from today. It is made clear that in the event the Applicant fails to deposit the amount, as stated supra, the Respondent Bank shall be at liberty to issue the sale certificate in favour of the highest bidder in the auction and such sale shall be subject to the result of the above SA." 28. In terms of the aforesaid order, respondent borrowers were to deposit the sum of Rs.6 lakhs on or before 9th April, 2015, but admittedly, the borrowers failed to deposit the aforesaid amount and on the said date i.e. 9th April, 2015 I.A. No.1687 of 2015 came to filed before the Tribunal seeking extension of time period by another 15 days to deposit the sum of Rs.6 lakhs and extension of 15 days' time was granted by the Tribunal to deposit the sum of Rs.6 lakhs to the borrowers by an order dated 17th April, 2015. ....
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....here was great emphasis that Door No."12-3-393" was mentioned instead of "12-3-39" and so also the breach of Rule 9(4) of the Rules, 2002, the Debts Recovery Tribunal dismissed the application by an order dated 1st August, 2019. 32. The order of the Tribunal dated 1st August, 2019 was an appealable order under Section 18 of the SARFAESI Act, 2002 and in the ordinary course of business, the borrowers/person aggrieved was supposed to avail the statutory remedy of appeal which the law provides under Section 18 of the SARFAESI Act, 2002 in the absence of efficacious alternative remedy being availed, there was no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing writ application assailing order of the Tribunal dated 1st August, 2019 under its jurisdiction under Article 226 of the Constitution without exhausting the statutory right of appeal available at its command. 33. This Court in the judgment in United Bank of India vs. Satyawati Tondon & Others (2010) 8 SCC 110, was concerned with the argument of alternative remedy provided under the SARFAESI Act, 2002 and dealing with the argument of alternative remedy, this Court had observed....
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....e petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance." 34. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of predeposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of predeposit contemplated under 2nd proviso to Section 18 of the Act 2002. 35. The High Court under the impugned judgment has nonsuited the present appellant (auction purchaser) on the premise that there is an error in ....
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....al and that apart, it is not the case of the respondents that participants in e-auction sale are misguided because of the error in description of the property put to auction and when there is no ambiguity with regard to the detailed description of the mortgaged property put to auction, mere mentioning of the door number "12-3-393" instead of "12-3-39" is inconsequential and does not vitiate the auction proceedings held on 28th March, 2015. 38. So far as the second objection raised by the respondent, which prevailed upon before the High Court regarding the breach of Rule 9(4) of Rules, 2002 is concerned, it will be apposite to note Rules 9(4) and 9(5) of the Rules 2002 (preamended) which reads as under: "9. Time of sale, issues of sale certificate and delivery of possession, etc. ....... (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties. (5) In default of payment within the period mentioned in subrule (4), the deposit shall be forfeited and the property shall b....
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....s a written agreement between the parties and since parties to the written agreement is not defined in Rule 9(4), this Court was of the view that it covers into its fold the secured creditor, the auction purchaser and the borrower, but later the legislature taking into consideration the judgment of this Court made its intention clear by making an appropriate amendment in Rule 9(4) of the Rules, 2002 which came into effect by a notification dated 3rd November, 2016 effective from 4th November, 2016. 42. In the instant case, although there was no written consent by all the three partners, namely, secured creditors, borrowers and auction purchaser, as being referred to by this Court in General Manager, Sri Siddeshwara Cooperative Bank Limited (supra), but this fact cannot be ruled out that in the instant case, the peculiar situation has come forward when the respondent borrowers in the first instance approached the Tribunal assailing the e-auction notice issued by the respondent Bank (secured creditor) and were able to secure an interim order from the Tribunal dated 26th March, 2015 permitting the auction proceedings to continue, subject to the condition that the borrower shall depos....