TaxTMI 
TaxTMI 
2018 (6) TMI 1840
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.... be entertained as an efficacious alternative remedy is provided to the petitioners under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the SARFAESI Act'), and place reliance on the recent judgment of the Supreme Court in State Bank of Travancore v. Mathew K.C.in that regard, as to whether a writ petition should be entertained or not is ultimately a matter of discretion and this Court would exercise the same judiciously, keeping in mind the principles of self-imposed restraint adumbrated in cases where alternative remedies are available. Be it noted that in United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110], the Supreme Court pointed out that it is ultimately for the High Court to decide in a given case as to whether it should exercise discretion under Article 226 of the Constitution, despite the availability of an alternative remedy. The observations made in this regard were referred to by the Supreme Court in its recent judgment in Agarwal Tracom Pvt. Ltd. v. Punjab National Bank [(2018) 1 SCC 626]. Each case would turn upon its own individual facts. ....
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.... has been put in place by such amendments. Though an argument is advanced by the learned counsel for the bank that no specific pleading has been raised in relation to these aspects, we are of the opinion that once this Court is sensitized as to any failure in scrupulously adhering to the statutory mandate of the SARFAESI Act and the Rules of 2002, which has been put in place to safeguard the interest of the borrower, as clearly enunciated by the Supreme Court in Mathew Varghese, this Court cannot be a silent spectator to the perpetration of such illegalities notwithstanding the fact that clear and precise pleadings have not been put forth by the borrower. There shall accordingly be interim stay of all further proceedings, including the auction scheduled to be held on 03.04.2018, pursuant to the impugned sale notice dated 01.03.2018.' 2. I.A. No. 2 of 2018 was filed by the bank to vacate the aforestated interim order. No reply affidavit was filed in response thereto till date. 3. The petitioner firm availed a term loan along with overdraft facilities to the tune of Rs. 30,00,000/- and Rs. 40,00,000/- respectively from the bank in the year 2015. These acco....
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....itioners that the secured assets were undervalued, the bank stated that the valuation thereof was obtained from an official valuer before issuing the sale notice and the reserve price was fixed in respect of both the secured assets on the strength of such valuation. 5. Reference was made by the bank to case law in support of its contention that it had followed the due procedure. 6. It is true that the petitioners did not make any specific allegation in their writ affidavit in relation to violation of the mandatory provisions of the Rules of 2002 and more particularly, Rules 8(6) and 9(1) thereof in the context of the amended Section 13(8) of the SARFAESI Act. However, when a scheduled bank seeks to exercise the extraordinary and far-reaching power vesting in it under the provisions of the SARFAESI Act and the Rules framed thereunder, it must necessarily abide by and obey the due procedure prescribed thereunder. This Court, being the sentinel on the qui vive, would be quick to react in the event a secured creditor, such as the bank, seeks to exercise such power in violation of the mandatory procedure. Be it noted that a secured creditor, by virtue of the powers created by and ....
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....shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.' 9. In so far as the Rules of 2002 are concerned, amendments were made with effect from 04.11.2016, by way of G.S.R.1046(E) dated 03.11.2016. No amendment was made to Rule 8(6) of the said Rules but Rule 9(1) thereof stood amended. Rule 8(6), as it stands, then and now, to the extent relevant, reads as under: '8(6). The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5). ...........................' Rule 9(1) prior to its amendment read thus: '9(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 notice of sale has been served to the borrower.' But after its amendment, Rule 9(1) now reads as under: '9(1). No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which t....
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..... As per the edict of the Supreme Court in MATHEW VARGHESE v. M.AMRITHA KUMAR (2014) 5 SCC 610, this statutory notice period of thirty days was given to the borrower to provide him further time to redeem the secured asset. In this regard, the observations of the Supreme Court in Paras 31, 33.1 and 33.3 of the judgment are apposite of extraction: '31. Once the said legal position is ascertained, the statutory prescription contained in Rules 8 and 9 have also got to be examined as the said Rules prescribe as to the procedure to be followed by a secured creditor while resorting to a sale after the issuance of the proceedings under Sections 13(1) to (4) of the SARFAESI Act. Under Rule 9(1), it is prescribed that no sale of an immovable property under the rules should take place before the expiry of 30 days from the date on which the public notice of sale is published in the newspapers as referred to in the proviso to sub-rule (6) of Rule 8 or notice of sale has been served to the borrower. Sub-rule (6) of Rule 8 again states that the authorized officer should serve to the borrower a notice of 30 days for the sale of the immovable secured assets. Reading sub-rule (6) of Rul....
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.... of redemption would stand terminated immediately upon publication of the sale notice under Rule 9(1) of the Rules of 2002. The judgment of the Supreme Court in CANARA BANK v. M.AMARENDER REDDY (2017) 4 SCC 735, which was rendered in the context of the unamended provisions, would therefore have no application to the post-amendment scenario in the light of the change brought about in Section 13(8). To sum up, the post-amendment scenario inevitably requires a clear thirty day notice period being maintained between issuance of the sale notice under Rule 8(6) of the Rules of 2002 and the publication of the sale notice under Rule 9(1) thereof, as the right of redemption available to the borrower in terms of Rule 8(6) of the Rules of 2002, as pointed out in MATHEW VARGHESE (2014) 5 SCC 610, stands extinguished upon publication of the sale notice under Rule 9(1). 14. In the case on hand, it is an admitted fact that a clear thirty day notice period was not maintained, as the notice under Rule 8(6) of the Rules of 2002 was issued on 01.03.2018 and publication of the auction sale notice in newspapers, under Rule 9(1) of the Rules of 2002, was on 03.03.2018. There is, thus, a clear violati....