TaxTMI 
TaxTMI 
2022 (8) TMI 1440
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....an from the second respondent, Union Bank of India, Rentachintala Branch, Guntur District in the State of Andhra Pradesh. For availing the loan, third respondent mortgaged the following properties: ...property situated in Plot Nos. 1, 2, 7, 8, 13 to 21, 33 to 38 of Mycon Acropolis in Site - B and Plot Nos. 1 to 12 of Mycon Acropolis in Site - C in Sy. No. 24/EE, total extent 10010.74 sq.yards in Nandupalli Village, Nagaram Gram Panchayat, Maheshwaram Mandal, R.R. District and also Plot Nos. A11 to A15 in Sy. No. 302, Maheshwaram Revenue Village & Mandal, R.R. District... 4. For various reasons, third respondent failed to repay the loan. Consequently, respondent Nos. 1 and 2 i.e., Union Bank of India declared the loan account as Non Performing Asset (NPA), whereafter steps were taken for realisation of outstanding dues under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, 'the SARFAESI Act' hereinafter). The total amount due from the third respondent was around Rs. 14,00,17,012.00 i.e., about Rs. 14.00 crores. Second respondent issued sale notice dated 06.02.2021 for sale of the mortgaged properties b....
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....-13, A-14 & A-15, Sy. No.302, Maheshwaram Revenue Village and Gram Panchayat, Maheshwaram Mandal, Ranga Reddy District. Extent: 1619 Sq. Yards 56.00 2 Open Plot Nos: 1, 2, 4, 5 to 13, 15, 16, 25 to 39 Sy.No:24/EE, Nandupally Village, Nagaram Gram Panchayat, Maheshwaram Mandal, Ranga Reddy District. Extent: 9763 Sq. Yards 165.50 3 Open Plot Nos: 1, 2, 7, 8, 13, 14, 15, 16, 17, 18, 19, 20, 21, 33, 34, 35, 36, 37, 38 of Mycon Acropolis in Site - B and Plot Nos: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 of Mycon Acropolis in Site-C in Sy.No.24/EE. Extent: 10010.74 Sq. Yards 170.00 4 Property situated at D.Nos.873 and 874 of Rentachintala Village, Near Macherla to Rentachintala Road, Rentachintala Mandal, Guntur District. Extent: Ac.1.79 Cents 125.00 12. It is stated that out of the above four properties, the first three properties were sold in auction on 16.03.2021. Auction sale for the fourth property did not materialise for want of bidders. In so far the property in respect of which petitioner is concerned, the following details have been furnished: Property No:1: Mr. Amme Srisailam/Petitioner was the successful bidder for the Property No. 1, who....
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....rding to respondent Nos. 1 and 2, the borrower is M/s. Palnadu Cold Storage and the property in question was mortgaged by the third respondent as security for the loan availed of. M/s. Palnadu Cold Storage has instituted S.A. No. 148 of 2021 before the Debts Recovery Tribunal, Visakhapatnam which is pending. Non-joinder of M/s. Palnadu Cold Storage has vitiated the writ proceedings because it is a necessary party. 19. Finally respondent Nos. 1 and 2 have stated that immediately after OTS, the sale price of Rs. 57.00 lakhs was refunded to the petitioner. Therefore, no prejudice has been caused to the petitioner. 20. Third respondent has also filed counter affidavit. At the outset, a preliminary objection has been raised that petitioner has got adequate and efficacious alternative remedy available under Section 17 of the SARFAESI Act. Without availing such remedy, petitioner has straightaway invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India which is not justified. According to the third respondent, Ex. P.2 letter dated 17.03.2021 filed by the petitioner is not a sale confirmation letter. That apart in Ex. P.5 letter dated 08.04.....
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....before the date of publication of notice for public auction or inviting quotation or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured asset - (i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount, no further steps shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. Learned Senior Counsel therefore contends that post amendment the right of redemption of the borrower ceases the moment notice for public auction is issued. After the right of redemption was extinguished it was not open for the Bank to enter into OTS with the borrower to frustrate the auction which was lawfully conducted in which petitioner was the successful bidder. He further submits that in view of the overriding effect of the SARFAESI Act in terms of Section 35 thereof, Section 60 of the Transfer of Property Act, 1882 would not be available to the borrower post notice for public auction. In....
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....he loan. When the borrower failed to repay the loan, respondent Nos. 1 and 2 after declaring the loan account as NPA proceeded under the SARFAESI Act. Ultimately auction sale notice was issued on 06.02.2021, whereafter auction was held on 16.03.2021. Petitioner was the successful bidder for the subject land for Rs. 57.00 lakhs which it paid. In the meanwhile, third respondent submitted proposal dated 18.03.2021 for OTS which was recommended by the second respondent on 20.03.2021 and was accepted by first respondent on 31.03.2021 for Rs. 5.10 crores which admittedly has been paid by the third respondent. Thereafter respondent Nos. 1 and 2 returned Rs. 57.00 lakhs to the petitioner. 28. According to the petitioner, such an action by respondent Nos. 1 and 2 is not permissible in law. 29. Let us deal with this aspect. Basic contention of the petitioner is that Section 13(8) of the SARFAESI Act prohibits such a course of action. 30. Section 13 deals with Enforcement of Security Interest. As per sub-section (1), notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enf....
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.... not proceed further with the public auction. 34. But the moot question is whether sub-section (8) of Section 13 of the SARFAESI Act can restrain the secured creditor from realising the outstanding dues from the borrower after notice for public auction is issued? In other words, whether sub-section (8) of Section 13 of the SARFAESI Act can bar the secured creditor from receiving the outstanding dues from the borrower post publication of notice for public auction? 35. Before we attempt to answer the above question, it would be apposite to briefly advert to the decisions cited at the bar. 36. In so far the decision of the Gujarat High Court in Sushen Medicamentos Private Limited (supra) relied upon by learned counsel for respondent No. 3 is concerned, the said decision was rendered on 03.08.2011 much before Section 13(8) of the SARFAESI Act was substituted. Therefore, the above decision may not have any significant relevance to the present litigation. Nonetheless, in the facts of that case, Gujarat High Court took the view that though the highest bidder in the auction may be entitled to refund of the amount offered and deposited by him but he cannot claim the right to get th....
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....er. It has been held as follows: The danger of interpreting Section 13(8) as though it relates to the right of redemption, is that if payments are not made as per Section 13(8), the right of redemption may get lost even before the sale is complete in all respects. But in law it is not. 39. Thus this Court emphasised that the right of redemption is not lost immediately upon the highest bid made by the purchaser in an auction is accepted. 40. A three-Judge Bench of the Supreme Court in S. Karthik (supra) held that the right of redemption which is embodied in Section 60 of the Transfer of Property Act, 1882 is available to the mortgagor unless it has been extinguished by the act of the parties. Only on execution of the conveyance and registration of transfer of mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. Referring to the previous decisions of the Supreme Court, it has been held that the right to redemption stands extinguished only on the sale certificate getting registered. 41. This position has been explained by the Punjab & Haryana High Court in Pal Alloys & Metal India Private Limited (supra)....
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....ome due, the mortgagor has a right, on payment or tender, of the mortgage money, to require the mortgagee (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof back to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. As per the proviso, the right conferred under the aforesaid provision shall not be extinguished by any act of the parties or by decree of a Court. 46. Therefore, on a careful application of Sections 35 and 37 of the SARFAESI Act, it is evident that the situation contemplated under Section 13(8) of the SARFAESI Act does not exclude application of Section 60 of the Transfer of Property Act, 1882. As explained by this Court in Concern Readymix (supra), a restriction on the right of the mortgagee to deal with the proper....