TaxTMI 
TaxTMI 
2022 (9) TMI 1553
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..... 4. The Chief Manager of the State Bank of India, SARB, Ludhiana (respondent No. 2) replied to the petitioner stating that borrower had filed a Writ Petition against the SBI in this High Court, but there was no stay granted in respect of the subject property. 5. The petitioner then sent another e-mail on 09.12.2021 to respondent No. 2 stating that this information was very important and had been suppressed by the Bank, that it was misusing powers given to it under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act of 2002"), and respondent No. 2 should share the complete details of litigation so that the petitioner can discuss the matter with his legal advisors, and then decide whether or not to purchase the property. He further sought 30 days' time for the said purpose while reserving his right to file criminal and civil proceedings against respondent No. 2 and the Bank. 6. Respondent No. 2 then replied to the same on 10.12.2021 stating that Writ Petition filed in the loan account relates to issues concerning two other mortgaged properties, and the petitioner has to deposit balance 7....
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....d the earnest money back to the said Auction Purchaser in January 2021. It was stated that its action in suppressing the said fact and putting the property for re-sale, and inducing the petitioner to purchase the property, which is in dispute in litigation, and compelling the petitioner to purchase the litigation, is highly improper, and it should refund the earnest money of Rs. 16,08,250/- with interest @ 9 % per annum. 10. Ignoring the same, the Bank sent an email through respondent No. 2 on 15.12.2021(Annexure P-16) forfeiting the amount of Rs. 16,08,250/- exercising its power under Rule 9 (5) read with Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the Rules"). 11. Thereafter, the Bank put the property to sale on 24.02.2022 through e-auction again. The prayer in the Writ Petition 12. The petitioner, therefore, has filed this Writ Petition seeking refund of the said amount of Rs. 16,08,250/- with interest, and sought quashing of the e-mail dt.15.12.2021 issued by respondent No. 2 forfeiting the said amount deposited towards the earnest money by him. Contentions of petitioner 13. It is the contention of the petitioner that it was t....
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....ere is basis', 'as is what is basis' and 'whatever there was basis', and so the petitioner is not entitled to any relief since the pendency of the litigation cannot be an excuse for the petitioner not to make payment within the statutory time frame work provided under the Rules. 20. It is also contended that the petitioner was aware about the earlier auctions conducted by the Bank, and till date there was no hindrance in the sale or stay of the sale being conducted by the Bank. 21. It is also stated that the CWP No. 22761 of 2020 has been dismissed as withdrawn on 21.02.2022. 22. It is also contended that the petitioner had knowledge of the earlier successful bid made by Smt. Jaswinder Kaur and the documents thereto pertaining to the said sale, and so the petitioner cannot take shelter that he was unaware of the previous litigation, and refuse to deposit the balance sale consideration. 23. It is, however, admitted in the later sale notice dt.24.02.2022, the Bank did mention about CWP No. 22761 of 2020 by way of abundant caution. 24. It is also contended that the petitioner cannot place reliance on the order dt.10.11.2021 in CWP-PIL-77-2021 as no Bank would take property from t....
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....17 of the Act. 31. From the facts narrated above, it is clear that the subject property belonging to the borrower M/s. Meridian Milk Products was initially auctioned on 31.12.2021 through an e-auction, but prior to the said date on 29.12.2020, the borrower had filed CWP No. 22761 of 2020 in this Court alleging that the borrower wanted to settle the matter under the OTS but the Bank was keen to sell the property. 32. In the auction held on 31.12.2020, Smt. Jaswinder Kaur became the successful bidder, and deposited the EMD of Rs. 15.91 Lakhs with the respondent-Bank. 33. Later on 11.01.2021, she came to know that the property for which she had bid in the e-auction held on 31.12.2020 was under litigation, and given a representation for refund of the earnest money alleging that the Bank concealed the fact about the litigation in the advertisement issued for the e-auction. 34. It is not in dispute that the Bank refunded the entire earnest money to her in January 2021. 35. It then proceeded to conduct a re-auction of the property on 25.11.2021 through an e-auction but even in the said e-auction sale notice, it did not mention about the pendency of the litigation. 36. It is stated t....
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....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 the 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 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. 45. Thus, it is clear that in the sale notice, it is incumbent on the secured creditor to disclose the details of the 'encumbrances' known to it as per Clause (a), and also 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 as per Clause (f). 46. A....
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....roperty for Rs. 9 Lakhs after receiving a sum of Rs. 1.50 Lakhs as earnest money. They then applied on 15.01.1990 to the Income Tax authorities for a clearance certificate for sale of the property. 53. The appellants, who had been in occupation of the premises, and were running a hotel therein, and also residing therein and were paying rents to the Trust regularly, sent a letter on 23.01.1990 to the Trustees offering a higher amount of Rs. 14,20,000/-. Thus, the offer of the appellants is higher than that of respondent No. 10 to 15. 54. The Trustees informed the appellants vide letter dt.26.02.1990 that their offer to purchase the property for Rs. 14.20 Lakhs would be placed before the meeting of the Trustees, and the decision taken would be communicated to them, and asked them to wait for the result of the meeting. 55. Thereafter, on 16.03.1990, the Trust through its Managing Director filed an application in the High Court seeking permission to sell the property to the purchasers for Rs. 9 Lakhs as according to them, it was the highest offer, and to execute and register the necessary deed of sale. Such permission was granted by the High Court on 19.03.1990, and sale deed was al....
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.... in favour of respondents No. 10 to 15, and remitted the matter to the High Court to call for a fresh offers from the appellants. The plea of the trustees that the sale was on as is where is condition was not accepted by the Supreme Court. The decision in Haryana Financial Corporation and Another (2010) 63. In Haryana Financial Corporation v. Rajesh Gupta (2010) 1 SCC 655, an advertisement had been issued by the State Financial Corporation for sale of various units including the land of the defaulting unit for which respondent made an offer of Rs. 25 Lakhs and deposited Rs. 2.5 Lakhs by way of earnest money. 64. On the very next day, the respondent wrote a letter to the Corporation stating that on visiting factory, he had noticed the premises did not have any independent appropriate passage from the road, and requested the Corporation to apprise him in that matter. 65. Meanwhile, at the instance of the Corporation, the amount of bid was doubled. 66. Raising the same grievance again, the respondent requested the State Financial Corporation to supply him the copy of the approved building plan/site plan for the mortgaged building. But there was no specific reply by the Corporatio....
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....2. It also held that the Corporation did not provide to the buyer the entire documentation as required by Section 55 (1)(b) of the Act of 1882. It therefore, directed to refund of the forfeited amount with interest @ 12 % per annum to the respondent. 73. Though the Corporation pleaded that the sale was on as is where is basis, the said plea was not accepted on the ground of suppression of facts by the Corporation. The Court held that the Corporation was an instrumentality of the State and so shall act fairly. Existence of ligation in respect of an asset sought to be sold by a secured creditor would fall within the definition of the term 'encumbrance' 74. We shall now look at the issue from another perspective. 75. We had earlier pointed out that in the sale notice, it is incumbent on the secured creditor to disclose the details of the 'encumbrances' known to it as per Clause (a) of Proviso to Rule 8(6), and also 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 as per Clause (f) of Proviso to Rule 8(6). 76. The Supreme Court had an occasion to consider the meaning of "encumbrance" i....
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....n view of the suppression about the litigation in the sale notice dt.7.11.2021 by the Bank of the pending litigation in regard thereto as on the date of the sale/e-auction i.e. 25.11.2021, the action of respondent-Bank is vitiated. 83. We may point out that Rule 8(6)(f) of the Rules protects the interest of the intending purchaser to be put on notice as to encumbrance as otherwise, he or she would be purchasing property, and simultaneously buying litigation as well, and the intending purchaser may not bid in the event, if he or she came to know any encumbrance over the property. That is why the Rules specifically contemplate a provision for the Authorized Officer, while notifying the sale, to specifically state as to the encumbrance. Merely by mentioning in the e-auction notice that the sale is on as is where is basis, as is what is basis and whatever there is basis, the Bank is not absolved of its statutory obligation of disclosing the "encumbrances" attached to the property brought for sale by way of tender or any auction or sale by public auction. 84. A similar view has been taken by this Court in the case of Joginder Singh ( CWP No. 22743-2019 dt. 19.7.2022 of Division Bench ....