TaxTMI 
TaxTMI 
2024 (12) TMI 879
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...................... 13 B. SUBMISSIONS OF THE PARTIES ...................................................... 20 i. Submissions of the Successful Auction Purchaser / the petitioner. .... 20 ii. Submissions of the Borrower / the respondent no. 1........................... 28 iii. Submissions of the Subsequent Transferee / respondent nos. 2 & 4. . 38 iv. Submissions of the Bank / the respondent no. 3. ................................. 45 C. ISSUES FOR DETERMINATION ......................................................... 49 D. ANALYSIS ............................................................................................... 50 i. Concept of Abuse of Process of Court and Collateral challenge to judgments that have attained finality. ................................................. 50 a. The Decision of this Court in Celir LLP v. Bafna Motors & Ors. (2023 INSC 838) and the Scope of challenge before it................................................................... 77 b. The 'Henderson' Principle as a corollary of Constructive Res- Judicata. ............ 83 ii. Applicability of Lis....
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....of land admeasuring 16200 sq. metres having buildings and ancillary structures on it at plot Nos. D-105, D 110 and D-111 respectively situated at the Trans Thane Creek Industrial Area MIDC Village Shirwane, Thane, Belapur Road, Nerul, Navi Mumbai, Thane, Maharashtra (hereinafter referred to as the "Secured Asset") belonging to the Borrower vide a Mortgage Deed dated 28.01.2020 in lieu of the sanctioned credit. 6. The Borrower defaulted in repayment of the said loan amount and accordingly on 31.03.2021 the Borrower's LRD Term Loan Account was declared as a Non-Performing Asset (NPA). 7. The Bank on 07.06.2021 issued a demand notice under Section 13 subsection (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short, the 'SARFAESI Act') for repayment of the principal amount along with interest, cost, charges, etc. As of 30.04.23, an aggregate sum of Rs. 123.83 crore was due and payable by the borrowers to the Bank. 8. Owing to the failure of the Borrower & the guarantor in repaying the outstanding amount referred to above, the Bank proceeded to take measures for possession of the Secured Asset under the SARA....
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....purchaser towards the discharge of such encumbrances. xxx xxx xxx 26, The above movable / immovable secured assets will be sold in "As is where is", "As is What is" and "whatever there is" condition. xxx xxx xxx 29. The sale is subject to outcome of S.A No. 46/2022 pending before DRT, Mumbai." 13. The Borrower herein on 26.06.2023 preferred two applications before the DRT being I.A. No. 2253 of 2023 and I.A. No. 2254 of 2023 in S.A. No. 46 of 2022, respectively inter-alia seeking to amend amending its pleadings for the purpose of challenging the 9th auction proceedings and for seeking stay of the said auction in the meantime, respectively. 14. Pursuant to the 9th notice of sale, the auction proceedings were conducted on 27.06.2023. The petitioner herein participated in the same and submitted its bid of Rs. 105.05 crore, along with a deposit of Rs. 10.5 crore as earnest money. 15. In the said 9th auction conducted by the Bank, the petitioner herein was declared as the highest bidder. The Bank on 30.06.2023 vide its email sent a "Sale Confirmation Letter" to the petitioner, declaring him as the highest bidder / H1 in the auction of the sec....
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....AY: (a) That this Hon'ble Court be pleased to issue Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate Writ, calling upon the papers and proceedings of the Securitization Application No. 46 of 2022 pending before the Hon'ble DRT I, Mumbai and after examining the legality, validity and propriety thereof, be pleased to allow the Petitioners to redeem the mortgage as per schedule provided in the Interim Application No. 2339 of 2023 filed before the Hon DRT I, Mumbai or within such reasonable period as this Hon'ble Court may deem fit and proper; (b) That this Hon'ble Court be pleased to direct the Respondent to issue "No Dues Certificate" and release All piece and parcel of leasehold land to the extent of 16200 sq. mtrs various buildings and ancillary structures at amalgamated plot no. D-105, D-110 and D-111, Trans Thane Creek Industrial Area, MIDC, Village Shirwane, Thane- Belapur Road, Navi Mumbai, Dist- Thane, Maharashtra, 400706, after getting the entire redemption amount; (c) In the alternate, that this Hon'ble Court be pleased to direct the Respondent not to take any further steps for issuance of the sale Certifi....
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.... Nos. 19523-19524 of 2023 (later renumbered as Civil Appeal Nos. 5542-5543 of 2023) before this Court, challenging the final judgment and order dated 17.08.2023 passed by the High Court. The aforesaid Special Leave Petitions were instituted on 21.08.2023 and it is pertinent to note that there was a caveat at the end of the Borrower herein, and thus the Borrower was fully aware of the aforesaid Special Leave Petition pending before this Court. 25. On 25.08.2023, the aforesaid special leave petitions were taken up for hearing by this Court for the first time and the Borrower herein was also present during the hearing through his counsel. However, since the judgment and order dated 17.08.2023 passed by the High Court was not made available, this Court vide its order dated 25.08.2023 adjourned the matter to 01.09.2023. It is material to note that there was no interim stay or status quo operating between the parties. 26. On 26.08.2023, the judgment and order dated 17.08.2023 passed by the High Court was uploaded and made available to the parties, and the Borrower pursuant to the said order of the High Court transferred a sum of Rs. 104 crore to the Bank for redeeming its mortgage.....
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....nt Developments and the Acts alleged to be in contempt thereof. 31. On 26.09.2023, the Borrower preferred a review against the aforesaid final judgment and order dated 21.09.2023 passed by this Court in Civil Appeal Nos. 5542-5543 of 2023 being R.P. (C) Nos. 611-612 of 2024. On 27.09.2023, the petitioner herein paid the remaining amount of Rs. 23.95 crore in terms of the aforesaid judgment of this Court whereupon Sale Certificate for the Secure Asset came to be issued by the Bank. 32. It is alleged that the Bank on the very same day addressed one letter to the Borrower requesting for the cancellation of the Release Deed dated 28.08.2023 and for returning the original title deeds to the Secured Asset in order to refund the amount paid towards redemption of the mortgage. However, the Borrower on the other hand disputed the receipt of the aforesaid letter. Nevertheless, the Bank on 18.10.2023 addressed one another letter calling upon the Borrower to execute a Deed of Cancellation of the aforesaid Release Deed and to handover the original title documents of the Secured Asset. 33. Thereafter, the petitioner herein sent several reminders to the Bank inter-alia to handover the ph....
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.... the symbolic possession of the Secured Asset which had already been delivered. It further assured that the Bank was exploring all options for handing over the original title deeds. In regards to the physical possession, the Bank informed that it had already filed an application under Section 14 of the SARFESI Act, which was still pending and that until appropriate orders were passed, it was not possible to handover the physical possession of the Secured Asset. 36. On the other hand, the Subsequent Transferee upon receipt of the aforesaid legal notice, instituted a suit being the Special Civil Suit No. 5 of 2024 against the petitioner inter-alia seeking a declaration that (a) they are the owners and title-holder of the Secured Asset; (b) the Assignment Agreement dated 28.08.2023 is legal and valid and (c) they are entitled to the physical possession of the Secured Asset. It has been alleged that the Subsequent Transferee was constrained to prefer the above suit, as the petitioner herein had attempted to take forceful possession of the Secured Asset. The Bank on 16.01.2024 filed an application in the aforesaid suit for rejection of plaint under Order VII, Rule 11 of Code of Civil....
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.... Appellate Tribunal, Mumbai (for short, the "DRAT"). It appears from the material on record that the DRAT vide its order dated 29.02.2024 granted status quo and deferred the proceedings for physical possession, and further directed the Bank to deposit Rs. 129 crore paid by the Borrower before it, in contrast to the order of this Court in Civil Appeal Nos. 5542-5543 of 2023 wherein the said amount was ordered to be refunded in clear terms. 42. On 01.03.2024, the present contempt petition came to be filed before this Court seeking initiation of contempt proceedings against the respondents for wilful disobedience of this Court's order in Civil Appeal Nos. 5542-5543 of 2023 and further praying for i) handing over of the physical possession and original title deeds to the Secured Asset, ii) annulment of the Release Deed, the No Dues Certificate and the Deed of Assignment in favour of the Subsequent Proceedings and iii) the quashing of all proceedings pending in respect of the Secured Asset before the DRT, DRAT and the suit proceedings of the Subsequent Transferee. 43. It further emerges from the materials on record that in the suit proceedings the Civil Court, Belapur vide its ord....
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....omplied with. In such circumstances, the petitioner placing reliance on para 98 of the decision in the Main Appeals, submitted that once the entire bid price is paid and there is no stay granted by any forum known to law, the secured creditor is duty bound to issue a valid sale certificate and handover the physical possession of the secured asset. 49. It was further submitted that the Borrower and the Subsequent Transferee have not only refused to hand over the possession and original title deeds to the Secured Asset in complete defiance of the decision in the Main Appeals but have also resorted to frivolous and malicious proceedings before various forums to undermine and circumvent the decision of this Court. It was highlighted that inasmuch as three different proceedings have been instituted by the respondents for seeking prayers which are in teeth of the decision of this Court in the Main Appeals. The details are as under: - i. Securitization Application No. 46 of 2022 along with I.A. Nos.3199 of 2023 & 3220 of 2023 before the DRT-I, Mumbai. ii. Securitization Application No. 53 of 2024 along with I.A. No. 456 of 2024 before the DRAT, Mumbai iii. Sp....
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....arding the transfer of the leasehold rights of the Secured Asset in favour of the petitioner. (iii) Similarly, the Subsequent Transferee vide its letter dated 17.10.2023 asked the Executive Officer of the Maharashtra Industrial Development Corporation to not take any action regarding the transfer of the Secured Asset to the petitioner. (iv) In November, 2023, the Borrower filed I.A. No. 3220 of 2023 in S.A. No. 46 of 2022 to amend the securitization application for inter-alia challenging the issuance of sale certificate by the Bank as directed by this Court on the ground that such issuance is contrary to the provisions of the SARFAESI Act, as the property no longer vested with the Bank in view of the No Dues Certificate and the Release Deed that was executed during the pendency of the Main Appeal, and that the Bank deliberately suppressed this fact from this Court. (v) On 05.01.2023, the Subsequent Transferee filed Special Civil Suit No. 5 of 2024 inter-alia for seeking a declaration that it is the rightful owner of the property, as the Sale Certificate issued to the petitioner does not confer ownership right and title in respect of the property by conten....
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....y gap between the notice to the borrower and the notice of sale is mandatory only for the first auction. Placing reliance on the Proviso to Rule 9(1) it was submitted that for any subsequent auctions after the first auction fails, only 15-days' time period is required between the notice of sale and the date of auction. 55. It was submitted that in the present case, since the Bank had already conducted a total of 8 auctions prior to the auction in which the petitioner emerged as the successful bidder, the same only required a 15-days' statutory notice period. As the notice of sale for the 9th auction was published on 12.06.2023 and the ultimate auction held on 30.06.2023, the statutory 15-day time period was duly maintained. Thus the 9th auction was in due compliance of the statutory requirements and constituted a valid sale. 56. Reliance was also placed on the decision of this Court in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors, reported in (2008) 9 SCC 299 to canvass that a sale by way of public auction cannot be set aside until there is any material irregularity and/or illegality committed in holding the auction or if suc....
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....ourt. ii. Submissions of the Borrower / the respondent no. 1. 60. Dr. A.M. Singhvi the learned Senior Counsel appearing for the Borrower submitted that this Court in its decision in the Main Appeals only decided the issue of interpretation of Section 13(8) of the SARFAESI Act, and rightly chose not to decide either the validity of the 9th auction process or to interfere with the proceedings emanating from S.A. No. 46 of 2022 that was pending before the DRT. 61. He further submitted that since the terms of the auction more particularly clause 29 therein specifically stipulated that the auction is subject to the outcome of the proceedings in S.A. No. 46 of 2022 pending before the DRT, this Court rightly never decided the validity of the auction proceedings and left it for the DRT to decide. 62. It was submitted that in the Main Appeals, this Court held that writ jurisdiction ought not to have been invoked by the Borrower having already availed the statutory remedy and rightly did not decide the issue of validity of the auction conducted by the Bank as such remedy was available to the Borrower to avail in the S.A. No. 46 of 2022 pending before the DRT. 63. It was also s....
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....subject matter of the Main Appeals and no prayer to this effect was made by the petitioner, merely because physical possession has not been handed over it cannot be said that any contempt of this Court's decision has been committed and thus, the present contempt petitions are misconceived. 67. It was further submitted that the petitioner was well aware that as per the terms of auction it was not entitled to obtain physical possession and thus, in its written submissions had only prayed that the Bank be directed to issue a Sale Certificate and carry all other necessary acts under the SARFAESI Act. Even this Court in the Main Appeals only directed the issuance of the Sale Certificate and not the delivery of physical possession of the Secured Asset. 68. He also submitted that where an auction is conducted on symbolic possession, the correct approach for obtaining physical possession of the secured asset is to initiate proceedings before the District Magistrate in terms of Section 14 of the SARFAESI Act. In this regard, reliance was placed on the decision of this Court in ITC Ltd. v. Blue Coast Hotels Limited & Ors. reported in (2018) 15 SCC 99. 69. He further submitted that i....
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....ssion, no contempt could be said to have been committed. Similarly, the transfer of the Secured Asset to the Subsequent Transferee during the pendency of the Main Appeals also does not amount to contempt as the same was done in compliance of the High Court's impugned order. Since the High Court had allowed the Borrower to redeem the mortgage on the condition that it tenders the entire dues payable by 31.08.2023 failing which the amount of Rs. 25 crore paid by it would be forfeited, & the entire dues would not have paid the Borrower would have not only lost the amount already paid by it but would have also been in contempt of the order passed by the High Court. 73. Thus, in order to comply with the High Court's order to its letter and spirit, the Subsequent Transferee paid the remaining dues to the Bank on behalf of the Borrower and thereafter the Secured Asset was transferred to it. He further submitted that, since during the pendency of the Main Appeals, there was no prohibitory order or stay by this Court, the transferring of ownership by way of the Assignment Agreement does not amount to contempt. In this regard, reliance has been placed on the decision of this Court in Colle....
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..... In this regard it was submitted that first, the proceedings before this Court in the Main Appeals emanated from an interlocutory stage and secondly, both the auction and the Sale Certificate issued in pursuance thereto does not vest in the petitioner an absolute ownership in the Secured Asset. 78. He submitted that S.A. No. 46 of 2022 was filed by the Borrower assailing the validity of the measures taken by the Bank under the SARFAESI Act and the same was still pending. When the 9th auction came to be conducted, the Borrowers filed an interlocutory application in the aforesaid securitization application for seeking redemption of mortgage, wherein orders were reserved. Against the aforesaid, the Borrower filed a writ petition before the High Court for seeking redemption of mortgage which was allowed. The same came to be challenged before this Court in the Main Appeals, wherein only the right of redemption in terms of Section 13 sub-section (8) of the SARFAESI Act was decided. Thus, the very proceedings before this Court in the Main Appeals emanated from an interlocutory stage and all other issues except the right of redemption continued to survive in the S.A. No. 46 of 2022. As....
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.... Main Appeals nor issued a notice of the said proceedings either by the petitioner or by the Bank, despite the fact that they were aware of the transactions entered into by the Borrower for the transfer of the Secured Asset in its favour. He further submitted that prior to entering into the transaction there was no prohibitory order or interim order of stay concerning the said Secured Asset either by this Court or any other court. Since, the transaction which led to the purchase of the said property by it was completed and duly registered with the knowledge and cooperation of the Bank before the decision of this Court in the Main Appeals, they are neither in breach or violation of this Court's decision and as such the present contempt proceedings deserves to be dismissed qua the Respondent. It was further submitted that the title to the Secured Asset in favour of the Subsequent Transferee was never questioned or challenged before any forum or impeached in any manner known to law even after the decision of this Court in the Main Appeals. 83. He further submitted that when the Subsequent Transferee tendered the entire consideration for the Secured Asset, there was admittedly neith....
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....sset and handed over the original title deeds thereto, the Subsequent Transferee is said to have obtained a clear title of the property. He further argued that since there was a second charge over the said property, the Bank could have only confirmed a conditional sale of the Secured Asset. Consequently, even if the auction was completed, the said property would not have been free from all encumbrances and the petitioner would have been required to redeem the second charge to acquire a clear title. Since it is the Subsequent Transferee who undertook the necessary steps to redeem the second charge, it is said to have acquired a clear title both in law and in equity. 87. It was submitted that the Subsequent Transferee was constrained to prefer the Special Civil Suit No. 5 of 2023 as the petitioner herein had attempted to take forceful possession of the Secured Asset. It was further submitted that the said suit had to be filed to protect its right and prevent its dispossession without following the due process of law. However, in terms of the undertaking given to this Court during the course of proceedings on 18.10.2024, it was submitted that the Subsequent Transferee has instructe....
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....is Court in the Main Appeals as evident from the questions of law framed therein, primarily related to the cut-off date to exercise right of redemption under Section 13(8) of the SARFAESI Act and not regarding the validity of the measures taken under the SARFAESI Act, 2002, including the auction process. 93. Since the auction conducted by the Bank by which the Sale Certificate was issued to the petitioner was subject to the outcome of S.A. No. 46 of 2022 pending before the DRT, the petitioner ought not to be permitted to extend the scope of the matter to overcome these proceedings pending in the DRT. 94. He submitted that it is the bona fide understanding of the Subsequent Transferee that the auction by which the petitioner claims its rights is illegal, having regard to the law laid down by this Court in the Main Appeals. He argued that the auction was bad in law as the Bank has violated mandatory statutory requirements for the auction process, more particularly the mandatory 30-days period required to be maintained between the notice to the borrower and the sale notice in terms of Rule 8(6) and 9(1) of the SARFAESI Rules. In the present case both the aforesaid notices were i....
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....ned order of the High Court that had allowed the Borrower to redeem the mortgage. 100. He submitted that in the said decision, this Court not only held the redemption of mortgage after auction notice as unlawful but also confirmed the right of the auction purchaser to the Secured Asset and directed the refund of the entire amount paid by the Borrower towards redemption, and further directed the Bank to issue the sale certificate in favour of the petitioner in accordance with Rule 9(6) of the SARFAESI Rules upon payment of an additional amount of Rs. 23.5 crore by it. 101. He submitted that the implied effect of this decision is that the Release Deed executed by the Bank and the Assignment Agreement executed by the Borrower had to be cancelled and the original title deeds to the Secured Asset were to be returned to the bank so that they may be handed over to the petitioner. 102. He submitted that the Bank in compliance of this Court's decision in the Main Appeals, issued the Sale Certificate for the Secured Asset to the petitioner and on the same day addressed a letter to the Joint Sub-Registrar, Thane, requesting it to take immediate steps for cancellation of the aforesaid....
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....cated the issue by taking recourse to untenable dilatory litigations against one and all. 108. In light of the above, the Bank was compelled to prefer the present miscellaneous application before this Court for seeking directions for the implementation of the decision of this Court in the Main Appeals and interalia declare the Release Deed dated 28.08.2023 executed by the Bank in compliance of the High Court's impugned order and the Assignment Agreement dated 28.08.2023 executed by the Borrower in favour of the Subsequent Transferee as null and void and further direct the Borrower to return the original title documents of the subject property to the along with the details for initiating refund of its money paid towards redemption of mortgage, and to direct the District Magistrate Thane to immediately take possession of the secured asset and handover the same to the Bank. C. ISSUES FOR DETERMINATION 109. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following questions fall for our consideration: - I. Whether any act of contempt could be said to have been committed by the respondent nos. 1 to 4 respe....
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....eadings to challenge the 9th auction proceedings and for seeking stay of the said auction in the meantime. In the said application, the Borrower inter-alia sought to challenge the 9th Auction on the ground that there was no 30 or 15 days between the 'service' of the notice of sale and the date of auction, and thus was in violation of the statutory rules. The relevant grounds sought to be included by way of amendment of pleadings are as under: - "IN GROUNDS: After Ground No. G: Insertion of Ground Nos. G(i) to G(viii) G-(i) Undisputedly, in the 1st auction proceeding under sale notice dated 25th March, 2022, the Respondent failed to give a clear 30 (thirty) days of notice. Likewise, in the 2nd auction proceeding under sale notice dated 30th April 2022, the Respondent failed to give a clear 15 (fifteen) days of notice. Additionally, there were several glaring defects and illegalities in both the sale notices. Therefore, the sale notices dated 25th March 2022 and 30th April, 2022 cannot be treated and terms as lawful sale notices. The Respondent suo-moto cannot be considered to have conducted the 1st or 2nd auction and failed. According to the Applicants, the Respond....
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.... further steps in confirming the sale to the petitioner till the S.A. No. 46 of 2022 is decided by the DRT. Thus, in essence, the prayer of the Borrower before the High Court was two-fold: - (i) Prayer (a) / Para 11(a) of the writ petition: Either to seize the issues arising in the S.A. No. 46 of 2022 before the DRT for itself and decide the same in favour of the Borrower and consequentially permit it to redeem the mortgage of the Secured Asset or; (ii) Prayer (b) & (c) / Para 11(b) (c) of the writ petition: Alternatively, stay the confirmation of the sale under the 9th auction by the Bank till the S.A. No. 46 of 2022 is decided by the DRT along with a further direction that the Borrower be given the liberty to tender the remaining amount and redeem the mortgage i.e., prayers 11(c) and 11(b) respectively. At the cost of repetition, the relevant prayers sought by the Borrower in the writ petition before the High Court are reproduced hereunder: - "11. THE PETITIONERS, THEREFORE, PRAY : (a) That this Hon'ble Court be pleased to issue Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate Writ, calling upon the papers ....
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.... decided it could not have redeemed its mortgage without a specific direction permitting it to do so. 115. The pleadings of the Borrower in the aforesaid writ petition are also significant to the controversy at hand. The Borrower had assailed the demand notice dated 07.06.2021 under Section 13(2), the possession notice dated under Section 13(4) and the e-auction sale notices dated 25.03.2022 issued under the SARFAESI Act on various grounds. Pertinently, the Borrower in its writ petition never imputed any illegality or perversity to the 9th Auction notice. From a plain reading of the aforesaid writ petition, the following position emerges: - (i) Although the Borrower at paragraph 4.28 has stated that the aforesaid auction notice was issued on 12.06.2023 scheduling the auction for 30.06.2023, yet there is nothing to indicate that the Borrower had assailed the said notice on the ground of want of a 30 / 15 days period of notice in terms of Rule 8 and 9 of the SARFAESI Rules. (ii) In the very next paragraph i.e., at paragraph 4.29, although the Borrower has stated that the sale process is absolutely erroneous, yet it has not laid any specific challenge to the 9th a....
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....rch 2022, whereas the Auction is fixed on 29th April 2022 Thus, there is no clear gap of 30 (thirty) days. Being 1st auction Respondent is duty bound to give clear 30 (thirty) day notice to the Petitioners as per the mandate* of Rule 8(6) read with Rule 9(1) of the SIE Rules. Thus, the impugned e-auction notice dated 25th March 2022 and all further and consequential action become perverse; s. that, the impugned sale notice dated 25th March 2022 is in violation of Rule 8(7) (b) of SIE Rules. Under Rule 8(7)(b), legislature requires authorized officer to state the "secured debt for recovery of which the property is to be sold". Perusal of the impugned auction notice, demonstrates that Respondent has recorded alleged outstanding as on 28th February 2022 and failed to state exact outstanding as on the date of sale notice for which the property is getting sold. The amount of dues mentioned in the purported auction* notice is uncertain and vague. In these peculiar circumstances it is more than enough to prove that there is basic and patent illegality in the. entire E-auction proceeding; t. that, as per the mandate of Rule 8(6)(f), mandates of the secured creditor/author....
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....anvassed any submissions on the illegality or invalidity of the measures taken by the Bank under the SARFAESI Act including the validity of the 9th auction notice dated 30.06.2023. The specific plea which the Borrower had taken in the present contempt petition, namely the lack of a 30 / 15 days gap between the sale notice and auction is conspicuously absent. On the contrary it appears that the Borrower in the aforesaid writ petition had abandoned its right to challenge the validity of all measures taken by the Bank under the SARFAESI Act. We say so because of the following reasons: - (i) First, before the High Court the Borrower had submitted that if they are unable to pay the entire dues for redemption of mortgage by 31.08.2023, then the possession of the Secured Asset would be voluntarily handed over to the petitioner. The relevant observations read as under: - "5. Today, Mr. Shinde, the learned Advocate appearing for the Respondent Bank, on instructions, has stated that if the Petitioners are willing to pay the entire amount of Rs. 129 crores on or before 31st August 2023 and subject to them paying over to the Bank a sum of Rs. 25 crores today [by Demand Drafts], the....
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....re to its promise to pay the entire dues [of 129 crores] by 31st August 2023, then naturally, the Bank will receive its entire money. In contrast, if the Petitioners default in making payment of the entire sum of Rs.129 crores, the sum of Rs. 25 crores to be paid over to the Respondent Bank today, would be appropriated by the Bank towards the outstanding dues of the Petitioners, and the balance Rs.105.05 crores would be received from the Auction Purchaser who has already deposited the entire sale consideration with the Respondent Bank. It is taking these circumstances into consideration that the Respondent Bank has changed its stand from the stand it took before the DRT when it opposed the Petitioners' application for redemption. Another reason why the Respondent Bank has changed its stand is because the entire litigation will come to an end on the passing of this order. In other words, on the passing of this order itself, the entire challenge laid by the Petitioners to the actions of the Bank [under the provisions of the SARFAESI Act, 2002] comes to an end. Therefore, even if the Petitioners default in making payment by 31st August 2023, no challenge can be laid to the sale of....
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....t. It is needless to clarify that even if the Petitioners do not withdraw the Securitization Application, the same shall stand dismissed in light of this order and the Petitioners will not be permitted to litigate any further with the Respondent Bank in relation to the secured asset. In other words, if the Petitioners default in making the balance payment of Rs.104 crores to the Respondent Bank by 31st August 2023, the Auction Purchaser shall get the secured asset free from litigation. As per the statement made by Mr. Khandeparkar, and which is accepted as an undertaking given to the Court, if the Petitioners default in making the balance payment of Rs.104 crores by 31st August 2023, physical, vacant, quiet, and peaceful possession of the secured asset shall be handed over to the Auction Purchaser on or before 5th September 2023." ( Emphasis supplied ) 117. What can be discerned from the above is that although the Borrower in its writ petition had initially prayed for adjudication of the S.A. No. 46 of 2022 either by the High Court itself or in the alternative by the DRT subject to the auction proceedings being stayed, yet during the hearing it had effectively waived of....
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....rsuant to the above, the petitioner herein on 04.09.2023 at 15:40 PM filed its written submissions wherein it inter-alia submitted that since the auction was already completed and the Bank had confirmed the sale of the Secured Asset to the petitioner, a vested right in the Secured Asset had accrued in its favour. It further submitted that of the manner in which the Borrower and the Bank during the pendency of the Main Appeals, had precipitated the matter by hastily entering into private arrangements to overtake the proceedings and undermine the issue involved, prayed that this Court not only set-aside the High Court's impugned order but also inter-alia order the issuance of sale certificate of the Secured Asset and the handing over of its original title deeds along with reversal of all steps taken by the Bank and the Borrower pursuant to the High Court's order. The relevant portion of the petitioner's written submissions are reproduced hereunder: - "5.6 Knowing that the Supreme Court may consider the legality of what was being attempted, the Borrowers and the Bank have precipitated matters with the intention of letting events overtake this Hon'ble Court's scrutiny. Not onl....
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....arranted no interference of this Court in view of the fact that the mortgage has already been redeemed and that even the Secured Asset stood transferred to a third-party, the Borrower interestingly never raised the issue of the illegality of the 9th auction notice. Even though the petitioner herein had contended that it had a vested right in the Secured Asset and prayed for issuance of sale certificate to that effect and handing over of original title deeds, the Borrower remarkably neither disputed the same nor imputed any illegality in the very auction process through which the petitioner claimed its vested right. The Borrower having already waived / abandoned its right to challenge the legality of the auction proceedings before the High Court did not even put forth an alternative plea to preserve its right to pursue S.A. No. 46 of 2022 in the event this Court held that it had no right to redeem the mortgage. The entire written submissions of the Borrower is being reproduced hereunder: - "WRITTEN SUBMISSIONS ON BEHALF OF RESPONDENT NO. 1 1. The present Special Leave Petition arises out of the impugned order dated 17.08.2023 (uploaded on 26.8.2023) in Writ Petitio....
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....ng extraordinary jurisdiction under Article 226 5. The Respondent No. 1 had approached Debt Recovery Tribunal no 1- Mumbai challenging Auction Proceedings initiated by Respondent no 3 whereby upon urgent mentioning, Securstisation Application no 46/2022 was placed for urgent hearing on 18th June 2023 along with Connected Applications, i.e. Application for Right to Redemption. Despite various hearings taking place, where on multiple occasions, the Respondent No. 1 informed the DRT that a Demand Draft of Rs. 10 Crores is ready (And during course of hearing before the Hon'ble DRT Demand Draft totalling Rs. 25,00,00,000/- were ready to be submitted), and the total amount of Rs. 1,24,00,00,000/- would be paid on or before 31.08.2023, no orders came to be passed by the Hon'ble DRT 1. This was even prior to the Auction Purchaser 1.e. The Petitioner herein, depositing 100% of the Purchase value, and despite the Auction Purchaser not having paid the balance 75% purchase fees. 6. It is DRT), relevant to note that before the Mumbai Debt Recovery Tribunal-I (the Respondent No. 1 had carried a draft for Rs. 10 crores and also expressed it willingness to make the balance paymen....
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.... as Annexure R-1 (Colly). 9. Since there has been full compliance of the Impugned Order by the Respondent No.1 herein as well as the Respondent No.3 Bank, the SLP has essentially become infructuous. 10. The only issue which remains is the refund of the amount deposited by the Petitioner herein. This is an issue between the Petitioner and the Respondent No.3 Bank and the Respondent No.1 has no reason to come in the way of the refund of the amount to the Petitioner herein. 11. There is a specific direction of the Hon'ble High Court that the Respondent Bank shall immediately keep the entire amount of Rs. 105.05 Crores (deposited by the Auction Purchaser/Petitioner herein) in a 'No Lien Interest Bearing Account' and if the Respondent No.1 pays the balance amount of Rs. 104 Crores to the Respondent Bank by 31.8.2023 (which it has), then the Respondent Bank shall refund the amount of Rs. 105.05 Crores deposited by the Auction Purchaser together with accrued interest on or before 7.9.2023. The impugned order correctly interprets Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest Act,2002 (SARF....
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....s complete by registration the mortgagor does not lose right of redemption." 15. This position has also been echoed in the case of Mathew Varghese V/s M. Amrithakumar 2014 5 SCC 610 [Annexure R-3] where this Hon'ble Court has held that upon a combined reading of S. 60, 54 of the Transfer of Property Act and S. 17 of the Registration Act, it can be concluded that the extension of the right of redemption comes much later than the sale notice. 16. Though the decision in Mathew Varghese (supra) was prior to the 2016 Amendment to SARFAESI Act, its applicability has been continued to be held valid even after the amendment to the said Act. A Division Bench of the Hon'ble High Court of Telangana in the case of Concern Readymix V/s Authorized Officer, Corporation Bank and Anr 2018 SCC OnLine Hyd 783 [Annexure R-4], whereby the Hon'ble Court, after juxtaposing the Amended and Unamended provisions of Section 13(8) of the SARFAESI Act, qua the right of redemption available to the Mortgagor held that the Amended S. 13(8) of the SARFAESI Act only puts a restriction on the right of the Mortgagee to deal with the property and does not speak in express terms about the equity of re....
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....secured creditor from proceeding further with the transfer of the secured asset by way of lease, assignment or sale; a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor, the payment of the amount mentioned in Section 13 (8) of the SARFAESI Act ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the Act; that redemption comes later; extinction of the right of redemption comes much later than the sale notice; and the right of redemption is not lost immediately upon the highest bid made by a purchaser in an auction being accepted. We also hold that such a right would continue till the execution of a conveyance i.e. issuance of sale certificate in favour of the mortgagee. A similar view has been taken by this Branch in M/s Hoshiarpur Roller Flour Mill Private Limited and another V/s Punjab National Bank (CWP No. 1440 of 2021). ... It would therefore, certainly be available to the Petitioners herein before the issuance of sale certificate in favour of Respondent Nos. 2 and 3. Point (a) is answered accordingly in favour of the....
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.... be interpreted to only exclude S. 69 and 69A of the Transfer of Property Act, 1862 and the same does not affect the applicability of Section 60 of the Transfer of Property Act, 1862. 25. It is thus humbly submitted that the arguments and contentions of the Petitioner are liable to be rejected. Various High Courts have consistently held that the right of redemption has to be exercised in terms of S. 60 of the Transfer of Property Act, 1862 and not u/s 13 (8) of the SARFAESI, 2002 and the amendment to Section 13(8) does not affect or take away this right in any manner. It is therefore respectfully submitted that the present case is not a case warranting exercise of this Hon'ble Court's jurisdiction under Article 136 of the Constitution." 121. What can be discerned from the above is that: - (i) It is true the Borrower had assailed the actions of the Bank under the SARFAESI Act before the DRT by way of S.A. No. 46 of 2022. When the 9th Auction notice came to be issued on 12.06.2023 which the Borrower alleges to have received on 14.06.2023, the same was also challenged in the aforesaid securitization application by way of I.A. No. 2253 of 2023. (ii....
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....le under the law or not, the sale at any cost cannot be confirmed in favour of the petitioner due to alleged illegality in the auction process. Not once did the Borrower raise the issue of there being no 30 / 15-days' time gap between the notice of sale and the auction nor the issue that as per the terms of the auction, the same was subject to the outcome of the S.A. No. 46 of 2023. (vii) Remarkably, although the Borrower during the course of hearing of the Main Appeals urged that no indulgence of this Court was warranted as it had already complied with the terms of the High Court's impugned order and that the entire matter had been rendered infructuous, yet at the same time, not once did the Borrower even remotely indicate that it was in the process of withdrawing the S.A. No. 46 of 2023 as evinced from its written submissions. (viii) Moreover, the Borrower despite being fully aware of the prayer of the petitioner for seeking confirmation of the sale in its favour and issuance of the sale certificate to the Secured Asset both during the course of hearing and in its written submissions which would have rendered the S.A. No. 46 of 2022 infructuous, it never prayed ....
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....the remedy under the SARFAESI Act and no writ petition would lie or be maintainable. The relevant observations read as under: - "18. [...] If proceedings are initiated under the Sarfaesi Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the Sarfaesi Act and no writ petition would lie and/or is maintainable and/or entertainable. [...]" ( Emphasis supplied ) 126. Thus, the remedy for seeking redemption of mortgage was not only available to the Borrower under Section 17 of the SARFAESI Act but was also availed by him, by way of I.A. No. 2339 of 2023 in S.A. No. 46 of 2022. This application for seeking redemption of mortgage was also heard by the DRT for quite some time, and even orders were reserved. However, suddenly, the Borrower decided to move the High Court for seeking the very same relief that it had sought in the securitization application. 127. As there was virtually no difference between either the scope of proceedings or the prayer sought before the DRT and that before the High Court, once the Borrower had chosen to espouse the same mat....
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....rt thereafter proceeded to determine the Borrower's right of redemption and after going through the facts of the case, held that since at the time of redemption of mortgage the notice of auction had already been published, it was impermissible for the High Court to allow the Borrower to redeem the same. 132. Thus, this Court only went on to determine the Borrower's right to redeem the mortgage and having done so, this Court inter-alia set-aside the impugned order of the High Court and in view of the fact that the Bank had already confirmed the sale in favour of the petitioner, and in the absence of any challenge to the auction process, further directed that the sale certificate of the Secured Asset be issued to the petitioner. The operative portion of the said decision reads as under: - "106. In the result, both the appeals succeed and are hereby allowed. 107. The impugned judgment and order passed by the High Court is hereby set aside. 108. The respondent Bank shall refund the entire amount deposited by the borrowers i.e., an amount of Rs. 129 crore paid by them in lieu of the redemption of mortgage of the secured asset at the earliest. The appellant ....
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.... Sir James Wigram, V.C. held that where a given matter becomes the subject of litigation and the adjudication of a court of competent jurisdiction, the parties so litigating are required to bring forward their whole case. Once the litigation has been adjudicated by a court of competent jurisdiction, the same parties will not be permitted to reopen the lis in respect of issues which might have been brought forward as part of the subject in contest but were not, irrespective of whether the same was due to any form of negligence, inadvertence, accident or omission. It was further held, that principle of res judicata applies not only to points upon which the Court was called upon by the parties to adjudicate and pronounce a judgement but to every possible or probable point or issue that properly belonged to the subject of litigation and the parties ought to have brought forward at the time. The relevant observations read as under: - " In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to tha....
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....lleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, meritsbased judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all pos....
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....tion is of critical importance. It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by article 6 ... While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression [...]" ( Emphasis supplied ) 138. In Virgin Atlantic Airways Ltd. v. Zodiac Seats UK Ltd. reported in [2014] AC 160 Lord Sumption JSC further expounded the 'Henderson Principle' as although separate and distinct from cause of action estoppel or res judicata yet having the same underlying public interest that there should be finality in litigation and that a party should not be twice vexed in the same ....
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....nderson Principle, in the same manner as the principles underlying res judicata, is intended to ensure that grounds of attack or defence in litigation must be taken in one of the same proceeding. A party which avoids doing so does it at its own peril. In deciding as to whether a matter might have been urged in the earlier proceedings, the court must ask itself as to whether it could have been urged. In deciding whether the matter ought to have been urged in the earlier proceedings, the court will have due regard to the ambit of the earlier proceedings and the nexus which the matter bears to the nature of the controversy. In holding that a matter ought to have been taken as a ground of attack or defence in the earlier proceedings, the court is indicating that the matter is of such a nature and character and bears such a connection with the controversy in the earlier case that the failure to raise it in that proceeding would debar the party from agitating it in the future. The doctrine itself is based on public policy flowing from the age-old legal maxim interest reipublicae ut sit finis litium which means that in the interest of the State there should be an end to litigation and no ....
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....for this purpose is not confined to the issues which the court is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them. This is therefore another and an equally necessary and efficacious aspect of the same principle, for it helps in raising the bar of res judicata by suitably construing the general principle of subduing a cantankerous litigant. That is why this other rule has some times been referred to as constructive res judicata which, in reality, is an aspect or amplification of the general principle." ( Emphasis supplied ) 142. This Court in Devilal Modi v. Sales Tax Officer, Ratlam & Ors. reported in AIR 1965 SC 1150, held that if the underlying rule of constructive res judicata is not applied to writ proceedings, it would be open to the party to take one proceeding after another and urge new grounds every time, and would be inconsistent with considerations of public policy. The relevant observations read as under: - "8. [.......
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....allenges. At its core, the principle stipulates that all claims and issues that could and should have been raised in an earlier proceeding are barred from being raised in subsequent litigation, except in exceptional circumstances. This rule not only supports the finality of judgments but also underscores the ideals of judicial propriety and fairness. 145. There are, four situations where in second proceedings between the same parties doctrine res judicata as a corollary of the principle of abuse of process may be invoked: (i) cause of action estoppel, where the entirety of a decided cause of action is sought to be relitigated; (ii) issue estoppel or, "decided issue estoppel," where an issue is sought to be relitigated which has been raised and decided as a fundamental step in arriving at the earlier judicial decision; (iii) extended or constructive res judicata i.e., "unraised issue estoppel," where an issue is sought to be litigated which could, and should, have been raised in a previous action but was not raised; (iv) a further extension of the aforesaid to points not raised in relation to an issue in the earlier decision, as opposed to issues not raised in relation to the dec....
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....ple would be applicable. 150. Parties cannot be allowed to exploit procedural loopholes and different foras to revisit the same matters they had deliberately chosen not to pursue earlier. Thus, where a party deliberately withholds certain claims or issues in one proceeding with the intention to raise them in a subsequent litigation disguised as a distinct or separate remedy or proceeding from the initial one, such subsequent litigation will also fall foul of this principle. 151. Similarly, where a plea or issue was raised in earlier proceedings but later abandoned it is deemed waived and cannot be relitigated in subsequent. Allowing such pleas to be resurrected in later cases would not only undermine the finality of judgments but also incentivize strategic behaviour, where parties could withdraw claims in one case with the intention of reintroducing them later. proceedings. Abandonment signifies acquiescence, barring its reconsideration in subsequent litigation. This ensures that judicial processes are not misused for tactical advantage and that litigants are held accountable for their procedural choices. Parties must litigate diligently and in good faith, presenting their en....
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....o, the very issue of validity of the 9th auction notice and the proceedings thereto properly belonged to the subject of litigation in the Main Appeals before this Court and ought to have been brought forward as part of the subject in contest. (ii) Moreover, since there was virtually no difference between the prayer sought before the DRT and that before the High Court, once the Borrower had chosen to espouse the same matter already sub-judice in DRT before the High Court, it was the duty of the Borrower to bring within the fold of its case all issues and grounds in respect of the 9th auction proceedings in the proceedings arising from the writ petition, by virtue of the Doctrine of Merger and Election. Since the prayers that were sought before the DRT had been merged with the prayers before the High Court, the scope of proceedings of the Main Appeals encompassed the issue of validity of the Bank's actions under the SARFAESI Act and by extension the 9th auction notice dated 12.06.2023 which the Borrower for reasons best known to it, and such now cannot be permitted to raise these issued when they ought to have been raised in the Main Appeals. In this regard we may refer to t....
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....eprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity. By that law, a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. Taking inconsistent pleas by a party makes its conduct far from satisfactory. Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily." ( Emphasis supplied ) (iv) The premise on which the writ petition came to be filed by the Borrowers before the High Court is also significant. The Borrower in the writ petition contended that they have an apprehension that the DRT may reject their redemption application and the entire matter would become infructuous as the Bank at that point of time had already accepted the entire sale consideration for the auction from the petitioners and as such may likely issue the Sale Certificate to the Secured Asset. Thus, the Borrower's themselves were under the impression and understanding that once the Sale Certificate is issued, the sale to the Secured Asset beco....
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.... absolute. (vii) Lastly, this court in its decision in the Main Appeals by no means either preserved the right or permitted the Borrower to continue pursuing the proceedings in S.A. No. 46 of 2022 pending before the DRT. This is in view of the maxim Expressio Unius Est Exclusio Alterius i.e., the expression of one thing is the exclusion of another. Where a court consciously and specifically grants certain reliefs but does not advert to other reliefs or rights, the relief so expressly provided necessarily leads to the implied exclusion of the other reliefs and rights. Thus, when this Court directed the issuance of the Sale Certificate it necessarily excluded the right to pursue the DRT proceedings. (viii) Mere reference to the pendency of the DRT Proceedings in the judgment by no means could lead to the inference that this Court had preserved the rights of the Borrower herein to pursue the same. One cannot assume or infer any right by referring to a stray sentence here and a stray sentence there in the judgment. It is trite that judgments of courts are not to be construed as statutes. ii. Applicability of Lis Pendens in the absence of any registration as require....
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....er party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose. Explanation.-- For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force." 158. The following conditions ought to be fulfilled for the doctrine of lis pendens to apply: - i. There must be a pending suit or proceeding; ii. The suit or proceeding must be pending in a competent court; iii. The suit or proceeding must not be collusive; iv. The right to immovable property must be directly and specifically in question in the suit or proceeding; v. The property must be transferred by a party to the li....
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....rally means a pending suit, and the doctrine of lis pendens has been defined as the jurisdiction, power, or control which a court acquires over property involved in a suit pending the continuance of the action, and until final judgment therein." It was observed there: "Expositions of the doctrine indicate that the need for it arises from the very nature of the jurisdiction of Courts and their control over the subject-matter of litigation so that parties litigating before it may not remove any part of the subject-matter outside the power of the Court to deal with it and thus make the proceedings infructuous." ( Emphasis supplied ) 162. In the present case, it has been canvassed on behalf of the Subsequent Transferee that it is a bona-fide third party purchaser of the Secured Asset since it was neither arrayed as a party to proceedings in the Main Appeals nor issued a notice of the said proceedings either by the petitioner or by the Bank. 163. In Sanjay Verma v. Manik Roy reported in (2006) 13 SCC 608 this Court held that the principle of lis pendens enshrined in Section 52 of the TPA is not only based on equity, good conscience and justice but is also a princ....
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....ciple of lis pendens will govern the present case and the second sale cannot have the overriding effect on the first sale. xxx xxx xxx 15. So far as the present case is concerned, it is apparent that the appellant who is a subsequent purchaser of the same property, has purchased in good faith but the principle of lis pendens will certainly be applicable to the present case notwithstanding the fact that under Section 19(b) of the Specific Relief Act his rights could be protected." ( Emphasis supplied ) 165. Similarly in a recent decision of this Court in Chander Bhan (D) through Lr. Sher Singh v. Mukhtiar Singh & Ors. reported in 2024 INSC 377 it was held that once the transaction in question is found to be illegal due to the doctrine of lis pendens, any defence of the subsequent transferee that they are a bona-fide purchaser is liable to be rejected. The relevant observations read as under: - "21. Once it has been held that the transactions executed by the respondents are illegal due to the doctrine of lis pendens the defence of the respondents 1-2 that they are bonafide purchasers for valuable consideration and thus, entitled to protection un....
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....y" in place of "active prosecution". The Amending Act also included the Explanation defining the expression "pendency of suit or proceeding". "Pendency" is defined to commence from the "date of institution" until the "disposal". The argument of the respondents that the doctrine of lis pendens does not apply because the petition for review was lying in the registry in a defective state cannot be accepted. The review proceedings were "instituted" within the period of limitation of thirty days. The doctrine of lis pendens kicks in at the stage of "institution" and not at the stage when notice is issued by this Court. Thus, Section 52 of the Transfer of Property Act would apply to the third-party purchaser once the sale was executed after the review petition was instituted before this Court. Any transfer that is made during the pendency is subject to the final result of the litigation." ( Emphasis supplied ) 168. Since, in the present case the Special Leave Petitions were already instituted and pending before this Court as on 28.08.2023 i.e., the date of execution of the Assignment Agreement for the transfer of the Secured Asset in favour of the Subsequent Transferee, the s....
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.... by any law for the time being in force." ( Emphasis supplied ) 170. It was submitted on behalf of the Subsequent Transferee that in view of the aforesaid state amendment to Section 52 of the TPA, in order to invoke lis pendens under the said provision it is mandatory as per sub-section (1) that a notice of pendency of a suit or proceeding is registered in respect of the property which is the subject-matter of such proceeding in the manner laid down in sub-section (2) and in the event no such notice of pendency is registered then lis pendens will not be applicable. It was further submitted that since in the present case admittedly there was no registration of notice of pendency by the petitioner in respect of the Secured Asset, the Assignment Agreement dated 28.08.2023 and the transfer of the said property in pursuance thereto is not hit by lis pendens. 171. We have carefully gone through the aforesaid state amendment made to Section 52 of the TPA. The amended Section 52 sub-section (1) of the TPA casts upon a party who is claiming any right to a property which is a subjectmatter of any pending suit or proceeding an additional duty to register a notice of pendency in....
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....exploitation of procedural gaps by parties who deliberately delay or avoid registering such notices to defeat substantive rights of the parties and undermine the very sanctity of judicial proceedings. Such an interpretation would lead to a very chilling effect whereby, thirdparties despite being expected to verify the title and status of the property would simply abdicate their duty to conduct thorough due diligence in transactions involving immovable properties or that despite being fully aware of the pendency of such proceedings would be able to deviously claim absolute rights to such property or worse, mischievously execute back-dated agreements in collusion with a party to a lis prior to registration of such notice of pendency to circumventing the very proceedings and render them infructuous. 174. In Sanjay Verma (supra) this Court cautioned that the doctrine of lis pendens is a principle of public policy without which it will be impossible to bring an action or suit to a successful termination if alienations are permitted to prevail thereby undermining the sanctity of judicial proceedings and rights of parties so involved therein. Thus, we are of the considered view that ev....
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....ing however, when things went wrong, they now cry foul of not being impleaded as parties and heard by this Court in the Main Appeals. Even otherwise, assuming that the petitioner and the Bank herein deliberately chose not to implead the Subsequent Transferee herein in order to mislead this Court in the Main Appeals, the same is immaterial as the Subsequent Transferee too failed to implead itself despite being aware of the pendency of the proceedings before this Court. If at all they were so concerned about the transfer of the Secured Asset in their favour, either they ought to have themselves attempted to implead itself before this Court or requested the Borrower to do the same. In view of the Doctrine of Pari Delicto i.e.., 'in equal fault, the law aids neither party', the Subsequent Transferee cannot seek any benefit from the fault of the petitioner or the Bank when it is itself equally at fault. 176. In view of the aforesaid, we are of the considered view that the execution of the Assignment Agreement dated 28.08.2023 and the transfer of the Secured Asset in pursuance thereto in favour of the Subsequent Transferee is hit by lis pendens despite the fact that no notice of pende....
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....s to be void or proceed to pass appropriate directions to the concerned authorities to ensure that the contumacious conduct on the part of the contemnor does not continue to enure to the advantage of the contemnor or anyone claiming under him. 181. Since in the present case, the Assignment Agreement dated 28.08.2023 whereby the Secured Asset was transferred in favour of Greenscape / the Subsequent Transferee herein was effected by the Borrower on the strength of its right of redemption pursuant to the High Court's impugned order which was ultimately set-aside by this Court in its judgment and order dated 21.09.2023 in the Main Appeals, the same rendered Borrower's right to transfer the Secured Asset non-est and by extension the Assignment Agreement void. iii. Whether any contempt is said to have been committed by the respondents herein? 182. In order to decide whether the appellants are guilty of civil contempt, it would be apposite to refer to Section 2(b) of the Act, 1971, which reads as under: - "2. Definitions.- In this Act, unless the context otherwise requires,- xxx xxx xxx (b) "civil contempt" means wilful disobedience to any judg....
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....court of record" and states that it shall have all the powers of such a court including the power to punish for contempt of itself. The provisions of the Act, 1971 and the Rules framed thereunder form a part of a special statutory jurisdiction that is vested in courts to punish an offending party for its contemptuous conduct. It needs no emphasis that the power of contempt ought to be exercised sparingly with great care and caution. The contemptuous act complained of must be such that would result in obstruction of justice, adversely affect the majesty of law and impact the dignity of the courts of law. 187. It must also be understood that contempt proceedings are sui generis inasmuch as the Law of Evidence and the Code of Criminal Procedure, 1973 are not to be strictly applied. At the same time, the procedure adopted during the contempt proceedings must be fair and just that is to say the principles governing the Rule of law must be extended to the party against whom contempt proceedings have been initiated. The party must have every opportunity to place its position before the Court. Such a party must not be left unheard under any circumstances. 188. In Ram Kishan v. Tarun ....
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....law since the image of such a majesty in the minds of the people cannot be led to be distorted. The respect and authority commanded by courts of law are the greatest guarantee to an ordinary citizen and the entire democratic fabric of the society will crumble down if the respect for the judiciary is undermined. It is true that the judiciary will be judged by the people for what the judiciary does, but in the event of any indulgence which can even remotely be termed to affect the majesty of law, the society is bound to lose confidence and faith in the judiciary and the law courts thus, would forfeit the trust and confidence of the people in general." ( Emphasis supplied ) 190. In Pushpaben & Anr. v. Narandas Badiani & Anr. reported in (1979) 2 SCC 394, it was held that contempt of court is a special jurisdiction to be exercised sparingly and with caution whenever an act adversely affects the administration of justice or which tends to impede its course or tends to shake public confidence in the judicial institutions. It further held that this jurisdiction is to be exercised not for the protection of the dignity of an individual judge but to protect the administration of ....
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....d by public agitation or publications. It has to be remembered that even at turbulent times through which the developing countries are passing, contempt of court means interference with the due administration of justice." ( Emphasis supplied ) 192. In Rita Markandey v. Surjit Singh Arora reported in (1996) 6 SCC 14, it was observed that even if parties have not filed an undertaking before the court but if the court was induced to sanction a particular course of action or inaction on the representation made by a party and the court ultimately finds that the party never intended to act on the said representation or such representation was false, the party would be guilty of committing contempt. The relevant observations read as under: - "12. Law is well settled that if any party gives an undertaking to the court to vacate the premises from which he is liable to be evicted under the orders of the court and there is a clear and deliberate breach thereof it amounts to civil contempt but since, in the present case, the respondent did not file any undertaking as envisaged in the order of this Court the question of his being punished for breach thereof does not arise. ....
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....court (or an undertaking given to a court); (ii) there must be disobedience to such judgment, decree, direction, order, writ or other process of a court (or breach of undertaking given to a court); and (iii) such disobedience of judgment, decree, direction, order, writ or other process of a court (or breach of undertaking) must be wilful." 195. However, the subsequent observations made by this Court in Patel Rajnikant (supra) are significant. It observed that the court should not hesitate in wielding the potent weapon of contempt, it is for the proper administration of justice and to ensure due compliance with the orders passed by it in order to uphold and maintain the dignity of courts and majesty of law. The relevant observations read as under: - "70. From the above decisions, it is clear that punishing a person for contempt of court is indeed a drastic step and normally such action should not be taken. At the same time, however, it is not only the power but the duty of the court to uphold and maintain the dignity of courts and majesty of law which may call for such extreme step. If for proper administration of justice and to ensure due compliance wi....
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....ust be respected not only in the letter of their orders but also in the broader spirit of the proceedings before them. 200. Any contumacious conduct of the parties to bypass or nullify the decision of the court or render it ineffective, or to frustrate the proceedings of the court, or to enure any undue advantage therefrom would amount to contempt. Attempts to sidestep the court's jurisdiction or manipulate the course of litigation through dishonest or obstructive conduct or malign or distort the decision of the courts would inevitably tantamount to contempt sans any prohibitory order or direction to such effect. 201. Thus, the mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt. Such actions interfere with the administration of justice, undermine the respect and authority of the judiciary, and threaten the rule of law. 202. However, at the same time, the power of contempt ought to be exercised sparingly and with caution and care. It operates with a string of caution and unless otherwise satisfied beyond doubt, it would neither be fair nor reasonable for the cour....
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....t issued any specific direction either to the Borrower or the Subsequent Transferee as regards the handing over of physical possession and the original title deed to the Secured Asset, or the proceedings pending before the DRT in S.A. No. 46 of 2022. However, the same would not mean that the decision of this Court in the Main Appeal was bereft of any direction as to the outcome of its findings. This Court in the operative portion of the Main Appeals stated in unequivocal terms that the confirmation of the sale by Bank under Rule 9(2) of the SARFAESI Rules had vested the petitioner herein with a right to obtain the certificate of sale of the Secured Asset. It further held categorically that the Borrower herein could not have redeemed the mortgage upon publication of the 9th auction notice. Furthermore, this Court explicitly directed the Bank to not only issue the Sale Certificate to the petitioner herein in accordance with Rule 9(6) of the SARFAESI Rules but also directed the refund of the amount of Rs. 129 crore paid by the Borrower. Moreover, the impugned order of the High Court had been set-aside by this Court in toto. As already discussed in paragraph 154, the natural corollary ....
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....rather than proceeding to presume a self-serving interpretation of the decision. At this stage, we may also explain the correct approach to be adopted by the other courts and forums where a party seeks to espouse a cause based on its own understanding or interpretation of a decision of an higher authority. In such situations, the courts or forums should neither aid the parties in their attempt to reinterpret the decision of a higher court nor should they embark on an inquisitorial exercise of their own in order to derive the scope or intent of the order in question. The courts and tribunals should not conflate a decision of a higher court that declares a law with a decision that declares the inter-se rights of a parties, the former only operates as a precedent and thus, it is open for the lower courts to apply their minds to assess whether the same is applicable to the issues before it or what law has been laid down therein. However, the latter not only has precedential value but also carries with it the weight of determination of the issues directly involved between the very parties before it, the subject-matter itself and by extension the entire cause of action. Since such decisi....
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.... not only sought the relief of declaration of title in its favour but also the invalidation of the Sale Certificate issued to the petitioner, contrary to the decision of this Court in the Main Appeals. 208. In the facts of the case, we are convinced that both the Borrower and the Subsequent Transferee have committed contempt of this Court's judgment and order dated 21.09.2023 in the Main Appeals. The aforementioned acts of the contemnors are nothing more than a gamble on their part to circumvent and undermine the findings and directions passed by this Court in the Main Appeals. Similarly, the lame excuses offered by them for explaining their conduct are also nothing more than a calculated attempt in the hope that they would get away with legitimizing the illegal Assignment Agreement even after the decision of this Court, and is equally contemptuous. 209. However, on an overall conspectus of the facts of the present case, while the initial acts of the Borrower and the Subsequent Transferee are in violation of this Court's judgment and order dated 21.09.2023, yet the efforts on their part to take steps and make amends by withdrawing the Special Civil Suit No. 5 of 2024 along wi....
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....ation under subsections (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of a registered deed of transfer." ( Emphasis supplied ) 212. In LICA (P) Ltd. v. Official Liquidator reported in (1996) 85 Comp Cas 788 (SC) this Court held that the purpose of an open auction is to get the most remunerative price with the highest possible public participation, and as such the courts shall exercise their discretion to interfere where the auction suffers from any fraud or inadequate pricing or underbidding that too with circumspection, keeping in view the facts of each case. The relevant observations read as under: - "The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The court would, therefore, have to exercise its....
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....less a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud. The relevant observations read as under: - "13. Undoubtedly, public money should be recovered and recovery should be made expeditiously. But it does not mean that the financial institutions which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions. xxx xxx xxx 28. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is coextensive with that of the principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud." ( Emphasis supplied ) 215. In ....
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....bject property." ( Emphasis supplied ) 217. In the present lis, it is not the case of the Borrower herein that the 9th auction conducted by the Bank was a result of any collusion or fraud either at the behest of the Bank or the Successful Auction Purchaser herein. Aside from the lack of any 15-days gap between the notice of sale and the notice of auction, no other illegality has been imputed to the aforesaid auction proceedings. It is also not the case of the Borrower that due to the absence of the aforesaid statutory period, any prejudice was caused or that it was prevented from effectively exercising its rights due to such procedural infirmity. Despite a total of eight auctions being conducted by the Bank from April, 2022 to June, 2023, not once did the Borrower express its desire to redeem the mortgage. Even when the auction notice came to be issued on 12.06.2023, the Borrower never intimated that it was in process of redeeming the mortgage with the aid of the Subsequent Transferee and that the auction be delayed even though, as per the parties own submissions, they started exploring the possibility of redeeming the mortgage and thereafter transferring in June, 2023 ....
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....ourt in Janak Raj v. Gurdilal Singh & Ors. reported in AIR 1967 SC 608 wherein it was held that even if a decree pursuant to which auction was previously conducted was later set-aside, the successful auction purchaser's rights will remain unaffected and he would still be entitled to confirmation of sale in its favour. The relevant observations read as under: - "27. For the reasons already given and the decisions noticed, it must be held that the appellant-auction purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale the decree had been set aside. The policy of the Legislature seems to be that unless a stranger auctionpurchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified. The Code of Civil Procedure of 1908 makes ample provision for the protection of the interest of the judgment-debtor who feels that the decree ought not to have been passed against him. On the fa....
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....ontemnor or anyone claiming under him. 223. In view of the aforesaid, we pass the following orders and directions: - (i) The legality and validity of the 9th auction proceedings conducted pursuant to the notice of sale dated 12.06.2022 is upheld. The sale of the Secured Asset to the petitioner is hereby confirmed and the title conferred through the Sale Certificate dated 27.09.2023 is declared to be absolute. (ii) The Borrower and the Bank shall immediately take steps for the cancellation of the Release Deed dated 28.08.2023 within a period of one week from the date of pronouncement. (iii) The Borrower shall also unconditionally withdraw the S.A. No. 46 of 2022 pending before the DRT within a period of one week from the date of pronouncement. (iv) The Assignment Agreement dated 28.08.2023 is hit by lis pendens and hereby declared void. The Subsequent Transferee shall hand over the peaceful physical possession of the Secured Asset along with its original title deeds to the Bank within a period of one week from the date of pronouncement of this judgment. In the event of any further hinderance or any obstruction that may be caused by the Borrower....