TMI Blog2020 (4) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... ternative remedy - this is a fit case to entertain the writ petition against the impugned order passed by the Tribunal. Whether the SA is barred by limitation? - HELD THAT:- Having withheld the said information from the petitioners, the first respondent cannot be permitted to plead the bar of limitation because it would amount to allowing the first respondent to take advantage of its own wrong, which is impermissible in law - Having suppressed that the auction was conducted on June 14, 2018 successfully and that the second respondent was the highest bidder from the petitioners, the first respondent cannot plead that the S. A. was filed beyond the period of 45 days from the sale on September 4, 2018. Whether there is a waiver by the petitioners of rights under the SARFAESI Act, 2002? - HELD THAT:- The Tribunal had also held that there was a waiver by the petitioners of their right to contend about illegality if any committed in the conduct of e- auction on June 14, 2018 by the first respondent-bank - In the instant case also though the first respondent-bank did not disclose to the petitioners about the sale in the e-auction held on June 14, 2018 to the second respondent, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest Act, 2002 (for short the Act ) on June 3, 2017 stating that the petitioners have to pay ₹ 25,55,410.96 towards OCC loan account as well as term loan account. 6. The petitioners contends that thereafter the petitioners paid ₹ 8 lakhs on December 27, 2017 and the entire OCC loan liability of ₹ 7,43,766.96 as mentioned in the notice issued under section 13(2) of the Act was cleared by the first petitioner. 7. Later, on February 21, 2018 the first respondent-bank issued notice under rule 8(6) of the SARFAESI Rules informing about proposed sale (30 days notice) of the secured asset, i. e., a house bearing No. SRT 59(1-7-38/6) admeasuring 150 sq. yds. consisting ground + 1st floor RCC structure situated at Industrial Colony, Mushirabad, Hyderabad mortgaged by the petitioners, fixing the reserve price at ₹ 58,86,000 and asking the petitioners to pay the said amount before the date of publication of notice for public auction. 8. The petitioners then issued a reply on March 5, 2018 stating that they have paid ₹ 18.25 lakhs as dues (including ₹ 8 lakhs paid on December 27, 2017) by February 21, 2018 and this was not reflected in the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated February 21, 2018 issued under rule 8(6) of the Rules mentions that the first respondent had taken possession of the secured asset on November 15, 2017 but the petitioners were not served with any possession notice dated November 15, 2017 as is alleged by the first respondent and such notice was never affixed or published as mandated in the Act and Rules ; that even notice dated February 21, 2018 issued under rule 8(6) of the Rules was defective for want of proper service, affixture and publication in the news papers as mandated under law ; and that notice dated May 5, 2018 published in Andhra Jyothi newspaper dated May 10, 2018 was also not served or affixed. 16. It was contended that the said notice was defective for want of details of existing liability and the deposit of ₹ 18.25 lakhs by the petitioners was not given credit to by the first respondent. 17. It is alleged that in the e-auction notice dated May 13, 2018 the liability of the petitioners was mentioned as only ₹ 10,76,373 but the property having reserve price worth of ₹ 58.86 lakhs was put up for sale, which was not warranted. 18. It is also contended that the actual price of the secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal with unclean hands; that an interim order was granted on September 4, 2018 directing the petitioners to deposit ₹ 1 lakh in one week, but the petitioners did not comply and merely issued a cheque for the said amount on September 5, 2018 ; that the first respondent-bank informed the petitioner that the account had become NPA and any cheque drawn on the said account cannot be acted upon. 27. It is also stated that the petitioners had deposited ₹ 2 lakhs on June 14, 2018 after the auction had been conducted and sought for stopping of the auction proceedings, and taking into account their request, sale confirmation letter was not issued to the successful bidder. But since the petitioners did not close the loan accounts, the first respondent-bank had issued sale confirmation letter to the successful bidder. The plea of the auction purchaser/second respondent in the S. A. 28. The auction purchaser who was impleaded as the second respondent in the S. A. supported the stand taken by the first respondent-bank. The order of the Debts Recovery Tribunal in S. A. No. 182 of 2018 dated July 25, 2019 : 29. The Debts Recovery Tribunal dismissed the S. A. on July 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that the date of auction was not informed to the petitioner and there was no waiver by the petitioner. 37. According to him, there is no proper valuation also before the property was put to sale and the order of the Tribunal is thus vitiated because payments made of ₹ 2 lakhs on June 14, 2018 and ₹ 8.25 lakhs paid on March 5, 2018 were not taken into account. The stand of the second respondent/auction purchaser before this court 38. The second respondent filed a counter stating that on September 26, 2019 he had gifted the secured property purchased by him in the e-auction sale held on June 14, 2018 to his wife and two children under a registered gift deed dated September 26, 2019. 39. Therefore, the wife and children of the second respondent were impleaded as respondents Nos. 3 to 5 in the writ petition. Events after filing of the writ petition 40. After the writ petition was filed, on December 19, 2019 this court directed counsel for respondents Nos. 1 and 2 to file an affidavit stating the date when 25 per cent. of the bid amount was paid by the auction purchaser (second respondent), when the letter of confirmation was issued by the first re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 17 of the Act. They had questioned in the S. A. : (i) notice dated May 5, 2018 under rule 8(6) of the Rules published on May 10, 2018, (ii) e-auction notice dated May 13, 2018 published in Andhra Jyothi newspaper fixing the date of auction as June 14, 2018, and (iii) also the proposed action of the first respondent-bank in contemplating to take physical possession of the secured asset through Advocate- Commissioner appointed in Crl. M. P. No. 328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dated August 10, 2018 issued by the Advocate-Commissioner. 47. It was the specific plea of the petitioner in the S. A. that the petitioners had enquired on June 15, 2018 about the result of the auction held the previous day, i. e., on June 14, 2018 but the first respondent-bank did not furnish any information in that regard to the petitioners (paragraph No. 3, page No. 5 of the S. A.). 48. There is no denial of this fact in the counter-affidavits filed by the first respondent-bank in the S. A. though it admitted in paragraph No. 6 that on June 15, 2018 the second petitioner gave a letter promising to pay instalments. 49. If the auction had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain the favourable interpretation of the law. In support thereof, the author has placed reliance on another maxim frustra legis auxilium invocat quaerit qui in legem committit. He relies on Perry v. Fitzhowe [1846] 8 QBD 757 ; (15 LJ QB 239). At page 192, it is stated that if a man be bound to appear on a certain day, and before that day the obligee puts him in prison, the bond is void. At page 193, it is stated that 'it is moreover a sound principle that he who prevents a thing from being done shall not avail himself of the non-performance he has occasioned'. At page 195, it is further stated that 'a wrong doer ought not to be permitted to make a profit out of his own wrong'. At page 199 it is observed that 'the rule applies to the extent of undoing the advantage gained where that can be done and not to the extent of taking away a right previously possessed'. 29. The Division Bench of the High Court has recorded the finding that the respondent has absconded from open military detention. From the narration of the facts it is clear that the respondent was bent upon protracting preliminary investigation. Ultimately, when the GCM was constituted, he had ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st two auctions, whether that con duct of the borrower would amount to waiving the mandatory requirement of publishing subsequent notice dated April 27, 2006 fixing the date of auction as May 8, 2006 ? Our answer has to be in the negative. The aforesaid conduct cannot be taken as waiver of the mandatory condition of 30 days' notice for auction as well as other requirements. For examining the plea of waiver, we will have to see as to whether by implied or express actions, the borrower has waived the aforesaid mandatory requirement when the property was put to sale. We do not find, nor is it suggested, even the slightest move on the part of the borrower in this regard which may amount to waiver either express or implied. On the contrary, when notice dated April 27, 2006 was published, the borrower immediately filed Writ Petition No. 6471 of 2006 challenging the auction-notice. Thus, its conduct, far from waiving the afore said requirement, was to confront the bank by questioning its validity. It is a different matter that it had to withdraw the said writ petition in view of availability of alternate remedy. Immediately, it filed an application under section 18 of the SARFAESI Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he auction purchaser by giving him more time that what is permitted by rule 9(4) to make payment of the 75 per cent. balance sale consideration. 62. Though under rule 9(3) the auction purchaser has to deposit the 25 per cent. of the amount of sale price immediately after sale, admittedly the second respondent deposited the 25 per cent. of the sale consideration on June 15, 2018, i. e., after the day of the sale, and not immediately after the sale. 63. Further, under rule 9(4), the auction purchaser should pay 75 per cent. of the balance consideration within fifteen days of the confirmation of the sale, i. e., within fifteen days from June 14, 2018, i. e., before June 29, 2018. In the instant case, the first respondent-bank admittedly permitted the second respondent to pay the balance consideration even on July 26, 2018 almost one month after June 29, 2018. 64. This indicates that there is active collusion between the officials of the first respondent-bank and the auction purchaser and the bank had gone out of the way to favour the auction purchaser. The challenge to the notice dated May 5, 2008 under rule 8(6) is not barred by limitation 65. We shall deal with the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed asset through Advocate-Commissioner appointed in Crl. M. P. No. 328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dated August 10, 2018 issued by the Advocate-Commissioner. 70. Therefore we hold that the plea in the SA about the invalidity of the notice dated May 5, 2018 issued under rule 8(6) is not barred by limitation and the Tribunal erred in taking the said view. Non-compliance with rule 8(6) 71. No material has been produced by the first respondent-bank that it had complied with the service affixture and publication of the possession notice dated November 15, 2017 and notice dated February 21, 2018 under rule 8(6), and service and affixture of notice dated May 5, 2018. Strangely the Tribunal gave no finding on these aspects. This is clearly erroneous. Consequently we declare the order of Crl. M. P. No. 328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad under section 14 of the Act as invalid and the same is also set aside. The first respondent could not have conducted sale of the entire secured asset for dues which are fraction of it's value 72. We also hold that the action of the first respondent in issuing the e-auction ..... 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