Home Case Index All Cases Companies Law Companies Law + SC Companies Law - 2015 (1) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 461 - SC - Companies LawValidity of auction sale - Right of the auction buyer - entitlements of the guarantors who stepped into the shoes of the borrowers as provided under Section 13(8) of the SARFAESI Act - appellant contended that once the sale has been effected and confirmed in accordance with law, merely because someone else can offer a higher amount, the Court should not have interfered with the already confirmed sale as that would become an unending affair if such approach made by parties are entertained. - Interpretation of Section 13(8) of the SARFAESI Act, read with Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002 - Violation of right of redemption - Denial of adequate opportunity and time to repay the borrowed sum - Auction of property without giving proper notice. Held that:- Whole procedure followed by the 4th Respondent-Bank in effecting the sale on 28.12.2007 and the ultimate confirmation of the sale on 11.01.2008, stood vitiated as the same was not in conformity with the provisions of the SARFAESI Act and the Rules framed thereunder. Though, such a detailed consideration of the legal issues was not made by the Division Bench while setting aside the sale effected in favour of the Appellant, having regard to the construction of the provisions of the SARFAESI Act, the RDDB Act and the relevant Rules, we are convinced that the Judgment of the Division Bench [2010 (3) TMI 1050 - KERALA HIGH COURT], was perfectly justified and we do not find any infirmity with the same. Judgment passed in Writ Appeal No.1555 of 2009 dated 08.03.2010, was a self contained one and due to the failure of the 1st and 2nd Respondents in not handing over the Demand Draft for ₹ 2,00,00,000/- to the Appellant within the stipulated time limit, namely, on or before 08.06.2010, the sale effected in favour of the Appellant stood confirmed Inasmuch as we have found there was absolutely no justifiable grounds for the Division Bench to grant further time in its Order dated 18.06.2010, we are of the view that it will be travesty of justice if the earlier Judgment dated 08.03.2010, which worked itself out on 08.05.2010, is to be reversed for the flimsy grounds raised by the 1st and 2nd Respondents that they could not raise funds in spite of two months time granted to them for paying a sum of ₹ 2,00,00,000/- in favour of the Appellant. We have also found that while the time granted by the Division Bench expired by 08.05.2010, the application for extension was filed 40 days later, i.e. on 10.06.2010. Therefore, for such a recalcitrant attitude displayed by Respondents 1 and 2 in respect of a litigation which involved very high stakes, the Division Bench should not have come for their rescue in the absence of any weighty reasons. The reason adduced on behalf of Respondent 1 and 2 is the standard reason which any party used to plead while seeking for extension of time. Since very valuable rights of the Appellant were at stakes and the Order of the Division Bench also remained in force, insofar as it related to the cancellation of the sale deed, which existed in favour of the Appellant till 08.05.2010 and by virtue of the noncompliance of the conditions imposed in the said Judgment dated 08.03.2010 by the 1st and 2nd Respondents the ownership rights of the Appellant got crystallised on and after 09.05.2010, we fail to find any justification at all for the Division Bench to interfere with the said right in such a casual manner by accepting the flimsy reasons of the 1st and 2nd Respondents. Therefore, while upholding the Judgment of the Division Bench dated 08.03.2010 passed in Writ Appeal 1555 of 2009, for the reasons stated herein, the Orders dated 18.06.2010 and 08.07.2010 passed in I.A. Nos.437 and 507 of 2010 are set aside. Value of the property which was knocked out in favour of the Appellant in a sum of ₹ 1,27,00,101/- by confirming the sale by the 4th Respondent-Bank on 31.12.2007 and 11.01.2008, the same was found to be not in accordance with the provisions of the SARFAESI Act. Since the proper procedure for effecting the sale was not followed, it will have to be held that the price fetched through the Appellant cannot be held to be the correct price for the mortgaged property involved in these proceedings. Further, the very fact that in the year 2010 the property could fetch ₹ 2,03,00,000/-, we are of the view that in all fairness even while confirming the Order of the Division Bench, by which the sale in favour of the Appellant came to be confirmed, the difference in the sale price should be directed to be paid by the Appellant. While the price paid by the Appellant was ₹ 1,27,00,101/-, the price ultimately fetched at the instance of the 1st and 2nd Respondents was ₹ 2,03,00,000/-. Therefore, after giving credit to ₹ 1,27,00,000/-, the Appellant would still be liable to pay a further sum of ₹ 76,00,000/- to the 1st and 2nd Respondents. - Decided partly in favour of appellants.
|