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2018 (3) TMI 275 - HC - Indian LawsMaintainability of petition - SARFAESI Act - the contentions are raised that it is the case of the petitioners that with a mala fide intention and in collusive manner, the mortgage deed is entered between the Respondent No.1 and Respondent No.2 inter se without any intimation to the members of the Cooperative Society i.e. the petitioners - on one hand, the petitioners are claiming as bonafide purchasers for a value and on the other hand, the respondent no.1bank is claiming rights under the provision of the special statute like SARFAESI Act on the basis of the mortgage - Held that: - the balance is required to be struck between two competing claims. Therefore having regard to the provision of the SARFAESI Act, which is enacted by the Legislature with an aim to protect the interest of public financial institution like the bank, it has to be considered with balance with the principle of equality and fairness. If the provision of the SARFAESI Act are pressed into service by the respondent no.1bank, it is also obligatory for the bank to have a strict adherence to necessary procedure and cannot afford to remain indifferent, particularly when, the principle of estopppel and legitimate expectation are staring in the face that the financial institution like the bank claiming exercise of rights under the special statute like the SARFAESI Act are also under the obligation to adhere to the norms and the procedure to protect their own interest. The doctrine of estoppel and legitimate expectation would require public financial institution or the bank to have certain amount of clarity as well as procedural safeguard by evolving necessary regulatory frame work or mechanism that third party rights are not also put to such situation. It is well settled that alternate remedy is not a bar to exercise the discretionary jurisdiction under Article 226 of the Constitution of India. An application does not seem to have been filed by the respondent no.1bank with details and affidavit as provided and referred to proviso to Section 14 of the SARFAESI Act - It has also been provided in Section 13(4) of the SARFAESI Act that when the borrower fails to discharge his liability as provided in subsection (2), the secured creditor like the bank may have a recourse for the recovery of the secured debt as referred to in Section 13(4) of the Act. The mortgage qua land over which the construction has been made and the claim made by the petitioner that they have purchased bonafide could be considered on the basis of the material that could be produced before the Debt Recovery Tribunal with every detail with regard to the escrow account, which the bank was obliged to maintain and the respondent no.2 (builder) was obliged to deposit the consideration and also the Circular of the Reserve Bank of India as stated above, which the bank was obliged to follow - the matter is remanded back to the Debt Recovery Tribunal for examination of material with every detail afresh with reference to the provision of the SARFAESI Act as well as other material on the basis of which, the rights are claimed by the purchasers like petitioners as a bonafide purchasers. Petition allowed by way of remand.
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