TMI Blog2005 (1) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short Securitisation Act) and following non-compliance proceeded to take possession of the secured assets under section 13(4) thereof on 6th December, 2002. The property consisted of certain parcels of land situated at Marol, Mumbai as also the plant and machinery situated thereon. 3. Thereafter the respondent issued public auction notice on 19th June, 2004 to hold the auction on 30th July, 2004. Petitioners filed Appeal under section 17 of the Securitisation Act to challenge the notice dated 3rd August, 2002 and applied for interim stay, but that was rejected by the Debts Recovery Tribunal (DRT) on 22nd July, 2004. The petitioner filed W.P. Lod. No. 2124 of 2004 to challenge the notice dated 3rd August, 2002 and 19th June, 2004. Therein an order was passed in terms of the minutes by Division Bench on 30th July, 2004. 4. Petitioners had given an undertaking to pay the second respondent an amount of Rs. 50 lakhs on or before 15th August, 2004 and the balance in monthly instalment of Rs. 30 lakhs. Those undertakings were accepted. It was provided in the consent terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that under section 13(8) of the Securitisation Act, a valuable right is conferred on the borrower to clear the dues of the secured creditor along with cost, charges and expenses any time before the date fixed for sale or transfer and if that is so done, secured asset is not to be sold. This section 13(8) reads as follows: "(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset." 8. Mr. Subramaniam then referred us to the observations of the Apex Court in para 54 of the judgment rendered in the case of Mardia Chemicals Ltd. v. Union of India [2004] 4 SCC 311 which explains this right of redemption available to a borrower under section 13(8) of this Act. This para reads as follows: "54. Insofar as the argument advanced on behalf of the petitioners that by virtue of the provisions contained under sub-section (4) of section 13 the borrowers lose their right of redempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any of the following methods: ( a )by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or ( b )by inviting tenders from the public; ( c )by holding public auction; or ( d )by private treaty; (6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include ( a )the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; ( b )the secured debt for recovery of which the property is to be sold; ( c )reserve price, below which the property may not be sold; ( d )time and place of public auction or the time after which sale by any other mode shall be completed; ( e )depositing earnest money as may be stipulated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly. (9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not." 10. It was submitted that in the instant case no such notice as required under rule 8(6) was given to the petitioners and the notice of sale published on 26th October 2004 was also defective, being in breach of Rule 9(1) inasmuch as though it was published on 30th October 2004, it called for the bids only by 5th November, 2004. Mr. Subramaniam submitted that if the rights of the borrower as explained by the Apex Court are to be protected, it was necessary that these rules must be interpreted and enforced as they have been drafted. That alone will give an opportunity to the party concerned to redeem the property. In the present case, notice under Rule 8(6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n further stated that the remaining balance out of the claim of Rs. 15 lakhs, as claimed by the bank will be paid to the bank by evening by a cheque of Attorneys which will be subject to the appropriate adjustments between 2nd respondent and petitioners. Since the respondent No. 2 bank was receiving this amount Mr. Shah did not canvas any further submissions to object to the reliefs in the petition. 12. It was however, Mr. Madan, learned Counsel for respondent No. 4 who objected to the submissions raised by Mr. Subramaniam. Mr. Madan submitted that as far as both these prayers i.e. prayer ( a ) challenging the advertisement and prayer ( c-i ) challenging the order passed on the Miscellaneous Application is concerned, petitioners had remedy under the Securitisation Act. As far as the advertisement is concerned, it is a measure under section 13(4) and therefore, an appeal is available to the petitioners under section 17 and as far as the order on the Miscellaneous application is concerned, appeal is available under section 18 to the Appellate Tribunal. Both these remedies ought to have been exhausted and this Court should not interfere. That apart, on merits Mr. Madan submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 15. True it is that in the event of any measures being taken by a bank or when any order is passed by the D.R.T. an appeal ought to be preferred as provided under the statute. However, as far as the writ court is concerned, the rule of exhaustion of internal statutory remedy is a rule of self-limitation as has been stated by the Apex Court time and again. In the present case, the question was with respect to action of respondent No. 2 and whether it was in accordance with law. Prima facie, we do not find that notice of sale was in accordance with the statutory rules nor does the impugned order passed by the D.R.T. take cognisance of these breaches. In the circumstances, we allow this petition in terms of prayer clauses ( a ) and ( c-i ) though without any order for costs. 16. In view of the order passed as above, respondent No. 2 bank will return petitioners documents to the Attorneys of the petitioners and will also refund the amount of Rs. 15 crores which has been collected from the 4th respondent within 48 hours. The amount will not carry any interest. Possession of the property concerned will be returned to the petitioners by the second respondent immediately af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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