TMI Blog2010 (10) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is for issuing appropriate direction to the second respondent/State Bank of Mysore to refund the sale advance of Rs. 25,20,000 paid to the schedule mentioned property on March 11, 2010. The brief facts which are relevant for consideration herein are as follows: The third respondent borrowed money from the second respondentbank and the property belonging to the third respondent was mortgaged in favour of the bank as security for repayment of the amount. The third respondent defaulted in discharge of its liability resulting in bringing the property for sale and tender-cum-auction sale notice was issued in the newspaper on January 27, 2010. The petitioner herein participated in the bid and was declared as the successful bidder for an offer of Rs. 1,00,95,000. Pursuant to the same, the petitioner has paid a sum of Rs. 17,18,352 towards 25 per cent of the sale consideration and the time was given to the petitioner for paying the balance sale consideration of Rs. 75,75,000 on or before March 26, 2010. In the meanwhile, the petitioner applied for encumbrance certificate in respect of the property on March 18, 2010 and the encumbrance certificate was obtained on the same date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal objection raised by the learned counsel for the second respondent is against the maintainability of this writ petition. It is contended by the learned counsel for the second respondent that the statutory remedy available to the petitioner is to approach the Debt Recovery Tribunal under the relevant provision of SARFAESI Act and the writ jurisdiction does not lie. On merits it is considered that the petitioner was aware of the encumbrance on March 5, 2010 while inspecting the documents which are available in the office of the second respondent and he participated in the bid with the full knowledge about the property regarding its nature, extent, location, condition, etc., and if there is no basis for the petitioner to raise this issue except to postpone the payment of balance sale consideration within the prescribed time, in order to avoid cancellation of bid and the same lacks bona fide on merits. I have considered the rival submissions made on both sides and perused the materials available on record. Before going into the claim of the petitioner on facts, the first aspect to be considered is about the maintainability of this writ petition. The relief sought for herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative remedy and allowed the writ petition by granting prohibitory order as sought for by the petitioner therein. The same was challenged before the Supreme Court. The Supreme Court has considered the claim of the appellant-bank both in law and on facts and has arrived at a conclusion that as the writ petition is filed against the notice issued under sections 13(2) and 13(4), ignoring the availability of the statutory remedy before the DRT, the same is not maintainable. While doing so, the apex court has also expressed serious concern about the fact that the High Court has been continuously ignoring the availability of statutory remedies under the DRT Act and SARFAESI Act while exercising its jurisdiction under section 226 of the Constitution of India which have serious adverse impact on the right of banks and other financial institutions to recover their dues. The Supreme Court has at the end of its judgment cautioned the High Courts to exercise their discretion in future in such matters with greater caution, care and circumspection. Though this court is bound to follow the observation of the Supreme Court, the same is in my considered view, inapplicable to the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of availability of alternate remedy raised on the side of the second respondent-bank is devoid of any merits and deserves no acceptance. On merits, the facts made available herein would reveal that the tendercum-auction notice was issued on January 27, 2010, as per which, the inspection of the property under auction by the buyers was fixed on March 4, 2010 and verification of the documents relating to title, ownership and other legal procedure with the branch of the bank was fixed during office hours on March 5, 2010, collection of tender forms from the bank was on March 9, 2010 between 11 am and 1 pm and the last date for submission of the same was on March 10, 2010 before 4 pm. It is not in dispute that the petitioner has submitted his tender in full after complying with all formalities and has been declared as the successful bidder and paid the advance amount. However, the petitioner thought fit not to proceed with the purchase of the property by raising the issue that the property was under attachment by the Sales Tax Department. The petitioner has come forward with such contention for the first time in his letter dated March 26, 2010, wherein, it is specifically stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nders 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 by the secured creditor; (f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property. A reading of rule 8(6) makes it very clear as to what are the relevant particulars to be furnished in the sale notice, as per which the description of the property to be sold among other particulars including the details of the encumbrances and any other thing which the authorised officer considers it material for a purchaser to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng writ jurisdiction. The Division Bench has while setting aside the order as invalid, held at para 5 of the order as follows: 5. We have considered the submissions. Of course, in the aforesaid judgment, the Supreme Court, while considering a sale by the official liquidator, has held that it is the duty of the intending purchaser to satisfy himself as to the encumbrance before participating in the bid. Having participated in the bid, the intending purchaser cannot later on turn around and question the official liquidator on the ground that the encumbrance was not notified. In that case, the provisions of the Rules as applicable in the present case are not applicable to the official liquidator. But in the case on hand, once possession is taken over under section 13(4) or under section 14 of the SARFAESI Act, whenever the secured creditor contemplates a sale of immovable property, they will have to follow rule 8 of the Security Interest (Enforcement) Rules, 2002. Rule 8(6)(f) mandates the secured creditors to set out in the terms of sale notice any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of earnest money is arbitrary and unfair and directed the Corporation to refund the forfeited amount. The learned counsel for the second respondent has also cited an authority reported in HI-Q Electronics Private Limited v. Branch Manager, Tamil Nadu Industrial Investment Corporation Limited I [2001] BC 708, wherein, the case is arising out of section 29 of the State Financial Corporation Act, 1951 and the property was under attachment by the Sales Tax Department and the successful bidder by reason of such attachment, sought for refund of the amount and the same was rejected by the bank and the bid amount was forfeited. When the same was challenged before our High Court, the learned single Judge rejected the contention of the writ petitioner therein that non-disclosure of the fact regarding the letter from the Sales Tax Department to the petitioner amounts to fraud and on that basis, the petitioner can ignore the same. Our High Court was not inclined to interfere with the auction sale which was already confirmed mainly in view of clause 16 of the terms and conditions under which it is the duty of the intending purchaser to verify the dues payable on the property on the princi ..... 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