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2016 (1) TMI 86 - MADRAS HIGH COURT

2016 (1) TMI 86 - MADRAS HIGH COURT - TMI - Auction Sale - whether the Fourth Respondent/Appellate Tribunal should have held that the First Respondent/Borrower does not have any right to challenge the ‘Auction Sale’ and the so-called third party purchaser is only vested with the ‘Equitable Right of Redemption’ of the said property? - Held that:- In the instant case, the auction sale notice was published on 09.07.2004 and in Tamil Daily ‘Dina Thanthi’ it was published on 10.07.2004. On 26.09.2008 .....

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ank without obtaining the valuation of the property from the ‘Approved valuer’, the plea of the Third Respondent/Bank is that it had taken the valuation from the ‘Approved valuer’ and on that basis only the ‘Upset Price’ was fixed. Therefore, the contra stand taken on behalf of the First Respondent/Borrower is not accepted by this Court.

Insofar as the stand of the First Respondent/Borrower (Firm) is that the Third Respondent/Bank had published the Possession notice only in English Da .....

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ly recalled the words of Robert Frost who said “a bank is a place where they would lend you an umbrella in a fair weather and ask for it back when it begins to rain”. At this stage, one cannot ignore a very vital fact that unless loans are repaid promptly, ‘Money’ will not be under circulation and in fact the Banks/Financial Institutions be in great difficulties. Recently, the members of the Public Accounts Committee of Parliament (Panel) were informed that public sector banks are dealing with 2 .....

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f the First Respondent/Borrower is completely erased. Further, the third party ‘bona fide auction purchasers’ for valuable consideration in the eye of law are to be protected because of the primordial reason that they should not fall a prey to the vicissitudes of fortunes of the numerous proceedings initiated by the First Respondent/Borrower at all forums. As such, the sale of secured assets by the Authorised Officer of the Bank on 13.08.2004 and 09.04.2009, consequent to the issuance of sale no .....

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14 & 17203 of 2015 and M.P.Nos.1, 1, 1 & 1 of 2014 - Dated:- 23-7-2015 - MR. SATISH K. AGNIHOTRI AND MR. M.VENUGOPAL, JJ. For The Petitioner : Mr.E.Omprakash For The Respondent : Mr.T.Saikumar, Mr.Jayesh B.Dolia The Petitioners have preferred the instant Writ Petitions praying for passing of a common order by this Court in calling for the records relating to the impugned order dated 22.08.2014 in R. A.(SA) No.132 of 2012 on the file of the Fourth Respondent/Debt Recovery Appellate Tribunal, Chen .....

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09 are erroneous one, since it was passed without appreciation of the facts and circumstances of the case. 3. It is the contention of the Learned counsel for the Petitioners that the Fourth Respondent/Appellate Tribunal by virtue of the impugned order dated 22.08.2014 had caused serious prejudice insofar as the sale in favour of the Petitioners which had become absolute, had been set aside without properly considering the evidence on record, documents and pleadings projected by the parties. 4. A .....

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he Petitioners urges before this Court that the First Respondent/Borrower had transferred its interest in the property to a third party purchaser, viz., one Ramesh, which fact was admitted in the pleadings of the First Respondent/Borrower before the Appellate Tribunal. Therefore, it is represented on behalf of the Petitioners that the Fourth Respondent/Appellate Tribunal should have held that the First Respondent/Borrower does not have any right to challenge the Auction Sale and the so-called th .....

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urther, the so-called purchaser of the subsisting mortgage had initiated numerous proceedings before the Civil Court and the Rent Control Forums. 7. The Learned counsel for the Petitioners submits that the Fourth Respondent/Appellate Tribunal had come to a wrong conclusion that the sale under the provisions of the SARFAESI Act is in violation of the orders of Status Quo and was conducted without proper publication and therefore, was liable to be set aside. 8. The Learned counsel for the Petition .....

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Tribunal should have held after the dismissal of the said S.A. No.15 of 2007, the sale which took place earlier stood confirmed and the auction purchasers had derived a right to the property absolutely. 9. The plea of the Petitioners is that the Fourth Respondent/Appellate Tribunal had wrongly construed that there were orders of Status Quo when the auction sale was completed on 13.08.2004, holding that the orders of the Debts Recovery Appellate Tribunal, Mumbai was later set aside by this Court .....

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ertaining the Writ Petition against the order of the Debts Recovery Appellate Tribunal had in fact remanded back the matter to the Debts Recovery Tribunal for consideration after setting aside the order dated 12.08.2004 without granting any relief to set aside the sale. 11. The Learned counsel for the Petitioners project an argument that the Appellate Tribunal should have considered the relief sought for in the Writ Petition in W.P. No.24814 of 2004 was only to set aside the auction sale and the .....

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it was published only in the English newspaper and the same is in violation of Rule 8 of the SARFAESI Act. Moreover, the Appellate Tribunal had failed to take note of the vital fact that the said notice was published in Vernacular daily namely, Dina Thanthi on 10.07.2004 and there was strict compliance of the same. In reality, the First Respondent/Borrower on obtaining the status quo order from the Debts Recovery Appellate Tribunal had published a notice in Dina Thanthi in response to the sale n .....

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the impugned order was related to subsequent sale after the disposal of the Appeal in the earlier round of litigations. 14. The Learned counsel for the Petitioners contends that the finding of the Fourth Respondent/Appellate Tribunal that the sale conducted by means of an Ex-parte Order passed by the Debts Recovery Appellate Tribunal, Mumbai, which was later set aside by this Court is improper and untenable in law. Also, it is the stand of the Petitioners that the Appellate Tribunal failed to no .....

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A by the Debts Recovery Tribunal-III, Chennai. 15. The Learned counsel for the Petitioners submits that the Petitioners are the successful bidders with the highest bid offer of sale of the properties in regard to item Nos.2, 4 and 1 respectively of the sale notices. All the Petitioners were issued with the necessary sale certificate dated 13.05.2008 by the Second Respondent/Bank and the same were duly registered as document Nos.5379, 5378 and 5380 of 2008 on the file of the District Registrar, V .....

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Gojer Bros. Pvt. Ltd., V. Ratan Lal Singh [1974 (2) SCC 453] e)Kunhayammed V. State of Kerala & Others [2000 (6) SCC 359] 17.He also seeks in aid to the decisions of the Hon ble Supreme Court in Janak Raj V. Gurdial Singh and another reported in AIR 1967 SC 608 and 2014 (1) CTC 732 in Sadashiv Prasad Singh s case to highlight the point that the Petitioners are the bona-fide purchasers for valuable consideration. Submissions of the Petitioners/Bank in W.P. No.30711 of 2014: 18. The Learned co .....

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half of the Petitioners that bank was constrained to invoke the ingredients of the SARFAESI Act by issuing notice dated 21.10.2002 under Section 13(2) of the Act, claiming a sum of ₹ 1,29,27,587/- with further interest at contractual rate and costs. 20. The Learned counsel for the Petitioners/Bank proceeds to state that the First Respondent/Borrower approached the bank to settle the matter under one time settlement and offered to pay a sum of ₹ 55 lakhs by their letter dated 31.12.20 .....

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alance as one time settlement amount and further, failed to fulfill the terms and conditions of the one time settlement. 21. The Learned counsel for the Petitioners contends that since after receipt of 13(2) notice of the SARFAESI Act, the First respondent/Borrower approached this Court by filing W.P. No.8929 of 2003, challenging the issuance of the 13(2) notice and the said Writ Petition was dismissed on 01.07.2004. Apart from that, pending Writ Petition, the First Respondent approached the Ban .....

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of W.P. No.8929 of 2003, the Bank invoked Section 13(4) of the SARFAESI Act by taking symbolic possession of the properties by issuance of Possession Notice dated 01.07.2004 and after taking possession, the Bank through its Authorised Officer issued Sale Notice by inviting bids from the public for sale of the mortgaged properties. 23. Continuing further, the Learned counsel for the Petitioners Bank states that the First Respondent/borrower challenged the sale notice by filing S.A. No.20 of 2004 .....

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he sale but the sale may not be confirmed till the matter was heard by the Presiding Officer of the Debts Recovery Tribunal-I, Chennai on merits. 24. The Learned counsel for the Petitioners brings it to the notice of this Court that based on the order of the Debts Recovery Appellate Tribunal, the Petitioners Bank proceeded with the sale scheduled on 13.08.2004 and in the auction conducted on 13.08.2004, persons namely, 1. Dinesh Kumar Jain 2. V.Ganapathi 3. S.Gnanavadivu 4. a)Fatima Saudi b)V.Sa .....

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ter for fresh disposal by the Debts Recovery Appellate Tribunal, Chennai. In turn, the Debts Recovery Appellate Tribunal, Chennai disposed of the Appeal by remitting back the matter to Debts Recovery Tribunal, Chennai for disposal of the S.A. No.20 of 2004 on merits. 26. The Learned counsel for the Petitioners/Bank contends that after bifurication of the Debts Recovery Tribunal, the S.A. No.20 of 2004 was transferred to Debts Recovery Tribunal-III, Chennai and renumbered as S.A. No.15 of 2007 an .....

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nk as against the order of dismissal dated 09.05.2008 in S.A. No.15 of 2007 passed by the Debts Recovery Tribunal-III, Chennai, the First Respondent/Borrower filed an Appeal under Section 18 of the SARFAESI Act before the Debts Recovery Appellate Tribunal, Chennai in RA(SA) No.60 0f 2008 and the same was dismissed on merits on 08.04.2009. 28. It is contended on behalf of the Petitioners/Bank that bank initiated SARFAESI proceedings by issuing Demand Notice in respect of second set of properties .....

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ntained and tenders, if any received are directed to be kept in abeyance till 07.11.2008. Therefore, the bids were not opened. Subsequently, bids were opened and auction was conducted on 09.04.2009 after dismissal of the R. A.(SA) No.60 of 2008 on 08.04.2009. 29. The Learned counsel for the Petitioners/Bank urges before this Court that the First Respondent/Borrower filed W.P. No.8004 of 2009 as against the order dated 08.04.2009 passed by the Debts Recovery Appellate Tribunal in R. A.(SA) No.60 .....

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the First Respondent/Borrower approached the Debts Recovery Tribunal by filing S.A. No.120 of 2009 under Section 17 of the SARFAESI Act and that the Debts Recovery Tribunal-III, Chennai dismissed the said SA through an order dated 09.12.2011. The First Respondent/Borrower dissatisfied with the said order passed in S.A. No.120 of 2009 filed an Appeal before the Debts Recovery Appellate Tribunal in R. A.(SA) No.132 of 2012. On hearing both sides, the Debts Recovery Appellate Tribunal, Chennai on 2 .....

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lowed by the Bank in inviting tenders and fixing the reserve price etc., and it was rightly found by the Appellate Tribunal that the sale of the secured assets for ₹ 68.61 lakhs in favour of the auction purchasers and receipt of 25% of the same are legally valid. At this stage, it is represented on behalf of the Petitioners/Bank that this order was not set aside by this Court in W.P.8004 of 2009. However, the Second Respondent/Debts Recovery Appellate Tribunal through its order dated 22.08 .....

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e bids were received on or before 05.11.2008 with the Bank as per order dated 23.10.2008 of the Debts Recovery Appellate Tribunal in I. A.1995 of 2008 in RA(SA) No.60 of 2008 and after dismissal of R. A.(SA) No.60 of 2008 on 08.04.2009, the sale process was completed. Thereafter, tenders were opened and auction was taken on 09.04.2009. As such, the observations made of the Debts Recovery Appellate Tribunal in the order in R. A.(SA) 132 of 2012 on 22.08.2014, that sale had not taken place on the .....

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a fide auction purchasers of the property brought for sale by the Second Respondent/Bank under the provisions of SARFAESI Act. Further, being the highest bidders and after making payment, got sale confirmed and in fact, the Second Respondent/Bank had executed the Sale Certificates in their favour and duly registered on the file of the District Registrar, Vellore. Thus, these Petitioners have become the absolute owners of the properties. 34. The Learned counsel for the Petitioners submits that th .....

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. Also that, on failure to redeem the property, the Second Respondent as a mortgagee had every right to enforce the mortgage to realise the dues. 35. The Learned counsel for the Petitioners contends that the First Respondent/Borrower challenged the dismissal order of the SA by filing an appeal before the Debts Recovery Appellate Tribunal in RA (SA) No.60 of 2008 and the said Appeal was dismissed on 08.04.2009 with costs, thereby, confirming the order of Debts Recovery Tribunal-III, Chennai in S. .....

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Petitioners are the successful bidders in the tender cum auction conducted by the Authorised Officer of the Second Respondent/Bank and in the sale notice dated 26.09.2008 issued by the Second Respondent/Bank, it could be seen that notice under Section 13(2) was issued on 21.10.2002 and on 27.05.2008, possession in respect to the properties purchased by the Petitioners was taken under Section 13(4) of the Act. 38. The Learned counsel for the Petitioners/Auction purchasers contends that after iss .....

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titioners that in respect of the Properties purchased by them, the borrower had not questioned the same under the provisions of Section 13(4) of the Act or publication notice under the SARFAESI Act. 40. The Learned counsel for the Petitioners submits that the First Respondent/Borrower filed I. A. No.1995 of 2008 in S.A.446 of 2008 before the Debts Recovery Appellate Tribunal instead of projecting an application or appeal under Section 17 of the Act before the Debts Recovery Tribunal but only had .....

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y the bank. 41. The Learned counsel for the Petitioners contends that the status quo order dated 23.10.2008 passed by the Debts Recovery Appellate Tribunal makes it clear that there is no prohibition in receiving sealed tenders but the same could be opened consequent to the status quo order. 42. The Learned counsel for the Petitioners submits that status quo was ordered to be maintained and tenders if any received were directed to be kept in abeyance till 07.11.2008. Further on 08.04.2009, the D .....

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the bank and that the Authorised Officer on 09.04.2009, confirmed the sale in favour of the Petitioners and later, issued the sale certificates. Therefore, it is the contention of the Petitioners that they are the bona-fide purchasers for valuable consideration and their rights as absolute owners pursuant to the sale could not be questioned expect in cases where the borrower establishes fraud having been committed in the sale. Moreover, it is pointed out on behalf of the Petitioners before this .....

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d Rules made thereunder and further, they acquired the sale of secured assets on 13.08.2004 and 09.04.2009, pursuant to the sale notices dated 09.07.2004 on 26.09.2008 was valid and conducted in accordance with the provisions of the Act and Rules made there under. 45. The Learned counsel for the Petitioners states that the First Respondent/borrower filed an appeal before the Debts Recovery Appellate Tribunal in R. A.(SA).132 of 2012 and on 22.08.2014, the Appellate Tribunal allowed the Appeal wi .....

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bmits that the impugned order dated 22.08.2014 passed by the Debts Recovery Appellate Tribunal in RA.(SA) 132 of 2012 had failed to consider the points putforth by the auction purchasers and the bank and further, it had not formulated necessary points for determination and consideration and adjudicate on the issues raised by the respective parties. 48. The Learned counsel for the Petitioners refers to the decision of the Hon ble Supreme Court in Sadhasiv Prasad Singh V. Harendar Singh and others .....

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ate subsequently will not operate as a bar for the title to the property . 49. The learned counsel for the Petitioners refers to the judgment of the Division Bench of this Court dated 10.08.2007 in WA(MD) Nos.145 & 146 of 2007 in CDJ 2007 MHC 2046 [K. Chidambara Manickam V. Shakeena and others] wherein it was held that sale of the secured asset in public auction as per Section 13(4) of the SARFAESI Act, which ended in issuance of a sale certificate as per Rule 9 (7) of the rules is a complet .....

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f sale of Schedule II property and further, it was also observed that if the Petitioner had failed to deposit the amount within the stipulated time even though he claims that he had deposited a total sum, the Petitioner having not exercised its right to set aside the sale of the property within the stipulated time then, the auction purchaser was entitled to have the sale certificate . 51. The Learned counsel for the Petitioners cites the order of the Division Bench of this Court dated 10.07.2008 .....

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2 & 1223 of 2005 in CDJ 2005 MHC 1328 [K.Kandasamy & another V. The Authorised Officer, State Bank of India and another] wherein in para 9 among other things it was held that the provisions of Tamil Nadu Transparency in Tenders Act are not applicable to the sale of secured assets of both movable and immovable under the provisions of the Securisation Act . 53. The Learned counsel for the Petitioners relies on the order of the Division Bench of this Court dated 03.02.2015 in W.P. No.31904 .....

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this remedy . The First Respondent/Borrower s Submissions: 54. According to the Learned counsel for the First Respondent/ Borrower, the Debts Recovery Tribunal-I, Chennai passed an ex-parte interim order of status quo on 29.07.2004 in S.A. No.20 of 2004 and without filing any application to vacate the said order, the Bank filed an appeal in M. A.(SA) No.120 of 2004 against the said ex-parte interim order and on 12.08.2004, at the admission stage itself, the appeal was allowed thereby, the inter .....

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ecovery Appellate Tribunal, Chennai with a direction to issue notice to both the parties and to dispose of the matter afresh. Further, it is represented on behalf of the First Respondent/ Borrower that the Debts Recovery Tribunal-I, Chennai passed orders on 24.02.2005 making the status quo order absolute and as such, the sale which took place on 13.08.2004 was an illegal one and to lend support to the said contentions, the Learned counsel for the First Respondent/ Borrower cites the following de .....

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t allow the perpetuation of the wrong doing. In our view, the inherent power will not only be available in such a case, but it is bound to be exercised in that manner in the interests of justice. Even apart from Section 151, we should observe that as a matter of judicial policy, the court should guard against itself being stultified in circumstances like this by holding that it is powerless to undo a wrong done in disobedience of the court s orders. Bit in this case it is not necessary to go to .....

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tio laid down in the aforesaid decisions. That part, in the case of Ramchandra Ganpat Shinde v. State of Maharashtra and others reported in AIR 1994 SC 1673 the Supreme Court in paras 12 and 13 has observed as under:- 12. Mr.Justice Arthur, J.Venderbilt in his The Change of Law Reforms 1955 at pages 4 and 5 stated that:- ..... It is the Courts and not in the legislature that our citizens primarily feel the keen, the cutting edge of the law. If they have respect for the work of their Courts, thei .....

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justice is ingrained in our conscience and though ours is a nascent democracy which has now taken deep roots in our ethos of adjudication - be it judicial, quasi-judicial or administrative as hallmark, the faith of the people in the efficacy of judicial process would be disillusioned, if the parties are permitted to abuse its process and allowed to go scot free. It is but the primary duty and highest responsibility of the Court to correct such orders at the earliest and restore the confidence of .....

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ed. 29. Apart from the fact whether A.K.Ghosh had a legal authority to sub-lease or not it was not open to him to grant a sub-lease in violation of the order. It is no use contending as Mr. Chidambaram, learned Counsel for the respondents does, that there was a bar to such a sub-lease under the terms of the status quo order. It has the effect of violating the preservation of status of the property. This will all the more be so when this was done without the leave of the Court to disturb the stat .....

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circumvented by parties with impunity and expect the Court to confer its blessings. It does not matter that to the contempt proceedings Somani Builders was not a party. It cannot gain an advantage in derogation of the rights of the parties, who were litigating originally. If the right of subtenancy is recognised, how is status quo as of 15-9-1988 maintained? Hence, the grant of sub-lease contrary to the order of status quo is clearly illegal. All actions including the grant of sub-lease are cle .....

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ce on the material aspect of violation of injunction order is eloquent enough. We cannot hold that conclusion of the Courts below to the effect that power to transfer the said property was subject to the injunction order issued by this Court, in any way vitiated by error of law or is in any way perverse. In the light of the decision of the Supreme Court, the transfer was clearly illegal if not void... 1997 (3) SCC 443 para 28 wherein it is held as follows: 3) In the decision of Hon ble Supreme C .....

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8. It is extremely unfortunate that the learned Judge had not even cared to bestow thought and entertained an oral application at the instance of a person who had nothing to do till then with the application for contempt. He had not even taken out an application to implead himself as a party. If mere oral mention could be enough to direct a Special Officer to remove the padlock, one has to put aside the law of procedure altogether and render justice as the court conceives, conferring benediction .....

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and to pass any interim orders therein, the Court should decide the question of jurisdiction in the first instance but that does not mean that pending the decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case. A mere objection to jurisdiction does not instantly disable the court from passing any interim orders. It can yet pass appropriate orders. At the same time, it should also decide the q .....

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make appropriate directions. For example, take a case, where a party has been dispossessed from the suit property by appointing a receiver or otherwise; in such a case, the Court should, while holding that it has no jurisdiction to entertain the suit, put back the party in the position he was on the date of suit. But this power or obligation has nothing to do with the proposition that while in force, these orders have to be obeyed and their violation can be punished even after the question of j .....

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d the Petitioner Gnanavadivu and the sale certificate was issued by the Bank in his favour and the said auction of the Bank is an illegal one as per the following decisions: 1)The Authorised Officer, Indian Bank, Mylapore V. Tetrahydron Ltd., & Others [2013 (1) LW 711] 2)Hemalatha V. The Authorised Officer, Indian Bank [2012 (5) CTC 1]. At this stage, the Learned counsel for the First Respondent/Borrower appraises this Court that the Indian Bank had preferred an appeal before the Hon ble Sup .....

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irtue of tender cum auction sale and that the Fourth Respondent/Debts Recovery Tribunal had granted an interim order of status quo in I. A. No.1995 of 2008 in RA (SARFAESI) No.60 of 2008 (SA.15 of 2007, Debts Recovery Tribunal-III, Chennai) on 23.10.2008 and further, it was directed that tenders if any, were directed to be kept in abeyance till 07.11.2008. Moreover, the Debts Recovery Appellate Tribunal, Chennai directed the First Respondent/ Borrower to pay the costs and expenditure of the sale .....

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14 (5) SCC 610 wherein it was held that no sale or transfer of secured asset to be made on any subsequent date without notifying borrower afresh with 30 days clear individual notice of the fresh date of sale or any sale or transfer of secured assets under SARFAESI Act in violation to any of the above mandatory requirements would be invalid . In short, the Hon ble Supreme Court had observed that the provisions of Rule (8) of 2002 Rules and Rule 15, Schedule II Pt. I of Income Tax Act, 1961 by vir .....

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s, mere sending of notice is not enough. Further, if the notice was not received, it was to be served by affixture, admittedly in the present case, it was not done. 61. The Learned counsel for the First Respondent forcefully contends that Rule (6) of the SARFAESI Rules clearly envisages publication of possession notice in vernacular language also which was not done by the bank and in fact, the bank had published the notice only in English daily. Also, it is the plea of the First Respondent/Borro .....

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7; 25 lakhs which was strangely returned by the bank and the bank decided to proceed with the auction etc. 63. The Learned counsel for the First Respondent adds to state that in between Section 13(2) notice and 13(4) proceedings, an one time settlement offer was made to deposit a sum of ₹ 55 lakhs where under, it was mandated that a sum of ₹ 10 lakhs was to be deposited within 10 days and the balance of ₹ 45 lakhs to be deposited within 30 days. The said offer was made by the B .....

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45 lakhs with a delay of 18 months and another sum of ₹ 10 lakhs was deposited by it towards interest as there was a delay which was not taken into account by the Bank although the said offer was granted pursuant to the direction of the Reserve Bank of India and the same offer had been repeatedly extended upto five to six times in respect of many other borrowers. 65. The Learned counsel for the First Respondent/Borrower refers to the Division Bench of this Court in Hanu Reddy Realty India .....

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ribution of tobacco and allied products had took a loan of ₹ 7.5 lakhs during the year 1990 and cash credit and guaranty facility of ₹ 30 lakhs from the year 1990-92, aggregating to ₹ 37.5 lakhs. In fact, the First Respondent was unable to repay the loan and resultantly, its account was classified as Non Performing Asset from 1995. The Third Respondent/Bank caused a notice under Section 13(2) of the SARFAESI Act, 2002 on 21.10.2002 claiming a sum of ₹ 1,24,27,587/-. 67. I .....

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e sub-section and in that context, it is for the borrower to discharge its liabilities within 60 days from the date of such notice. The fulfillment of conditions is mandatory as qualified by the word then found in such-section as per decision of Core Ceramics V. Union of India [AIR 2008 (Calcutta) at page 88 and at page 92]. 69. It is not in dispute that the First Respondent approached the Third Respondent/Bank for one time settlement through letter dated 24.02.2003 offering to accept to pay  .....

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Section 13(4) and sale notice dated 09.07.2004 bringing for auction sale on 12.08.2004. Soon after receipt of the notice, it transpires that the First Respondent/Borrower got in touch with the Third Respondent/Bank and expressed its willingness to satisfy the earlier conditions of the agreement which was accepted by the bank. As a matter of fact, the Third Respondent/Bank directed the First Respondent/Borrower to deposit some sum and accordingly, the First Respondent/Borrower deposited a sum of .....

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caused a public notice on 06.08.2004 in Tamil daily viz., Dina Thanthi intimating the orders passed by the Tribunal and being aggrieved about the same, the Third Respondent/Bank filed M. A.(SA)No.120 of 2004 on the file of the Fourth Respondent/DRAT assailing the Ex-parte Interim Order passed by the DRT-I, Chennai in S.A. No.20 of 2004. The DRAT (in-charge) Mumbai allowed the S.A. No.20 of 2004 on 12.08.2004 by setting aside the order of status quo passed by the DRT, Chennai. Moreover, the DRAT .....

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ck for afresh disposal after hearing both the parties. The Fourth Respondent/DRAT by virtue of the order dated 14.10.2004, disposed of the appeal by directing the Bank to approach the DRT. 73. Apart from that, the DRT-I, Chennai on 03.12.2004 heard the subject matter and continued the interim order on condition by directing the First Respondent to deposit a sum of ₹ 45 lakhs as one time settlement scheme within 30 days from the date of receipt of the order. The said interim order was made .....

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e First Respondent/Borrower is that the sale of four items of properties is an erroneous one. In this connection, it cannot be brush aside that this Court on 07.08.2009 in the final orders passed in W.P.8004 of 2009 had given opportunity to the First Respondent/Borrower to approach the DRT under Section 17 of the SARFAESI Act to agitate all the issues which were raised before this Court within two weeks from the date of receipt of copy of the order etc., and disposed of the writ petition. In rea .....

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sets etc., as such, when the First Respondent/Borrower had not approached the Third Respondent/Bank in regard to the repayment of due amount to redeem the mortgaged sale of four mortgaged properties, on 13.08.2004, it had certainly lost its right of redemption in the eye of law in the considered opinion of this Court. 76. It is to be noted that the Third Respondent/Bank conducted the sale on 13.08.2004 pursuant to the sale notice dated 09.07.2004. Moreover, when the third respondent/Bank sold fo .....

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ctive, this Court comes to an inescapable conclusion that the sale of four mortgaged properties on 13.08.2004 when the order of status quo is not in existence is a valid one in the eye of law. 77. In the case on hand, the First Respondent/Borrower had not repudiated the possession notice dated 27.05.2008. As a matter of fact, the First Respondent/Borrower projected the I. A. No.1995 of 2008 in S.A. No.446 of 2008 before the Fourth Respondent/DRAT, Chennai soon after receipt of sale notice dated .....

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ld by this Court that the First Respondent had lost its opportunity to question the issuance of sale notice dated 26.09.2008 issued by the Third Respondent/bank. 78. It is to be borne in mind that the RA(SA) 60 of 2008 filed by the First Respondent/Bank was dismissed by the Fourth Respondent/DRAT on 08.04.2009, then the interim order earlier passed would not survive when that be the fact situation, the Third Respondent/Bank had not committed any error when it opened the sealed tenders received f .....

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ndent/Borrower that the prospective purchasers submitted that the auction tenders scheduled on 05.11.2008 and in the absence of any notice issued by the Third Respondent/Bank determining new date of auction, the sale dated 09.04.2009 is per se illegal. The candid fact is that 33 sealed covers were received by the bank. However, by virtue of the order of Debt Recovery Appellate Tribunal, the same was not held on 05.11.2008. It is to be noted that three bidders withdrew their offer in lieu of the .....

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ing to the opening of bids on 09.04.2009 and selling the properties to the concerned parties. Consequently, the contra plea taken on behalf of the First Respondent/Borrower is outrightly rejected by this Court. 80. In the instant case, one cannot remain silent to the fact that the First Respondent/Borrower pending mortgage, disposed of the properties to one Ramesh and not bringing this fact to the fore, has projected the S.A. 120 of 2009. When the First Respondent/Borrower had sold some of the p .....

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e Constitution of India. Also that, it was issued with the demand notice under Section 13 (8) of the SARFAESI Act on 21.10.2002 and again on 16.12.2006. Indeed, the First Respondent/Firm was provided with adequate opportunities to settle the dues and redeem the mortgaged properties, which was not availed off by it diligently (including the opportunity of exercising the right of redemption as envisaged under Section 13(8) of the Act). 81. At this stage, this Court aptly points out the decision of .....

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the Court of Law that the material irregularity or illegality had resulted in substantial injury to it. 83. As regards, the plea taken on behalf of the First Respondent/Firm as per Rule 9(1) of SARFAESI Rules, the sale notices have to be served on all the guarantors/mortgagors and the same was not followed by the Third Respondent/Bank. It is to be pointed out that Section 13(2) notice was served on the partnership firm namely, the First Respondent/Borrower and the firm was represented by the Man .....

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tnership Act, 1932 an admission or representation made by a partner concerning, the affairs of the firm would be evidence against the firm under Section 18 of the Indian Evidence Act, 1872 as per decision Sohanlal and others V. Gulab Chand reported in AIR 1966 Rajasthan 229 and at special page 231. Apart from that, Section 25 of the Indian Partnership Act provides that every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a par .....

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rs of the firm are capable of being sued and of being adjudged as judgment debtors, a suit may be filed and a decree may be obtained against a firm under Order 30 of the Civil Procedure Code. Further, such a decree may be executed against the property of partnership and against all the partners by following the procedure of Order 21 Rule 50 of the Civil Procedure Code. 86. In the instant case, the auction sale notice was published on 09.07.2004 and in Tamil Daily Dina Thanthi it was published on .....

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Third Respondent/Bank without obtaining the valuation of the property from the Approved valuer , the plea of the Third Respondent/Bank is that it had taken the valuation from the Approved valuer and on that basis only the Upset Price was fixed. Therefore, the contra stand taken on behalf of the First Respondent/Borrower is not accepted by this Court. 88. Insofar as the stand of the First Respondent/Borrower (Firm) is that the Third Respondent/Bank had published the Possession notice only in Eng .....

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ank had filed the copy of Possession Notice dated 27.05.2008 and newspaper publication at pages 27 to 29 of the bank s typed-set as stated by the Debts Recovery Tribunal-III, Chennai in its order dated 09.12.2011 in S.A.120 of 2009. Further, in para 10.16, the Debts Recovery Tribunal-III, Chennai in S.A.120 of 2009 while passing the order had stated categorically that a perusal of typed set of documents filed by the Respondent bank established the fact that sale notice dated 26.09.2008 was serve .....

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to be pertinently recalled the words of Robert Frost who said a bank is a place where they would lend you an umbrella in a fair weather and ask for it back when it begins to rain . At this stage, one cannot ignore a very vital fact that unless loans are repaid promptly, Money will not be under circulation and in fact the Banks/Financial Institutions be in great difficulties. Recently, the members of the Public Accounts Committee of Parliament (Panel) were informed that public sector banks are de .....

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