TMI Blog2011 (11) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... ally air-conditioned Restaurant cum Bar and Restaurant. In the first floor a party hail and 24 rooms in each of the 2nd, 3rd and 4th floors. According to him, entire hotel building is well furnished. The appellant had availed a loan of ₹ 1,84,70,000/-. At the time of sanctioning the loan, the premises was valued at ₹ 3. 16 crores. On the ground that, appellant did not pay the dues payable to the bank, by invoking provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SERFAESI Act 2002) by issuing notice under Section 13(2) of the SERFAESI Act, 2002 to take formal possession of the property and later on the property was brought for sale, The appellant had challenged bringing the property for sale by filing W.P.No.41445/2004, which came to be dismissed on 28.02.20Q5. Thereafter, again the property was brought for sale by the bank by issuing sale notice dated 09.03.2005. Though paper publication was issued by the bank, the property was not sold on account of non participation of the prospective buyers. 4. The respondent No.2 again issued sale notice by publishing in Indian Expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the order passed by the DRT and confirmation of the sale by the respondent Nos. 1 and 2 in favour of respondent No.3 has to be set aside. 8. According to him, there was no sufficient time was granted to the prospective buyers to participate in the proceedings. Therefore, he contends that, though as per the provisions of Rule 8 and 9, the bank was required to publish the notice in Kannada language, which is the vernacular and official language of Belgaum. According to him, when the value of the premises was more than ₹ 3.OO crores as on the date of sanctioning the loan and when due to improvements were made by the appellant and on account of escalation in the real estate business, considering that the locality of the hotel of the appellant, acceptance of sale consideration for ₹ 2. 16 crores is against the principles of natural justice. He further contends that, when the property worth several crores together has to be brought for sale, the Authorized Officer and the bank was required to give proper publicity inviting the tenders from the prospective bidders. Without doing so, by. taking paper publication in Indian Express daily newspaper in English, which was pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Authorized Officer to take out publication by giving 30 days notice notifying the purchasers to participate in the bid. According to them the Rule 8 is applicable only when the sale is conducted by respondent Nos, 1 and 2 for the first time, and when the sale was postponed on two occasions and on the first occasion on account of pendency of the writ petition and on the second occasion on account of the non participation of bidders and the sale conducted by respondent Nos. 1 and 2 is well within the provisions of the Rules. Therefore, they contend that, either Sub Rule 6 of Rule 8 and 9 are not applicable to the facts and circumstances of this case. To support their case, they have relied upon the judgement of DRT, Allahabad in Progressive Enterprises Others Vs. Nainital Bank Ltd., [(2009(2) D.R.T.C.390(DRAT, All.)]. 10. They further contend that, Authorized Officer has the liberty to extend the time beyond 15 days for payment of balance sale consideration from the date of confirmation of sale. The appellant cannot be permitted to contend that the acceptance of balance sale consideration by the Authorized Officer as illegal. In the circumstances, they request the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured 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 ecu red 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. 15. Rule 9 of the Security Interest (Enforcement) Rules, 2002 reads as hereunder: 9. Time of same, issues of sale certificate and delivery of possession, etc. (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule(6) or notice of sale has been served to the borrower. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecured 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. 16. From the plain reading of these two rules, it is clear that the respondent-bank was required to serve notice of 30 days for the sale of immovable property by following the sub Rule 5 of Rule 8, which reads as hereunder: Rule 8 Sale of immovable secured assets: (5) Before effecting sale of the immovable property referred to in sub-rule(1) of nile 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property arid may sell the whole or any part of such immovable secured asset 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. 17. In the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e failed to discharge their duties as trustees while selling the property worth several crores. Respondent Nos. 1 and 2 have not placed any material to show how and when payment was made by respondent No.3 after the confirmation of the sale. As per the sale notice, respondent No.3 was required to deposit entire sale consideration within 15 days from the date of conformation of the sale. In the counter, the respondent-bank has stated that the respondent No.3 has made the payment within the time allowed by the Authorized Officer. When the sale consideration is ₹ 2.16 crores, the bank was required to give details of the payment made by respondent No.3 in order to hold whether the payment was made within the time stipulated in the sale and whether the time was extended by the Officer by accepting the reasonable cause shown by the purchaser and whether the purchaser is bonafide purchaser or not. Unfortunately, the bank has failed to produce these documents. Therefore, on the face of it, sale effected by respondent Nos, 1 and 2, based on the paper publication dated 28.04.2006 and 05.05.2006 and acceptance of bid of respondent No.3 on 06.05.2006 is held to be bad in law. 20. As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder. 22. Under Section 18 of the Act, the appellant is required to deposit 5Q% of the amount of debt due from him, and without depositing such amount, he cannot file an appeal. He can make an application seeking permission of the Appellate Tribunal to reduce the amount to be deposited. Under such circumstance, the Appellate Tribunal can give exemption of depositing 50% provided the appellant depositing 25% of the amount demanded. Therefore, without depositing either 5Q% or 25% as required der Section 18 of the Act, the appellant cannot file an appeal. 23. When the person has lost the property in a sale consideration by the bank for non payment of more than 5 crores, it is difficult for a person like the appellant to approach the Tribunal to file an appeal by depositing 50% of 25% the amount. In view of the special circumstances, as the property worth several crores is sold in public auction without following the procedure, this Court is of the opinion that, the remedy available under Section 18 of the Act cannot be alternate remedy. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 9 of the Security Interest (Enforcement) Rules, 2002. We are of the opinion that all error is committed by the learned Single Judge in not considering the aforesaid provisions of law. Therefore, the order of learned Single has to be set aside. 27. In the result, the appeal is allowed. The sale conducted by respondent Nos. 1 and 2 in respect of the Hotel Vandana Palace situated in Belgaum pursuant to the sale proceedings dated 08.05.2006 is hereby set aside. The respondent Nos. 1 and 2 shall re-auction the property by following the provisions of the SERFAESI Act, 2002 and Rules made therein by giving paper publication as required under the provisions of Rule 8 and 9 of the Security Interest (Enforcement) Rules, 2002. Respondent Nos. 1 and 2 shall refund the amount paid by respondent No.3 along with the cost incurred by the respondents in getting the sale certificates. Since respondent No.3 has enjoyed the property, he is not entitled for any interest or damages. Respondent No.3 is granted four weeks time to hand over the possession of the premises to respondent Nos. 1 and 2 and respondent Nos. 1 and 2 shall take possession of the property within four weeks as granted by this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
