TMI Blog2016 (10) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... s left open as laid down in Mathew Varghese supra for the secured creditor bank to proceed afresh for sale of the property by public auction or the like as per the due procedure under law, if the writ petitioner/Debtor fails to liquidate the debt as per the right of redeeming the debt available till transfer of the property by public auction and registration. d) Copy of this order shall be marked to the District Registrar, Kurnool, of Kurnool District, for effecting necessary cancellation and changes in his records in terms of Section 31(2) of the Specific Relief Act, 1963. - WRIT PETITION No.7802 of 2016 - - - Dated:- 22-8-2016 - SRI SANJAY KUMAR AND Dr. B.SIVA SANKARA RAO, JJ. For The Petitioner : Sri J.U.M.V.Prasad For The Respondent : Sri M.Srikanth Reddy, Ms.T.Suneetha ORDER: (Per Hon ble Dr.Justice B.Siva Sankara Rao) The writ petitioner is seeking a Writ of Mandamus to declare the impugned E-auction sale dated 14.03.2016, covered by E-auction sale notice dated 10.02.2016, that was published in Eenadu Telugu Daily News Paper dated 13.02.2016, claiming the same even in pursuance of unserved demand and possession notices respectively dated 20.05.2015 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated by Act and the Rules made there under. 2-c. It is the contention therefrom that though the Bank was to obtain valuation certificate from any approved valuer and fix reserve price and thereafter issue sale notice by following the procedure contemplated by the provisions supra including by stating about possession and total description of the property to be sold, date of sale with reserve price etc. contents, which are material to redeem the property if any under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (for short Rules, 2002 ) and without even further publication under Rule 9(1) and without even 30 days time gap from date of publication to the date of sale, viz., from 13.02.2016 to 14.03.2016, which is a statutory mandate and also by fixing reserve price of 17,12,000/- though the property is worth more than ₹ 40 lakhs. It is further averred that the Bank is aware of the exparte decree in the suit proceedings in O.S.No.79 of 2011 and of petition filed to set aside the exparte decree with delay condonation including to receive written statement in the suit that are pending and by charging exorbitant rate of interest and other sums in bringing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession notice dated 05.10.2015 under Section 13(4) of the Act and the possession notice was also published in the said newspapers on 10.10.2015 and it is after obtaining valuation of the property from the approved valuer, the reserve price was fixed by the Bank and as the petitioner failed to repay the debt even after issuance of possession notice, the Bank issued sale notice and also E-auction sale notice dated 10.02.2016 and cause published the same in Saakshi and Hans India newspapers on 13.02.2016 for the auction that was scheduled to be conducted on 14.03.2016. It is also the contention that Smt. V. Prameela Reddy, 2nd respondent herein became the highest bidder for ₹ 18,02,000/- and she has paid 25% of the bid amount on that day and balance 75% on 29.03.2016 including vide cheque No.163386 for ₹ 3,50,000/-, that the writ petitioner having borrowed, committed default in payment of the loan and thereby is not entitled to obstruct the recovery proceedings initiated by the Bank from what the Division Bench of this Court laid down in Bhanu Constructions Co. Ltd Vs. Recovery Officer, DRT, Hyderabad 2010(3)ALD 57(DB) under RDDBFI Act,1993 is defaulters cannot be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olation if at all shown from the above, the writ petition is maintainable as an exceptional case, irrespective of alternative remedy available. The expressions of the Apex Court referred to in the counter of the 1st respondent- Bank of Satyawati Tondon (supra), Kanaiyalal Lalchand Sachdev(supra) though speak that an effective and efficacious alternative remedy provided is generally a bar to invoke writ jurisdiction which is a self restraint in exercise of the plenary jurisdiction. In fact the subsequent expression of the Apex Court in General Manager, Sri Siddeshwara Cooperative Bank Limited and Anr. v. Ikbal Ors (2013) 10 SCC 83, at para-28, which is also a case under the provisions of the SARFAESI Act, while referring to Satyawati Tondon (supra), particularly at para-45 on rule of exhaustion of alternative remedy that it is only a rule of discretion and not one of compulsion. I t was held categorically that no doubt, availability of an efficacious alternative remedy under Sections 17 and 18 of the Act by itself is not an absolute bar for exercise of the plenary powers by the extraordinary jurisdiction under Article 226 of the Constitution of India. The larger Bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising its plenary jurisdiction. It is ultimately there from held in para-4 what is laid down supra that the authority not acted in accordance with the provisions of the enactment in question, despite an alternative efficacious remedy is available, the writ Court can entertain and otherwise there is a self restraint for invoking plenary jurisdiction from efficacious alternative remedy available in general . 7.Thus, when the very 30 days time kept mandatorily required not in dispute; and when same is stated violated, to decide the same as the main question in impugning the auction sale for the date of sale notice publication and date of sale not even in dispute, the writ petition is held maintainable from reading together of the expressions on the principles laid down therein supra. 8. Once the writ petition is maintainable as concluded supra, coming to merits, whether there is actual 30 days time from date of publication to date of auction sale viz., from 13.02.2016 to 14.03.2016 is the main question required to answer, leave about no demand notice is served personally, but for stating in the notice dt.05.01.2016(which even at bottom show another date 05.10.2015), of demand n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 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. (7) Every notice of sale shall be affixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchaser in the form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if the thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. (8) On such deposit of money for discharge of the encumbrances, the authorised officer may issue or cause the purchaser to issue 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. Section 13 of the Act, reads as under: 13. Enforcement of security interest.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer by way of lease, assignment or sale for realising the secured asset: 2[(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset\: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt;] (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. (5) Any payment made by any person referred to in clause (d) of sub-section (4) to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmen s dues with the liquidator in accordance with the provisions of section 529A of that Act: Provided also that the liquidator referred to in the second proviso shall intimate the secured creditors the workmen s dues in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956) and in case such workmen s dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmen s dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator: Provided also that in case the secured creditor deposits the estimated amount of workmen s dues, such creditor shall be liable to pay the balance of the workmen s dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator: Provided also that the secured creditor shall furnish an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to judicial legislation but it can mould and creatively interpret the provisions by adopting such functional approach and go behind the words to remove the difficulties in implementation of the legislative intent that to be considered from the object and purpose of the enactment. 10. The other decision placed reliance is Commercial Tax Officer, Rajastan Vs. Binani Cements Ltd . 2014 (8) SCC 319, wherein it was held that general law yields to special law from the Latin Maxim- Generalia Specialibus Non Derogant- even both operate in the same field to the respective extent. 11. There is no dispute on the propositions of purposive interpretation as per object and intendment of the Act in question and prevailing of special law over general law to that extent from any irreconcilability, but for to reconcile any law and equity from the contention of the auction purchaser already paid the amount and property transferred in his favour and equity does not permit to set aside the sale by any technicalities. In fact, if at all there is any equity, it must weigh in favour of the borrower from the expression of the Apex Court in this regard in N.Padmamma Vs.S.Ramakrishna Reddy (2008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force. Thus, the provisions of the Act, shall not be in derogation but in addition to any other law for the time being in force (which include the General Clauses Act and Indian Limitation Act) unless same is inconsistent with any other law to say then the provisions of the Act prevails over the other law inconsistent to it. In this regard, the Apex Court in Mathew Varghese v. M.Amritha Kumar (2014) 5 SCC 610 held at para-45 as follows: [45] A close reading of Section 37 shows that the provisions of the SARFAESI Act or the rules framed thereunder will be in addition to the provisions of the RDDB Act. Section 35 of the SARFAESI Act states that the provisions of the SARFAESI Act will have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force. Therefore, reading Sections 35 and 37 together, it will have to be held that in the event of any of the provisions of RDDB Act not being inconsistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of publication, no sale shall take place. So there must be clear 30 days in between from the date of publication to the date of sale and either the date of publication or date of sale to be excluded in computing the 30 days. Once there must be clear 30 days gap, leave about the exclusion of either or other of the two days, there is no clear 30 days time from the publication dated 13.02.2016 to the date of sale of 14.03.2016 undisputedly. 14. In this context, it is also profitable to extract the relevant portions of the expression in Mathew Varghese supra. 33.3 Be that as it may, the paramount objective is to provide sufficient time and opportunity to the borrower to take all efforts to safeguard his right of ownership either by tendering the dues to the creditor before the date and time of the sale or transfer, or ensure that the SECURED ASSET derives the maximum price and no one is allowed to exploit the vulnerable situation in which the borrower is placed. 34. At this juncture, it will also be worthwhile to refer to Rules 8(1) to (3) and in particular Sub-rule (3), in order to note the responsibility of the secured creditor vis--vis the secured asset taken p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it clear that simply because a secured interest in a secured asset is created by the borrower in favour of the secured creditor, the said asset in the event of the same having become a non-performing asset cannot be dealt with in a light-hearted manner by way of sale or transfer or disposed of in a casual manner or by not adhering to the prescriptions contained under the SARFAESI Act and the abovesaid Rules mentioned by us. [36] Having analyzed the relevant statutory prescriptions under the SARFAESI Act, as well as, the Rules, 2002 it will be necessary to refer to the decisions placed before us on the above aspects, before examining the manner in which the sale of the secured asset of the 1st and 2nd Respondents was dealt with by the 4th Respondent-Bank and by effecting the sale in favour of the Appellant herein. [37] [38] The completion of sale, it is stated, can be held to be so unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Therefore, it was held that until the sale is complete by registration of sale, the mortgagor does not loose the right of redemption. It was also made clear that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticed above, this Court also examined Rules 8 and 9 of the Rules, 2002. On a detailed analysis of Rules 8 and 9(1), it has been held that any sale effected without complying with the same would be unconstitutional and, therefore, null and void . 16. In a recent Division Bench expression of this Court by us (SK,J Dr.SSRB,J) in W.P.No.15370 of 2015 dated 12.07.2016, referring to Mathew Varghese supra held in this regard that there must be clear 30 days duration to say a clear 30 days time gap, the relevant observation reads as follows:- A propos the statutory procedural prescriptions in Rules 8 and 9 of the Rules of 2002, the Supreme Court opined that the requirement under Rule 8(6) and Rule 9(1) contemplates a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspapers. In other words, per the Supreme Court, while the publication in a newspaper should provide 30 days clear notice, as Rule 9(1) also states that such notice of sale is to be in accordance with the proviso to sub rule 6 of Rule 8, 30 days clear notice to the borrower should be ensured as stipulated under Rule 8(6) as well. It was therefore held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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