TMI Blog2012 (8) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... tan Magistrate on such factual background also must be set aside. Order on the file of the learned Chief Metropolitan Magistrate, Egmore, Chennai is set aside. The learned Chief Metropolitan Magistrate is directed to put the petitioner in vacant possession of the property by deputing the very same Commissioner or another Advocate Commissioner within two weeks from the date of receipt or production of a copy of this order. It is open to the learned Chief Metropolitan Magistrate to take police assistance. The Authorised Officer of the Bank is directed to assist the learned Chief Metropolitan Magistrate and/or the Advocate Commissioner to effect re-delivery to the petitioner or her authorised agent. - W.P.No.13091 of 2012 & M.P.Nos.1 & 2 of 2012 - - - Dated:- 13-8-2012 - MR. D.MURUGESAN AND MR. K.K.SASIDHARAN, JJ. For petitioner : Thiru.S. Sethuraman For respondents : Mrs. S. Hemalatha for M/s. THA. Sirish Chowdhary K.K.SASIDHARAN, J Introductory: The collusive sale made by the Authorised Officer, Indian Bank in favour of a person, who was not even a bidder and the conduct of auction proceedings, in spite of the stay granted by this Court, restraining the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was restrained from confirming the auction sale. 5. Even though this Court restrained the Bank from confirming the auction on 7 January 2011, the Authorised Officer proceeded with the sale, accepted the highest bid and thereafter issued a letter of confirmation to another person. The Authorised Officer along with Goondas, Police and Advocate Commissioner came to the subject premises on 28 July 2011 and made an attempt to take possession of property. This made the petitioner's mother to file a writ petition before this Court in W.P.No.18342 of 2011. This Court having found that possession was illegally taken from Mrs. Rajalakshmi, passed an order on 10 August 2011 directing the Authorised Officer to hand over vacant possession to her. Since the said order was not complied with, the petitioner filed a Contempt Petition bearing No.1403 of 2011. Thereafter the Authorised Officer delivered vacant possession to her. 6. Mrs. Rajalakshmi, the petitioner in W.P.No.18442 of 2011 died on 10 December 2011 and the petitioner succeeded to the estate. While so, on 14 April 2012, the Authorised Officer along with the Advocate Commissioner, Police Officials and Goondas once again desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sale consideration after a period of eighteen months and ultimately sold the property to yet another person. Discussion: 12. The earlier order passed by the Magistrate was set aside by this Court primarily on the ground that the person in possession of the property, was not shown as a party in the application filed by the Bank under Section 14 of the SARFAESI Act. Mrs.Chandrika Sundar, died in the year 1999 and yet she was shown as the person in possession of the property. When it was found that Mrs.Rajalakshmi, mother of Mrs. Chandrika Sundar has been in possession and enjoyment of the property, we set aside the order passed by the learned Chief Metropolitan Magistrate on 10 August 2011 and directed the Authorised Officer to put the petitioner in vacant possession of the property. The said order was ultimately complied with after the receipt of notice in the contempt proceedings. 13. Mrs. Rajalakshjmi died thereafter and the petitioner succeeded to the estate. The Authorised Officer, in the meantime, filed a fresh petition before the learned Chief Metropolitan Magistrate in Crl.M.P.No.821 of 2012 under Section 14 of the SARFAESI Act in the name of Mrs. Rajalakshmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, No.106/A, Kumarappa Mudali Street, Nungambakka, Chennai 600 034 did not pay the balance amount for want of physical possession of the subject premises. Thus as the Bank had required the interest to be paid by C.A. S.Manisekaran, if he was required to register the sale certificate. C.A. S.Manisekaran had accordingly paid the balance amount together with interest amount vide cheque dated 11.06.2012 paid a sum of ₹ 1,20,00,000/- to and in favour of Indian Bank, ARMB Hyderabad. C.A. S.Manisekaran, had vide letter dated 11.06.2012 nominated one Mrs.V.Padmavathy, aged about 63 years W/o.Thiru.R.Vadivelu, Old No.5, New No.7, Ganesh Nagar, Anna Nagar, Cuddalore 607 001 and requested to execute the sale certificate of the subject premises in the name of Mrs.V.Padmavathy. (viii) Date on which the sale certificate was issued in the name of the Auction Purchaser, including the name and address of the person in whose name it was registered :- Sale Certificate was issued to and in favour of the nominee of C.A. S.Manisekaran Viz., Mrs.V.Padmavathy, aged about 63 years, W/o Thiru.R.Vadivelu, Old No.5, New No.7, Ganesh Nagar, Anna Nagar, Cuddalore 607 001 on 12.06.2012. ix In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the bid in favour of Thiru B. Subramani on 7 January 2011. The learned counsel for the Bank on instructions submitted that the interim order was made known to the Authorised Officer only at 1.25 p.m. and by that time he has already issued the order of confirmation. However, on a perusal of the auction proceedings we found that the order of confirmation was not issued to the highest bidder. It was issued to Thiru S. Manisekaran, who was not a bidder. 19. The Authorised Officer has produced a copy of the letter issued by Thiru B. Subramani appointing Thiru S. Manisekaran as his nominee to pay the balance amount and he also made a request to the Bank to issue the sale certificate in favour of the nominee. The date of the letter was corrected as 7 January 2011. There is no indication as to the actual time of receipt of the said letter by the Authorised Officer. The confirmation letter proceeds as if Thiru S. Manisekaran himself took part in the auction and the sale was concluded in his favour for a sum of ₹ 1,15,00,000/-. The subsequent correspondence exchanged between Thiru S. Manisekarn and the Authorised Officer shows that 75% of the bid amount viz.,Rs.86,25,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a person who appears subsequently, as the nominee of the successful bidder. 25. The sale is Governed by the provisions of the SARFAESI Act and the Rules made thereunder. (a) Rule 9(2) of the Security Interest (Enforcement) Rules 2002 provides that the sale shall be confirmed in favour of the purchaser, who has offered the highest sale price in his bid and shall be subject to confirmation by the secured creditor. (b) Rule 9(3) provides that the purchaser shall immediately deposit 25% of the amount of the sale price with the Authorised Officer conducting the sale and in default of such deposit, the property shall forthwith be sold again. (c) Rule 9(4) provides that the balance amount of purchase price payable shall be paid by the purchaser on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties. (d) Rule 9(5) gives authority to the Bank to forfeit 25% of the amount in case balance 75% is not deposited within the stipulated period. (e) Rule 9(6) gives power to the Authorised Officer to issue sale certificate indicating the sale of the immovable property in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fine and for the above discussions, we hold: (i) sub-rule (1) of Rule 57 is mandatory; (ii) sub-rule (2) of Rule 57, is not mandatory, as it could be applied as far as possible with necessary modifications; (iii) such modifications can be made by incorporating the same in the terms and conditions in the sale notice itself and in the absence of such modification in the sale notice, the Recovery Officer cannot extend the time for payment of the balance amount of 75 percent beyond the period of 15 days; (iv) in the event the conditions of the sale notice provide for such extension and on the strength of the same if any extension is granted, the same can be tested before the Competent Authority on the ground of arbitrary exercise of power, unjustifiable for extraneous consideration or on the ground of malafide in the given facts and circumstances of the case. 30. The fact that the auction purchaser failed to deposit 75% of the bid amount on or before 22 January 2011 would result in forfeiture of 25% of the bid amount paid by Thiru B.Subramani and it would give a cause of action to the Bank to issue a notification once again for sale. 31. The Authorised Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that the Authorised Officers of the Banks should not behave like property dealers and dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions. 35. The present case is a classic example as to how the Authorised Officers of the Banks are dealing with the secured assets, by misusing the enormous power at their command. 36. The Supreme Court in Kanyalal Lalchand Sachdev v. State of Maharashtra (2011(2) SCC 782) observed that an action under Section 14 of the SARFAESI Act constitutes an action taken after the stage of section 13(4) and the same would fall within the ambit of Section 17(1) of the Act, meaning thereby it is open to the DRT to consider as to whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security were in accordance with the provisions of the Act and Rules made thereunder. 37. The view taken by the Supreme Court in United Bank of India v. Satyawati Tandon (2010 (8) SCC 110) that the action taken under Section 14 of the SARFAESI Act is appealable under Section 17(1) of the Act was reiterated in Kanyalal Lalchand Sachdev v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short, the Authorised Officer has no authority to recognise a person as the nominee of the successful bidder. 42. The order passed by the learned Chief Metropolitan Magistrate, Egmore, earlier on 29 June 2011 in Crl.M.P.No.2522 of 2011 permitting the Bank to take possession of the property was set aside by this Court. The said order was duly communicated to the learned Chief Metropolitan Magistrate. The Bank thereafter approached the Magistrate with an application in Crl.M.P.No.821 of 2012. The very same learned Magistrate has considered the subsequent application and passed an order on 22 February 2012 appointing an Advocate Commissioner to take possession of property. The learned Magistrate in the factual background of the case should have asked for better particulars from the Bank. The order passed by the learned Metropolitan Magistrate does not contain any reference about the earlier order passed by him, which was ultimately set aside by this Court. It is true that the respondent has no say in an application filed by the Bank under Section 14 of the SARFAESI Act. That does not mean that the learned Chief Metropolitan Magistrate is bound to pass an order at the instance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the excise department issued licences in violation of the interim order passed by the High Court. The matter was thereafter taken up before the High Court by way of a Contempt Petition. The learned Single Judge of the High Court dismissed the contempt application observing that the contemnors did not understand the implications and consequences of a prohibitory order passed in an independent proceeding. The matter was thereafter taken up in appeal. The Supreme Court having found the violation and the grant of licence by flouting the direction, observed that a party to the litigation cannot be allowed to take an unfair advantage by committing breach of an interim order and escape the consequences thereof. The Supreme Court further said: 34. It is settled law that a party to the litigation cannot be allowed to take an unfair advantage by committing breach of an interim order and escape the consequences thereof by pleading misunderstanding and thereafter retain the said advantage gained in breach of the order of the Court. Such violations should be put an end to with an iron hand.......... 38. In the instant case, the respondents have conducted the auction quite contrary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in two weeks from the date of receipt or production of a copy of this order. It is open to the learned Chief Metropolitan Magistrate to take police assistance. The Authorised Officer of the Bank is directed to assist the learned Chief Metropolitan Magistrate and/or the Advocate Commissioner to effect re-delivery to the petitioner or her authorised agent. Direction: 50. The factual matrix of this case clearly indicates the role played by the Authorised Officer as a real estate agent without making an attempt to get best price and thereby to protect the interest of the Bank. The Authorised Officer appears to have acted on extraneous reasons and helped the real estate lobby to make illegal gain. The provisions of the SARFAESI Act was not intended for such purpose. The Bank is entitled to take recovery action by invoking the provisions of the Act. However, the action should not be for the purpose of assisting the real estate agents to enrich themselves. 51. This case is really an eye opener. It is high time that the higher officers of the Bank rise to the occasion, so that such illegal acts would not recur in future. 52. We, therefore, direct the Chairman-cum-Managing Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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