TMI Blog2021 (12) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... after receipt of the representations dated 1st/6th November 2016, but without making any reference to the aforesaid representation. Accordingly, on the first point, the High Court concluded that there had been a violation by the Bank of its mandatory statutory duty under Section 13(3A) of the SARFAESI Act. Whether any of the reliefs claimed in the O.A. by the petitioners is barred by limitation? - HELD THAT:- In the present case, it is clear from a bare perusal of the letter dated 7th November 2016 sent by the Bank to its Zonal Manager that the Bank actively considered the Borrower s request for extension of the moratorium period. The Borrower did not submit the viability report and failed to bring in ₹ 45,00,000/- (Rupees forty five lakhs only). Post this default also there were negotiations with assurances and promises by the Borrower. Displaying forbearance, the Bank granted indulgence as action under the SARFAESI Act was deferred for nearly one year from 7th November 2016 till 6th October 2017. Thereafter, negotiations were held on 30th October 2017, 6th November 2017 and 8th November 2017 - in the present case, the Borrower has waived and is estopped from challengi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 upholding the procedure and sale of the Subject Property under the SARFAESI Act is upheld - petition dismissed. - CIVIL APPEAL NO. 7372 OF 2021 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 5051 OF 2020) CIVIL APPEAL NO. 7373 OF 2021 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 6178 OF 2020) - - - Dated:- 3-12-2021 - JUSTICE L. NAGESWARA RAO, JUSTICE SANJIV KHANNA And JUSTICE B.R. GAVAI For the Parties : Mr. S. Niranjan Reddy, Sr. Adv. Mr. Amit K. Nain, AOR Mr. Raavi Yogesh Venkata, AOR Mr. G.K. Despandey, Adv Mr. A.V.S. Raju, Adv. Mr. Somanath Padhan AOR Mr. Ashok Anand, Adv. Mr. Rakesh Kumar Singh, Adv. Mr. Aakash Kakade, Adv. Mr. Aabhas Parimal, Adv. JUDGMENT SANJIV KHANNA, J. Leave granted. 2. The impugned judgment dated 24th January 2020 passed by the Division Bench of the High Court of Telangana at Hyderabad allows Writ Petition No. 13936 of 2019 preferred by M/s. Alphine Pharmaceuticals Private Limited and Bejjenki Bhaskara Chary (collectively referred to as the Borrower ) and thereby sets aside and quashes the proceedings initiated by M/s. Andhra Bank (the Bank , for short) for sale of the mortgaged asset, namely, plot No. 66/B-1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , proceed to narrate the facts in some detail: (i) The Borrower was sanctioned working capital limit of ₹ 35,00,000/- (Rupees thirty five lakhs only) and granted term loan of ₹ 1,52,00,000/- (Rupees one crore fifty two lakhs only) by the Bank in March 2015 with moratorium period of six months to enable the Borrower to purchase M/s. Alphine Pharmaceuticals Pvt. Ltd. from its erstwhile promoters. (ii) In accordance with the terms of the loan, the Subject Property was mortgaged by the Borrower with the Bank. (iii) The Borrower failed to repay the loan as per the payment schedule as a result of which, on 31st July 2016, the loans were declared as a Non-Performing Asset. (iv) On 1st August 2016, the Bank issued notice to the Borrower under Section 13(2) of the SARFAESI Act calling upon the Borrower to discharge its liability within sixty days failing which the Bank would be entitled to exercise all or any of its rights under sub-section (4) to Section 13 of the SARFAESI Act. (v) The Borrower neither made any payment nor responded by way of a reply within sixty days of the notice under Section 13(2) of the SARFAESI Act. (vi) On 1st November 2016 and 6th Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced the interest and instalment payments by which they had liquidity problem in the working capital and could not execute orders obtained from the new clients. The account was identified as NPA on 31.07.2016 and we have issued Notice under SARFAESI Notice under Section 13(2) was issued on 01.08.2016 and the acknowledgement of notice from the borrower and guarantors has been received on 12.08.16. The company earlier informed that they are entering MOU with an investor group for infusion of ₹ 1.00 crore and the liquidity problem will be solved and they can revive the production activity at higher level. It is informed that the investors have invested only ₹ 15.00 lakhs from which the company had remitted ₹ 10.00 lakhs into OCC account and utilized ₹ 5.00 lakhs for payment of salary and other dues. The investors have opted out without investing further amount. The present position of limits and liabilities is as under: 14. BALANCE OUTSTANDING: (Liability with our bank) (Rs. in Crs) FACILITY LIMIT SANCTIONED OUTSTANDING BALANCE RECOVERY AFTER NP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the full extent by infusing ₹ 60.00 lakhs within three months by the company as promised and payment of ₹ 10.74 lakhs into OCC account after NPA date, we recommend for deferring action under SARFAESI till the TEV Report is appraised and viability of the company is established by our approved agency and allow operations in the OCC account after bringing the liability to within the limit in OCC account. Thus, the action under the SARFAESI Act was recommended to be deferred to enable the Borrower to submit detailed project/viability report, bring OCC account within limit and increase production to the fullest extent by infusing ₹ 60,00,000/- (Rupees sixty lakhs only) towards the working capital. The Borrower was to be allowed operations in their bank account after bringing the OCC liability within the prescribed limit. (ix) The third party investor brought in ₹ 15,00,000/- (Rupees fifteen lakhs only), out of which ₹ 5,00,000/- (Rupees five lakhs only) was utilised for payment of salary and ₹ 10,00,000/- (Rupees ten lakhs only) was remitted to the OCC account. Thereafter, the third party investor opted out and did not bring in the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need to submit the restructuring proposal in the prescribed format along with the details of additional collateral security as well as legal opinion and valuation report. The documentation, it was stated, was not received. Also, visit of the Bank officers to the proposed collateral security property had not been arranged. The Borrower was informed that the Bank would take a call on Borrower s request for opening the factory, which was in the Bank s possession, after receipt of the aforementioned papers etc. along with realisation of cheque presented by the Borrower. The Borrower was advised to comply with the terms immediately to enable the Bank to consider the proposal for restructuring, with a warning that in case of delay, the Bank would set into motion the proceedings under the SARFAESI Act which had been temporarily halted. (xvii) On 18th December 2017, the Borrower again wrote seeking regularisation of the account and waiver of penal charges levied in terms of the loan agreement. A restructuring proposal was submitted as per the format with a request that the same should be considered and the Borrower be permitted to bring the unit to commercial operation as a onetime oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledge about the writ petition preferred by the Borrower on 6th July 2019. The Second Purchaser had acquired the plot with the bare structure, which the Second Purchaser claims was in a dilapidated condition. The Second Purchaser had an existing industrial establishment on a plot of land adjacent to the Subject Property. After the purchase, the structure standing on the Subject Property was demolished and the Second Purchaser has constructed a new structure, as per the Second Purchaser at the cost of over ₹ 70,00,000 (Rupees seventy lakhs only). 9. After a detailed perusal of the facts in the present matter, we would like to refer to the findings of the High Court and our findings on the legal issues with reference to the points formulated by the High Court, as set out in paragraph 4 above. For convenience, we would like to simultaneously deal with points (a) and (b). 10. In brief, the impugned judgment upholds the contention on violation of Section 13(3A) of the SARFAESI Act relying on the judgment of this Court in ITC Limited v. Blue Coast Hotels Limited and Others, (2018) 15 SCC 99 that compliance with Section 13(3A) being mandatory, the Bank had failed to respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in the sub-section (4) to Section 13 under Section 17 of the SARFAESI Act. In this view of the matter, the High Court with respect to the second issue held that though the O.A. was filed on 1st October 2018, the Borrower can challenge the possession notice issued on 3rd March 2017, taking of symbolic possession, taking of physical possession in May 2017, the sale notice issued on 2nd July 2018, and the sale certificate dated 27th September 2018 as they all form part of the same cause of action. Consequently, it was observed that challenge to the actions/measures prior to 2nd July 2018 would not be barred by limitation. 12. In view of the factual matrix of the present case, which has been set out in detail above and the aspect of waiver and estoppel discussed subsequently, it is not necessary for us to examine the question of violation of Section 13(3A) of the SARFAESI Act and also whether the cause of action from the date of issue of notice under Section 13(2) of the SARFAESI Act till the issuance of the sale certificate is a continuing cause of action. Suffice it would be Civil Appeal a/o. of SLP (C) No. 5051 of 2020 Anr. Page 16 of 28 to observe that in the case of ITC Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and is cognizant of the legal rights in that matter, and yet for some consideration consciously abandons the existing legal right, advantage, benefit, claim or privilege. Waiver can be contractual or by express conduct in consideration of some compromise. However, a statutory right may also be waived by implied conduct, like, by wanting to take a chance of a favourable decision. The fact that the other side has acted on it, is sufficient consideration. It is correct that waiver being an intentional relinquishment is not to be inferred by mere failure to take action, but the present case is of repeated positive acts post the notices under Sections 13(2) and (4) of the SARFAESI Act. Not only did the Borrower not question or object to the action of the Civil Appeal a/o. of SLP (C) No. 5051 of 2020 Anr. Page 18 of 28 Bank, but it by express and deliberate conduct had asked the Bank to compromise its position and alter the contractual terms. The Borrower wrote repeated request letters for restructuring of loans, which prayers were considered by the Bank by giving indulgence, time and opportunities. The Borrower, aware and conscious of its rights, chose to abandon the statutory cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law or rule made solely for the benefit and protection of the person in private capacity. If a party gives up the advantage that could be taken of a particular position in law, it cannot later be permitted to change and turn around so as to avail of that advantage. However, this rule will not apply when there is a prohibition against contracting out of the statute, which prohibition would have its consequences or in case the waiver would be contrary to public policy. Further, a person cannot waive a right of a third person. 16. This principle has been subsequently followed in Pravesh Kumar Sachdeva v. State of Uttar Pradesh and Others, (2018) 10 SCC 628 to hold that waiver is abandonment of a right which normally everybody is at liberty to waive. Waiver is nothing unless it amounts to release, albeit it can be adduced from acquiescence or may be implied. The essence of waiver is an estoppel and they are questions of conduct and, therefore, necessarily determined on the facts of each case. As a rule and judicial policy, the courts of law do not allow a litigant to take inconsistent position to gain advantage through the aid of judicial proceedings. 17. In consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt may result in unjust enrichment on account of events happening in-between. Else the relief may not be denied solely on account of time lost in prosecuting proceedings in judicial or quasijudicial forum and for no fault of the petitioner. A plaintiff or petitioner having been found entitled to a right to relief, the court would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him... Reference in this regard can be also made to an earlier decision of this Court in Rameshwar and Others v. Jot Ram and Another. (1976) 1 SCC 194. 18. In the present case, it is clear from a bare perusal of the letter dated 7th November 2016 sent by the Bank to its Zonal Manager that the Bank actively considered the Borrower s request for extension of the moratorium period. The Borrower did not submit the viability report and failed to bring in ₹ 45,00,000/- (Rupees forty five lakhs only). Post this default also there were negotiations with assurances and promises by the Borrower. Displaying forbearance, the Bank granted indulgence as action under the SARFAESI Act was deferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on report which has been placed on record is dated 19th February 2018, values the land, the building and the machinery separately. The machinery has been valued with specific reference to as many as 55 separate items under the Heading Description of Machinery . The valuation report itself has not been disputed or challenged. We do not agree with the High Court that the machinery should have been separately auctioned or sold. This would be putting fetters and restrictions on the Bank by baring the Bank from selling the machinery along with the building and the land. Prejudice and loss caused to the Borrower is not shown and established. Auction sale as confirmed was at a price higher than the fair market valuation of the land, the building and the machinery. Whether or not the price of the machinery should be accounted for the purpose of payment of stamp duty on a composite sale wherein the land, the building and the machinery located in the building are sold, would not be of any relevance and importance as the issue in question does not concern payment of stamp duty and the principles applicable. On the other hand, the law recognises that the lender knows its interests and how to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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