TMI Blog2022 (11) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bank was for 54 cents. That thereafter the sale certificate was registered in the month of October, 2010. Thereafter the plaintiff filed the suit for recovery of damages with respect to 14.40 cents. The final certificate was registered on 01.10.2010 and thereafter when the suit was filed in the year 2012 it cannot be said that the suit was barred by limitation. At this stage, it is required to be noted that as such no issue was framed by the learned Trial Court on whether the suit is barred by limitation or not. Suit was barred by Section 34 of the SARFAESI Act or not - HELD THAT:- It is required to be noted that the suit was for damages/compensation, with respect to the balance land, which could not have been decided by the DRT or Appellate Tribunal, Section 34 of the SARFAESI Act shall be applicable only in a case where the Debt Recovery Tribunal and/or Appellate Tribunal is empowered to decide the matter under the SARFAESI Act. The plaintiff was not challenging the sale/sale certificate. The plaintiff claimed the damages/compensation with respect to the less area. Therefore, the High Court has seriously erred in holding that the suit was barred by Section 34 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of Financial Assets and Enforcement of Security Interest Act 2002 (hereinafter referred to as SARFAESI Act, 2002 ) 2.1 That the Bank secured the possession and thereafter by notice for auction dated 23.01.2007 the secured asset admeasuring 54 cents was put to auction. The appellant original plaintiff after inspection of the property submitted the quotation for sale of 54 cents of land and offered Rs.32,05,000/. It appears that in the quotation the original plaintiff specifically stated that the offer of Rs.32,05,000/is subject to the condition that absolute ownership and vacant possession of full extent of property without encumbrances is handed over. However, by communication dated 05.03.2007, the Bank replied that as in the invitation to the public for tenders, it is stated that the property would be sold in as is where is and as is what is condition, the original plaintiff may confirm that he is ready and willing to offer the bid and take the property in the present condition. It appears that vide communication dated 08.03.2007, the original plaintiff reiterated that she is ready to purchase the property only if, absolute ownership, vacant possession and full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property is less than 54 cents and still she purchased the secured property. It was the case on behalf of the defendants that there was no fraud committed by them. It was submitted that the documents submitted to them by the borrowers were relating to the total extent of 54 cents of land which was put to auction. That it was the case on behalf of the defendants that the plaintiff is not entitled to any compensation from the defendants. The learned Trial Court framed the following issues: (i) Whether the suit is maintainable? (ii) Whether the plaintiff is entitled to get a decree as prayed for? (iii) Reliefs and Costs? 2.4 That the learned Trial Court decreed the suit and directed the defendant Bank to pay to the plaintiff a sum of Rs.58,10,000/with future interest @ 12% pa from the date of suit till realization. 2.5 Feeling aggrieved and dissatisfied with the judgment and decree passed by the learned Trial Court, the defendant Bank filed the present appeal before the High Court. By the impugned judgment and order the High Court has allowed the appeal preferred by the defendants and has quashed and set aside the decree passed by the learned Trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, she would withdraw her offer and the earnest money would be returned. It is submitted that the bank took the possession of the auctioned property through the intervention of the Court under Section 14 of the SARFAESI Act and asked the appellant to pay the balance sale consideration which was done by the appellant on 17.10.2007. Consequently, the bank issued certificate of sale for 54 cents of land on 21.11.2007 and thereafter the sale certificate was registered and the sale deed was executed on 01.02.2010 for 54 cents of land. It is submitted that therefore when the bank transferred to the appellant only 39.60 cents of land a fact which was known to the bank and the appellant paid an amount of Rs.32,05,000/for 54 cents of land the appellant original plaintiff is entitled to the remaining area of land i.e. 14.40 cents. It is submitted that therefore the Trial Court had rightly decreed the suit. 3.3 Learned Counsel appearing on behalf of the appellant has further submitted that the respondent bank while exercising the powers provided under the SARFAESI Act failed to comply with Rule 8(6)(a) and (f) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deficiency in extent. 4.3 It is further submitted that even otherwise as observed and held by Hon ble High Court the suit itself was barred under Section 34 of the SARFAESI Act. 4.4 It is submitted that in terms of Section 34 of the SARFAESI Act, the jurisdiction of the Civil Court is absolute barred except in case the plaintiff is able to show fraud or misrepresentation. It is submitted that in the present case from the communications on record and that the possession was handed over to the bank pursuant to the order under Section 14 of the SARFAESI Act on 08.10.2007 and thereafter the plaintiff made the payments on various dates, leading to the issuance of the sale certificate on 21.11.2007, which was registered almost 3 years later on 01.02.2010, it is very much clear that the plaintiff was aware of the extent of the property and no case of fraud is made out. 4.5 Even the claim of the plaintiff was barred by limitation. It is submitted that the suit was filed in the year 2012 while the auction sale took place on 05.02.2007 and the sale certificate was issued on 21.11.2007. The payments were made on October, 2007. It is submitted that thus the cause of action arose on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank. Despite the above the Bank issued the sale certificate dated 21.11.2007 for 54 cents of land, however, handed over the possession of the secured property admeasuring 39.60 cents only. The sale consideration received by the Bank was for 54 cents. That thereafter the sale certificate was registered in the month of October, 2010. Thereafter the plaintiff filed the suit for recovery of damages with respect to 14.40 cents. The final certificate was registered on 01.10.2010 and thereafter when the suit was filed in the year 2012 it cannot be said that the suit was barred by limitation. At this stage, it is required to be noted that as such no issue was framed by the learned Trial Court on whether the suit is barred by limitation or not. 5.2 Now so far as the submission on behalf of the plaintiff and the finding recorded by the High Court that the suit was barred by Section 34 of the SARFAESI Act is concerned, at the outset it is required to be noted that the suit was for damages/compensation, with respect to the balance land, which could not have been decided by the DRT or Appellate Tribunal, Section 34 of the SARFAESI Act shall be applicable only in a case where the Debt Recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate only for 34.60 cents. This shows the conduct on the part of the bank. 5.4 Rule 8 of the 2002 Rules cast a duty on the authorized officer to take all precautions before putting the secured asset to sell. As per subrule 5 of Rule 8 before effecting sale of the immovable property (secured assets) the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor and fix the reserve price of the property and may sell the whole or any part of such immovable secured asset. Therefore, when the reserve price was fixed the same was for 54 cents. Therefore, it can be presumed that the Bank was aware that the actual area of the secured asset is less than 54 cents. As per Section 54 of the Transfer of Property Act the seller was bound to disclose any buyer any material defect in the property of which the buyer is not aware and which the buyer could not ordinarily discover. Under the circumstances also the submission on behalf of the Bank that the property was put to auction on as is where is and as is what is condition, thereafter the plaintiff shall not be entitled to compensation of the less area cannot be a ..... 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