9911796707
TMI Blog2022 (8) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, Rentachintala Branch, Guntur District in the State of Andhra Pradesh. For availing the loan, third respondent mortgaged the following properties: ...property situated in Plot Nos. 1, 2, 7, 8, 13 to 21, 33 to 38 of Mycon Acropolis in Site - B and Plot Nos. 1 to 12 of Mycon Acropolis in Site - C in Sy. No. 24/EE, total extent 10010.74 sq.yards in Nandupalli Village, Nagaram Gram Panchayat, Maheshwaram Mandal, R.R. District and also Plot Nos. A11 to A15 in Sy. No. 302, Maheshwaram Revenue Village & Mandal, R.R. District... 4. For various reasons, third respondent failed to repay the loan. Consequently, respondent Nos. 1 and 2 i.e., Union Bank of India declared the loan account as Non Performing Asset (NPA), whereafter steps were taken for realisation of outstanding dues under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, 'the SARFAESI Act' hereinafter). The total amount due from the third respondent was around Rs. 14,00,17,012.00 i.e., about Rs. 14.00 crores. Second respondent issued sale notice dated 06.02.2021 for sale of the mortgaged properties by way of e-auction. The date of auction was scheduled o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aheshwaram Mandal, Ranga Reddy District. Extent: 1619 Sq. Yards 56.00 2 Open Plot Nos: 1, 2, 4, 5 to 13, 15, 16, 25 to 39 Sy.No:24/EE, Nandupally Village, Nagaram Gram Panchayat, Maheshwaram Mandal, Ranga Reddy District. Extent: 9763 Sq. Yards 165.50 3 Open Plot Nos: 1, 2, 7, 8, 13, 14, 15, 16, 17, 18, 19, 20, 21, 33, 34, 35, 36, 37, 38 of Mycon Acropolis in Site - B and Plot Nos: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 of Mycon Acropolis in Site-C in Sy.No.24/EE. Extent: 10010.74 Sq. Yards 170.00 4 Property situated at D.Nos.873 and 874 of Rentachintala Village, Near Macherla to Rentachintala Road, Rentachintala Mandal, Guntur District. Extent: Ac.1.79 Cents 125.00 12. It is stated that out of the above four properties, the first three properties were sold in auction on 16.03.2021. Auction sale for the fourth property did not materialise for want of bidders. In so far the property in respect of which petitioner is concerned, the following details have been furnished: Property No:1: Mr. Amme Srisailam/Petitioner was the successful bidder for the Property No. 1, who has remitted the amounts as follows: Bid Amount Amount Remitted Date of Receipt Remarks 57.00 Lakhs 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loan availed of. M/s. Palnadu Cold Storage has instituted S.A. No. 148 of 2021 before the Debts Recovery Tribunal, Visakhapatnam which is pending. Non-joinder of M/s. Palnadu Cold Storage has vitiated the writ proceedings because it is a necessary party. 19. Finally respondent Nos. 1 and 2 have stated that immediately after OTS, the sale price of Rs. 57.00 lakhs was refunded to the petitioner. Therefore, no prejudice has been caused to the petitioner. 20. Third respondent has also filed counter affidavit. At the outset, a preliminary objection has been raised that petitioner has got adequate and efficacious alternative remedy available under Section 17 of the SARFAESI Act. Without availing such remedy, petitioner has straightaway invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India which is not justified. According to the third respondent, Ex. P.2 letter dated 17.03.2021 filed by the petitioner is not a sale confirmation letter. That apart in Ex. P.5 letter dated 08.04.2021 petitioner had requested respondent Nos. 1 and 2 to consider issuance of sale certificate and registration of the property. This would show that the first resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the secured asset - (i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount, no further steps shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. Learned Senior Counsel therefore contends that post amendment the right of redemption of the borrower ceases the moment notice for public auction is issued. After the right of redemption was extinguished it was not open for the Bank to enter into OTS with the borrower to frustrate the auction which was lawfully conducted in which petitioner was the successful bidder. He further submits that in view of the overriding effect of the SARFAESI Act in terms of Section 35 thereof, Section 60 of the Transfer of Property Act, 1882 would not be available to the borrower post notice for public auction. In this connection, learned Senior Counsel has placed reliance on the decision of the Supreme Court in Shakeena (supra). 24. The above contention of the learned Senior Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereafter auction was held on 16.03.2021. Petitioner was the successful bidder for the subject land for Rs. 57.00 lakhs which it paid. In the meanwhile, third respondent submitted proposal dated 18.03.2021 for OTS which was recommended by the second respondent on 20.03.2021 and was accepted by first respondent on 31.03.2021 for Rs. 5.10 crores which admittedly has been paid by the third respondent. Thereafter respondent Nos. 1 and 2 returned Rs. 57.00 lakhs to the petitioner. 28. According to the petitioner, such an action by respondent Nos. 1 and 2 is not permissible in law. 29. Let us deal with this aspect. Basic contention of the petitioner is that Section 13(8) of the SARFAESI Act prohibits such a course of action. 30. Section 13 deals with Enforcement of Security Interest. As per sub-section (1), notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of the SARFAESI Act. Sub-section (8) of Section 13 prior to its substitution was as follows: (8) If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auction is issued? In other words, whether sub-section (8) of Section 13 of the SARFAESI Act can bar the secured creditor from receiving the outstanding dues from the borrower post publication of notice for public auction? 35. Before we attempt to answer the above question, it would be apposite to briefly advert to the decisions cited at the bar. 36. In so far the decision of the Gujarat High Court in Sushen Medicamentos Private Limited (supra) relied upon by learned counsel for respondent No. 3 is concerned, the said decision was rendered on 03.08.2011 much before Section 13(8) of the SARFAESI Act was substituted. Therefore, the above decision may not have any significant relevance to the present litigation. Nonetheless, in the facts of that case, Gujarat High Court took the view that though the highest bidder in the auction may be entitled to refund of the amount offered and deposited by him but he cannot claim the right to get the property if there has been a compromise between the borrower and the secured creditor even after the auction sale. 37. A Division Bench of this Court in Concern Readymix (supra) noted the changes that were made to the SARFAESI Act by the Enforcement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. But in law it is not. 39. Thus this Court emphasised that the right of redemption is not lost immediately upon the highest bid made by the purchaser in an auction is accepted. 40. A three-Judge Bench of the Supreme Court in S. Karthik (supra) held that the right of redemption which is embodied in Section 60 of the Transfer of Property Act, 1882 is available to the mortgagor unless it has been extinguished by the act of the parties. Only on execution of the conveyance and registration of transfer of mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. Referring to the previous decisions of the Supreme Court, it has been held that the right to redemption stands extinguished only on the sale certificate getting registered. 41. This position has been explained by the Punjab & Haryana High Court in Pal Alloys & Metal India Private Limited (supra), wherein it has been clarified that the amended Section 13(8) of the SARFAESI Act merely prohibits the secured creditor from proceeding further with the transfer of the secured asset by way of lease, assignment or sale if the dues are paid before issuance of sale notice for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in possession of the mortgaged property, to deliver possession thereof back to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. As per the proviso, the right conferred under the aforesaid provision shall not be extinguished by any act of the parties or by decree of a Court. 46. Therefore, on a careful application of Sections 35 and 37 of the SARFAESI Act, it is evident that the situation contemplated under Section 13(8) of the SARFAESI Act does not exclude application of Section 60 of the Transfer of Property Act, 1882. As explained by this Court in Concern Readymix (supra), a restriction on the right of the mortgagee to deal with the property post issuance of notice for public auction is not the same as the right of redemption available to the mortgagor. 47. In so far the present case is concerned, admittedly the bid amount of the petitioner was Rs. 57.00 lakhs. Though the auction was conducted on 16.03.2021 and payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
