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TMI Blog2022 (1) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of Certiorari quashing the order dated 13.12.2021 passed by DRT, Jaipur in Transferred Securitization Application No. 50 of 2021; Mahipal Singh Yadav vs. Union Bank of India; B. Issue Writ, Order, or Direction quashing the Sale Certificate dated 16.12.2021, drawn in favour of O.P. No.2 which is a consequential act of the Respondent Bank, as a result of the passing of the impugned order dated 13.12.2021; 3. Even though in terms of the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 (here in after referred as the SARFAESI Act), any person aggrieved by an order of the DRT has a right to prefer an appeal before the Debt Recovery Appellate Tribunal (DRAT) under Section 18 of the Act, 2002, however, the office of DRAT has been lying vacant since 30.10.2021. 4. The Supreme Court in its order dated 16.12.2021 has requested the concerned High Court(s) to entertain the matters falling within the jurisdiction of DRTs and DRATs, as a stop-gap arrangement, with the objective of addressing the grievance of the petitioner who, on account of such vacancy, may not be able to exercise their legal rights. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the petitioner actually had, or tendered the amount of Rs. 2.65 crores to the respondent No.1. This plea of the petitioner is, therefore, neither here nor there. 11. The petitioner proceeded to file I.A. No. 2199 of 2021 before DRT-I, New Delhi in pending S.A. No. 22 of 2019, seeking setting aside of the auction conducted on 15.09.2021, and for issuance of directions to the respondent Bank not to confirm the sale of the subject property in favour of the auction purchaser, i.e. the respondent no.2. 12. As per the petitioner, the petitioner had repeatedly been writing to the respondent Bank for disclosing the name of the auction purchaser as well as the bid amount, and only on 27.10.2021, the respondent Bank informed the petitioner that the bid amount received by it was of Rs. 2,65,00,000/-, and the successful auction bidder is Mrs. Sudesh Rani, wife of Mr. Anil Kumar, respondent No.2 here in. 13. Since the highest bid amount received by the respondent Bank was the reserve price, the auction purchase was confirmed at the reserve price. The petitioner contended that the said auction at the reserve price, and confirmation thereof, are violative of Rule 9(2) of the Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have heard the learned counsels for the parties and have gone through the record and Judgments cited before us. 19. Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 reads as under:- 9. Time of sale, Issue of sale certificate and delivery of possession, etc.- (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 8. Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. xxxxx 20. The SARFAESI Act, 2002 was enacted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised 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 affixed on a conspicuous part of the immovable property and may, if the authorised offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price". 29. The submission of the petitioner is that the words "such price" used in the second proviso to Rule 9(2) refers to the reserve price, where as, the submission of the respondent is that the expression "such price" refers to the highest offered price, which is not higher than or equal to the reserve price. That is, it is lower than the reserve price. 30. No doubt, the second proviso to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 is not very happily worded, but it is for the Court to find the true meaning of the said Rule, - a meaning which advances the object of the Act and the Rules. At this juncture, we may refer to the observations of Lord Denning in the case of Seaford Court Estates Ltd. v. Asher [1994] 2 All ER 155 wherein he held: "When a defect appears a judge cannot simply fold his hand and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament and then he must supplement the written words so as to give 'force and life' to the intention of the Legislature. A judge should ask himself the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding liability of the borrower, may still consider it to be financial prudent to accept such a bid, and may give their consent to the confirmation of the sale. To deal with a situation like that, the second proviso has been built into Rule 9(2). The second proviso to Rule 9(2) provides flexibility to the concerned parties, namely, the borrower and the secured creditor, to sell the secured asset, with their consent, at a price which is even below the reserve price. No doubt, the purpose of holding a public auction/ tender to sell an immovable asset is to secure the highest and best price since that would inure to the benefit of not only the borrower but also the secured creditor. However, the expectations of the borrower and secured creditor may not always be met for myriad reasons, and the offers received during the public auction/ tender may be even below the reserve price. It is to deal with such like situations that the second proviso to Rule 9(2) seeks to lay down a flexible procedure with the object of fructifying the endeavour to sell the immovable asset that the authorised officer undertakes at substantial monetary expense and expense of time. 33. The word "such price" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to the effect that if the Authorised Officer fails to obtain a price higher than the reserve price it can be confirmed only with the consent of the Secured Creditor as well as the borrower and not bereft of such consent. But the learned counsel for the Bank as well as purchaser had submitted that since the proceeding under Section 17 is pending, the question now raised in the Writ Petition as well raised in the proceedings and in view of such existence of such alternative remedy, the Writ Petition should not be entertained. 12. In the present case, the bid offered was the same as the reserve price and therefore, the Authorised Officer could confirm such sale only with the consent of the borrower and the Secured Creditor. It is crystal clear from the present stand taken by the borrower indicates that there is no consent for confirmation of such sale. As a matter of fact, the Authorised Officer has never bothered to find out from the borrower whether he was willing that the sale should be confirmed, despite the fact that the Authorised Officer had failed to obtain a price higher than the reserve price." 35. The interpretation adopted by the Court in K. Raamaselvam (supra) rende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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