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SUPREME COURT OF INDIA
R.K. AGRAWAL, ABHAY MANOHAR SAPRE, JJ.
Agarwal Tracom Pvt. Ltd. – Appellant(s)
VERSUS
Punjab National Bank & Ors. – Respondent(s)
CIVIL APPEAL No. 19847 OF 2017 (ARISING OUT OF SLP (C) No. 33514/2016)
Decided On : 27-11-2017
(2010) 8 SCC 110 – Relied upon
2014(4) Mh.L.J. 113 – Distinguished
(b) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 17(1) – Auction purchaser – Held, is ‘any person’ u/s 17(1) – entitled to challenge forfeiture of his deposit before DRT u/s 17(1). (Para 31)
Facts of the case:
Respondents-Punjab National Bank had given loan facility to a Company called "M/s India Iron & Steel Corporation Limited" ("Borrower”) for their business.
The Borrower, however, failed to clear their loan amount and became a defaulter in its repayment. The PNB, therefore, issued a public sale notice in the public auction fixed for 17.06.2014.
The appellant's bid was accepted by the PNB followed by execution of memorandum of understanding between the appellant and the PNB. The PNB authorized the appellant to dismantle and sell the scrap plant and the machinery which was lying at the Borrower’s factory's premises after depositing the necessary installment of sale amount.
The appellant failed to pay the regular installments towards sale money and sought extension of time to pay and remove the scrap material from the site.
The Debt Recovery Tribunal (DRT) directed the appellant not to remove any material from the factory premises.
The appellant then wrote a letter to PNB requesting them to refund their money with interest.
The writ petition was disposed of observing therein that since the appellant had failed to comply with the term of memorandum of understanding the PNB cannot proceed with the auction sale held on 17.06.2014 and nor can the appellant be permitted to remove the scrap material lying in the factory premises.
PNB forfeited the appellant's deposit.
The Single Judge of the High Court dismissed the appellant's writ petition on the ground of availability of alternative statutory remedy to the appellant of filing the application under Section 17 of the SARFAESI Act before the DRT to challenge the action of PNB in forfeiting the deposit money of the appellant.
The Division Bench dismissed the appeal and confirmed the order of the Single Judge.
Finding of the Court:
The Writ Court as also the Appellate Court were justified in dismissing the appellant's writ petition.
Result: Appeal dismissed.
Based on the provided legal document, the auction purchaser is considered a person aggrieved by measures taken by a secured creditor under the relevant section of the law. Specifically, the auction purchaser falls within the scope of "any person" who is entitled to challenge actions such as forfeiture of deposit before the designated tribunal. The law recognizes that auction purchasers, as parties directly affected by measures like forfeiture, have the standing to file applications challenging such measures. Therefore, the auction purchaser is classified as an aggrieved person with the legal right to seek redress through the appropriate statutory remedy before the designated tribunal.
JUDGMENT
Abhay Manohar Sapre, J.
1. Leave granted.
2. This appeal is directed against the final judgment and order dated 11.05.2016 passed by the High Court of Delhi at New Delhi in LPA No.699 of 2015 whereby the Division Bench of the High Court dismissed the appeal filed by the appellant herein for quashing the order dated 01.09.2015 passed by the Single Judge, which dismissed the appellant’s W.P.(c) No.8314 of 2015.
3. The controversy involved in the appeal centers around the short facts and is essentially a legal one. However, few relevant facts need mention, in brief, to appreciate the controversy.
4. Respondents-Punjab National Bank(hereinafter referred to as "PNB") is a Nationalised Bank. The PNB had given loan facility to a Company called "M/s India Iron & Steel Corporation Limited" (in short, "Borrower”) for their business, which they were carrying at a place called Noorpur Khirki, Village Farid Nagar, Tehsil Dhampur, District Bijnor (U.P.).
5. To secure the loan amount, the Borrower had secured their assets, which consisted of the land, factory building, plant and machinery situated at Dhampur. The Borrower, however, failed to clear their loan amount and became a defaulter in its repayment. The PNB, therefore, invoked their powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) and issued a public sale notice in leading English newspapers for sale of the mortgaged assets of the Borrower in the public auction fixed for 17.06.2014 (Annexure-P-1). The appellant herein was one of the bidders, whose bid was declared the highest.
6. The appellant's bid was accordingly accepted by the PNB followed by execution of memorandum of understanding between the appellant and the PNB (Annexure P-4). The PNB also sent a letter to the appellant stating that the entire plant, machinery, land and the building is auctioned in favour of the appellant. The letter also authorized the appellant to dismantle and sell the scrap plant and the machinery which was lying at the Borrower’s factory's premises after depositing the necessary installment of sale amount, as agreed upon between the parties in the memorandum of understanding.
7. The appellant, however, failed to pay the regular installments towards sale money in terms of memorandum of understanding to PNB and sought extension of time to pay and remove the scrap material from the site.
8. This gave rise to the disputes between the parties, namely, PNB, appellant (auction purchaser) and the Borrower before the Debt Recovery Tribunal (DRT), Lucknow being S.A. No 310 of 2014 wherein an order was passed on 03.07.2014 (Annexure-P-11) directing the appellant not to remove any material from the factory premises. The appellant then wrote a letter to PNB requesting them to refund their money with interest. This led to another dispute between the parties which was filed in the DRT and then before the appellate authority-DRAT and finally, in the High Court at Allahabad in Writ Petition(c) No. 22246/2015 by the Borrower. This writ petition was disposed of finally on 29.05.2015 observing therein that since the appellant had failed to comply with the term of memorandum of understanding inasmuch as the appellant having failed to deposit the requisite installment of sale money, the PNB cannot proceed with the auction sale held on 17.06.2014 and nor can the appellant be permitted to remove the scrap material lying in the factory premises.
9. This led the PNB to forfeit the appellant's deposit by their letter dated 26.06.2015 (Annexure-P25). The appellant objected to the action of PNB by letters and then filed the writ petition in the High Court of Delhi challenging therein the action of PNB in forfeiting the appellant's deposit of money.
10. The Single Judge of the High Court, by order dated 01.09.2015, dismissed the appellant's writ petition on the ground of availability of alternative
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