IMPORTANT POINT
Auction sale of secured asset (NPA) – Sale once validly concluded, cannot be interfered with.

JUDGMENT

A.M. Khanwilkar, J.

These appeals take exception to the impugned judgment and order of the Madras High Court, Madurai Bench dated 10th August, 2007 in Writ Appeal (MD) Nos.145 and 146 of 2007 respectively; whereby, the Division Bench of the High Court dismissed the writ petitions filed by the appellants praying for setting aside of notice issued by the respondent bank in exercise of powers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "2002 Act") dated 14th November, 2005 and the consequent public notice dated 15th November, 2005 for sale of the subject property, the public auction conducted in furtherance thereof on 19th December, 2005, declaration of respondent No.3 as the highest bidder in the said public auction and the sale certificate issued in his favour dated 6th January, 2006.

2. Briefly stated, in 2003, Shri P. Shahul Hameed and Smt. Shakeena (appellants/borrowers) were sanctioned a term loan of Rs.10 Lacs each under Star Mortgage Loan by the respondent bank. The accounts became NPA (Non-Performing Assets) from 30th June, 2004. As there was default in re-payment, the respondent bank issued legal notice dated 19th October, 2004 to repay the dues within seven days. On 1st December, 2004, notice was issued under Section 13(2) of the 2002 Act to the appellants, calling upon them to discharge the loan within sixty days. In reply, the appellants by representations dated 10th December, 2004, requested the respondent bank to grant time for bringing the account in order. In view of the default in discharging the loans by the appellants, the respondent bank, exercised its power under Section 13(4) of the 2002 Act. Accordingly, constructive possession of the mortgaged property was taken over by the respondent bank on 8th February, 2005.

3. The appellants then filed S.A. Nos.21 and 22 of 2005, by invoking Section 17 of the 2002 Act, before the Debts Recovery Tribunal II, Chennai, challenging the notices, issued by the respondent bank. On 18th March, 2005, DRT-II, Chennai passed an order in S.A. Nos.21 and 22 of 2005 staying all further proceedings on condition that the appellants would pay Rs.1.50 Lac in each appeal. However, the appellants failed to comply with the said order and, therefore, the order being a self-operating order, stood automatically vacated. Later on, S.A. Nos.21 & 22 of 2005 were eventually dismissed for non-prosecution/default on 28th September, 2005, for non-payment of court fee.

4. The respondent bank then brought the secured property for sale by inviting sealed tenders vide sale notice dated 15th November, 2005. Notice was also given to the appellants on 14th November, 2005. The appellants herein neither objected to the said sale notice nor challenged the same. Thus, the sale was held on 19th December, 2005, in which one Mr. Chidhamara manickam, respondent No.3 herein was declared as the highest bidder who had quoted a sum of Rs.42,51,000/-(Rupees Forty-Two Lacs Fifty-One Thousand Only). He also deposited 25% of the sale consideration immediately, as per the rules. On 2nd January, 2006, the appellants approached the respondent bank and deposited three cheques for total sum of Rs. 25,21,446/- (Rupees Twenty-Five Lacs Twenty-One Thousand Four Hundred Forty-Six Only). These cheques were duly returned by the respondent bank on 4th February, 2006 as it could not be treated as a valid tender.

5. The highest bidder (respondent No.3) in the meantime had complied with all the terms and conditions of sale as a result of which the sale was confirmed in his favour. In that, he paid the entire sale consideration of Rs. 42,51,000/- (Rupees Forty-Two Lacs Fifty-One Thousand Only) by 4th January, 2006. On payment of sale consideration, the respondent bank credited a sum of Rs. 12,40,000/- (Rupees Twelve Lacs Forty Thousand Only) in the loan account of appellant No. 2 herein and a sum of Rs. 12,52,350/- (Rupees Twelve Lacs Fifty-Two Thousand T