SUPREME COURT OF INDIA
L. Nageswara Rao, B.R. Gavai, B.V. Nagarathna, JJ.
S. Karthik & Ors. - Appellants
Versus
N. Subhash Chand Jain & Ors. - Respondents
Civil Appeal Nos. 5920 – 5923 of 2021 [Arising out of Special Leave Petition (Civil) No.8614-8617 of 2020]
Decided On : 23-09-2021

IMPORTANT POINTS
(1) Auction sale of secured asset – Unless and until a clear 30 days' notice is given to borrower, no sale or transfer can be resorted to by a secured creditor. Secured creditor cannot effect sale or transfer of secured asset on any subsequent date by relying upon notification issued earlier and he will have to initiate the procedure de novo.
(2) Right of redemption which is embodied in Section 60 of Transfer of Property Act, is available to mortgagor unless it has been extinguished by act of parties.

Headnote:

(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 13(4) – Security Interest (Enforcement) Rules, 2002 – Rules 8(6) and 9(1) – Auction sale of secured asset – Unless and until a clear 30 days' notice is given to borrower, no sale or transfer can be resorted to by a secured creditor – In the event of any such sale properly notified after giving a 30 days' clear notice to borrower did not take place as scheduled for reasons, which cannot be solely attributable to borrower, secured creditor cannot effect sale or transfer of secured asset on any subsequent date by relying upon notification issued earlier and he will have to initiate the procedure de novo. (Paras 20 and 56)

(B) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 13(4) – Security Interest (Enforcement) Rules, 2002 – Rules 8(6) and 9(1) – Transfer of Property Act, 1882 – Section 60 – Auction sale of secured asset – Equitable mortgage in favour of respondent-Bank guaranteeing loan taken by borrower was in respect of four properties – Sale as per notice could not take place on scheduled date on account of interim orders passed by DRT, Chennai, which were passed on representation of guarantors – Even thereafter, guarantors continued with their effort to prolong proceedings – Appellants had more than one opportunity for redemption of mortgage – However, from their conduct, it appears that they were only interested in protracting litigation – It is appellants at whose intervention and on whose incorrect representation sale could not be held – Even after auction purchaser emerged successful in bid and had paid bid money, opportunity was given by DRT, Chennai, to appellants to deposit amount of Rs.4.80 Crores within one month – However, without complying with same, appellants continued with their dilatory tactics – Though appellants had ample opportunities for redemption of mortgage, they failed to avail of said opportunities – Right of redemption which is embodied in Section 60 of Transfer of Property Act, is available to mortgagor unless it has been extinguished by act of parties – Though auction purchaser emerged as successful bidder and though sale has been registered in his favour, for a period of last 9 years, he could not enjoy fruits of sale – Appellants continued to enjoy rent of properties ownership of which vests in auction purchaser – Appeals dismissed with costs quantified at Rs.1,00,000/- payable each to respondent-Bank and auction purchaser. (Paras 57, 66, 68, 73, 74, 78 and 83)

Facts of the case:

Present appeals challenge the common judgment and order dated 18.11.2019 passed by the High Court of Judicature at Madras in Writ Petition Nos. 30710 and 30712 of 2019 filed by respondent No. (Auction Purchaser) and in Writ Petition Nos. 28034 and 28036 of 2019 filed by appellants herein, thereby disposing of all four writ petitions.

Findings of Court:

We, therefore, direct the appellants to handover vacant and peaceful possession of the properties at Items ‘A’ and ‘D’ of the Schedule of Properties in the First Sale Notice dated 21.1.2012, within a period of 8 weeks from the date of this judgment to the auction purchaser. We further direct the appellants to pay the rent, received by them, from the said properties, since 15.9.2012 till date, within a period of three months from the date of this judgment. However, in the facts of this case, we do not intend to pass any orders with regard to interest on the said amount.

Result : Appeals dismissed with costs.