2021 Supreme(SC) 771

SUPREME COURT OF INDIA
(From the High Court for the State of Telangana at Hyderabad)
L. NAGESWARA RAO, SANJIV KHANNA, B.R. GAVAI, JJ.
Arce Polymers Private Limited – Appellant
Versus
M/s. Alphine Pharmaceuticals Private Limited and Others – Respondents
Civil Appeal Nos. 7372, 7373 of 2021, Special Leave Petition (Civil) Nos. 5051, 6178 of 2020
Decided On : 03-12-2021

IMPORTANT POINTS
(1) Restoration of physical possession of Subject Property to Borrower – To ignore conduct of Borrower would not be reasonable to Bank once third party rights have been created.
(2) A person cannot waive a right of a third person.
(3) If a party gives up advantage that could be taken of a particular position in law, it cannot later be permitted to change and turn around so as to avail of that advantage.
(4) Relief may be granted in respect of one aspect and not others.

Headnote:

(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 13(3A) – Security Interest (Enforcement) Rules, 2002 – Rule 8 – Restoration of physical possession of Subject Property to Borrower – Not only did Borrower not question or object to action of Bank, but it by express and deliberate conduct had asked Bank to compromise its position and alter contractual terms – Borrower wrote repeated request letters for restructuring of loans which prayers were considered by Bank by giving indulgence, time and opportunities – Borrower, aware and conscious of its rights, chose to abandon statutory claim and took its chance and even procured favourable decisions – Its conduct had put Bank in a position where they have lost time, and suffered on account of delay and laches, which aspects are material – Action on Subject Property was delayed by more than a year as at behest of Borrower, Bank gave them a long rope to regularise account – To ignore conduct of Borrower would not be reasonable to Bank once third party rights have been created – In this background, principle of equitable estoppel as a rule of evidence bars Borrower from complaining of violation – Taking into consideration entire facts of case, which perspicuously reflect disingenuous conduct on part of Borrower to gain indulgence, unfulfilled assurances and promises, their unwillingness to pay, Borrower has waived and is estopped from challenging violation of Section 13(3A) of SARFAESI Act – Prejudice and loss caused to Borrower is not shown and established – Auction sale as confirmed was at a price higher than fair market valuation of land, building and machinery – Whether or not price of machinery should be accounted for the purpose of payment of stamp duty on a composite sale wherein land, building and machinery located in building are sold, would not be of any relevance and importance as issue in question does not concern payment of stamp duty and principles applicable – Law recognises that lender knows its interests and how to secure best value of property given the fact that mortgaged property had to be sold for recovery of debts due and payable to Bank – Impugned order passed in Writ Petition set aside and order passed by Debts Recovery Tribunal upholding procedure and sale of Subject Property under SARFAESI Act upheld. (Paras 14, 18, 19 and 21)

(B) Doctrine – Waiver – Applicability – Waiver is an intentional relinquishment of a known right – Waiver applies when a party knows material facts and is cognizant of legal rights in that matter, and yet for some consideration consciously abandons existing legal right, advantage, benefit, claim or privilege – Waiver can be contractual or by express conduct in consideration of some compromise – However, a statutory right may also be waived by implied conduct, like, by wanting to take a chance of a favourable decision – Fact that other side has acted on it, is sufficient consideration – Waiver being an intentional relinquishment is not to be inferred by mere failure to take action – A privilege conferred or a right created by a statute, if it is solely for benefit of a party, said party can waive it – However, where a provision enacted is founded on public policy, courts would be slow to apply doctrine of waiver – Doctrine applies in first situation as right to waive inheres in concept of personal privilege and right. (Paras 14 and 15)

(C) Doctrine – Waiver – Everyone has a right to waive and to agree to renounce an advantage of law or rule made solely for benefit and protection of person in private capacity – If a party gives up advantage that could be taken of a particular position in law, it cannot later be permitted to change and turn around so as to avail of that advantage – However, this rule will not apply when there is a prohibition against contracting out of statute, which prohibition would have its consequences or in case waiver would be contrary to public policy – A person cannot waive a right of a third person – Waiver is nothing unless it amounts to release, albeit it can be adduced from acquiescence or may be implied – Essence of waiver is an estoppel and they are questions of conduct and necessarily determined on facts of each case – As a rule and judicial policy, courts of law do not allow a litigant to take inconsistent position to gain advantage through aid of judicial proceedings. (Paras 15 and 16)

(D) Administration of Justice – Moulding of Relief – General approach is that claimant who succeeds in establishing unlawfulness of administrative action is entitled to grant of remedial order – However, general proposition does not undermine discretion which courts or judicial authorities have in assessing what is fair and just to do in a particular case – to withhold remedy altogether or to mould remedy by grant of a declaration rather than a more coercive quashing, prohibiting or mandatory order or injunction which may have been sought – Relief may be granted in respect of one aspect and not others. (Para 17)

Facts of the case:

Impugned judgment dated 24th January 2020 passed by Division Bench of High Court of Telangana at Hyderabad allows Writ Petition No. 13936 of 2019 preferred by M/s. Alphine Pharmaceuticals Private Limited and Bejjenki Bhaskara Chary (‘Borrower’) and thereby sets aside and quashes the proceedings initiated by M/s. Andhra Bank for sale of the mortgaged asset, as being in violation of the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Security Interest (Enforcement) Rules, 2002.

Findings of Court:

Valuation certificate or report is dated 19th February 2018. Attempts to sell property were made thereafter on 28th March 2018 and 14th June 2018 but without success as there were no bidders. Accordingly, it was decided to reduce the reserve price from Rs.2,78,10,000/- to Rs.2,60,00,000/-. However, in fourth auction successful bid given by Basa Chandramouli was for Rs.2,91,20,000/-, which is much higher than reserve price of Rs.2,60,00,000/- or the fair market value of Rs.2,73,80,000/- in terms of valuation report.

Result : Appeals allowed.