1. Loan default — SARFAESI Act proceedings — Section 14 order for possession of secured assets — Challenge before Debt Recovery Tribunal. (Para 1 , 2 )
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2021 Supreme(SC) 887
SUPREME COURT OF INDIA
Sanjay Kishan Kaul, Dinesh Maheshwari, Hrishikesh Roy, JJ.
M/s Esjaypee Impex Private Limited - Appellant
Versus
The Asst. General Manager - Respondent
Petition(s) for Special Leave to Appeal (C) No(s). 24164/2019
Decided On : 05-01-2021
Important Points
Points of Law : Only required the authorised officer of the bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act.
Subject
Property Law - Real Estate
Act Referred
Headnote
Security Interest Act, 2002 - Immovable property - Handed over to auction - To repay loan to Canara Bank and consequent proceedings initiated by Bank Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act - Chief Metropolitan Magistrate passed an order under Section of the Act on qua handing over possession of secured assets to Canara Bank in respect of an immovable property being Old Door Street Chennai as security to the Bank.
Finding Of The Court :
Court had also noticed that in case auction purchaser was to continue to enjoy property and petitioner defaulted one week's time would be granted to remove what has been stored in back portion - Bank will ensure that those goods are removed within one week from today to facilitate unhindered enjoyment of possession by auction purchaser - Counsel for the Bank agreed that the sale certificate has to be further validated and assured that the needful will be done within two weeks. However, a submission was made that the sale certificate was then to be handed over to the registering authority for registration and payment of stamp duty.
Result : Order accordingly
Legal Category Hierarchy
Advocates appeared:
Ms. Shalini Kaul, for the Appellant; Mr. M.L. Ganesh, Adv, Mr. K. V. Vijayakumar, Mr. S. Nagamuthu, Mr. P. Krishnan, Adv, Mr. M.A. Chinnasamy, Ms. C. Rubavathi, Adv, for the Respondent
Ms. Shalini Kaul, for the Appellant; Mr. M.L. Ganesh, Adv, Mr. K. V. Vijayakumar, Mr. S. Nagamuthu, Mr. P. Krishnan, Adv, Mr. M.A. Chinnasamy, Ms. C. Rubavathi, Adv, for the Respondent
Table of Contents
2. Borrower sought time to deposit funds to reclaim property; auction purchaser sought refund of deposits or perfection of title. (Para 6 , 7 , 9 )
3. Peremptory orders for deposit were not complied with despite multiple extensions; failure to meet conditions for staying the auction results in dismissal. (Para 7 , 8 , 9 )
4. Under Section 17(2)(xii) SARFAESI Act and Section 89(4) Registration Act, the authorized officer must provide a validated sale certificate to the purchaser and notify registering authorities. (Para 12 )
5. Special leave petitions dismissed; bank directed to remove stored goods and provide a validated sale certificate to the auction purchaser. (Para 9 , 11 , 13 )
6. What is the effect of failing to comply with a peremptory order for deposit in a challenge to a property auction?
If a party fails to deposit the required amount within the time stipulated by a peremptory order, the petitions challenging the proceedings will stand dismissed. (Para 7 , 8 , 9 )
7. What are the legal requirements for the registration of a sale certificate issued under the SARFAESI Act?
Pursuant to Section 17(2)(xii) of the SARFAESI Act and Section 89(4) of the Registration Act, 1908, the authorized officer must hand over the validated sale certificate to the auction purchaser and forward a copy to the registering authorities for filing in Book I. (Para 12 )
ORDER
1. The proceedings in the present matter emanate from the failure of the appellant M/s Esjayee Impex Pvt. Ltd. To repay a loan to Canara Bank and the consequent proceedings initiated by the Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act). The Chief Metropolitan Magistrate passed an order under Section 14 of the said Act on 24.02.2019 qua handing over possession of secured assets to Canara Bank in respect of an immovable property being Old Door No. 23, New Door No. 2, Rajarathinam Street, Kilpauk, Chennai-600010 as security to the Bank.
2. The appellant, aggrieved by this order, filed SA No. 139 of 2019 before the Debt Recovery Tribunal-1(hereafter referred to as "DRT"), Chennai in which a status quo order was passed dated 28.05.2019. The continuation of these proceedings on status quo order resulted in the Canara Bank in approaching Madras High Court by filing W.P. No.23573 of 2019.
3. The bank stated that it had already sold the secured assets to the auction purchaser namely, M/s Realty Associates. The possession could not be transferred because of the status quo order. The auction purchaser had paid Rs. 5.11 crores as against auction price of Rs.20.44 crores.
4. The auction purchaser also filed W.P. No. 34653 of 2018 seeking refund of the deposit with interest. It may be noticed that the auction purchaser had requested for time to pay the balance 75% of the amount on account of criminal proceedings filed by the borrower, but was informed that there was no stay against the same and thus, the demand was reiterated by the Bank. The aforesaid two writ petitions were dealt with by the impugned order dated 16.09.2019. Interim directions were passed staying the status quo order passed by the DRT. An interim direction was also issued to the auction purchaser to deposit the entire balance auction amount and the possession was to be taken over and handed over to the auction purchaser on the balance amount having been paid with stipulation for police aid, if need arises. Simultaneously, the DRT was directed to pass the final orders on merits on the SA filed by the borrower under Section 17 of the said Act after giving opportunity to all concerned that order be transmitted to the High Court.
5. The appellant borrower assailed this order in the present proceedings. An interim order was passed on 06.12.2019 directing the private respondent not to create any third party interest in the property in question. The auction purchaser made a grievance on 27.07.2020 that despite the deposit of the amount he was being deprived of enjoyment in view of this interim order and thus the matter was directed to be taken up on 18.08.2020.
6. On the said date, it was recorded that to say the least it was an unusual order passed by the High Court taking into consideration the nature of relief prayed for! The submission of the learned senior counsel for the auction purchaser was also recorded that there was no difficulty in confining the relief to refund of the amount which was alleged to have been forfeited. However, he submitted that the subsequent amount deposited (with interest) as well as the earnest money should be returned to him in which eventuality the auction purchaser would not claim any interest in the properties. Since the Bank had already appropriated the amounts, they did not have much to say. The borrower and the guarantor, being husband and wife, sought time to obtain instructions whether they could deposit the aforesaid amount so that the Bank could get the same amount or something more than what they have and the auction purchaser could get refund of the amount as set out in the said order.
7. On 11.09.2020, the appellant sought two months' more time to come up with the money in terms of order dated 18.08.2020. Last opportunity was granted to the appellant to deposit the amount, accordingly the interest rate which would b
