V.V.S.Rao, J

The petitioner is a partner of the firm M/s.Seema Trading Company. The said firm availed credit facilities from the first respondent bank. The debt was secured by equitable mortgage created by the petitioner in respect of a flat situated in Diwandevdi, Hyderabad. The loan account became Non-Performing Asset (NPA). The first respondent, therefore, filed O.A.No.191 of 2002 before the Debts Recovery Tribunal (DRT), Hyderabad. While the same was pending, the Parliament enacted the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act, for brevity). The first respondent then issued notice dated 07.08.2002 under Section 13(2) of the Act demanding the borrower to discharge the debt within 60 days. Aggrieved by the same, the petitioner questioned the vires of the Act by filing W.P.No.21734 of 2003, which was dismissed on 21.04.2004 following the judgment of the Supreme Court in Union of India v Mardia Chemicals Limited (2004) 4 SCC 311. Immediately thereafter the petitioner instituted O.S.No.7134 of 2005 on the file of the Court of the Junior Civil Judge, City Civil Courts, Hyderabad, and obtained interim injunction against the first respondent from proceeding under the Act. After getting the said ad interim injunction vacated on 28.11.2005, the first respondent issued possession notice on 22.12.2005 under Section 13(4) of the Act. On the same day, the notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (the Rules, for brevity) was issued to the borrower informing that the property would be sold if the amount due was not repaid. This was followed by publication of auction sale notices in newspapers on 08.05.2006, 12.12.2006 and 20.11.2007. These facts are not disputed.

2. The bank issued yet another notice under Rule 8(6) on 21.11.2007 to the borrower for sale of the immovable secured assets by public auction. On 27.11.2007, the property was put to public auction and the second respondent became the highest bidder by quoting Rs.12,71,000/-. Assailing the same, the petitioner filed S.A.No.222 of 2007 under Section 17 of the Act, before the DRT. The said appeal was allowed on 09.06.2008. The first respondent then filed R.A.(S.A.).No.113 of 2010 before the Debts Recovery Appellate Tribunal (DRAT), Chennai. By impugned order, dated 26.07.2011, the DRAT allowed the same recording a finding that the bank complied with the Rules 8(6) and 9(1) and had not contravened any provisions of the Act.

3. The counsel for the petitioner relies on an unreported decision of the learned Single Judge of this Court in W.P.No.4914 of 2007, dated 12.03.2007 (P. Kanaka Durga Raju v Punjab National Bank, Zonal Office) and submits that the auction sale conducted before the expiry of the notice period of thirty days as contemplated under Rule 8(6) of the Rules is vitiated by illegality. He would point out that the borrower was issued notice under Rule 8(6) on 21.11.2007 giving thirty days time, but the auction was conducted on 27.11.2007 before the expiry of the notice period itself.

4. The Standing Counsel for the first respondent bank would submit that the auction was initiated against the borrower as well as the sureties on 07.08.2002 followed by the possession notice under Section 13(4) of the Act on 22.12.2005. He would urge that when the notice under Rule 8(6) was issued on 22.12.2005 itself, the sale conducted on 27.11.2007 is not vitiated by any contravention of law. He would further submit that the publication was made on three occasions before conducting the auction and Rule 9(1) must be construed as directory when a notice was served under Rule 8(6) on the borrower.

5. The two points that fall for consideration are in relation to the construction of Rules 8 and 9 of the Rules and the validity of the auction conducted by the first respondent on 27.11.2007 pursuant to the notice issued under Rule 8(6) and publication of auction sale notice in the news