Point of Law: Court agree with her argument that service of notice as envisaged under Section 13(2) of Act and Security Interest Enforcement Rules are mandatory and any infraction in issuance and publication of notice vitiates whole action.

JUDGMENT :

The order dated 15.11.2021 in writ petition No.201415/2021 has given rise to these two writ appeals which have been disposed of by a common judgment.

2. The first respondent in the appeals was the writ petitioner. For the sake of convenience the writ petitioner is referred to as the borrower, the appellant in W.A.No.200178/2021, as auction purchaser and the appellant in W.A.No.200194/2021, as bank.

3. The default committed by the borrower in repaying the loan that he had obtained from the bank resulted in collateral security created in land bearing Sy.No.77 measuring 17 acres 39 guntas situated at the village Malagatti, Taluk Aurad, District Kalaburagi ('property' for short) being brought to auction by the bank under Section 13(4) of The Securitization And Reconstruction of Financial Assets And Enforcement Of Security Interest Act, 2002 (‘SARFAESI ACT’ for short). The borrower filed the writ petition seeking a writ of certiorari to quash the sale notice dated 03.06.2021 published in the news paper on 11.06.2021 as per Annexure-H and e-mail communication dated 23.07.2021 issued by the bank as per Annexure-L. He also sought a writ of mandamus to the bank to consider his representation dated 20.07.2021. The learned Single Judge by order dated 15.11.2021, allowed the writ petition canceling the sale deed executed by the bank in favour of the auction purchaser and directed the bank as also the auction purchaser to execute such documents as are required to annul the sale deed in respect of aforementioned property. The learned Single Judge also gave other directions as may be necessary for appropriating the amount that the borrower owed to the bank from the deposit made by him in the High Court and to take such other steps for completing the process of re-transfer of the property from the auction purchaser to the borrower. Aggrieved by the order of learned Single Judge, these two writ appeals are filed.

4. The case posited by the borrower in the writ court was that he availed loan of Rs.59,75,000/- from the bank on 26.10.2007 for construction of a godown in the property referred to above. The property was offered as collateral security for the loan by executing a mortgage by deposit of title deeds. It was agreed between him and the bank that the loan should be repaid in 132 monthly installments spread over for a span of 11 years. He was paying the installments regularly. Without issuing any notice to him, the property was brought to sale. The bank claimed to have taken symbolic possession of the property in the year 2015 itself. In fact on 05.11.2018, he made payment of Rs.9,00,000/- and on 19.11.2018, he made payment of Rs.6,50,000/-. All these payments were subsequent to notice said to have been given in the year 2015 itself for taking possession. All of a sudden in the year 2021, without issuing fresh demand notice, the bank issued a letter to him intimating that the property was sold in auction on 29.06.2021 for Rs.3,30,00,000/- to M/s Talampalli Venture Private Limited i.e., the auction purchaser. This letter dated 05.07.2021 was served on him personally on 20.07.2021. In the said letter it was mentioned that the sale notice had been issued on 02.06.2021.

5. The borrower alleged in the writ petition that in-fact he was not issued with any notice before taking over possession and before conducting the auction. His main contention was that the property could not have been sold in auction under the provisions of SARFAESI Act as no action under its Section 13(4) could be taken in respect of an agricultural land. On 20.07.2021, the borrower wrote a letter to the bank expressing his desire to clear entire outstanding dues. He had made ready Rs.80,00,000/- for clearing the dues. But he received a reply from the bank that the auction purchaser had already paid Rs.3,30,00,000/- to it and thereby his loan account had been closed appropriating his dues from the sale proceeds and he should come over to bank and collect the balance of