Point of Law : Jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority.

ORDER :

1. The petitioner is before this Court calling in question sale certificate dated 10-10-2014 issued by the Authorised Officer of the 1st respondent/Punjab National Bank (‘the Bank’ for short) in favour of the petitioner and consequently seeks a mandamus for refund of a sum of Rs. 30,69,08,217 paid by the petitioner towards purchase of schedule property along with interest and expenses incurred by it.

2. Heard Sri Venkatesh P. Dalwai, learned counsel appearing for the petitioner, Sri Vikram Huilgol, learned senior counsel appearing for respondents 1 and 2 and Sri Ashok Haranahalli, learned senior counsel appearing for respondent No. 4.

3. Facts, in brief, germane are as follows:

One Madhava Iyengar was the absolute owner of property in Sy.No. 19/A of Peenya Village, Yeshwanthpur Hobli, Bangalore North Taluk. He, at the relevant point in time, gets the property converted from agriculture to residential purposes. The property is what is described in the schedule to the petition. Respondents 1, 2 and 3/Authorized Officer of the Bank, Senior Manager of the Bank and one Smt. Poonam Lakhani claim that Madhava Iyengar had executed a General Power Attorney (‘GPA’ for short) in favour of one T.Selvaraju in respect of the property in the year 1989. On 19-01-2009 Madhava Iyengar represented by the GPA holder Mr.T.Selvaraju is said to have executed a sale deed in favour of the 3rd respondent/Smt. Poonam Lakhani in respect of the schedule property. On 20-01-2010 Mr. T.Selvaraju executes a rectification deed in respect of the deed that was executed on 19-01-2009.

4. M/s Awesome Clothing Company Private Limited (‘the Company’ for short) of which the 3rd respondent is the Director and one of the guarantors approached the 2nd respondent/Bank seeking finance of Rs. 15/- crores for business development. The Bank sanctions the finance as sought in the month of March 2010 drawing up certain statutory conditions. The 3rd respondent was also one of the guarantors to the loan availed by the Company. Therefore, the 3rd respondent creates equitable mortgage by deposit of title deeds of the property in favour of the Bank as security to the loan. The documents that were deposited in exchange of loan were the GPA executed by Madhava Iyengar in 1989, sale deed dated 19-01-2009 which was executed in favour of the 3rd respondent by the GPA holder, rectification deed dated 20-01-2010 and a deed of confirmation dated 28-05-2011.

5. The 3rd respondent defaults in repayment of loan so advanced by the Bank. It is, therefore, the Bank institutes proceedings under the SARFAESI Act and issues e-auction sale notice on 05-08-2014 inviting offers from desired for sale of the mortgaged asset for recovery of money due from the Company. The total debt as on 31-06-2014 was Rs. 21,29,50,462.00. The reserve price was fixed at Rs. 12.71 crores. The notice of e-auction depicted that the 1st respondent/Bank had already taken symbolic possession of the property on 31-01-2013; that it has a right to sell the same under the SARFAESI Act, 2002 and therefore, e-auction notice was being issued.

6. The sale notice indicated that the property would be sold on “as is where is basis, as is what is basis and whatever there is basis”. The petitioner being desirous of securing the property participated in the auction. The petitioner visited the site and it was assured by the Bank regarding clear and marketable title and thereafter the petitioner participated in the auction, emerged as successful bidder and paid a sum of Rs.15.21 crores towards the auction price of the property. The petitioner claims to have borrowed all the money from NBFC to fund auction purchase on certain rate of interest. The Bank executed a sale certificate on 10-10-2014 in favour of the petitioner acknowledging Rs. 15.21 crores towards auction sale price of the property and hands over possession of the property. A