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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
KRISHNA S.DIXIT, G.BASAVARAJA
S.V. Ramaswamy, S/o. Late. Vijeraghavan – Appellant
Versus
H. and M. Infrastructures (Partnership Firm), Rep By Its Partner Mr. Hanumantharayappa, S/o. Hanumegowda – Respondent
| Table of Content |
|---|
| 1. petitioners' argument on auction rules (Para 3) |
| 2. respondents' counter-argument (Para 4 , 5) |
ORDER :
Petitioners being the guarantors to the 2003 loan availed by the 4th respondent herein are knocking at the doors of Writ Court for assailing the Debt Recovery Appellate Tribunal’s order dated 18.07.2024, whereby appeal in S.A.No.4/2016 filed by the Respondent Nos.1 & 2 herein came to be allowed by setting aside Debt Recovery Tribunal’s order dated 28.4.2023 entered in S.A.No.146/2020. The DRT-II having favoured petitioners’ said S.A., had set aside the Sale Certificate with a direction to refund the sale consideration with interest to the purchasers.
2.1 4th respondent vide loan transaction dated 16.06.2003 had borrowed a certain sum of Rs.3,22,00,000/- (Rupees Three Crore & Twenty Two Lakh) only, in the form of Packaging Credit and Guarantees (Inland and Foreign), from the Bank of India. Petitioners happen to be the guarantors and had provided their property by way of mortgage for securing the repayment of loan. Because of failure of debt servicing, Sale Notice qua petitioners’ property came to be issued on 5.12.2015. Petitioners filed S.A.No.4/2016 challenging the
The bank cannot negotiate a sale with the second highest bidder without conducting a fresh auction if the highest bidder fails to comply with auction conditions.
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
Auction sale under SARFAESI Act upheld; simultaneous civil proceedings do not invalidate the completed transaction, and allegations of undervaluation found unsubstantiated.
The High Court cannot entertain a writ petition under Article 226 when an effective alternative remedy exists under the SARFAESI Act, emphasizing the need for exhaustion of statutory remedies.
The main legal point established in the judgment is the interpretation of Rule 9(4) and 9(5) of the Security Interest (Enforcement) Rules, 2002, highlighting the requirement for the purchaser to pay ....
The court reinforced that compliance with statutory notice requirements and fair valuation is essential in property auctions under the SARFAESI Act to protect borrower rights.
The court affirmed that procedural infractions in auction proceedings under the SARFAESI Act do not invalidate the auction unless they result in injustice.
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