A bank cannot proceed with auction proceedings after issuing a one-time settlement proposal unless it has revoked the proposal and the acceptance period has expired.

ORDER :

1. Petitioner is before the Court seeking for the following reliefs:

i. Issue a writ of certiorari or any other writ or order and quash the letter SBI/SAMB/LCLO-5/SILKTEX/2020-21/203 dated 08.09.2020-Annexure-Y issued by R2;

ii. Issue a writ of mandamus or any other writ or order and direct the Respondent Bank to refund the excess amount of Rs.4,05,93,277/- along with interest & damages to the Petitioner.

iii. Issue a writ of mandamus or any other writ or order and direct the Respondent Bank to compensate the Petitioner for missing inventories.

iv. Pass such other order as this Hon’ble Court deems fit in the interest of justice and equity.

2. The Petitioner claims to be a public limited company registered under the provisions of the Companies Act, 1956, being in the business of manufacturing and exporting silk-blended fabrics and apparel. The Petitioner had availed of financial facilities from the overseas branch of Respondent No. 1, State Bank of India, as regards which the Petitioner had mortgaged immovable properties owned by the company in favour of the Respondent Bank, as also hypothecated certain plant and machinery.

3. The Petitioner was unable to repay the amount in favour of Respondent -Bank allegedly due to poor market conditions, pursuant to which Respondent No.3 had issued notice on 18.07.2015 under subsection (2) of Section 13 of the SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT , 2002, [hereinafter referred to as ‘Sarfaesi Act’]. Pursuant to which possession notice having been issued on 16.09.2015, a notice under subsection (4) of Section 13 of the Sarfaesi Act was issued, taking symbolic possession.

4. Thereafter, the Respondent issued an e-auction sale notice dated 14.12.2015, fixing the date of auction as 19-01.2016. The auction not being successful, another e-auction notice was issued on 10.02.2016, which was also unsuccessful for want of bidders.

5. A further notice of intimation of sale was issued on 16.04.2016 of movable and immovable properties, as regards which a e-auction sale notice had been issued on 13.04.2016, indicating the date of auction on 18.05.2016. The said auction was also not held on account of a lack of bidders. Respondent-Bank took physical possession of the entire property, including the factory premises, plant and machinery under subsection (4) of Section 13 of the Sarfaesi Act.

6. On 14.08.2018, the Bank informed the Petitioner that State Bank of India has come out with a one- time settlement scheme 2018 [OTS] and the Petitioner would be eligible to take benefit of the OTS scheme. In the said letter, a one-time settlement for an amount of Rs.6,23,31,720/-, was given to the Petitioner with the Petitioner having time until 30.09.2018 to communicate its acceptance of the offer and pay 5% of the OTS amount, namely Rs.31,16,586/-.

7. In the meanwhile, on 30.08.2018, the Bank issued a statutory notice of 15 days under Rule 6(2) and Rule 8(6) of the Security Interest Bracket (Enforcement) Rules, 2002, for the sale of movable and immovable assets, with the auction scheduled to be held on 18.09.2018. Immediately on receipt of the notice, the Petitioner visited the respondent-Bank to inform them that it intended to avail the benefit of the OTS scheme and that they would submit their acceptance letter with initial payment of Rs.31,16,586/- within the period as prescribed in the OTS letter. These amounts were deposited on 28.09.2018. However, on 16.10.2018, Respondent Bank sent an email containing an attachment, a letter dated 12.10.2018, indicating that the Respondent had proceeded with the e-auction sale, the prop