Court ruled that non-compliance with SARFAESI rules voided sale; observed that the rights of borrowers can be waived through their conduct and failure to assert them timely.

JUDGMENT :

Ajay Kumar Gupta, J.

1. Dr. Tushar Kanti Karmakar, purchaser of mortgaged property and Secured Creditor, State Bank of India assailed the impugned Judgment and Order dated 11th December, 2018 passed by Single Bench of this High Court in W.P. No. 11203(W) of 2010 (Shilabati Hospital Private Limited & Ors. Vs. State Bank of India & Ors.) by filing two separate appeals being MAT No. 56 of 2019 and MAT No. 118 of 2019 respectively.

2. By the said impugned judgment and order, the Single Judge allowed the Writ Petition, inter alia, on the following terms:

“.... the Bank acted without jurisdiction in selling the immovable property concerned without adhering the Rule 8 (8)of the Security Interest (Enforcement) Rules 2002.

Rule 8 (8) of the Security Interest (Enforcement) Rules, 2002 is as follows:

“(8) Sale by any method other than public auction or public tender shall be on such terms as may be settled between the parties in writing.”

Rule 8 (8) of the Security Interest (Enforcement) Rules, 2002 requires the Bank, to enter into an agreement, in writing with the parties affected by the property concerned, to allow the Bank to sell such property other than by means of a public auction. In the facts of the present case, the Bank was required to take the written consent not only of the borrower, but also of the guarantor and the person claiming title over the property to sell such property by a method other than public auction. The Bank did not do so. Therefore, the Bank did not adhere to the provisions of the (8) of the Security Interest (Enforcement) Rules, 2002. The auction of the Bank is therefore, wholly without jurisdiction.

The Bank is an authority within the meaning of Article 12 of the Constitution of India. Any action of such authority within the meaning of Article 12 of the Constitution of India if found to be without jurisdiction can be assailed under Article 226 of the Constitution of India. The writ petition of 2010 and is pending for a considerable period of time. It would be improper to relegate the parties to avail of the remedies under the Act of 2002 at this stage of the proceeding and this late.”

3. The Appellant, Dr. Tushar Kanti Karmakar further assailed two other impugned interlocutory orders dated 30.09.2020 and 02.12.2020 passed by the Single Bench of this High Court in another writ petition filed by the writ petitioners being W.P.A No. 6046 of 2020 (Shilabati Hospital Private Limited & Ors. Vs. State Bank of India & Ors.) by way of filing two separate appeals being MAT No. 702 of 2020 and MAT No. 815 of 2020 respectively.

4. By the first impugned order dated 30.09.2020, the Single Judge passed interim order, inter alia, as under:

“The private respondent and/or its men, agent, assigns are restrained from dealing with and/or disposing of and/or alienating and/or creating any third party right or changing the nature and character of the property, which was sold to the private respondent and the sale has been set aside by order dated 11th December, 2018, until the disposal of the present writ petition.

The private respondent shall maintain a separate account on and from 1st October, 2020 till the disposal of the appeal on account of the income generated by operating the clinic and/or the hospital at the property in question. The Monthly accounts for each month shall be produced before the court at the time of final hearing of the writ petition when the Bank and the Petitioners Shall be at liberty to seek inspection thereof.”

5. Similarly, by the second impugned order dated 02.12.2020, the Single Bench pa