Point of Law : Court while it is true that the statute does mandate and envisage the deposit being made in accordance with the provisions made in sub-rule (3), this Court cannot shut its eyes to the unprecedented situation which came to prevail on account of the pandemic outbreak.

JUDGMENT :

Yashwant Varma, J.

1. This petition has been preferred challenging the orders of 22 April and 10 June 2021 passed by the respondent Financial Institution, [FI]. By the order of 22 April 2021, the respondent FI had proceeded to apprise the petitioner here that consequent to a failure on its part to pay the balance 15% of the reserve sale price in accordance with the timelines fixed under Rule 9(3) of the Security Interest (Enforcement) Rules, 2002, [2002 Rules], it had taken a decision to cancel the sale of the mortgaged property and to forfeit the earnest money deposited by the petitioner amounting to Rs.41.80 lakhs. The communication further sets out the decision of the respondent to refund the amount of Rs.62.75 lakhs which had been additionally deposited. The 10 June 2021 order which is assailed, is in substance, a sale notice which had come to be issued in respect of the mortgaged property for which the petitioner had submitted a bid. For the purposes of disposal of the present writ petition the following essential facts would merit being noted.

2. The proceedings for the sale of the mortgaged property commenced pursuant to a notice issued on 26 February 2021. The reserve price which was fixed by the Bank was of Rs. 4,17,91,000/-. The date of the auction was fixed for 15 March 2021. The petitioner here submitted a bid of Rs. 4.18 crores and as per the terms of the sale notice deposited 10% of the bid amount amounting to Rs. 41.80 lakhs on 12 March 2021. This deposit represented the earnest money as required to be furnished in terms of the sale notice. In the e-auction which was conducted on 15 March 2021, the bid of the petitioner was found to be the highest and was ultimately accepted by the respondent Bank. The petitioner asserts that 15 and 16 March 2021 were closed on account of a bank holiday being the ensuing weekend. All banks and financial institutions are stated to have remained non-functional on account of a strike call given by the Employees Union. Resultantly banks did not function on 15 and 16 March 2021. These facts are not disputed by the FI.

3. Since the petitioner had already deposited 10% as earnest money, it was obliged to furnish the balance 15% of the total amount payable in terms of Rule 9(3) by the next working day which undisputedly was 17 March 2021. The petitioner contends that on account of the Covid-19 pandemic which broke out across the country, it’s statutory obligation came to be seriously impeded. It is submitted that various monies which were expected by the petitioner also could not reach them and came to credited only on 20 March 2021. Resultantly, the petitioner was able to deposit a sum of Rs. 30 lakhs only on 17 March 2021. The balance amount of Rs. 32,75,000/- which was payable on 17 March 2021 was ultimately deposited on 18 March 2021. It is this default of one day which forms and constitutes the basis for the impugned action of the respondent Bank.

4. When the writ petition was initially entertained, a learned Judge on 25 June 2021, taking note of the submissions advanced, had by a detailed order provided that the respondents would maintain status quo with respect to the property in question.

5. Upon exchange of pleadings and when this writ petition was taken up for final disposal, a preliminary objection was raised by Ms. Gupta, learned counsel appearing for the respondent Bank, who contends that the jurisdiction of the Court under Article 226 of the Constitution could not have been invoked till such time as the petitioner had availed of the alternative remedy as embodied in Section 17 of the SARFAESI Act. It was her submission that it is well settled in law that the mandate of Section 17 cannot be short circuited, and the jurisdiction of the Court under Article 226 of the Constitution invoked directly.

6. The Court finds itself unconvinced by this submission bearing in mind that the Court had by way of the original interim order entertained the petition and directed parties to