1. The first petitioner is a company engaged in manufacture of ‘Centrifuged Latex’ and ‘Skim Rubber Crepe’. The second petitioner is the Managing Director of the company. The first petitioner company availed various credit facilities from the 1st respondent Bank, for which the stock in trade, plant and machinery, and book debts of the company were hypothecated, along with collateral security of equitable mortgage created with respect to various items of immovable properties belonging to the petitioners.

2. The issue involved in this writ petition relates to sale of immovable property, conducted pursuant to Ext.P3 proclamation. Pursuant to proceedings initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) respondents 1 & 2 had issued a demand under Section 13(2) of the Act, as per Ext.P1, dt.10.10.2009. According to the petitioners, on receipt of Ext.P1, they raised objections through various representations, inter alia seeking re-structuring of the credit facilities and also contending that certain properties described as schedule B and C of the notice are agricultural lands which is exempted from the purview of the SARFAESI Act under Section 31(1). But the objections were rejected, and invoking Section 14(1) the 2nd respondent had approached the Chief Judicial Magistrate Court. The property in question was taken over possession by issuing Ext.P2 notice under Rule 8(1) of the Security Interest (Enforcement) Rules 2002. Thereafter the respondents 1 and 2 had conducted sale of the immovable property which is having an extent of 2.70.74 Hectares, situated in Kovvappally Village in Kanjirappilly Taluk along with the factory building, plant and machinery contained therein.

3. The sale in question was conducted for a sum of Rs.2,51,00,000/-. As per Ext.P3 sale notice, the reserve price fixed for the property in question is a sum of Rs.2,15,00,000/-. According to the petitioner, the valuation of the property in question is Rs.4,15,72,260/- as per Ext.P4 valuation report prepared by an independent valuer, as on 1.8.2005. It is stated that Ext.P4 valuation report was prepared at the behest of the 1st respondent Bank while it took over the accounts of the petitioner company from Union Bank of India, Kottayam branch. The petitioner had also produced another valuation report, Ext.P5, prepared at the instance of Andhra Bank, with whom the petitioners had proposals for taking over the accounts. As per Ext.P5, valuation with respect to the property having an extent of 2.70.74 Hectares with factory building, plant and machinery is Rs.7,12,65,000/-. Therefore, contention of the petitioner is that the sale price of Rs.2,51,00,000/- at which the bid was finalized in favour of the 4th respondent, is only a paltry sum.

4. The sale conducted on 29.9.2010 is inter alia challenged on the ground that it is vitiated by a material irregularity of lack of notice to the petitioners who are the borrowers, as mandated under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. Contention of the petitioner is that as per Rule 8(6) it is mandatory that notice should be issued to the borrower with respect to the various steps adopted under Rule 8(5), such as, obtaining of valuation of the property through approved valuer, fixing of reserve price of the property, and fixing of the mode of sale. But no such notice was issued in the case at hand and hence the sale is liable to be set aside, is the contention.

5. In the counter affidavit filed by respondents 1 & 2 it is stated that, after taking over possession of the property, a valuation report was obtained from an approved valuer, who reported that the market price of the property is Rs.2,14,86,395/-. On that basis the reserve price was fixed at Rs.2,15,00,000/-, in consultation with the secured creditor. It is further stated that the sale was conducted after publication of notice in two dailies. The sale was fixed