Introduction:

A company borrows, and another company mortgages its property to secure the loan. Two NRI directors, wife and husband, own both the companies. Default committed, the Bank brings four secured properties for sale. The sale becomes the bone of contention.

2. The companies contend that the upset price in auction is ludicrously low; they also maintain that one property answers the description of agricultural land. So S.31 of the SARFAESI Act bars its sale. We will examine both these contentions.

Facts:

3. The 1st and the 2nd petitioners are the Private Limited Companies. The 3rd petitioner, an individual, is a Director in both the Companies. In fact, both the Companies are closely held family ventures. Of the respondents, the first respondent is the Bank; the second, the purchaser who purchased two of the four secured assets; and the third, the Tribunal.

4. The 1st petitioner—M/s.Sharada Flour Products Pvt. Ltd—initially took two term loans of Rs.6 crores and Rs.1.5 crores, besides a cash credit facility for Rs.6.5 crores. When the loans were renewed, the cash credit was brought down to Rs.5.5 crores. When Sharada took the loan, the second petitioner— M/s.Thekkemukkal