High Court of Judicature at Madras
K. SUGUNA & M. DURAISWAMY, JJ.
M/s. P.M. Associates
Versus
IFCI Limited, rep by its Regional Manager & Others
W.P. Nos. 1937 & 4088 of 2012 & M.P. Nos. 1 & 2 of 2012 in W.P. No. 1937 of 2012 & M.P. Nos. 2 to 4 of 2012 & 1 of 2013 in W.P.No.4088 of 2012
Decided On : 23-08-2013
The Court held that the Authorised Officer under the SARFAESI Act has no authority to cancel the Sale Certificate issued in favor of the auction purchaser. The Court also held that the auction purchaser is entitled to get the Sale Certificate registered in their favor.
Fact of the Case:
The petitioner participated in an auction conducted by the respondents under the SARFAESI Act and submitted their bid for a sum of Rs.20,00,10,000/-. The petitioner was declared as the successful bidder and the Sale Certificate was issued in their favor on 16.09.2011. However, by letter dated 08.02.2012, the second respondent cancelled the Sale Certificate and returned the bid amount to the petitioner. The petitioner filed two writ petitions challenging the cancellation of the Sale Certificate and seeking a direction to the respondents to hand over physical possession of the properties.
Finding of the Court:
The Court held that the Authorised Officer under the SARFAESI Act has no authority to cancel the Sale Certificate issued in favor of the auction purchaser. The Court also held that the auction purchaser is entitled to get the Sale Certificate registered in their favor.
Issues: 1. Whether the Authorised Officer under the SARFAESI Act has the authority to cancel the Sale Certificate issued in favor of the auction purchaser? 2. Whether the auction purchaser is entitled to get the Sale Certificate registered in their favor?
Ratio Decidendi: The Court held that the Authorised Officer under the SARFAESI Act has no authority to cancel the Sale Certificate issued in favor of the auction purchaser. The Court also held that the auction purchaser is entitled to get the Sale Certificate registered in their favor. The Court relied on the following judgments: (1) (2007) 5 Supreme Court Cases 745 [B.Arvind Kumar Vs. Govt. of India and others] (2) AIR 2008 Madras 108 [K.Chidambara Manickam Vs. Shakeena & Ors.] (3) (2010) 6 Supreme Court Cases 193 [Eureka Forbes Limited Vs. Allahabad Bank and others]
Final Decision: The Court set aside the proceedings/letter dated 08.02.2012 on the file of the second respondent and directed the respondents 1 & 2 to hand over physical possession of the properties to the petitioner/auction purchaser within a period of three months from the date of receipt of a copy of this order. The Court also held that the petitioner/auction purchaser is entitled to get the Sale Certificate registered in their favor.
M. Duraiswamy, J.
1. Heard Mr.R.Shanmugam, learned counsel for the petitioner, Mr.P.S.Raman, learned senior counsel for the first respondent and Mr.AR.L.Sundaresan, learned senior counsel for the third respondent.
2. The petitioner has filed the writ petition in W.P.No.1937 of 2012 to issue a writ of mandamus directing the respondents to register the Sale Certificate dated 16.09.2011 executed by the respondents in their favour in respect of the movable and immovable properties and to effect changes in the revenue records to record the ownership of the properties sold to them and to hand over physical possession of the same under the SARFAESI Act.
3. The petitioner filed the writ petition in W.P.No.4088 of 2012 to issue a writ of certiorarified mandamus to call for the records in proceedings/letter dated 08.02.2012 on the file of the second respondent and to quash the same as ultra vires, unconstitutional and contrary to the provisions of the SARFAESI Act and Rule 7(2) of the Rules thereunder and against the principles of natural justice and consequently to direct the respondents 1 & 2 to hand over physical possession of the properties, movable and immovable as well as the Sale Certificate dated 16.09.2011 to them in respect of the entire properties and directing the respondents 1 & 2 not to allow anyone including the third respondent who claims to have clinched a "Settlement" with the respondents, not to deal with the properties or to carry on operation or business in the said properties.
4. Since the issue involved in both the writ petitions are common, both the writ petitions are disposed of by this common order.
5. The brief case of the petitioner necessary for the disposal of the writ petitions are as follows:
(i) According to the petitioner, on seeing the public auction notice dated 27.03.2012 published in Tamil Daily "Dinamalar" given by the respondents with regard to the sale of movable and immovable properties in Survey Nos.649 and 652/1 measuring 6.99 acres of land along with fittings, fixtures and furniture, they participated in the auction and submitted their bid for a sum of Rs.20,00,10,000/- and they were declared as successful bidder in the auction. The said Sale Consideration of Rs.20,00,10,000/- was paid by the petitioner by way of Demand Draft dated 12.09.2011. On 16.09.2011, the second respondent issued Sale Certificate in favour of the petitioner making them as the lawful owner of the entire properties both movables and immovable.
(ii) After the issuance of the Sale Certificate, the petitioner, being the bona fide purchaser in the public auction conducted by the respondents under the SARFAESI Act and they being the lawful owner of the said properties, have got every right to protect the properties. On issuance of Sale Certificate on 16.09.2011, the respondents are bound to register the said Sale Certificate in favour of the petitioner and they are also duty bound to effect changes in the revenue records to record the ownership of the properties in the name of the petitioner. But even after four months from the date of issuance of Sale Certificate, the respondents have not also handed over the physical possession of the properties.
(iii) According to the petitioner, the Sale Certificate was issued under Rule 7(2) and Rule 9(6) of the Security Interest (Enforcement) Rules 2002 read with Section 13(12) of the SARFAESI Act and Rule 8 & 12 of the Rules. Further, according to the petitioner, as per Rule 7(2) of the Security Interest (Enforcement) Rules 2002, the sale in favour of the petitioner has become final and the petitioner Company has become the prima facie title holder of the entire properties both movables and immovable. Further, according to the petitioner, the Sale Certificate dated 16.09.2011 has become final. As per the Sale Certificate dated 16.09.2011, the third respondent, the defaulted borrower have no right to remove any of the properties from the purchased properties. The respondents
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