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2018 Supreme(Mad) 875
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
T.S. SIVAGNANAM, R. THARANI, JJ.
Indian Bank, Tanjore In Branch, Rep. by its Branch Manager/Authorized Officer & Another - Appellant
Versus
The District Collector, Office of the District Collector, Thanjavur & Others - Respondent
W.P(MD)Nos. 22573 of 2017 & 1514 of 2018 & W.M.P(MD)Nos. 1597, 1598 & 4667 of 2018
Decided On : 18-04-2018
D. Muruganandam, Additional Government Pleader, M. Mahaboob Athiff, M/s. Ajmal Associates, P.V. Muralidar, S. Sethuraman, Naveen Kumar Murthi, Advocates.
Headnote:
SARFAESI Act - Auction Sale - Section 14 - 13(3A) - 13(2) - 13(4)(6)(8) - 15 - 17 - 18 Rule 8(9) of SARFAESI Rules and section 55 of the Transfer of Property Act - The court discussed the provisions of the SARFAESI Act, including Section 14, 13(3A), 13(2), 13(4)(6)(8), 15, 17, 18 Rule 8(9) of SARFAESI Rules and section 55 of the Transfer of Property Act, and their interpretations. The court emphasized the objective of the SARFAESI Act, which is to enable secured creditors to realize long-term assets, manage liquidity problems, and improve recovery by exercising powers to take possession of securities and sell them. The court also highlighted the importance of speedy recovery of debt and the rights of secured creditors to take physical possession after issuing sale certificates.
Fact of the Case:
The case involved an auction sale conducted by the Indian Bank in respect of a property owned by Tmt.G.Anusya. The secured creditor filed a petition to direct the District Collector to implement orders under Section 14 of the SARFAESI Act, while the borrower challenged the order passed by the District Collector and sought to prevent the bank from taking over physical possession of the property.
Finding of the Court:
The court found that the borrower's attempts to stall lawful procedures were feeble and noted the borrower's failure to comply with conditional orders. The court held that the borrower had availed multiple loans from the secured creditor, failed to repay, and did not take effective steps to liquidate the dues. The court also emphasized the rights of secured creditors to take possession of securities and sell them for speedy recovery of debt.
Issues: The issues involved the borrower's challenge to the auction sale and the District Collector's authority to implement orders under Section 14 of the SARFAESI Act after the sale was completed.
Ratio Decidendi: The court's decision was based on the borrower's failure to comply with conditional orders, the objective of the SARFAESI Act to enable secured creditors to realize long-term assets and improve recovery, and the rights of secured creditors to take physical possession after issuing sale certificates.
Final Decision: The court directed the District Collector to issue a fresh notice to the borrower, giving them ten days to vacate the premises, and permitted the authorities to take over actual physical possession of the property and hand it over to the secured creditor. The court dismissed the borrower's petition and the connected Miscellaneous Petitions.
T.S. Sivagnanam, J.
1. Since both the writ petitions pertain to the same subject matter, namely, an auction sale conducted by the Indian Bank in respect of a property owned by Tmt.G.Anusya, the writ petitions were heard together and are disposed of by this common order.
2. The petitioner in W.P(MD)No.22573 of 2017 is M/s. Indian Bank, Thanjavur Junction Branch and the petitioner in W.P(MD)No.1514 of 2018 is Tmt.G.Anusya. The sixth respondent in W.P(MD)No.1514 of 2018 is the auction purchaser of the property brought for auction by the Indian Bank. The said auction purchaser has availed a loan from the City Union Bank Limited, Kumbakonam, which has been impleaded as the fifth respondent in W.P(MD)No.1514 of 2018. The other respondents in both the cases are the officials of the State Government, namely, District Collector, Thanjavur District, Revenue Divisional Officer, Thanjavur District and Tahsildar, Thanjvur Taluk. In this common order, the parties shall be referred to as the secured creditor, the borrower and auction purchaser.
3. The secured creditor has filed W.P(MD)No.22573 of 2017 to direct the District Collector, Thanjavur District, to implement his order, dated 22.06.2017 and the Revenue Divisional Officer, Thanjavur District, to implement his order, dated 28.06.2017, which is consequent to the order passed by the District Collector, Thanjavur District. The orders passed by the District Collector is under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [hereinafter referred to as 'SARFAESI Act'], extending assistance to the secured creditor to take possession of the property, which was sold in public auction and purchased by the auction purchaser.
4. The borrower, Tmt.G.Anusya, has filed W.P(MD)No.1514 of 2018, challenging the order passed by the District Collector, dated 22.06.2017 in exercise of his power under Section 14 of the SARFAESI Act and nominating the Revenue Divisional Officer, to take possession of the property immediately and hand over the same to the secured creditor.
5. Mr.M.Mahaboob Athiff, learned counsel appearing for the borrower, while assailing the correctness of the order passed by the District Collector, submitted that the secured creditor had violated Section 13(3A) of the amended SARFAESI Act, vide amendment made in 2004 and this defect is a cause to the root of the matter, vitiating the entire proceedings. Further, the learned counsel submitted that the property, which was sold in public auction, was grossly undervalued and in utter disregard and sold to the auction purchaser, who was the single bidder, in violation of law laid down by this Court in several decisions. Further, it is submitted that the District Collector has no jurisdiction to invoke his power under Section 14 of the Act after the sale was completed.
6. The learned counsel referred to the typed set of documents, earlier orders passed by the Court and the interim direction issued by this Court in W.P(MD)No.1514 of 2018 and submitted that the proceedings of the District Collector, deserve to be set aside.
7. The learned counsel appearing for the secured creditor submitted that the borrower had challenged the measures initiated by the secured creditor under the provisions of the SARFAESI Act, by approaching the Tribunal and the challenge to the proceedings has ended against the borrower, as the appeal filed before the Debts Recovery Appellate Tribunal was dismissed.
8. It is further submitted that the property was brought for auction after strictly following the procedures under the Act and it has been sold for the best price and inspite of the sale having been confirmed in favour of the auction purchaser and sale certificate issued on 24.03.2017 and registered before the concerned Sub Registrar, till date the secured creditor is unable to hand over actual physical possession of the property to the auction purchaser and therefore, they have been compel
