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2022 Supreme(P&H) 892
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
M.S. Ramachandra Rao, Jasjit Singh Bedi, JJ.
Sh. Kapil Kumar & Anr. – Appellants
Versus
Oriental Bank Of Commerce, The Mall, Kapurthala Through Its Authorized Officer & Ors. – Respondents
CWP No. 18724 of 2017 (O&M)
Decided On : 27-05-2022
Mr. Aalok Jagga, Advocate, for the Appellant; Mr. P.S. Sobti, Advocate, Mr. Akshay Bhan, Senior Advocate assisted by Mr. Shaurya Khanna, Advocate, for the Respondent.
The main legal point established in the judgment is the right of redemption available to the borrowers before the issuance of a sale certificate in favor of Auction Purchasers, and the sufficiency of interest as compensation for the period the amount was in the Bank's custody.
Headnote:
Writ Petition - Sale of Secured Asset - Section 60 of the Transfer of Property Act, 1882, CWP No.6402 of 2019 dt.23.12.2021 (DB) PHHC, Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247, Gajraj Jain v. State of Bihar, (2004) 7 SCC 151, M/s L.K. Trust v. EDC Ltd. and Others, (2011) 6 SCC 780, Allokam Peddabbayya and another v. Allahabad Bank and others, (2017) 8 SCC 272 - The court discussed the right of redemption available to the borrowers before the issuance of a sale certificate in favor of Auction Purchasers, and such a right would continue till execution of a conveyance. The court set aside the sale notice conducted by the respondent No.1-Bank of the petitioners' secured asset and directed the bank to restore the Title Deeds of the secured asset to the petitioners. The court also set aside the restriction imposed on the petitioners not to alter the nature of the property or create any third party rights against the property. The respondent No.1-Bank was directed to pay interest to the respondent No.7-Auction Purchaser from the respective dates of deposit of the bid amount till the refund was made.
Fact of the Case:
The Writ Petitioners sought to quash the sale notice of their property and set aside the sale certificate issued to the Auction Purchaser, contending that they were ready to clear off the loan and any coercive action such as sale was not required. The court recorded the contentions of the writ petitioners and directed the sale not to be confirmed. The matter underwent several adjournments, and the court directed the petitioners to deposit the outstanding amount without prejudice to the rights and issues raised.
Finding of the Court:
The court found that the right of redemption would be available to the borrowers before the issuance of a sale certificate in favor of Auction Purchasers, and such a right would continue till execution of a conveyance. The court set aside the sale notice and directed the bank to restore the Title Deeds of the secured asset to the petitioners. The court also set aside the restriction imposed on the petitioners not to alter the nature of the property or create any third party rights against the property. The respondent No.1-Bank was directed to pay interest to the respondent No.7-Auction Purchaser from the respective dates of deposit of the bid amount till the refund was made.
Issues: The issues involved the quashing of the sale notice and the sale certificate, the right of redemption available to the borrowers, and the compensation sought by the Auction Purchaser.
Ratio Decidendi: The court held that the right of redemption would be available to the borrowers before the issuance of a sale certificate in favor of Auction Purchasers, and such a right would continue till execution of a conveyance. The court also rejected the plea of the Auction Purchaser for higher compensation, stating that interest would suffice as compensation for the period the amount was in the Bank's custody.
Final Decision: The Writ Petition was disposed of, setting aside the sale notice conducted by the respondent No.1-Bank, directing the bank to restore the Title Deeds of the secured asset to the petitioners, and setting aside the restriction imposed on the petitioners. The respondent No.1-Bank was directed to pay interest to the respondent No.7-Auction Purchaser from the respective dates of deposit of the bid amount till the refund was made.
JUDGMENT
M.S. Ramachandra Rao, J. - In this Writ Petition, the Writ Petitioners had sought for quashing of the sale notice dt.16.05.2017 (Annexure P-16) by which the property of the petitioners-guarantors was put to sale, and also to set aside the sale certificate issued to the Auction Purchaser (respondent No.7) contending that he was ready and willing to clear-off the loan of the Bank, and any coercive action such as sale was not required.
Events after filing of this Writ Petition.
2. While issuing on 03.07.2017, this Court recorded the contentions of the writ petitioners that the total amount due as on that date is 4.7 Crores, and writ petitioners are ready to liquidate the entire amount along with future interest within three months, and that they would show their bona fides by depositing Rs. 2 Crores within one week from that day. The Court also directed that the sale shall not be confirmed meanwhile. The Auction Purchaser was also impleaded as respondent No.7 in the Writ Petition.
The order dt.11.7.2017 of this Court
3. When the matter was again listed on 11.07.2017, the Court took notice of:
(i) the fact that a Demand Draft amounting to Rs. 2 Crores was handed over to counsel for respondent No.1-Bank in the Court;
(ii) the contention of counsel for respondent No.7 that it had deposited the entire auction amount of Rs. 6,04,00,000/-, and that it had a right vested in it to own the property which was put up for sale;
(iii) plea of petitioners that though the sale was not confirmed, yet respondent No.7 had intentionally deposited the entire amount of bid only to create an equity in its favour which does not exist;
(iv) the contention counsel for the respondent No.1-Bank that the petitioners were recalcitrant and obdurate borrowers who have not paid dues of respondent No.1-Bank, and that if relief is granted in the Writ Petition, it would send a wrong signal to the purchasers in auctions made by the Banks;
4. It then held on 11.7.2017 that the matter requires adjudication, and the sum of Rs. 2 Crores paid by the petitioners be adjusted by respondent No.1-Bank against the amount owed by the petitioners. It further directed to deposit the money paid by respondent No.7 in escrow account interest bearing short term fixed deposit. It then adjourned to matter to 28.07.2017.
The order dt.22.1.2018 of this Court
5. Subsequently, matter underwent some adjournments and then on 22.01.2018, this Court directed counsel for respondent No.1-Bank to apprise the actual unpaid loan amount as on that date. It also directed the counsel for respondent No.7-Auction Purchaser to furnish the details of the interest liability and cost amount incurred so far by him. It mentioned
"the Court will also consider the prayer of respondent No.7 to award him some compensation in case the petitioners' claimed is accepted."
The order dt.27.3.2018 of this Court
6. On the next date of hearing i.e. 27.03.2018, the Court was informed that a letter dt.19.03.2018 was issued by respondent No.1-Bank informing the petitioner that the outstanding dues against them are to the tune of Rs. 2,76,29,606/-.
7. Therefore, while adjourning the matter to 30.04.2018, the Court directed the petitioners to deposit the said amount without prejudice to the rights and issues which have been raised. It also directed respondent No.1- Bank to refund the amount deposited by respondent No.7-Auction Purchaser alongwith interest as may be payable in such transactions, accrued upto the date of release, but without prejudice to rights of respondent No.7-Auction Purchaser.
The order dt.30.4.2018 of this Court
8. On the adjourned date i.e. 30.04.2018, it was reported to this Court that the petitioner had also deposited the balance loan dues of Rs. 2,76,29,606/- ; that counsel for respondent No.1-Bank stated that the petitioners are still liable to pay certain charges including the interest incurred by the auction purchaser/payable to him. It then directed that the details of such charges still payable by th
