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2018 Supreme(All) 2572
IN THE HIGH COURT OF ALLAHABAD
AMRESHWAR PRATAP SAHI, SHASHI KANT, JJ.
Dawar Footwear Industries – Appellant
Versus
Bank of India and Ors. – Respondents
Writ C No. 11243 of 2018
Decided On : 02-04-2018
Advocate Appeared:
For the Appellant : Rahul Agarwal
For the Respondents: R.V. Pandey
The highest bidder in an auction conducted under the SARFAESI Act, 2002, has remedies under the said act, and the Court may not interfere with the proceedings if the petitioner has already filed an impleadment application before the same Court where proceedings are pending.
Headnote:
SARFAESI Act - Auction Cancellation - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Section 17
Fact of the Case:
The petitioner challenges the respondent-bank's decision to cancel the e-auction of a property, which was the subject of proceedings under the SARFAESI Act, 2002. The respondent No. 4, the borrower, had filed an application/appeal under Section 17 of the SARFAESI Act, 2002, and the High Court at Lucknow had passed an interim order permitting the auction to proceed but restraining its finalization.
Finding of the Court:
The Court found that the challenge to the auction notice at this stage would not be permissible, considering the interim order passed by the High Court at Lucknow. The Court also noted that the petitioner had already filed an impleadment application before the same Court where proceedings were pending. Additionally, the highest bidder in an auction conducted under the SARFAESI Act, 2002, has remedies under the said act as explained by the Apex Court in the case of Agarwal Tracom Pvt. Ltd. v. Punjab National Bank and others (2018) 1 SCC 626 : (AIR 2017 SC 5562). The Court concluded that it was not inclined to interfere in this petition and accordingly rejected it.
Issues: The issues revolved around the cancellation of the e-auction of a property under the SARFAESI Act, 2002, and the petitioner's challenge to the same.
Ratio Decidendi: The Court's decision was influenced by the interim order passed by the High Court at Lucknow, which permitted the auction to proceed but restrained its finalization. The Court also emphasized that the petitioner had remedies available and had already filed an impleadment application before the same Court where proceedings were pending.
Final Decision: The petition was rejected by the Court.
JUDGMENT :
1. Heard Sri Shashi Nandan Senior Advocate along with Sri Rahul Agarwal, learned counsel for the petitioner, Sri Kartikeya Saran along with R.P. Pandey and Sri Misra Staff for the respondent Nos. 1, 2 and 3.
2. This writ petition has been filed questioning the correctness of the decision of the respondent-bank cancelling the e-auction dated 9th March, 2017 as communicated by the letters dated 22th February, 2018 and 12th March, 2018.
3. A supplementary affidavit has been filed today bringing on record a copy of a writ petition filed at Lucknow as well as the orders passed therein that was filed by the respondent No. 4 who is the borrower.
4. The dispute relates to a property which has been made subject-matter of auction when proceedings were initiated against the respondent No. 4 under the Securitization Act, 2002. The respondent No. 4 filed an application/appeal under Section 17 of this SARFAESI Act, 2002. During the pendency of the said application, it appears that some payment proposal was made by the 4th respondent but the bank proceeded to publish notices for auctioning of the property in proceedings under the SARFAESI Act, 2002. Aggrieved the 4th respondent filed Writ Petition No. 5211 (M/S) of 2017 at Lucknow. The said writ petition was entertained and an interim order was passed on 08.03.2017 whereby the Court observed that the auction of the property may take place but the same shall not be finalized till the next date of listing.
5. The order passed by the Court is annexure-4 to the writ petition and is extracted hereinunder:--
"Supplementary affidavit filed on behalf of the petitioner, taken on record.
Heard Sri Anurag Srivastava, learned counsel for the petitioner, Sri G.M. Kamil, learned counsel for opposite party No. 1/Union of India, Sri Dinesh Kumar Pathak, learned counsel for opposite party No. 2/Bank of India and perused the record.
Learned counsel for the petitioner, for the purpose of interim relief submits that petitioner/M/s. B.B. Foods Private Limited (a company incorporated under the provisions of the Companies Act, 1956) had taken a loan from opposite party No. 2/Bank of India, Mid Corporate Branch 49-50, Sulabhpuram, Sikandra Bodla Road, Agra. As the company did not pay the loan, so a proceedings has been initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereafter, the petitioner filed S.A. No. 339 of 2014 (M/s B.B. Foods Private Limited v. Bank of India) before Debt Recovery Tribunal, Lucknow. In the meantime, opposite party No. 2/Bank of India had proceeded for auction of the property of the petitioner/company, so an application has been moved on behalf of the petitioner for restraining the opposite party No. 2/Bank of India for auctioning the property in question. However, no heed has been paid in the matter in question.
Sri D.K. Pathak, learned counsel for opposite party No. 2/Bank of India submits that in view of the notification No. S.O.454(E) : MANU/FNSV/0010/2017 dated 15.2.2017 issued by Government of India, Ministry of Finance, Department of Financial Services, New Delhi (Published by Authority in the Gazette of India, Extraordinary, Part-II Section 3 sub-section (ii) No. 411), Debt Recovery Tribunal Lucknow has got no jurisdiction to entertain the S.A. No. 339 of 2014.
Sri Anurag Srivastava, learned counsel for the petitioner on the basis of averments as made in the supplementary affidavit, submits that notification No. S.O.454 (E) : MANU/FNSV/0010/2017 dated 15.2.2017 has been brought to the notice of the Debt Recovery Tribunal and on 16.2.2017 the order was passed which reads as under:--
"Vide Notification No. S.O.454 (E) : MANU/FNSV/0010/2017 dated 15.2.2017 issued by the Government of India, Ministry of Finance, Department of Financial Services, New Delhi [published by Authority in the Gazette of India, Extraordinary Part II-Section 3-sub-section (ii), No. 411], the case does not relates to jurisdiction of Debts Re
