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2019 Supreme(UK) 364
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Ramesh Ranganathan, Alok Kumar Verma, JJ.
Prateek Agarwal – Appellant
Versus
District Magistrate and Others – Respondents
Special Appeal No. 890 of 2019
Decided On : 23-09-2019
Advocate Appeared:
D.S. Patni, Davesh Bishnoi, S.S. Chaudhary, S.K. Jain, Siddhartha Jain.
The right of redemption under the SARFAESI Act can only be exercised before the date of publication of the notice for public auction, and the borrower has no right in law to seek redemption after the advertisement for auction has been published.
Headnote:
SARFAESI Act - Mortgage - Section 13, Section 14 - The court discussed the right of redemption under Section 60 of the Transfer of Property Act and the changes brought about by the amendment to Section 13(8) of the SARFAESI Act. It highlighted that the right of redemption can now be exercised only before the date of publication of the notice for public auction, and that the borrower has no right in law to seek redemption after the advertisement for auction has been published.
Fact of the Case:
The appellant, a guarantor for a loan extended to a company, mortgaged his residential house as security. The borrower company's account was declared as a non-performing asset, and the respondent-bank took symbolic possession of the mortgaged asset. The appellant sought to quash the order directing the respondent to take over physical possession of the property and to restore possession to him.
Finding of the Court:
The court held that the appellant could not challenge the order under Section 14 of the SARFAESI Act in proceedings under Article 226 of the Constitution of India, as he had already approached the Debt Recovery Tribunal and suffered an order that had attained finality. The court also emphasized that the right of redemption can now be exercised only before the date of publication of the notice for public auction.
Issues: The issues involved the challenge to the order under Section 14 of the SARFAESI Act, the right of redemption under Section 60 of the Transfer of Property Act, and the appellant's request for a one-time settlement with the respondent-bank.
Ratio Decidendi: The court's decision was based on the appellant's prior approach to the Debt Recovery Tribunal, the limitations on the right of redemption under the SARFAESI Act, and the discretion of the respondent-bank in regulating its business and considering a one-time settlement.
Final Decision: The Special Appeal was dismissed, and no costs were awarded.
JUDGMENT :
Ramesh Ranganathan, J.
1. This Special Appeal is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No. 2881 of 2019 dated 20.09.2019. The appellant herein filed the said Writ Petition seeking a writ of certiorari to quash the order dated 07.06.2015 passed by the first respondent directing the second respondent to take over physical possession of the residential house/property of the appellant-writ petitioner mortgaged with respondents 2 and 3; a writ of mandamus directing respondents 2 and 3 to restore possession of the residential house/property of the appellant-writ petitioner to him, along with all household articles; a writ of mandamus directing respondents 2 and 3 to accept the reserve price as stated in the advertisement dated 30.08.2019, or to re-pay the amount in installments and a writ of mandamus directing respondents 2 and 3 not to proceed with the auction in respect of the residential house/property as stated in the advertisement dated 30.08.2019.
2. Facts, to the limited extent necessary, are that the appellant writ petitioner, the Director of M/s Manokamna Steel Private Limited and the guarantor for the loan extended to the said company, had mortgaged his residential house as security for the loan extended to the said company. In the year 2011, the borrower company s account was declared as a non-performing asset and, at that time, the total liability of the borrower company stood at Rs. 6,95,00,000/-. A notice under Section 13 of the SARFAESI Act was issued, including with regards the residential property which had been mortgaged with the respondent-bank. Symbolic possession of the mortgaged asset was taken on 23.03.2011. An application was filed, under Section 14 of the SARFAESI Act, by the respondent-Bank before the first respondent in the year 2015 and the said application, filed under Section 14 of the SARFAESI Act, was allowed on 07.06.2015. The appellant-writ petitioner states that he came to know of the said order when the bank officials came to take physical possession of his house on 18.09.2019.
3. Mr. D.S. Patni, learned Senior Counsel appearing on behalf of the appellant-writ petitioner, would submit that it is on this date i.e. 18.09.2019 that the appellant-writ petitioner was dis-possessed from his residential house. The appellant-writ petitioner claims to have questioned the said advertisement, issued by the respondent-Bank for auction of the mortgaged property, before the Debt Recovery Tribunal, Lucknow and though, initially, an interim order of stay was granted, the said application, on its being transferred to the Debt Recovery Tribunal, Derhadun, was dismissed.
4. Mr. S.K. Jain, learned Senior Counsel appearing on behalf of the respondent-Bank, would submit that not only the advertisement issued by the respondent-Bank, but also the order passed under Section 14 of the SARFAESI Act, was subjected to challenge before the Debt Recovery Tribunal and the said order of the Debt Recovery Tribunal has attained finality.
5. If that be so, the appellant-writ petitioner could not have again questioned the order passed by the first respondent, under Section 14 of the SARFAESI Act, in proceedings under Article 226 of the Constitution of India, since he had already elected to approach the Debt Recovery Tribunal in this regard, and had suffered an order at the hands of the Debt Recovery Tribunal, which order has attained finality.
6. Be that as it may, the submission of Mr. D.S. Patni, learned Senior Counsel appearing on behalf of the appellant-writ petitioner, is that the appellant-writ petitioner had the right of redemption under Section 60 of the Transfer of Property Act and, since auction and sale of a residential property is an act of last resort, the appellant-writ petitioner should be permitted to pay the reserve price quoted in the advertisement, and direct the respondent- bank to hand-over physical possession of the residential property, on such payment, to the
