Compliance with Rule 8(5) of the Security Interest (Enforcement) Rules 2002 is mandatory before auctioning a property under the SARFAESI Act.

D.K. Paliwal, J.

The Writ petition No.3368/2012 preferred by Smt. Anita Sadana (auction purchaser) and W.P. No.3676/2012 preferred by State Bank of India are being disposed of by this common order as both the writ petitions have been preferred under Article 227 of the Constitution of India for quashing of the order Annexure P-1 passed by respondent No.-4 Debts Recovery Appellate Tribunal, Allahabad in appeal No. R-54/11 dated 12.03.2012 confirming the order passed by respondent No.-3 Debts Recovery Tribunal, Jabalpur in S.A. No.66 /2010 dated 24.02.2011, allowing the appeal of the respondent Baljinder Kaur.

2. For the purpose of consideration of the matter the facts stated in W.P. No.3676 are being mentioned.

3. The erstwhile State Bank of Indore, Gurudwara Chowk-Agra, Bombay Road, Shivpuri merged into the State Bank of India. The respondent No.-1 Smt. Baljinder Kaur borrowed money and mortgaged her house property. However she failed to pay dues as per the agreement. The petitioner bank claimed outstanding amount of Rs. 4,18,649/- from the borrower vide notice under Rules 6 and 8 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI ACT). Earlier a notice dated 29.05.2007 was issued for recovery of Rs. 3,58,967/- under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The amount was not paid by respondent No. 1 in stipulated time, thereafter a notice was served dated 23.08.2007 under Section 13(4) of SARFAESI Act. The possession of property was taken. The said notice was published in the newspapers on 28.08.2007 under Rule 8(2) of the Security Interest (Enforcement) Rules 2002. Thereafter it was open for the bank to auction the property for recovery of the dues. A sale proclamation under Section 13(4) was published on 11.09.2009 by which it was notified that the property shall be put to auction on 10.10.2009. It is further stated that the property was valued by the qualified valuer of the bank. Valuation report dated 30-08-2007 was submitted vide Annexure P/3. After following the due procedure, the auction of the mortgaged house property took place on 10.10.2009. In the auction three bidders participated. One of them was the petitioner of W.P No.3368/2012, Smt. Anita Sadana. The bid of Smt. Anita Sardana of Rs.7,70,000/- was the highest, hence the bid of Anita Sadana was accepted and the sale certificate was accordingly issued. The same was registered in the office of the Sub-Registrar Shivpuri on 7.11.2009. The original document of title of the said property was handed over to Smt. Anita Sadana. The amount of auction was received by the bank which was more than the amount of dues payable by the borrower, hence after making recovery of the dues the excess amount of Rs.2,73,369/- has been returned to the borrower vide bankers cheque No. 349320 dated 5.11.2009 which was accepted by the borrower. It is further stated that borrower respondent No.-1 got an order dated 8.10.2009 from the Consumer Protection Forum Shivpuri whereby the bank was directed to accept the overdue amount of the house loan including the penal interest if deposited before the proceedings of auction. However, the respondent No.-1 borrower filed an appeal before the D.R.T. Jabalpur for quashing the sale certificate. The appeal was allowed vide order dated 24.02.2011 Annexure P/2 against both the petitioners of Writ Petition No. 3676/2012 and Writ Petition No. 3368/2012. The bank challenged the order before the D.R.A.T. at Allahabad which has been dismissed vide order dated 12.03.2012 Annexure P/1. Being aggrieved from the aforementioned order both the Writ Petitions have been preferred.

4. Both the Writ Petitioners have submitted that the impugned orders Annexure P/1 and P/2 are contrary to law therefore liable to be quashed. It is further submitted that both the Tribunals have observed that bank have failed to comply with