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KARNATAKA HIGH COURT
S. Abdul Nazeer, J.
E. Ali —Petitioner
versus
The Syndicate Bank Manipal & Ors. —Respondents
Writ Petition No.15546 of 2011 (GM-RES)
Decided on 1.6.2015
(ii) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Section 13 & 14 — Transfer of Property Act, 1882 — Section 69 or 69-A — Security Interest (Enforcement) Rules, 2002 — Rule 8 — Secured creditor not taken physical possession of property — It was in possession of borrower — Before actual transfer of possession of property could be made — Borrower paid entire dues to secured creditor in terms of settlement arrived at between them — HELD — Question of bank transferring property to petitioner does not arise — This in conformity with S. 13(8) — Bank cannot retain 25% of amount deposited by petitioner in pursuance of auction made in terms of sale notice . (Para 15)
Result: Petition allowed.
S. Abdul Nazeer, J.—The petitioner has called in question the validity of the proceedings at Annexure-C dated 6.2.2008 and the interim certificates issued by the Authorised Officer at Annexures-D and E both dated 9.2.2008. The petitioner has also sought for quashing of the order of the Authorised Officer at Annexure-N forfeiting the amount deposited by him towards purchase of the properties more fully described in the interim certificates at Annexures-D and E.
2. The Authorised Officer of the Syndicate Bank, Sadashivanagar Branch issued an advertisement inviting tenders at Annexure-A for sale of the movable and immovable properties belonging to M/s. Ultradew. The petitioner submitted his offer along with certain other persons. The Authorised Officer conducted the auction on 5-2-2008. The petitioner was the highest bidder. The sale proceedings were drawn as per Annexure-B and the sale was confirmed in favour of the petitioner. The petitioner deposited Rs.45.25 lakhs with the Authorised Officer, which is 25% of the bid amount. The balance of Rs. 1,35,75,000 was required to be deposited at a later date. An interim sale certificate pertaining to movable property as per Annexure-E and immovable assets as per Annexure-D was issued in favour of the petitioner.
3. The contention of the petitioner is that he visited the premises and found that the property was occupied by some persons. The factory was run by third parties. Thus, the property in question was not vacant.
4. The petitioner addressed a letter to the Authorised Officer on 14.3.2008 at Annexure-F and expressed his anguish and sought clarification regarding delivery of possession of immovable assets and availability of movable assets listed in the proceedings. He also indicated his willingness to pay the balance amount provided the Bank assures handing over vacant possession of the premises and movable assets mentioned in the notification. The Bank sent a reply dated 17.3.2008 at Annexure-C stating that the sale is on as is where is basis. It is further stated that on receipt of balance sale consideration of 75% towards the movable and immovable assets, the sale certificate would be registered with the jurisdictional Sub-Registrar. It was clarified that physical possession will have to be taken by the petitioner.
5. The petitioner sent a protest letter as per Annexure-H to the Authorised Officer stating that ‘as is where is’ condition referred in the auction notice is with respect to the physical condition of the properties and not with regard to physical possession. Under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘SARF AESI Act’), possession has to be taken by the secured creditor and on auction, it has to be handed over to the purchaser. If possession is not going to be given, the said fact was required to be mentioned in clear terms in the tender itself. If the petitioner was to take possession for himself, he would not have ventured to participate in the auction. He insisted for an assurance of handing over of vacant possession of the premises at the time of execution of the sale deed on payment of balance of sale consideration. He also insisted that the Bank should ensure handing over of all the items mentioned in the notice. Unless the Bank ensures the above, he would not be in a position to pay the balance of sale consideration.
6. On 1.4.2008 vide Annexure-J, the Bank informed that the amount deposited by the petitioner stood forfeited and no further communication will be entertained in this regard. The petitioner got issued a notice through his Lawyer at Annexure-K, dated 11.4.2008 for refund of the amount deposited by him. The Bank sent a notice at Annexure-L, dated 23.4.2008 extending the time to deposit the balance of the amount for a further period of 7 days from the date of the receipt of the letter. The petitioner got issued yet another notice through his Lawyer at Ann
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