IMPORTANT POINT
Sub-section (8) of Section 13 of SARFAESI Act cannot bar secured creditor from receiving outstanding dues from borrower post publication of notice for public auction.

JUDGMENT

Ujjal Bhuyan, C.J.—Heard Mr. Vedula Srinivas, learned Senior Counsel appearing on behalf of Ms.Vedula Chitralekha, learned counsel for the petitioner; Mr. Sethu Madhav, learned counsel for respondent Nos.1 and 2; and Mr. Murali Manohar, learned counsel for respondent No.3.

2. By filing this petition under Article 226 of the Constitution of India petitioner seeks quashing of sale/e-auction conducted on 16.03.2021 in respect of plot Nos.A11 to A15, survey No.302, Maheshwaram Revenue Village and Mandal, Ranga Reddy District, under letter No.7860/45/111 dated 31.03.2021.

3. Case of the petitioner as projected in the writ petition is that third respondent M/s. Mycon Realtors Private Limited had availed loan from the second respondent, Union Bank of India, Rentachintala Branch, Guntur District in the State of Andhra Pradesh. For availing the loan, third respondent mortgaged the following properties:—

...property situated in Plot Nos.1, 2, 7, 8, 13 to 21, 33 to 38 of Mycon Acropolis in Site – B and Plot Nos.1 to 12 of Mycon Acropolis in Site – C in Sy.No.24/EE, total extent 10010.74 sq. yards in Nandupalli Village, Nagaram Gram Panchayat, Maheshwaram Mandal, R.R. District and also Plot Nos.A11 to A15 in Sy.No.302, Maheshwaram Revenue Village & Mandal, R.R. District...

4. For various reasons, third respondent failed to repay the loan. Consequently, respondent Nos.1 and 2 i.e., Union Bank of India declared the loan account as Non Performing Asset (NPA), whereafter steps were taken for realisation of outstanding dues under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’ hereinafter). The total amount due from the third respondent was around Rs.14,00,17,012.00 i.e., about Rs.14.00 crores. Second respondent issued sale notice dated 06.02.2021 for sale of the mortgaged properties by way of e-auction. The date of auction was scheduled on 16.03.2021.

5. Petitioner participated in the auction. His bid for plot Nos.A11 to A15 was Rs.57.00 lakhs. That was accepted by respondent Nos.1 and 2, whereafter petitioner paid the initial amount of 25% on 17.03.2021 and the balance amount of Rs.42,42,000.00 was paid within the prescribed time limit. Thereafter first respondent issued sale certificate to the petitioner on 25.03.2021. According to the petitioner, possession of the auctioned property was handed over to him on the same day.

6. It is stated that the petitioner received letter No.7860/45/111 dated 31.03.2021 from the first respondent stating that the borrower had settled the amount under One Time Settlement (OTS) scheme. Therefore the competent authority decided to cancel the e-auction conducted on 16.03.2021, whereafter the amount of Rs.57.00 lakhs paid by the petitioner was remitted back to his bank account.

7. Petitioner represented before the first respondent stating that the sale was already concluded and he was issued sale certificate. Therefore, it was impermissible to settle the matter with the borrower and cancel the sale already concluded in favour of the petitioner. First respondent informed the petitioner on 08.04.2021 that the matter was settled with the borrower i.e., third respondent under OTS and hence cancellation of e-auction was justified. Earlier letter dated 31.03.2021 was reiterated.

8. Petitioner has contended that Section 13(8) of the SARFAESI Act has undergone amendment in the year 2016. Post amendment the borrower can redeem the property only upto the date of sale notice but not beyond that. In this connection, reliance has been placed on the decision of the Supreme Court in Shakeena v. Union of India, Manu/SC/1119/2019.

9. With the above grievance, the present writ petition came to be filed.

10. This Court by the order dated 28.04.2021 had issued notice and passed an interim order to the effect that no third party rights sh