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IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
UJJAL BHUYAN, CHILLAKUR SUMALATHA, JJ.
G.Anil Chandvs – Appellant
Versus
The Authorized Officer – Respondent
W.P.Nos.23804, 23805 & 25432 OF 2018
Decided On : 18-01-2022
Constitution of India, 1950 - Writ petition - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 2(zb), 17, 13 (2), 13 (4) (ia) - Security Interest (Enforcement) Rules, 2002 - Rule 8 (1), 9 (4) - Respondents defaulted in repayment of loan - Consequently their loan account became irregular - Following laid down norms, loan account of respondent was declared as Non Performing Asset - Notice for sale under Rule 8 (6) of SARFAESI Rules was issued - Same was dispatched to respondent in their last known address by registered post with acknowledgement due, which was same as address disclosed by respondent themselves in their securitization application - Respondent challenged auction sale by filing securitization application under Section 17 of SARFAESI Act - By order securitization application was allowed by Tribunal by setting aside auction sale as well as sale certificate - Manipal Housing was directed to refund sale price to auction purchasers with simple interest at rate of 6% p.a. from date of deposit till date of payment besides restoring possession of schedule property to borrowers - Borrowers had filed securitization application beyond limitation period of 45 days from date of issuance of possession notice - This fact was overlooked by Tribunal as well as by Appellate Tribunal.
Finding of the Court :
Authorized officer may make an application to jurisdictional Debts Recovery Tribunal within 45 days from date on which such measure had been taken - Prayer made was to declare measures taken under Section 13 (4) of SARFAESI Act as illegal, arbitrary and null and void - What was faulted was regarding affixture of possession notice at a conspicuous place of schedule property as is requirement of Rule 8 (1) of SARFAESI Rules - If that be position, prima facie, securitization application was not filed by borrowers within stipulated period of 45 days as is required under Section 17 (1) of SARFAESI Act - From order of Tribunal it is not discernible as to whether any application for condonation of delay was filed or how Tribunal dealt with belated approach of borrowers - This is also an aspect which is required to be examined by Tribunal on remand - On a thorough consideration of all aspects of matter, court is of view that orders are required to be set aside and matter is required to be remanded back to Tribunal for a fresh decision - In interregnum, auction purchasers who had purchased schedule property shall continue to enjoy fruits of their purchase by maintaining their possession over schedule property and structures constructed–
Result: Writ petitions allowed
JUDGMENT AND ORDER:
(Per Hon’ble Sri Justice Ujjal Bhuyan)
All the above three writ petitions were heard together and are being disposed of by this common judgment and order.
2. We have heard Sri R.Sushanth Reddy, learned counsel and Sri Vivek Jain, learned counsel for the petitioners in W.P.No.23804 of 2018 and W.P.No.23805 of 2018; Sri Ashwin Kumar Jaiswal, learned counsel for the petitioners in W.P.No.25432 of 2018; and Sri Sharad Sanghi, learned counsel for the respondents in all the writ petitions.
W.P.No.23804 of 2018:
3. This writ petition has been filed by G.Anil Chand and G.Ramesh Kumar assailing the legality and validity of the order dated 02.05.2018 passed by the Debts Recovery Appellate Tribunal, Kolkata, in Appeal No.207/2017/532-534, confirming the order dated 23.05.2017 passed by the Debts Recovery Tribunal-II at Hyderabad (Tribunal) in S.A.No.651 of 2017.
4. Petitioners are the auction purchasers who had purchased the schedule property through auction sale. They are aggrieved by the order of the Tribunal setting aside the auction sale which order has been affirmed by the Debts Recovery Appellate Tribunal, Kolkata (Appellate Tribunal) in appeal filed by the petitioners.
5. Facts leading to filing of the present writ petition are, briefly, narrated hereunder.
6. Petitioners had purchased the schedule property bearing open plot No.66 in Sy.Nos.56, 63, 64 and 66, admeasuring 240 Sq.Yards situated at Ward No.4, Miyapur village, Boduppal Gram Panchayat under Ghatkesar Mandal in auction proceedings dated 13.11.2014. The auction proceedings were conducted to realize the loan amounts in respect of the loan account of respondent Nos.2 and 3 i.e. Y.Kiran Kumar and Smt. Aarthi Devi Mukhya, who had defaulted in repayment of the loan availed of from respondent No.4 – Manipal Housing Finance Syndicate Limited for which the loan account was classified as Non-Performing Asset (NPA) by respondent No.4. In the auction which was held on 13.11.2014 petitioners were the successful bidders. They had earlier paid an amount of Rs.2,16,000-00 equivalent to 10% of the reserve price on 24.09.2014 to respondent No.4 and paid a further amount of Rs.3,25,000-00 on 13.11.2014; thus paying an amount equivalent to 25% of the auction sale amount as on the date of the auction.
7. By letter dated 25.11.2014 petitioners sought additional time from respondent No.4 for payment of the balance sale consideration on the ground that they were processing a housing loan from Canara Bank. This was accepted by respondent No.4, whereafter authorized officer of respondent No.4 i.e. respondent No.1 informed the petitioners vide letter dated 26.11.2014 that additional time was granted for availing loan from Canara Bank to pay the balance 75%.
8. On 10.12.2014 petitioners paid the balance 75% of the sale consideration to respondent No.4 by way of a cheque which was directly issued by Canara Bank in favour of respondent No.4. On such payment, a sale certificate was issued by respondent No.4 in favour of the petitioners on the same day i.e. on 10.12.2014.
9. Petitioners have stated that after purchasing the aforesaid property which was an empty land, they had obtained building permission from the competent authority and constructed a house thereon. The construction was completed in the year 2015.
10. Respondent Nos.2 and 3 i.e. the borrowers challenged the auction proceedings before the Tribunal belatedly contending that the auction proceedings came to their knowledge only on 05.01.2015 whey they found some unknown persons on the schedule property. On various grounds, the auction sale was challenged by respondent Nos.2 and 3 before the Tribunal by filing securitization application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’ hereinafter). The same was registered as S.A.No.485 of 2015 before the Debts Recovery Tribunal-I, Hyderabad which was subsequently renumbered befor
Order of the Tribunal it is not discernible as to whether any application for condonation of delay was filed or how the Tribunal dealt with the belated approach of the borrowers.
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
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