The court ruled that auction purchasers acquire valid title to leasehold rights under SARFAESI Act, despite previous cancellations, asserting that state rules cannot overrule statutory law governing secured creditors' rights.

1. S.P. Upadhyay, learned senior counsel assisted by Mr. Ankit Pandey, learned counsel for the petitioner. Also heard Mr. Jitendra Pali, learned Deputy Advocate General appearing for respondent No.1, Mr. Prafull N. Bharat, learned senior counsel assisted by Mr. Ayaz Naved, learned counsel, appearing for respondent Nos.2 to 4 and Ms. Sharmila Singhai, learned senior counsel assisted by Mr. P.R. Patankar, learned counsel, appearing for respondent No.5.

2. The petitioner is a Company registered under the provisions of the Companies Act , 1956 engaged in the business of producing steel and iron products. The case of the petitioner, as presented in the writ petition, is that the Chhattisgarh State Industrial Development Corporation Limited (for short, 'CSIDC') had allotted four parcels of land situated at Industrial Development Center, Borai, Village Rasmada, District Durg to one M/s Brahaspati Iron and Steel Company Private Limited (for short, 'BISCPL'), who is engaged in manufacturing of hot and cold rolled products of steel and ancillary purposes, on lease for a period of 99 years. Four lease deeds were executed on 16.04.2004, 08.01.2007, 30.01.2009 and 21.05.2009, in respect of Plot Nos.77A, 77B, 78, 79, 80, 105, 106, 107, 108A, 108B and Part 81 and 104, Plot Nos.65-74 (zone - c); Plot Nos. Part 82, 83 to 87 and Part 99, 100 to 102, and Plot Nos.88 to 98 Part 99, respectively. Lease deed dated 16.04.2004 was for the period 16.04.2004 to 15.04.2103 in respect of 4.004 hectares; lease deed dated 08.01.2007 was for the period 08.01.2007 to 07.01.2106 in respect of 6.245 hectares; lease deed dated 30.01.2009 was for the period 30.01.2009 to 29.01.2108 in respect of 2.897 hectares; and lease deed dated 21.05.2009 was for the period 21.05.2009 to 20.05.2108 in respect of 4.00 hectares.

3. BISCPL took loan from the State Bank of India, i.e. respondent No.5 after obtaining No Objection Certificate (for short, 'NOC') from CSIDC against creation of security interest over its lease hold rights in respect of properties in question. The BISCPL defaulted in repayment of its secured debt to respondent No.5 and respondent No.5 declared BISCPL as Non Performing Asset (for short, 'NPA') as per the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ' SARFAESI Act ') and informed CSIDC in advance about initiating proceeding under the provision of S.13(4) of the SARFAESI Act and for recovery of secured debt, took possession of the secured assets including the right to transfer by way of lease, assignment or sale for realizing the secured asset. An e - auction sale notice under S.13(4) of the SARFAESI Act was published on 09.05.2015 for sale / transfer of the lease hold rights in the above mentioned properties.

4. The petitioner participated in the e - auction and was declared successful auction purchaser, and accordingly, sale certificate in respect of above mentioned properties was issued on 16.06.2015 upon payment of 25% of the total consideration amount of Rs.3,20,00,000/- to respondent No.5. The sale certificate was duly stamped by the petitioner by paying Rs.80,00,000/- as stamp duty and Rs.10,24,170/- as other ancillary registration charges on 24.06.2015. The petitioner paid Rs.12,80,00,000/- to respondent No.5 as total consideration for purchase of lease hold rights in the above mentioned properties.

5. By