Secured creditors must adhere to principles of fairness and reasonableness in property sales, ensuring maximum value recovery and respecting constitutional property rights.

J U D G M E N T

Petitioner was the guarantor to a loan availed by respondents 3 to 6 from the Willington Island branch of UCO bank (the bank). The petitioner has also mortgaged an item of property owned by him to secure the repayments of the said loan. When respondents 3 to 6 committed defaults in remitting the dues of the loan, proceedings have been initiated by the bank against the security, viz, the property mortgaged by the petitioner under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act) and brought the property for sale. Ext.P1 is the sale notice issued by the authorised officer of the bank in this connection. Pursuant to Ext.P1 sale notice, the property of the petitioner was sold to additional respondents 7 to 11 on 3.11.2017 for a sum of Rs.85,60,000/-. Consequent to the sale, WPC No.1030/18 2 on the same day, additional respondents 7 to 11 remitted 25% of the sale consideration, viz, Rs.21,40,000/- to the bank and the balance sale consideration viz Rs.64,20,000 was remitted by them to the bank on 4.1.2018. The petitioner challenged Ext.P1 sale notice before the Debts Recovery Tribunal in S.A.No.254 of 2017. Later, the petitioner has withdrawn the said proceedings and filed this writ petition challenging the sale held pursuant to Ext.P1 sale notice. The case of the petitioner is that the property of the petitioner which was sold in the proceedings initiated under the Act is one situated on the side of a National Highway; that the same is worth more than Rs.3 crores; that the same was sold recklessly by the bank for a paltry sum of Rs.85,60,000/-, when the liability was about 1.5 crores and when there is no other security for realisation of the deficit amount and that on account of the said sale, the personal properties of the petitioner over which the bank has no charge also became liable for the remaining debt. In short, the case of the petitioner is that the property was grossly undervalued by the bank in their eagerness to sell the same. It WPC No.1030/18 3 is stated by the petitioner in the writ petition that there is a purchaser for the property for an amount of Rs.1,57,20,425/- and if the petitioner is allowed to sell the property to that purchaser for the said amount, even though the said price is not the true and adequate price for the property, he will be in a position to liquidate the entire liability to the bank, so that there will not be any further proceedings against him for realisation of the deficit. Even though the property is sold, the petitioner has entered into Ext.P6 agreement with the person who is prepared to purchase the property for the said amount and sought permission of this Court to liquidate the entire liability by selling the property in terms of Ext.P6 agreement.

2. A counter affidavit has been filed by the additional seventh respondent on his behalf and also on behalf of additional respondents 8 to 11. Among others, it is contended by the said respondents in the counter affidavit that the sale of the property held in their favour was in accordance with the provisions of the Act; that they have been issued sale certificate pursuant to the sale by the authorised officer of the WPC No.1030/18 4 bank; that the sale in their favour has not been challenged by the petitioner before the Debts Recovery Tribunal under Section 17 of the Act; that the time prescribed for filing the application under Section 17 of the Act for challenging the sale is over and that therefore, the petitioner is not entitled to challenge the sale in a proceedings under Article 226 of the Constitution. It is also contended by the said respondents that they have raised the funds required for remitting the sale consideration by availing loans from the very same bank and from other sources and as such, they will be put to irreparable injury and loss, if the sale is interfered with by this Court. It is further contended by respondents 7 to 11 that this writ peti