Back
2024 Supreme(Online)(MAD) 20918
HIGH COURT OF MADRAS
Honourable Mr Justice S.S. SUNDAR
M.SANGEETHA RAJI – Appellant
Versus
THE REGIONAL DIRECTOR – Respondent
Legal heirs must be properly notified in property sales following the death of a mortgagor to ensure compliance with statutory requirements and protect their rights.
Headnote:
Settlement - Bank Sale Proceedings - SARFAESI Act - 13(2), 13(4), 14, Security Interest (Enforcement) Rules, 2002 - The court found irregularities in sale notices under SARFAESI, insufficient notice to legal heirs, and mandated proper adherence to prescribed valuation and notice protocols.
Fact of the Case:
The petitioner filed for a writ of mandamus to allow One Time Settlement and stop the sale of inherited property due to family default on a loan. The family had not informed the bank of the death of the co-mortgagor and legal heir.
Finding of the Court:
The court highlighted serious irregularities in the sale process, including failure to notify legal heirs and lack of proper valuation, leading to the conclusion that the sale was void and in violation of established regulations.
Issues: Whether the bank's sale proceedings were valid despite the irregularities in notifying the heirs and evaluating the property as required under the SARFAESI Act and relevant rules.
Ratio Decidendi: The sale was set aside due to collusion, significant procedural irregularities, and failure to provide legal notice to the heirs as mandated, undermining the rights of the borrower and mortgagors.
Final Decision: The court set aside the sale and directed the bank to refund the auction purchaser and consider the petitioner's OTS proposal.
O R D E R
(Order of the Court was made by S.S. SUNDAR, J.)
This writ petition is filed for issuance of a Writ of Mandamus directing the respondents to give a chance or opportunity to the petitioner to avail the benefit of One Time Settlement (OTS) on the basis of sanction letter dated 17.10.2022 given by 3rd respondent Bank under AMBY Scheme, by considering the representation of the petitioner dated 16.05.2024 within the time stipulated by this Court and to direct the 3rd respondent Bank to defer the sale proceedings initiated pursuant to the sale notice dated
17.04.2024 fixing the sale on 03.05.2024.
2.The petitioner's father Mr.C.Thangasamy availed credit facilities from the respondent Bank and it is admitted that the total amount borrowed by the petitioner's father is around Rs.90,00,000/-. The petitioner's father and mother by name Mrs.T.Rajeswari deposited the title deeds pertaining to the immovable properties which are now the subject matter of sale. The loan account of the petitioner's father was declared NPA even in 2010 and the 3rd respondent issued a demand notice under Section 13(2) of the SARFAESI Act on 15.02.2011. Thereafter, possession notice under Section 13(4) was also issued on 27.05.2011. The respondent Bank filed a petition under Section 14 of the SARFAESI Act and the District Collector has already passed an order for taking possession on 28.02.2014. It is stated that physical possession was taken on 30.07.2014. It appears that the respondent Bank has issued sale notices from November, 2014, after giving ample opportunity to the petitioner's father to settle the dues.
3.It is admitted that petitioner's mother Mrs.T.Rajeswari died on
27.12.2021. Unfortunately, the petitioner's father, who was a party to the proceedings, and petitioner's brother who also stood as guarantor did not inform the Bank about the death of petitioner's mother, even though a few applications were pending before the Debt Recovery Tribunal challenging the previous sale notices. On 24.02.2022, the second sale notice was issued including the property of petitioner's mother who is dead. Even though the sale proceedings are against one of the properties of the deceased, the said sale notice was challenged by petitioner's father Mr.C.Thangasamy without disclosing the death of his wife Mrs.T.Rajeswari. Again, the property was brought for sale on 17.04.2024, after the dismissal of SARFAESI Appeal in T.S.A.No.209 of 2023 filed by the petitioner's father, which was dismissed as infructuous.
4.It is now admitted before this Court that the 4th respondent participated in the public auction and was declared as successful bidder and all the four items of properties comprised in different Survey Numbers were sold for a sum of Rs.1,43,25,000/-. Even though there is a dispute with regard to the amount that was offered by the 4th respondent and the actual amount paid by the 4th respondent, this Court, having regard to the issues raised before this Court, is not inclined to elaborate further. It is admitted that the petitioner's father, in all the proceedings, never brought to the notice of the Bank about the death of his wife and guarantor the deceased Mrs.T.Rajeswari, despite the fact that she is the co-mortgager and owner of one of the items of the properties.
5.The specific stand taken by the petitioner is that the Bank as well the auction purchaser have colluded to mention the sum of Rs.1,43,25,000/- just to save the sale, because the sale cannot be confirmed by the Bank unless the Authorised Officer gets a price higher than the reserve price. It is admitted that the reserve price fixed was Rs.1,43,00,000/-. Learned counsel appearing for the petitioner pointed out serious irregularities in the sale of immovable secured assets. Referring to the notice that was published, the learned counsel for the petitioner pointed out that the sale was by showing the name of her mother who died on 2021. The petitioner produced the publication, in the newspaper in Cuddal
