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2025 Supreme(Online)(Tel) 68618
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Moushumi Bhattacharya, Gadi Praveen Kumar, JJ
Mansarovar Pearls (India) Pvt. Ltd. – Appellant
Versus
Canara Bank – Respondent
WRIT PETITION Nos.15369 and 24372 of 2025
For the Appellants/Petitioners: Avinash Desai, P.V.Suryanarayana, Sharad Sanghi
For the Respondents: B.Shiva Ram Sharma
A Tribunal's power of review under the DRT Rules is strictly limited to correcting errors apparent on the face of the record; it cannot be invoked to re-appreciate evidence or as an 'appeal in disguise' to re-examine issues already decided in the main proceedings.
Headnote:(A) SARFAESI Act, 2002 - Section 13(2), 13(4) and 18 - Debts Recovery Tribunal (Procedure) Rules, 1993 - Rule 5-A - Security Interest (Enforcement) Rules, 2002 - Rule 8(5), 9(3) and 9(4) - Auction sale - Review jurisdiction - Scope of review vs. appeal - Tribunal cannot exercise review power to re-appreciate evidence or correct judicial errors under the guise of an 'error apparent on the face of the record'. (Paras 8-12, 30-33)
(B) Review Jurisdiction - Error apparent on the face of the record - Must be self-evident and not require a long-drawn process of reasoning - Review cannot be an 'appeal in disguise' to re-agitate questions decided in original proceedings. (Paras 31-32)
(C) Auction Purchaser - Vested rights - Upon issuance and registration of sale certificate, the auction purchaser acquires a vested right to the property which cannot be disturbed absent proved fraud or illegality. (Para 35)
Facts of the case:
The principal borrowers availed credit facilities from the respondent bank, failed to repay, and initiated multiple legal proceedings challenging the bank's SARFAESI actions. The DRT initially upheld the bank's auction sale but later entertained a review petition to set it aside. The DRAT reversed the review order, leading to these writ petitions by the defaulting borrowers and the auction purchaser seeking possession.
Findings of Court:
The Court held that the DRT exceeded its limited review jurisdiction by re-appreciating evidence regarding valuation reports and Rule 8(5) compliance. Valuation adequacy and procedural compliance are matters for appeal under Section 18, not review. Consequently, the bank's action was restored, and the auction purchaser was granted the right to possession.
Issues: Whether the DRT acted within its jurisdiction in setting aside an e-auction order via a review petition and whether the procedural challenges regarding Rule 8(5) could be adjudicated in a review.
Ratio Decidendi: A review petition under Rule 5-A of the DRT Rules is restricted to errors apparent on the face of the record and cannot serve as an appeal in disguise to re-argue merits or correct alleged judicial errors requiring evidentiary analysis.
Result: Writ petition of borrowers dismissed; writ petition of the auction purchaser allowed.
| Table of Content |
|---|
| 1. bank's contention regarding finality of original orders and maintainability of review. (Para 14 , 13 , 14 , 15 , 16) |
| 2. procedural background of sarfaesi challenges and auction disputes. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 3. petitioner's argument on limited review scope and valuation error. (Para 7 , 8 , 9 , 10 , 11) |
| 4. arguments concerning vested rights of auction purchasers and procedural bar to review. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 5. review jurisdiction is narrow and does not permit re-appraisal of evidence. (Para 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37) |
14. (2015) 3 SCC 624 15. (2024) 2 SCC 362 THE HON’BLE JUSTICE MOUSHUMI BHATTACHARYA AND THE HON’BLE JUSTICE GADI PRAVEEN KUMAR WRIT PETITION Nos.15369 and 24372 of 2025 COMMON ORDER: (per Hon’ble Justice Gadi Praveen Kumar Since, the issues raised in both the Writ Petitions are one and the same, they are being disposed of by this common order.
W.P.No.15369 of 2025
2. This Writ Petition is filed by the petitioners/principal borrowers assailing the judgment dated 05.02.2025 passed in Appeal No.20 of 2024 by the Debts Recovery Appellate Tribunal at Kolkata (DRAT), which is preferred against the order dated 08-01-2024 in Review Petition No.3 of 2023 which was filed against the common order dated 22.05.2023 in Securitization Application (SA) No.87 of 2021 and Transfer Securitization Application (TSA) No.4 of 2021 (Old S.A.No.42/2021) passed by the Debts Recovery Tribunal-2, Hyderabad (DRT).
W.P.No.24372 of 2025
3. This Writ Petition is filed by the auction-purchaser of ‘A’ schedule property seeking declaration of the action of the respondent No.1 Bank in not delivering the physical possession of the property bearing Shop No.20 situated at ground floor of ‘Bhagyalaxmi Commercial Complex’ admeasuring 162.50 sq. ft. situated at Gulzar Houz, Hyderabad as per the registered Sale Certificate bearing Doc.No.1250 of 2023 dated 12.06.2023, as illegal, arbitrary, with a consequential direction to Respondent-
Bank to deliver physical possession of the said property to the petitioner.
4. The facts emanated from the record in W.P.No.15369 of 2025 are that the petitioner No.1 is a manufacturer of jewellery containing gold, silver, precious metals and semi-precious stones, and during the course of business, the 1st petitioner availed original and renewed credit facilities from the 1st respondent Bank from time to time. The cash credit limit allowed by the 1st respondent Bank was Rs.40 crores. Subsequently, it was reduced to Rs.35.35 crores vide Sanction Letter dated 06.12.2019 against the release of the mortgaged properties worth Rs.4.61 crores.
5. On default, the Respondent-Bank issued demand notice dated 11.02.2020 under Section 13(2) SARFAESI Act (the Act), followed by possession notice dated
24.09.2020 under Section 13(4) of the said Act. Eventually, an e-auction notice was issued dated 19.02.2021 and sale was conducted on 30.03.2021 in respect of Securitization Schedule (SA) properties. Aggrieved by same, the Principle Borrowers filed S.A.No.87/2021 & TSA No.4/2021 before DRT, Hyderabad, which were dismissed on 22.05.2023 holding Bank’s measures valid. Petitioners then filed Review Petition No.3/2023, which was partly allowed by DRT on 08.01.2024, setting aside the e-auction held on 30.03.2021 in respect of Schedule A & K properties, citing non-compliance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 (The Rules).The Bank filed Appeal No.20/2024 before DRAT, Kolkata, who by order dated 05.02.2025, allowed the appeal and dismissed the Review Petition holding that DRT had exceeded its review jurisdiction.
6. Aggrieved thereby, borrowers filed W.P.No.15369/2025, while the auction purchaser filed W.P.No.24372/2025 seeking delivery of possession before this court.
7. Heard Sri Avinash Desai, learned Senior Counsel representing Sri P.V.Suryanarayana, learned counsel for the petitioners in W.P.No.15369 of 2025 and respondent Nos.2 to 9 in
