CRP Nos.1892 & 2282 of 2021

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 27.10.2021

CORAM :

THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE

AND

THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU

C.R.P. Nos.1892 & 2282 of 2021

Shanmugavelu

Managing Director

M/s. Sunbright Designers Private Limited

Module No.4

Petitioner in

Readymade Garment Complex

CRP No.1892/21

SIDCO Industrial Estate

Respondent in

Guindy, Chennai - 600 032.

..

CRP No.2282/21

Vs.

The Authorised Officer

Central Bank of India

Corporate Finance Branch

Respondent in

Addison Buildings

CRP No.1892/21

No.803, Anna Salai

& Petitioner in

Chennai-600 002.

..

CRP No.2282 /21

Prayer in CRP No.1892 of 2021: Petition under Article 227 of the

Constitution of India against the order dated 30.07.2021 in

R.S.(SA)119 of 2019 in SA No.143 of 2018 i.e “The impugned order

stands modified to the extent that bank is entitled for forfeiture of a

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CRP Nos.1892 & 2282 of 2021

sum of Rs.50 lakhs” passed by the Debt Recovery Appellate Tribunal

Chennai on the file of the Debt Recovery Appellate Tribunal, Chennai.

Prayer in CRP.No.2282 of 2021: Petition under Article 227 of the

Constitution of India against the order dated 30.07.2021 made in RA

(SA) No.119 of 2019 on the file of the Debt Recovery Appellate

Tribunal, Chennai.

For Petitioner in

CRP No.1892/21 &

Respondent in

CRP No.2282/21

: Mr.G.Sethuraman

For Respondent in

CRP No.1892/21 &

Petitioner in

CRP No.2282/21

: Mr.M.Devaraj

COMMON ORDER

(Made by the Hon'ble Chief Justice)

Both the secured creditor bank and the original auction-

purchaser question the propriety of an order dated July 30, 2021

passed by the Debt Recovery Appellate Tribunal in Chennai. The order

impugned has been passed on an appeal by the bank assailing an

order dated May 06, 2019 passed by the Debts Recovery Tribunal II,

Chennai in proceedings under Section 17 of the Securitisation and

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CRP Nos.1892 & 2282 of 2021

Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002.

2. The appeal raises a fundamental issue and needs to be dealt

with on first principles. At the center of the controversy is a provision

of the Security Interest (Enforcement) Rules, 2002. Rule 9 of the said

Rules pertains to the time of sale, issue of sale certificate and delivery

of possession and the like of secured assets. Sub-rule (5) of Rule 9,

which is relevant for the present purpose, provides as follows:

"9. Time of sale, issue of sale certificate and

delivery of possession, etc. -

(1) ....

(5) In default of payment within the period

mentioned in sub-rule (4), the deposit shall be forfeited

and the property shall be resold and the defaulting

purchaser shall forfeit all claim to the property or to

any part of the sum for which it may be subsequently

sold.

... "

3. In the present case, the property was put up for sale in

December, 2016. The petitioner in CRP No.1892 of 2021 bid Rs.12.27

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CRP Nos.1892 & 2282 of 2021

crore for the relevant immovable property at the auction conducted by

secured creditor Central Bank of India on December 07, 2016. An

initial deposit was made by the auction-purchaser and, subsequent to

the bid, a total amount of Rs.3,06,75,000/- was tendered in total

against the bid price of Rs.12.27 crore. Repeated requests from the

secured creditor failed to elicit any further payment and, upon due

notice to the said highest bidder, the same property was put up for

sale again.

4. At the subsequent auction held on March 30, 2019, the

highest bid received was of Rs.14.76 crore. There is no doubt that the

sale has now been completed, the subsequent highest bidder has put

in the entire consideration and the sale certificate has been issued in

favour o