Telangana High Court
M/S Aruna Web Offset Printers vs Andhra Bank on 21 April, 2020
Author: M.S.Ramachandra Rao
Bench: M.S.Ramachandra Rao, K.Lakshman
THE HIGH COURT OF JUDICDATURE FOR THE STATE OF
TELANGANA : HYDERABAD
****
W.P.NO.16870 OF 2019
M/s Aruna Web Offset Printers represented
by its Managing Partner and another .. Petitioners
Vs.
Andhra Bank, A Govt of Undertaking,
Himayat Nagar Branch, Himayat Nagar,
Hyderabad 500 029 represented by its
Authorised Officer and another .. Respondents
DATE OF THE JUDGMENT PRONOUNCED: 21.04.2020
SUBMITTED FOR APPROVAL:
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE K.LAKSHMAN
1. Whether Reporters of Local newspapers Yes/No
may be allowed to see the judgment?
2. Whether the copies of judgment may be Yes/No
marked to Law Reporters/Journals
3. Whether Their Lordships wish to Yes/No
see the fair copy of the judgment?
___________________________
M.S.RAMACHANDRA RAO, J
_____________________
K.LAKSHMAN, J
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*HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTSICE K.LAKSHMAN
+ W.P.NO.16870 OF 2019
% DATED 21st APRIL, 2020
# M/s Aruna Web Offset Printers represented
by its Managing Partner and another .. Petitioners
Vs.
$ Andhra Bank, A Govt of Undertaking,
Himayat Nagar Branch, Himayat Nagar,
Hyderabad 500 029 represented by its
Authorised Officer and another .. Respondents
<Gist:
>Head Note:
! Counsel for the Petitioners : Sri G.K.Deshpande
^Counsel for 1st Respondent : M V Kini Co Advocates
Solicitors
^Counsel for 2nd Respondent : Sri Ravinder Vudiga
^Counsel for 3 to 5 Respondents : Sri Balshetty Sanjay Kumar
? CASES REFERRED:
1. AIR 1990 SC 119
2. (1996) 4 SCC 127
3. (2006) 5 SCC 340
4. (2014) 5 S.C.C. 660
5. Order dt.18.04.2018 in W.P.No.12189 of 2018 (High Court at
Hyderabad for the States of Telangana and AP)
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HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION No.16870 OF 2019
O R D E R:(Per Hon'ble Sri Justice M.S.Ramachandra Rao) Heard learned counsel for petitioners, Sri M.V. Kini, learned counsel for 1st respondent, Sri V.Ravinder, learned counsel for 2nd respondent and Sri B.Sanjay Kumar, learned counsel for respondent Nos.3 to 5.
2. The 1st respondent is a partnership firm carrying on business of Web Offset printer since 1991 and 2nd petitioner is it's Managing Director.
3. The petitioners approached the 1st respondent Bank for OCC credit facility of Rs.10.00 lakhs and Term Loan of Rs.23.00 lakhs for purchase of machinery of Rs.47.00 lakhs, in which petitioners' contribution was Rs.24.00 lakhs.
4. According to the petitioners, 1st respondent did not release the Term Loan in time making the business situation of the petitioners unviable disabling the petitioners from participating in the tenders invited by the Government for printing text books. The loan account of 1st petitioner therefore became NPA on 31.05.2017.
5. Thereafter the 1st respondent Bank issued demand notice under Section 13(2) of the SARFAESI Act, 2002 (for short 'the Act') on ::4::
03.06.2017 stating that petitioners have to pay Rs.25,55,410.96 ps towards OCC Loan Account as well as Term Loan Account.
6. Petitioners contends that thereafter petitioners paid Rs.8.00 lakhs on 27.12.2017 and the entire OCC Loan liability of Rs.7,43,766.96 Ps as mentioned in the notice issued under Section 13(2) of the Act was cleared by the 1st petitioner.
7. Later, on 21.02.2018, the 1st respondent Bank issued notice under Rule 8(6) of the SARFAESI Rules informing about proposed sale (30 days notice) of the secured asset i.e a house bearing No.SRT 59(1-7- 38/6) admeasuring 150 sq. yds consisting Ground + 1st Floor RCC structure situated at Industrial Colony, Mushirabad, Hyderabad mortgaged by the petitioners, fixing the reserve price at Rs.58,86,000/- and asking the petitioners to pay the said amount before the date of publication of notice for public auction.
8. Petitioners then issued a reply on 05.03.2018 stating that they have paid Rs.18.25 lakhs as dues (including Rs.8.00 lakhs paid on 27.12.2017) by 21.02.2018 and this was not reflected in the notice issued under Section 13(2) of the Act by 1st respondent.
9. On 27.03.2018, petitioners sent another letter to the 1st respondent enclosing a post dated cheque bearing No.000307 dt.10.04.2018 drawn on Andhra Bank and requested the 1st respondent Bank to stop the process of sale.
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10. This was ignored by the 1st respondent Bank and on 10.05.2018. the 1st respondent published notice under Rule 8(6) of the Rules in Andhra Jyothi news paper to sell the above property for dues of Rs.10,73,373/- as on 30.04.2018. Later e.auction notice was also issued for recovery of Rs.10,76,373/-, due allegedly as on 30.04.2018.
11. On 14.06.2018, petitioners approached the 1st respondent and deposited a further sum of Rs.2.00 lakhs.
12. According to the petitioners, they approached the 1st respondent Bank on 15.06.2018 about the result of the auction, but the 1st respondent Bank did not furnish any information and the petitioners proceeded on the impression that the auction which was to take place on 14.06.2018 was not conducted.
13. On 10.08.2018, the Officials of the 1st respondent visited the secured property of the petitioners along with an Advocate- Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and gave 15 days notice to the occupants of the said premises to vacate it.
SA 182 of 2018 filed by the petitioners
14. On 04.09.2018, the petitioners filed S.A.No.182 of 2018 before the Debts Recovery Tribunal-1, Hyderabad (for short 'the Tribunal') seeking reliefs of setting aside of (i) the proceedings initiated by the 1st respondent pursuant to the sale notice dt.05.05.2018 published on 10.05.2018 in Andhra Jyothi news paper, (ii) e.auction notice ::6::
dt.13.05.2018 published in the same news paper on 13.05.2018 fixing the date of auction as 14.06.2018 and (iii) to declare that the action of the 1st respondent in contemplating to take physical possession of the property pursuant to the notice dt.10.08.2018 issued by the Advocate- Commissioner as per the Warrant under Section 14 of the Act from the Chief Metropolitan Magistrate, Hyderabad is illegal, arbitrary and to set it aside.
The pleas in the SA of the petitioners
15. In the S.A., it is the contention of the petitioners that the notice dt.21.02.2018 issued under Rule 8(6) of the Rules mentions that the 1st respondent had taken possession of the secured asset on 15.11.2017, but the petitioners were not served with any possession notice dt.15.11.2017 as is alleged by 1st respondent and such notice was never affixed or published as mandated in the Act and Rules; that even notice dt.21.02.2018 issued under Rule 8(6) of the Rules was defective for want of proper service, affixture and publication in the news papers as mandated under law; and that notice dt.05.05.2018 published in Andhra Jyothi news paper dt.10.05.2018 was also not served or affixed.
16. It was contended that the said notice was defective for want of details of existing liability and the deposit of Rs.18.25 lakhs by petitioners was not given credit to by the 1st respondent.
17. It is alleged that in the e.auction notice dt.13.05.2018, the liability of petitioners was mentioned as only Rs.10,76,373/-, but the property ::7::
having reserve price worth of Rs.58.86 lakhs was put up for sale, which was not warranted.
18. It is also contended that the actual price of the secured property is more than Rs.1.00 crore and it was the duty of the 1st respondent only to put up such extent of property as is sufficient to recover the dues.
19. It was pointed out that the schedule property consists of Ground + first floor building, that the same is divisible and can be sold in parts;
and at best, the 1st respondent should have put up for sale only one floor as held by the Supreme Court in Ambati Narasayya Vs. M.Subba Rao and another1.
20. A further contention is raised stating that the e.auction notice dt.13.05.2018 was bad since 1st respondent had not valued the property immediately before putting it to auction and the valuation itself was on a lower side.
The stand of the 1st respondent in the SA
21. Counter-affidavit was filed by the 1st respondent-Bank in the S.A. opposing grant of relief to the petitioners.
22. It is contended by the 1st respondent that the 1st petitioner failed to re-pay the outstanding loan amounts and that it was constrained to initiate proceedings under the Act against the petitioners and the secured asset.
1 AIR 1990 SC 119 ::8::
23. It is contended that notice dt.21.02.2018 under Rule 6(2)/ 8(6) informing about the sale (30 days' notice) was served on the 1st petitioner but it did not respond properly; another notice dt.05.05.2018 was also issued, but the 1st petitioner did not pay any amount; that the 1st respondent conducted e.auction of the mortgaged property on 14.06.2018 in which one Iftekar Hussain Syed (2nd respondent) (husband of 3rd respondent herein and also father of respondent nos.4 and 5) was declared as the successful bidder for Rs.58,86,000/- and on 25.06.2018, it had issued sale confirmation letter to him.
24. It is contended that the petitioners submitted letter on 15.06.2018 promising to pay instalments, but they did not honour the commitments made in the said letter.
25. It is contended that orders were obtained from the Chief Metropolitan Magistrate, Nampally under Section 14 of the Act in Crl.M.P.No.328 of 2018, that an Advocate-Commissioner was appointed by the said Court to evict the 2nd petitioner, and on 10.08.2018 the Advocate-Commissioner gave notice to the 2nd petitioner to vacate and handover physical possession of the secured asset.
26. It is alleged that the petitioner came to the Tribunal with unclean hands; that an interim order was granted on 04.09.2018 directing the petitioners to deposit Rs.1 lakh in one week, but the petitioners did not comply and merely issued a cheque for the said amount on 05.09.2018; that the 1st respondent Bank informed the petitioner that the account had ::9::
become 'NPA' and any cheque drawn on the said account cannot be acted upon.
27. It is also stated that the petitioners had deposited Rs.2 lakhs on 14.06.2018 after the auction had been conducted and sought for stopping of the auction proceedings, and taking into account their request, sale confirmation letter was not issued to the successful bidder. But since the petitioners did not close the loan accounts, the 1st respondent Bank had issued sale confirmation letter to the successful bidder. The plea of the auction purchaser / 2nd respondent in the S.A.
28. The auction purchaser who was impleaded as 2nd respondent in the S.A. supported the stand taken by the 1st respondent-Bank. The order of the Debt Recovery Tribunal in S.A.No.182 of 2018 dt.25.07.2019 :
29. The Debt Recovery Tribunal dismissed the S.A. on 25.07.2019.
30. It held that the petitioners had not raised any objection to the notice issued under Section 13(2) of the Act by the 1st respondent-Bank to them, that they had not replied to the same, that the 1st respondent- Bank was constrained to issue possession notice under Section 13(4) of the Act, and since no repayment was forthcoming, the 1st respondent Bank issued notice under Rule 8(6) and proceeded with the auction of the secured assets.
31. It held that the petitioners cannot question the previous measures of the 1st respondent Bank and cannot contend that there is a continuous cause of action; and that each measure has to be challenged within the ::10::
limitation period. It observed that there was no violation committed by the 1st respondent-Bank in taking steps under Section 14 of the Act for taking over physical possession of the secured asset for handing it over to the auction purchaser and that the auction purchaser had not chosen to challenge the auction conducted though he was aware of it within the time prescribed by law and therefore, he is deemed to have waived all his rights.
32. It also held that the 1st respondent-Bank had followed the procedure contemplated under the Act and the Rules made thereunder and the S.A. was without any merits.
33. Assailing the same, this Writ Petition is filed. Contentions of Counsel for the petitioner
34. Counsel for the petitioner reiterated the contentions raised in the S.A. and contended that the order passed by the Tribunal is unsustainable in law; that the several contentions raised by the petitioners were not adverted to or considered by the said Tribunal in the impugned order; that no findings had been recorded by the Tribunal on service, affixture and publication of the possession notice dt.15.11.2017 and notice dt.21.02.2018 under Rule 8(6), and service and affixture of notice dt.05.05.2018.
35. He also contended that the S.A. was filed on 04.09.2018 within time from the date of passing of order under Section 14 of the Act by the Chief Metropolitan Magistrate; that the Bank extended time for payment ::11::
by delaying deliberately the sale confirmation though Rule 9(2) says sale confirmation must be on the date of the auction; and that the Bank cannot sell property worth Rs.1 crore to realize dues of Rs.10,76,373/-.
36. He also contended that the date of auction was not informed to the petitioner and there was no waiver by the petitioner.
37. According to him, there is no proper valuation also before the property was put to sale and the order of the Tribunal is thus vitiated because payments made of Rs.2 lakhs on 14.06.2018 and Rs.8.25 lakhs paid on 05.03.2018 were not taken into account. The stand of the 2nd respondent /auction purchaser before this court
38. The 2nd respondent filed a counter stating that on 26.09.2019 he had gifted the secured property purchased by him in the e.auction sale held on 14.06.2018 to his wife and two children under a registered Gift Deed dt.26.09.2019.
39. Therefore, the wife and children of the 2nd respondent were impleaded as respondent nos.3 to 5 in the Writ Petition. Events after filing of the Writ Petition
40. After the Writ Petition was filed, on 19.12.2019, this Court directed the counsel for respondent nos.1 and 2 to file an affidavit stating the date when 25% of the bid amount was paid by the auction purchaser (2nd respondent), when the letter of confirmation was issued by the 1st respondent to the 2nd respondent, and when the balance consideration of ::12::
75% was paid by the 2nd respondent to the 1st respondent with documentary evidence.
41. On 23.12.2019 counter-affidavit was filed by the 1st respondent stating that e.auction was held on 14.06.2018; 25% of the bid amount was deposited on 15.06.2018; that 2nd respondent was the highest bidder; that confirmation letter was issued to him on 25.06.2018 which was received by him on 27.06.2018; and that the 75% of the sale consideration was paid by 2nd respondent in the following manner :
(i) On 18.06.2018 - Rs.0.50 lakhs
(ii) On 10.07.2018 - Rs.10.00 lakhs
(iii) On 11.07.2018 - Rs.17.00 lakhs
(iv) On 26.07.2018 - Rs.16.90 lakhs
The consideration by the Court
42. Firstly , it is important to note that in the earlier counter-affidavit filed by the 1st respondent on 14.11.2019 the above referred details had been suppressed by the 1st respondent-Bank.
43. It merely relied on the contents of the order passed by the Tribunal and raised the plea of existence of appellate remedy before the Debt Recovery Appellate Tribunal and contended that the Writ Petition was not maintainable.
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Alternative remedy no bar to entertaining of the Writ Petition
44. There is no dispute that though there is a remedy of appeal under Section 18 of the Act before the Debt Recovery Appellate Tribunal challenging the impugned order of the Tribunal, since there is no Chairman appointed to the Debt Recovery Appellate Tribunal at Kolkata (which has jurisdiction over the Tribunal), and since parties have to file the said appeal at the Office of the said Appellate Tribunal at Kolkata and then proceed to Allahabad where the In-Charge Debt Recovery Appellate Tribunal is functioning for any relief, we are of the opinion that the said appellate remedy is not an effective alternative remedy. Therefore, we hold that this is a fit case to entertain the Writ Petition against the impugned order passed by the Tribunal. Whether the SA is barred by limitation?
45. We shall first deal with the issue of limitation raised by the 1st respondent-Bank before the Tribunal in the S.A., which plea was accepted by the said Tribunal.
46. Admittedly, the S.A. was filed on 04.09.2018 by the petitioners under Section 17 of the Act. They had questioned in the S.A.
(i) notice dt.05.05.2018 under Rule 8(6) of the Rules published on 10.05.2018,
(ii) e.auction notice dt.13.05.2018 published in 'Andhra Jyothi' newspaper fixing the date of auction as 14.06.2018 and ::14::
(iii) also the proposed action of the 1st respondent-Bank in contemplating to take physical possession of the secured asset through Advocate-
Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dt.10.08.2018 issued by the Advocate-Commissioner.
47. It was the specific plea of the petitioner in the S.A. that the petitioners had enquired on 15.06.2018 about the result of the auction held the previous day, i.e., on 14.06.2018, but the 1st respondent-Bank did not furnish any information in that regard to the petitioners (para no.3, page no.5 of the S.A.).
48. There is no denial of this fact in the counter-affidavits filed by the 1st respondent-Bank in the S.A. though it admitted in para no.6 that on 15.06.2018, the 2nd petitioner gave a letter promising to pay installments.
49. If the auction had not fructified on 14.06.2018 and was adjourned, the petitioners would have had no problem of limitation at all.
50. Likewise, if the 1st respondent-Bank had informed the petitioners about the result of the auction held on 14.06.2018 and more particularly, that the 2nd respondent had become the highest bidder, the petitioners would have immediately invoked Section 17 of the Act.
51. It is not the case of the 1st respondent-Bank that it had made known to petitioners, the result of the e.auction held on 14.06.2018 before the O.A. was filed on 04.09.2018.
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52. Having withheld the said information from the petitioners, the 1st respondent cannot be permitted to plead the bar of limitation because it would amount to allowing the 1st respondent to take advantage of its own wrong, which is impermissible in law.
53. In Union of India v. Maj. Gen. Madan Lal Yadav2, the Supreme Court explained this principle in the following terms :
"28. ... ... ... It is an admitted position that GCM assembled on 25-2-1987. On consideration of the charge, the proceedings were adjourned from day to day till the respondent appeared on 2-3-1987. It is obvious that the respondent had avoided trial to see that the trial would not get commenced. Under the scheme of the Act and the Rules, presence of the accused is a precondition for commencement of trial. In his absence and until his presence was secured, it became difficult, nay impossible, to proceed with the trial of the respondent-accused. In this behalf, the maxim nullus commodum capere potest de injuria sua propria -- meaning no man can take advantage of his own wrong -- squarely stands in the way of avoidance by the respondent and he is estopped to plead bar of limitation contained in Section 123(2). In Broom's Legal Maxim (10th Edn.) at p. 191 it is stated:
"... it is a maxim of law, recognised and established, that no man shall take advantage of his own wrong; and this maxim, which is based on elementary principles, is fully recognised in courts of law and of equity, and, indeed, admits of illustration from every branch of legal procedure."
The reasonableness of the rule being manifest, we proceed at once to show its application by reference to decided cases. It was noted therein that a man shall not take advantage of his own wrong to gain the favourable interpretation of the law. In support thereof, the author has placed reliance on another maxim frustra legis auxilium invocat quaerit qui in legem committit. He relies on Perry v. Fitzhowe3. At p. 192, it is stated that if a man be bound to appear on a certain day, and before that day the obligee puts him in prison, the bond is void. At p. 193, it is stated that "it is moreover a sound 2 (1996) 4 SCC 127 ::16::
principle that he who prevents a thing from being done shall not avail himself of the non-performance he has occasioned". At p. 195, it is further stated that "a wrong doer ought not to be permitted to make a profit out of his own wrong". At p. 199 it is observed that "the rule applies to the extent of undoing the advantage gained where that can be done and not to the extent of taking away a right previously possessed".
29. The Division Bench of the High Court has recorded the finding that the respondent has absconded from open military detention. From the narration of the facts it is clear that the respondent was bent upon protracting preliminary investigation.
Ultimately, when the GCM was constituted, he had challenged his detention order. When he was unsuccessful and the trial was to begin he escaped the detention to frustrate the commencement of the trial and pleaded bar of limitation on and from 1-3-1987. The respondent having escaped from lawful military custody and prevented the trial from being proceeded with in accordance with law, the maxim nullus commodum capere potest de injuria sua propria squarely applies to the case and he having done the wrong, cannot take advantage of his own wrong and plead bar of limitation to frustrate the lawful trial by a competent GCM. Therefore, even on the narrow interpretation, we hold that continuation of trial from 2-3-1987 which commenced on 25- 2-1987 is not a bar and it is a valid trial."
54. This principle has been reiterated in several cases. One such case is Panchanan Dhara v. Monmatha Nath Maity3 :
"7. Performance of a contract may be dependent upon several factors including grant of permission by the statutory authority in appropriate cases. If a certain statutory formality is required to be complied with or permission is required to be obtained, a deed of sale cannot be registered till the said requirements are complied with. In a given situation, the vendor may not be permitted to take advantage of his own wrong in not taking steps for complying with the statutory provisions and then to raise a plea of limitation."(emphasis supplied) 3 (2006) 5 SCC 340 ::17::
55. Having suppressed that the auction was conducted on 14.06.2018 successfully and that the 2nd respondent was the highest bidder from the petitioners, the 1st respondent cannot plead that the S.A. was filed beyond the period of 45 days from the sale on 04.09.2018. Whether there is a waiver by the petitioners of rights under the SARFAESI ACT,2002?
56. The Tribunal had also held that there was a waiver by the petitioners of their right to contend about illegality if any committed in the conduct of e.auction on 14.06.2018 by the 1st respondent-Bank.
57. This aspect was considered by the Supreme Court in Vasu P. Shetty vs. Hotel Vandana Palace and others4. In the said judgment, the Supreme Court held as under :
"24. The moot question is, even if there were delaying tactics adopted by the borrower in respect of the first two auctions, whether that conduct of the borrower would amount to waiving the mandatory requirement of publishing subsequent notice dated 27-4-2006 fixing the date of auction as 8-5-2006? Our answer has to be in the negative. The aforesaid conduct cannot be taken as waiver of the mandatory condition of 30 days' notice for auction as well as other requirements. For examining the plea of waiver, we will have to see as to whether by implied or express actions, the borrower has waived the aforesaid mandatory requirement when the property was put to sale. We do not find, nor is it suggested, even the slightest move on the part of the borrower in this regard which may amount to waiver either express or implied. On the contrary, when notice dated 27-4-2006 was published, the borrower immediately filed Writ Petition No. 6471 of 2006 challenging the auction-notice. Thus, its conduct, far from waiving the aforesaid requirement, was to confront the Bank by questioning its validity. It is a different matter that it had to withdraw the said writ 4 (2014) 5 S.C.C. 660 ::18::
petition in view of availability of alternate remedy. Immediately, it filed an application under Section 18 of the SARFAESI Act. There is, thus, not even an iota of material suggesting any waiver on the part of the borrower.
25. The moment we find that the mandatory requirement of the Rules had not been waived by the borrower, consequences in law have to follow. As held in Mathew Varghese case, when there is a breach of the said mandatory requirement the sale is to be treated as null and void. Moreover, the appellant has no answer to many other infirmities pointed out by the High Court. We, therefore, are of the opinion that the present appeals lack merit."(emphasis supplied)
58. In the instant case also though the 1st respondent-Bank did not disclose to the petitioners about the sale in the e.auction held on 14.06.2018 to the 2nd respondent, as soon as the Advocate- Commissioner's notice dt.10.08.2018 was received by the petitioners, they filed the S.A. on 04.09.2018. There is nothing in the conduct of the petitioners to suggest that they had waived any rights under the statute or the rules made thereunder. Therefore, this plea of the 1st respondent- Bank about waiver by petitioners of their rights under law, is rejected. The respondents 1 and 2 did not comply with Rule 9:
59. The conduct of the 1st respondent-Bank in suppressing about the dates of payment by the 2nd respondent in the 1st counter-affidavit filed by it on 14.11.2019 is wholly inexplicable. Only when there was a specific order from the Court on 19.12.2019 to disclose details did the truth about the delay by it of issuing sale confirmation to the 2nd respondent till 27.06.2018 and payment of the balance 75% sale consideration by the 2nd respondent on 18.06.2018, 10.07.2018, 11.07.2018 and 26.07.2018 came to light.
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60. In our considered opinion, as per Rule 9(2), the sale confirmation letter ought to be issued to the auction purchaser on the day of the sale itself unless the amount offered by way of sale price is less than the reserve price. On no other count can issuance of sale confirmation letter be delayed by the secured creditor to the auction purchaser.
61. Contrary to this rule, though e.auction sale took place on 14.06.2018, sale confirmation letter was not issued to 2nd respondent till 27.06.2018 and this is clearly an attempt by the 1st respondent-Bank to favour the auction purchaser by giving him more time that what is permitted by Rule 9(4) to make payment of the 75% balance sale consideration.
62. Though under Rule 9(3) the auction purchaser has to deposit the 25% of the amount of sale price immediately after sale, admittedly the 2nd respondent deposited the 25% of the sale consideration on
15.06.2018 i.e after the day of the sale, and not immediately after the sale.
63. Further, under Rule 9(4), the auction purchaser should pay 75% of the balance consideration within fifteen days of the confirmation of the sale, i.e., within fifteen days from 14.06.2018, i.e., before 29.06.2018. In the instant case, the 1st respondent-Bank admittedly permitted the 2nd respondent to pay the balance consideration even on 26.07.2018 almost one month after 29.06.2018.
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64. This indicates that there is active collusion between the officials of the 1st respondent-Bank and the auction purchaser and the Bank had gone out of the way to favour the auction purchaser.
The challenge to the notice dt.5.5.2008 under Rule 8(6) is not barred by limitation.
65. We shall deal with the question whether the petitioners plea as to invalidity of notice dt.05.05.2018 under Rule 8(6) of the Rules published on 10.05.2018, and also the proposed action of the 1st respondent-Bank in contemplating to take physical possession of the secured asset through Advocate-Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dt.10.08.2018 issued by the Advocate-Commissioner, are barred by limitation.
66. It is true that notice dt.05.05.2018 under Rule 8(6) of the Rules was published on 10.05.2018 but the SA had been filed on 4.9.2018.
67. A Division Bench of this Court in M/s. Durga Bhavani Agro Tech Industry, Atmakur Village & Mandal, Warangal Dist rep. by its Manager M.Sreedhar Vs. Canara Bank, Hanamkonda Branch, Warangal rep. by its Authorized Officer and others5 held that the series of steps that could be taken by an authorized officer under Section 13(4) of the Act are generally termed as "measures"; it is the right of a person against whom one or more of the measures are taken under Section 13(4) of the Act to challenge those measures under Section 17 of the Act; and when an auction notice is challenged, it is even open to the 5 Order dt.18.04.2018 in W.P.No.12189 of 2018 (High Court at Hyderabad for the States of Telangana and AP) ::21::
borrower to challenge the series of steps from the date of issue of Section 13(4) of the Act, up to the date of the auction notice.
It observed that cause of action is nothing but a bundle of facts; Court fee does not become payable on every single cause of action; and Court fee before the Debts Recovery Tribunal is not paid on the basis of valuation of everyone of the prayers made before the Tribunal; and the Tribunal cannot ask the parties to pay Court fee afresh on prayers added by way of amendment and such power is not traceable to the statute or the rules.
68. This decision was followed and applied in an order dt.24.01.2020 in W.P.No.13936 of 2019 and in order dt.6.3.2020 in W.P.12081 of 2019 pronounced by this very Bench.
69. So since the challenge to the e.auction notice was already held by us to be not barred by limitation, by applying the above principle, to challenge the series of steps from the date of issue of Section 13(4) of the Act up to the date of the auction notice i.e , notice dt.05.05.2018 under Rule 8(6) of the Rules published on 10.05.2018, and also the proposed action of the 1st respondent-Bank in contemplating to take physical possession of the secured asset through Advocate- Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dt.10.08.2018 issued by the Advocate-Commissioner.
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70. Therefore we hold that the plea in the SA about the invalidity of the notice dt.5.5.2018 issued under Rule 8 (6) is not barred by limitation and the Tribunal erred in taking the said view.
Non compliance with Rule 8(6)
71. No material has been produced by the 1st respondent-Bank that it had complied with the service affixture and publication of the possession notice dt.15.11.2017 and notice dt.21.02.2018 under Rule 8(6), and service and affixture of notice dt.05.05.2018. Strangely the Tribunal gave no finding on these aspects. This is clearly erroneous. Consequently we declare the order of Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad under Sec.14 of the Act as invalid and the same is also set aside.
The 1st respondent could not have conducted sale of the entire secured asset for dues which are fraction of it's value
72. We also hold that the action of the 1st respondent in issuing the e.auction notice dt.13.05.2018, mentioning the liability of petitioners was mentioned as only Rs.10,76,373/-, but putting up property having reserve price worth of Rs.58.86 lakhs for sale, is not bonafide. On this ground also the sale held in favour of the 2nd respondent by the 1st respondent is set aside.
Conclusion:
73. For the aforesaid reasons, we allow the Writ Petition with costs of Rs.25,000/- to be paid to the 1st petitioner by the respondents; order dt.25.7.2019 in SA 182 of 2018 of the Debt Recovery Tribunal-I , ::23::
Hyderabad is set aside; we hold that the 1st respondent had not proved the service of notice under Rule 8(6) on petitioners or it's affixture; the sale confirmation made on 25.6.2018 of the subject property in favor of the 2nd respondent by the 1st respondent is declared invalid and is set aside; the order in Crl.M.P.No.328 of 2018 of the Chief Metropolitan Magistrate, Hyderabad under Sec.14 of the SARFAESI Act,2002 is set aside; consequently we declare that the 2nd respondent could not have gifted the subject property to respondents 3 to 5 under the regd. Gift deed dt.26.09.2019 and the same is declared null and void; and the respondents 2-5 are directed to hand over vacant possession of the subject property to the petitioners within 4 weeks from the date of receipt of copy of this order.
74. As a sequel, miscellaneous petitions, pending if any in this Writ Petition shall stand closed.
___________________________ M.S.RAMACHANDRA RAO, J ________________ K.LAKSHMAN, J Date: 21-04-2020 Note: L.R. copies to be marked.
B/o Vsv/