Madras High Court
M/S.P.M.Associates vs Ifci Limited on 23 August, 2013
Author: M. Duraiswamy
Bench: M. Duraiswamy
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.08.2013 CORAM THE HONOURABLE MS.JUSTICE K.SUGUNA and THE HONOURABLE MR. JUSTICE M. DURAISWAMY W.P.Nos.1937 & 4088 of 2012 and M.P.Nos.1 & 2 of 2012 in W.P.No.1937 of 2012 and M.P.Nos.2 to 4 of 2012 & 1 of 2013 in W.P.No.4088 of 2012 M/s.P.M.Associates, 70/A, IVY Banks, Upper Wood House Road, Udhagamandalam, rep by its Managing Partner, Mr.Murli Khemchand. ... Petitioner in both W.Ps Vs. 1.IFCI Limited, rep by its Regional Manager, Commercial Chambers, 142 Mahatma Gandhi Road, P.B.No.3318, Nungambakkam, Chennai-600 034. 2.The Authorised Officer, IFCI Ltd., No.7, 1st Floor,2nd Cross, CSI Compound, Mission Road, Bangaluru 560 027. 3.Sterling Holiday Resorts India Limited, No.163, TTK Road, Alwarpet, Chennai-18, rep by its Senior Vice President (Finance) Mr.Mohan ... Respondents in both W.Ps (R3 impleaded as per order dated 04.02.2013 in M.P.No.3 of 2012 in W.P.No.1937 of 2012) Prayer in W.P.No.1937 of 2012: Writ petition filed for the issuance of a Writ of mandamus directing the respondents to register the Sale Certificate dated 16.09.2011 executed by the respondents in favour of the petitioner in respect of movable and immovable properties described in Schedule I & II in the Sale Certificate and to effect changes in the Revenue Records to record the ownership of the properties sold to the petitioner and to handover physical possession of the same to petitioners forthwith under the Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act 2002 (Act 54 of 2002-SARFAESI Act) Prayer in W.P.No.4088 of 2012: Writ petition filed for the issuance of a writ of certiorarified mandamus to call for the records in proceedings/letter No.IFCI/BLRO SHRL/2012/4102 dated 08.02.2010 on the file of the second respondent and quash the same as ultra vires, unconstitutional, contrary to the provisions of the SARFAESI Act and Rule 7(2) of the Rules thereunder and against the principles of natural justice and consequently direct the respondents 1 and 2 to hand over physical possession of the properties, movable and immovable, as detailed in the Tender Document as well as the Sale Certificate dated 16.09.2012 to the prima facie title holder (i.e.) the petitioner herein, in respect of the entire properties both movables and immovable in S.No.649 and 652/1, Fern Hill, Uthagamandalam, without any further loss of time and further directing the respondents 1 and 2 being the possession holder of the above properties, as per Section 13 (4) of the SARFAESI Act, not to allow anyone, including the third respondent who claims to have clinched a "Settlement" with the respondents 1 and 2, not to deal with the properties in S.Nos.649 & 652/1, Fern Hill, Uthagamandalam, and/or to carry on operation or business in the said properties. For Petitioner : Mr.R.Shanmugam (in both W.Ps.) for M/s.Shanmugam Associates For Respondents : Mr.P.S.Raman, Senior Counsel (in both W.Ps.) for Mr.Om Prakash for M/s.Ramalingam Associates (R1) Mr.AR.L.Sundaresan, Senior Counsel for M/s.A.L.Gandhimathi (R3) (in both W.Ps.) R2- no appearance C O M M O N O R D E R
M.DURAISWAMY, J.
Heard Mr.R.Shanmugam, learned counsel for the petitioner, Mr.P.S.Raman, learned senior counsel for the first respondent and Mr.AR.L.Sundaresan, learned senior counsel for the third respondent.
2.The petitioner has filed the writ petition in W.P.No.1937 of 2012 to issue a writ of mandamus directing the respondents to register the Sale Certificate dated 16.09.2011 executed by the respondents in their favour in respect of the movable and immovable properties and to effect changes in the revenue records to record the ownership of the properties sold to them and to hand over physical possession of the same under the SARFAESI Act.
3.The petitioner filed the writ petition in W.P.No.4088 of 2012 to issue a writ of certiorarified mandamus to call for the records in proceedings/letter dated 08.02.2012 on the file of the second respondent and to quash the same as ultra vires, unconstitutional and contrary to the provisions of the SARFAESI Act and Rule 7(2) of the Rules thereunder and against the principles of natural justice and consequently to direct the respondents 1 & 2 to hand over physical possession of the properties, movable and immovable as well as the Sale Certificate dated 16.09.2011 to them in respect of the entire properties and directing the respondents 1 & 2 not to allow anyone including the third respondent who claims to have clinched a "Settlement" with the respondents, not to deal with the properties or to carry on operation or business in the said properties.
4.Since the issue involved in both the writ petitions are common, both the writ petitions are disposed of by this common order.
5.The brief case of the petitioner necessary for the disposal of the writ petitions are as follows:
(i)According to the petitioner, on seeing the public auction notice dated 27.03.2012 published in Tamil Daily "Dinamalar" given by the respondents with regard to the sale of movable and immovable properties in Survey Nos.649 and 652/1 measuring 6.99 acres of land along with fittings, fixtures and furniture, they participated in the auction and submitted their bid for a sum of Rs.20,00,10,000/- and they were declared as successful bidder in the auction. The said Sale Consideration of Rs.20,00,10,000/- was paid by the petitioner by way of Demand Draft dated 12.09.2011. On 16.09.2011, the second respondent issued Sale Certificate in favour of the petitioner making them as the lawful owner of the entire properties both movables and immovable.
(ii)After the issuance of the Sale Certificate, the petitioner, being the bona fide purchaser in the public auction conducted by the respondents under the SARFAESI Act and they being the lawful owner of the said properties, have got every right to protect the properties. On issuance of Sale Certificate on 16.09.2011, the respondents are bound to register the said Sale Certificate in favour of the petitioner and they are also duty bound to effect changes in the revenue records to record the ownership of the properties in the name of the petitioner. But even after four months from the date of issuance of Sale Certificate, the respondents have not also handed over the physical possession of the properties.
(iii)According to the petitioner, the Sale Certificate was issued under Rule 7(2) and Rule 9(6) of the Security Interest (Enforcement) Rules 2002 read with Section 13(12) of the SARFAESI Act and Rule 8 & 12 of the Rules. Further, according to the petitioner, as per Rule 7(2) of the Security Interest (Enforcement) Rules 2002, the sale in favour of the petitioner has become final and the petitioner Company has become the prima facie title holder of the entire properties both movables and immovable. Further, according to the petitioner, the Sale Certificate dated 16.09.2011 has become final. As per the Sale Certificate dated 16.09.2011, the third respondent, the defaulted borrower have no right to remove any of the properties from the purchased properties. The respondents 1 & 2 are purposefully avoiding to hand over physical possession of the properties to the petitioner with a view to enable the third respondent to initiate several proceedings against them.
(iv)But curiously suppressing the crucial fact that the petitioner has become the lawful owner of the entire properties under the Sale Certificate dated 16.09.2011, the respondents 1 & 2 as well as the third respondent have not disclosed or declared the factum of issuance of Sale Certificate dated 16.09.2011 executed by the respondents 1 & 2 in favour of the petitioner. The suppression of the said fact is evident from the affidavits filed in support of the writ petitions in W.P.Nos.21820 and 22837 of 2011 as well as in the petition and typed set of papers filed in S.L.P.No.27587 of 2011 by the third respondent before the Hon'ble Supreme Court. Even the respondents 1 & 2, who are the statutory authorities have suppressed to bring the said fact before this Court as well as before the Hon'ble Supreme Court. The respondents 1 & 2 have allowed the third respondent to carry on the business in the properties of the petitioner and the third respondent committed an act of theft of the movables from the petitioner's properties, with the permission of the respondents 1 & 2 by issuing gate pass and also sold the same to the third parties and appropriated the sale proceeds. Therefore, the petitioner gave a complaint to the local police. However, there was no follow up action by the police. Hence, the petitioner filed a petition before this Court in Crl.O.P.No.1760 of 2012 and by an order dated 10.02.2012 this Court directed the police to register an FIR as against the third respondent and its men and the same is under investigation.
(v)The writ petitions filed by the third respondent in W.P.Nos.21820 and 22837 of 2011 before this Court as against the respondents 1 & 2 were withdrawn by the third respondent on 14.02.2012 by filing a memo stating that the issue between the third respondent and the respondents 1 & 2 was settled. This Court, recording the memo dated 14.02.2012 filed by the third respondent, dismissed the two writ petitions as withdrawn. However, during the pendency of the writ petitions, the petitioner filed two miscellaneous petitions for impleading them as respondent in those two writ petitions. Since the writ petitions came to be dismissed as withdrawn, the petitioner also withdrew the said miscellaneous petitions. As on date, no other proceeding is pending between the respondents 1 & 2 and the third respondent before this Court. According to the petitioner, in view of the dictum laid down in the judgment (2007) 5 Supreme Court Cases 745 [B.Arvind Kumar Vs. Govt. of India and others] followed by the judgment of a Division Bench of this Court reported in AIR 2008 Madras 108 [K.Chidambara Manickam Vs. Shakeena and others] to the effect that registration of the Sale Certificate issued by the Authorised Officer under the SARFAESI Act 2002 is not required to be registered. Therefore, the petitioner is not pressing the relevant portion of the relief sought for in W.P.No.1937 of 2012.
(vi)According to the petitioner, once the sale of the properties in question have become absolute and final and the auction purchaser (i.e.) the petitioner will become the prima facie title holder of the properties. Therefore, the so called settlement reached and arrived at between the third respondent and respondents 1 & 2 will not have any impact on the petitioner's absolute ownership over the properties in question, especially when the respondents 1 & 2 have no power under the SARFAESI Act either unilaterally or otherwise to cancel the Sale Certificate dated 16.09.2011. In view of the judgment of the Hon'ble Supreme Court reported in (2004) 4 Supreme Court Cases 311 : AIR 2004 SC 2371 (Mardia Chemicals Ltd. and others Vs. Union of India and others), the entire provisions of the SARFAESI Act have been upheld and there is no provision under the SARFAESI Act enabling or empowering the Authorised Officer to cancel the Sale Certificate issued in favour of the auction purchaser. When the registration of the Sale Certificate issued to the petitioner under the SARFAESI Act is not mandatory or compulsory, the sale concluded by the Authorised Officer under the SARFAESI Act in favour of the petitioner has become absolute and the petitioner has become the prima facie title holder of the properties and the Sale Certificate dated 16.09.2011 issued in favour of the petitioner has become an evidence as to the title acquired by the petitioner.
(vii)Further, according to the petitioner, the impugned proceedings dated 08.02.2012 cancelling the Sale Certificate dated 16.09.2011 issued by the second respondent unilaterally without notice is contrary to the provisions of the SARFAESI Act and principles of natural justice. The respondents cannot nullify the absolute sale concluded in favour of the petitioner and the Sale Certificate dated 16.09.2011 issued in their favour by entering into the so called settlement between them. The cancellation of the Sale Certificate by letter dated 08.02.2012 are against the law laid down by the Hon'ble Supreme Court. In these circumstances, the petitioner has filed the above two writ petitions.
6.The brief case of the first respondent necessary for the disposal of the writ petitions:
(i)According to the respondent, they are interested only in the recovery of the dues from the defaulting borrowers and the actions and steps for the recovery of the dues taken up by them have been bona fide and were pursued with the sole objective of recovery of outstanding dues by resorting to all enforceable rights available under law and by strictly following the process prescribed under law. The respondent has been deprived of its entitlement and right of recovery of money from the defaulting borrower for more than 21 years. The credit facilities were granted to the borrower in the year 1991. Therefore, according to the respondent, it would only be prudent and beneficial in commercial parlance that an amicable solution is found at the earliest so that the amount recovered is available immediately for commercial use of the respondent. The respondent/Financial Institution had been contesting number of litigation in the hope of being able to recover money from the defaulting borrower.
(ii)The respondent filed an application in O.A.No.277 of 2000 for recovery of dues from the third respondent/borrower. The same was followed by issuance of notice under Section 13(2) of the SARFAESI Act dated 30.10.2007. The actions for recovery initiated under the DRT Act, 1993 and the SARFAESI Act, 2002 resulted into an unique situation whereby the respondent/Financial Institution was forced to fight multiple litigation at two opposite corners of the Country i.e. the Original Application and the litigation arising out of the same in Delhi and the Securitisation proceedings and the litigation arising out of the same in Chennai. After pursuing a number of appeals and writ petitions, the matter has also gone up to the Hon'ble Supreme Court by way of Special Leave Petition filed by the third respondent/borrower wherein the Hon'ble Supreme Court has already issued notice. On 20.10.2009, the Debt Recovery Tribunal, Delhi decreed the Original Application filed by the respondent and the same was challenged before the Debt Recovery Appellate Tribunal by way of appeals both by the first respondent/Financial Institution and the third respondent/borrower.
(iii)The order of the Debt Recovery Appellate Tribunal was further challenged by way of writ petition before the Hon'ble High Court of Delhi where the writ petition filed by the third respondent/borrower was withdrawn with liberty to file review petition. The said review petition is still pending before the Debt Recovery Appellate Tribunal, Delhi. By order dated 06.09.2010, the Debt Recovery Appellate Tribunal, Delhi directed the third respondent to pay the decreetal amount along with interest at the rate of 16% per annum effectively 10.03% per annum with quarterly rests.
(iv)According to the respondent, the following is the list of litigation pursued by them and against the third respondent/borrower:
1.Original Application No.277 of 2000.
2.SA No.189 of 2009.
3.Writ petition filed before the Hon'ble High Court of Chennai.
4.Writ petition filed before the Hon'ble High Court of Chennai.
5.Appeal filed by the respondent no.3/borrower before the learned Debt Recovery Appellate Tribunal, Delhi against the order dated 23.10.2009, passed by the Debt Recovery Tribunal, Delhi.
6.Appeal filed by the respondent no./financial institution before the learned Debt Recovery Appellate Tribunal, Delhi against the order dated 23.10.2009, passed by the Debt Recovery Tribunal, Delhi.
7.Writ petition No.7129 of 2010 filed before the Hon'ble High Court of Delhi by the respondent no.3/borrower against the order dated 06.08.2010 passed by the learned Debt Recovery Appellate Tribunal. Delhi.
8.Appeal filed by respondent no.1/financial institution before the Debt Recovery Appellate Tribunal, Chennai.
9.Writ petition No.6710 of 2011 filed before the Hon'ble High Court of Chennai by the respondent no.1/financial institution against the order dated 09.03.2011 of Debt Recovery Appellate Tribunal, Chennai.
10.Writ petition No.21820 of 2011 filed before the Hon'ble High Court of Chennai by the respondent no.3/borrower.
11.Writ petition No.22837 of 2011 filed before the Hon'ble High Court of Chennai by the respondent no.3/borrower.
12.Review Application filed before Debt Recovery Appellate Tribunal, Delhi.
13.Application filed by the respondent no.1/financial institution under Section 14 before the Metropolitan Magistrate, Ooty.
14.Writ Petition No.1937 of 2012 pending before this Hon'ble Court.
15.Writ Petition No.4088 of 2012 pending before this Hon'ble Court.
16.Contempt Petition before the Hon'ble High Court of Delhi.
17.SLP (C.) before the Hon'ble Supreme Court.
(v)As per the order of the Debt Recovery Appellate Tribunal, Delhi dated 06.08.2010, the first respondent was found entitled to a sum of Rs.10,06,36,973/- as on 31.12.2011. The sale in question was already challenged by the third respondent/borrower by way of two writ petitions before this Court and by way of Special Leave Petition before the Hon'ble Supreme Court. In these circumstances, the respondent found it a commercially prudent decision to accept the offer of payment of Rs.12,50,00,000/- from the third respondent/borrower. The said settlement was handed over with a view that the said amounts become available for further investment which would commercially benefit the first respondent/Financial Institution. In any event, the entire auction amount was neither utilised nor appropriated by the first respondent, since the matter was sub-judice before this Court. The said amount was kept in interest-bearing-no-lien account and subsequent to the settlement with the third respondent, the entire amount along with the interest has been returned back to the petitioner. The first respondent had tried its level best to conclude the sale and in that regard, not only had approached the Metropolitan Magistrate by filing an application under Section 14 of the SARFAESI Act, but also tried to hand over the physical possession to the petitioner. However, in obedience of the orders passed by this Court and in view of the pendency of the issues raised by the third respondent before this Court, no further actions were taken. The first respondent had duly disclosed the factum of issuance of Sale Certificate in favour of the petitioner in the counter affidavit filed by them in W.P.No.21820 of 2011 on 17.10.2011. In these circumstances, the first respondent prayed for dismissal of the writ petitions.
7.The brief case of the third respondent necessary for the disposal of the writ petitions are as follows:
(i)According to the third respondent, the first respondent had advanced a term loan to the tune of Rs.216 lakhs to set up Three Star Hotels at Ooty and Kodaikanal in Tamil Nadu, but disbursed only Rs.206 lakhs. The said loan was advanced by the first respondent under the consortium agreement along with M/s.Tourism Finance Corporation of India Limited. The amount advanced by M/s.TFCI was Rs.294 lakhs. The respondent offered their immovable properties as security and executed a joint memorandum of deposit of Title Deeds on 29.01.1989 in favour of the first respondent and M/s.TFCI. On 28.07.2009, the third respondent sent a communication to the first respondent to accept the one time settlement offer of Rs.111.86 lakhs but the first respondent refused to accept the offer and sent a reply dated 13.08.2009 from their Delhi Office on 17.08.2009. The said reply was received by the third respondent on 20.08.2009. By the time the refusal letter of OTS reached the third respondent, the second respondent, who is the Authorised Officer of the first respondent had taken possession of the movable properties on 21.08.2009.
(ii)Challenging this action, the third respondent filed an appeal under Section 17 of the SARFAESI Act in S.A.No.189 of 2009 before Debt Recovery Tribunal-I, Chennai. The third respondent deposited a sum of Rs.4.00 crores with the first respondent as per the directions of the Debt Recovery Tribunal-I, Chennai. The Debt Recovery Tribunal-I, Chennai by its order dated 05.03.2010 partly allowed the third respondent's appeal under Section 17 of the SARFAESI Act. The Debt Recovery Tribunal has set aside the action taken by the second respondent so far as it relates to the physical possession of the secured assets and permitted to proceed from the stage of symbolic possession. Immediately thereafter, the second respondent had issued tender cum auction sale notice on 25.03.2010 and fixed the auction sale on 28.04.2010. Immediately the third respondent filed R.A.S.A.No.107 of 2010 before the Debt Recovery Appellate Tribunal, Chennai and the Debt Recovery Appellate Tribunal, Chennai by order dated 07.04.2010 had granted interim injunction restraining the respondents 1 & 2 from proceeding further with SARFAESI action and also directed the third respondent to deposit a sum of Rs.1.00 crore. The said amount was deposited on 08.04.2010. The Debt Recovery Appellate Tribunal by its order dated 09.03.2011 set aside the orders of Debt Recovery Tribunal-I, Chennai dated 05.03.2010. The first respondent filed a writ petition in W.P.No.6710 of 2011 before this Court and this Court passed an interim order on 17.03.2011 giving certain direction to the parties. The writ petition was finally disposed of on 06.09.2011 setting aside the order dated 09.03.2011 passed by the Debt Recovery Appellate Tribunal, Chennai. By these proceedings in Debt Recovery Appellate Tribunal and before this Court, no action was taken by the respondents 1 & 2 pursuant to the tender notice dated 25.03.2010.
(iii)As a matter of fact, the respondents issued a sale notice on 25.03.2010 during the pendency of the appeal proceedings before the Debt Recovery Appellate Tribunal, Chennai accepting the order of Debt Recovery Tribunal-I, Chennai dated 05.03.2010. In the meanwhile, the Debt Recovery Tribunal-I, New Delhi by its order dated 23.10.2009 passed a decree quantifying the debt due by the third respondent and directing the third respondent to pay Rs.3,52,53,268/- along with the compound interest at the rate of 13.5% per annum with quarterly rests. Against this order, the third respondent preferred an appeal before the Debt Recovery Appellate Tribunal, Delhi in Appeal No.67 of 2010 and by its final order dated 06.08.2010, the Debt Recovery Appellate Tribunal, Delhi modified the order of the Debt Recovery Tribunal, Delhi and directed the third respondent to pay the pendent lite and future interest at the rate of 16% per annum simple interest.
(iv)While this appeal was pending, the third respondent approached M/s.TFCI Ltd for out of Court settlement and succeeded in its appeal and closed the entire claim by paying Rs.603 lakhs against their demand of Rs.1268 lakhs. Based on similar parameters a proposal was given to the first respondent. The first respondent filed a writ petition in W.P.No.7166 of 2010 and the third respondent filed a writ petition in W.P.No.7128 of 2010 before the High Court of Delhi. However, the third respondent, on the orders of the High Court, Delhi dated 11.11.2010 withdrew the writ petition and filed a review petition in Review Petition No.845 of 2010 before the Debt Recovery Appellate Tribunal, New Delhi. The Debt Recovery Appellate Tribunal, New Delhi has also stayed the execution of the decree by order dated 10.12.2010.
(v)According to the third respondent, after the disposal of the writ petition in W.P.No.6710 of 2011 on 06.09.2011, the respondents 1 & 2 have made attempts to take physical possession of the secured assets. Hence, the third respondent filed a writ petition in W.P.No.21820 of 2011 and by order dated 22.09.2011, this Court granted interim stay restraining the first respondent from precipitating further by filing Section 14 petition and ordered not to take physical possession of the secured assets. Further according to the third respondent, for the first time, the first respondent in their counter informed that they have issued a Sale Certificate to the petitioner on 16.09.2011. The sale notice dated 25.03.2010 could not be challenged by the third respondent in view of the pending proceedings before the Debt Recovery Appellate Tribunal, Chennai and before this Court.
(vi)The Sale Notice dated 25.03.2010 cannot be pursued further in view of the pendency of the legal proceedings and the increase in the value of the property. Hence, the third respondent filed another writ petition in W.P.No.22837 of 2011. The Hon'ble Supreme Court permitted the third respondent to deposit the balance dues with the first respondent in terms of decree dated 23.10.2009 passed by the Debt Recovery Tribunal, New Delhi as modified by the Debt Recovery Appellate Tribunal, New Delhi by its order dated 06.08.2010 after adjusting the amount deposited by the third respondent pursuant to the orders of the Hon'ble Supreme Court. The third respondent deposited a total sum of Rs.8,80,00,000/- and thereafter, approached the first respondent expressing its intention to pay the balance, if any, as per the first respondent's calculation.
(vii)Thereafter, by letter dated 03.02.2012, the first respondent informed that a sum of Rs.3,72,00,000/- was payable towards the full and final settlement of dues and requested the third respondent to pay the same on or before 06.02.2012. In terms of the said letter, the third respondent remitted the said amount of Rs.3,72,00,000/- totalling a sum of Rs.12,50,00,000/- towards full and final settlement of all dues to the first respondent. The first respondent had also handed over a copy of the letter dated 08.02.2012 addressed to one P.M.Associates informing them about the cancellation of the Sale Certificate issued to them and refund of all the amount paid by them with interest thereon. In view of the settlement of the account and cancellation of the Sale Certificate, it is deemed that the SARFAESI proceedings initiated by the first respondent had been withdrawn including the action of symbolic possession of the secured assets.
(viii)The respondent filed a memo dated 14.02.2012 and sought the permission of this Court to withdraw the two writ petitions on the ground that the matter has been settled and pursuant to the same, this Court dismissed the writ petitions as withdrawn on 14.02.2012. According to the third respondent, the sale notice was issued on 25.03.2010, but the petitioner has not filed the "Dinamalar" Tamil newspaper dated 27.03.2010 in which the said sale notice is alleged to have been published. The last date for submission of the tender was 28.04.2010 and the opening of the tender was on 28.04.2010 at 10.00 a.m. The petitioner has not filed any document to show that they have paid the Earnest Money Deposit of Rs.200 lakhs along with the tender document by way of Demand Draft in favour of the first respondent. A sum of Rs.20,00,10,000/- was paid by way of Demand Draft on 12.09.2011 and thereafter, the Sale Certificate came to be issued by the second respondent. No document has been filed by the petitioner to show that they had participated in the tender pursuant to the sale notice dated 25.03.2010. The sale notice dated 25.03.2010 came to be issued pursuant to the order of the Debt Recovery Tribunal-I, Chennai dated 05.03.2010. The said order and all further proceedings were stayed by the Debt Recovery Appellate Tribunal, Chennai on 07.04.2010 in the appeal filed by the third respondent.
(ix)Thereafter, by order dated 09.03.2011, the Debt Recovery Appellate Tribunal, Chennai set aside the order of Debt Recovery Tribunal-I, Chennai. Therefore, till the order was passed in W.P.No.6710 of 2011 on 06.09.2011, the respondents 1 & 2 had no power to proceed with the auction sale. After the said order on 06.09.2011, the respondents 1 & 2 without conducting any fresh tender or auction appears to have received the entire bid amount on 12.09.2011 and issued the Sale Certificate on 16.09.2011, which is nonest in law. The entire movable items described along with the tender document were not based on any inventory and were taken only from the valuation done in the year 2006. The petitioner lodged a false police complaint against the third respondent. The Inspector of Police filed a negative final report before the Judicial Magistrate, Uthagamandalam on 02.03.2012, treating the complaint filed by the petitioner as a case of civil nature and referred the same to the Judicial Magistrate, Uthagamandalam as mistake of fact. Since the procedures in the tender document were not followed and no letter of confirmation of the sale was issued in favour of the petitioner in terms of the tender document, issuance of Sale Certificate itself after a period of one year from the date fixed for opening of the tender is void ab initio.
(x)Further, the Sale Certificate attracts stamp duty under Article 23 of the Indian Stamp Act and 8% of the market value of the property is liable to be paid for the document. This Hon'ble Court in the judgment reported in 2010 (2) CTC 113 [In Re, The Official Liquidator, High Court, Madras] held that when a Sale Certificate has not been issued by the Civil or Revenue Officer, the exemption under Section 17 (2) (xii) of the Registration Act is not available to the petitioner. Once proper stamp duty is not paid for the said Sale Certificate and registered as required under law, then it is only a still born child and does not confer any right to the petitioner whatsoever. When the Sale Certificate is not properly stamped and registered, it is a void document and no right would vest upon the petitioner based on the same. The cancellation of the Sale Certificate is legally binding on the petitioner. In these circumstances, the third respondent prayed for dismissal of the writ petitions.
8.Mr.R.Shanmugam, learned counsel appearing for the petitioner in support of his contentions relied upon the following judgments:
(i)(2007) 5 Supreme Court Cases 745 [B.Arvind Kumar Vs. Govt. of India and others] wherein the Hon'ble Supreme Court in paragraph-12 held as follows:
"12.The plaintiff has produced the original registered sale certificate dated 29.8.1941 executed by the Official Receiver, Civil Station, Bangalore. The said deed certifies that Bhowrilal (father of plaintiff) was the highest bidder at an auction-sale held on 22-8-1941, in respect of the right, title, interest of the insolvent Anraj Sankla, namely, the leasehold right in the property described in the schedule to the certificate (suit property), that his bid of Rs.8350 was accepted and the sale was confirmed by the District Judge, Civil and Military Station, Bangalore on 25-8-1941. The sale certificate declared Bhowrilal to be the owner of the leasehold right in respect of the suit property. When a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction-purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorized by the court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under sub-sections (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of a registered deed of transfer."
(ii)AIR 2008 Madras 108 [K.Chidambara Manickam Vs. Shakeena & Ors.] wherein a Division Bench of this Court relying upon the judgment reported in 2007 5 Supreme Court Cases 745 held that when the sale of secured assets in public auction ended in issuance of Sale Certificate as per Rule 9(7) of Security Interest (Enforcement) Rules, 2002 in favour of the auction purchaser, the sale becomes absolute and title vests in the auction purchaser and such a Sale Certificate does not require registration. Further, the Division Bench held that the right of redemption provided to the borrower under Section 60 of the Transfer of Property Act will be available to the borrower before it is foreclosed or estate is sold and on the issuance of Sale Certificate to auction purchaser, the sale becomes complete, vesting the right in the property in favour of the auction purchaser.
(iii)2009-4-L.W.395 [M/s.Kathikkal Tea Plantations, rep by its Managing Director, N.Thiruneelakandan, Melur, Kil-Kotagiri Bazaar Post, The Nilgiris-643 271 Vs. State Bank of India rep. By its Chief Manager, V.M.Palaniswamy, 5/273, Kil-Kotagiri Branch, Kil-Kotagiri Bazaar Post, The Nilgiris & another] wherein a Division Bench of this Court held that once the Sale Certificate was issued and the money was recovered, the purpose is over and therefore, it cannot be termed as a "secured creditor" and the property cannot be a "secured debt". Further, the Division Bench held that the Banks are entitled to take possession under Section 14(2) of the SARFAESI Act and the issuance of Sale Certificate is not a bar to take physical possession.
(iv)(2010) 8 Supreme Court Cases 383 [Meghmala and others Vs. G.Narasimha Reddy and others] wherein the Hon'ble Supreme Court held as follows in paragraph no.34:
"34.An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. Fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. Suppression of a material document would also amount to a fraud on the court. (Vide S.P. Changalvaraya Naidu V. Jagannath, (1994) 1 SCC 1; Gowrishankar V. Joshi Amba Shankar Family Trust, (1996) 3 SCC 310:AIR 1996 SC 2202; Ram Chandra Singh V. Savitri Devi, (2003) 8 SCC 319; Roshan Deen V. Preeti Lal, (2002) 1 SCC 100:2002 SC (L&S) 97:AIR 2002 SC 33; Ram Preeti Yadav V. U.P. Board of High School & Intermediate Education, (2003) 8 SCC 311:AIR 2003 SC 4628; and Ashok Leyland Ltd. Vs. State of Tamil Nadu, (2004) 3 SCC 1 : AIR 2004 SC 2836). "
(v)(2010) 6 Supreme Court Cases 193 [Eureka Forbes Limited Vs. Allahabad Bank and others]. In this judgment, the Hon'ble Supreme Court in paragraph nos.76, 77 & 78 held as follows:
"76.The legislative object of expeditious recovery of all public dues and due protection of security available with the Bank to ensure prepayments of debts cannot be achieved when the officers/officials of the Bank act in such a callous manner. There is a public duty upon all such officers/officials to act fairly, transparently and with a sense of responsibility to ensure recovery of public dues. Even, an inaction on the part of the public servant can lead to a failure of public duty and can jeopardize the interest of the State or its instrumentality.
77.In our considered opinion, the scheme of the Recovery Act and language of its various provisions imposes an obligation upon the Banks to ensure a proper and expeditious recovery of its dues. In the present case, there is certainly ex facie failure of statutory obligation on the part of the Bank and its officers/officials. In the entire record before us, there is no explanation much less any reasonable explanation as to why effective steps were not taken and why the interest of the Bank was permitted to be jeopardized.
78.The concept of public accountability and performance is applicable to the present case as well. These are instrumentalities of the State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to the Government department, if not with a greater rigour. The well-established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office. In State of Bihar V. Subhash Singh, (1997) 4 SCC 430, this Court, in exercise of the powers of judicial review stated that, the doctrine of full faith and credit applies to the acts done by officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose."
(vi)AIR 2013 Supreme Court 58 [Ayaaubkhan Noorkhan Pathan Vs. State of Maharashtra and others] wherein the Hon'ble Supreme Court held as follows in paragraph no.26:
"26.In K.L.Tripathi V. State Bank of India & Ors., AIR 1984 SC 273, this Court held that, in order to sustain a complaint of the violation of the principles of natural justice on the ground of absence of opportunity of cross-examination, it must be established that some prejudice has been caused to the appellant by the procedure followed. A party, who does not want to controvert the veracity of the evidence on record, or of the testimony gathered behind his back, cannot expect to succeed in any subsequent grievance raised by him, stating that no opportunity of cross-examination was provided to him, specially when the same was not requested, and there was no dispute regarding the veracity of the statement. (See also: Union Bank of India V. P.K.Roy, AIR 1968 SC 850; and Channabasappa Basappa Happali V. State of Mysore, AIR 1972 SC 32)."
9.Mr.P.S.Raman, the learned senior counsel appearing on behalf of the first respondent, in support of his contentions, relied upon the following judgments:
(i)(1989) 4 Supreme Court Cases 344 [Maganlal Vs. M/s.Jaiswal Industries, Neemach and others] wherein the Hon'ble Supreme Court held that the mortgagors right to redeem under Section 60 of the Transfer of Property Act continues till the confirmation of sale pursuant to the final decree and it is not extinguished merely because the mortgagor failed to execute the final decree for redemption and the mortgagor can maintain a subsequent suit for redemption once again. Further, the Hon'ble Apex Court held that under Order 34 Rule 5 of the Civil Procedure Code, notwithstanding the confirmation of sale, Rule 5 would still be attracted where appeal against the order of confirmation is pending and till the appeal is finally decided, the sale does not become absolute.
(ii)(1977) 3 Supreme Court Cases 247 [Narandas Karsondas Vs. S.A.Kamtam and another] wherein the Hon'ble Apex Court held that the right of redemption which is embodied in Section 60 of the Transfer of Property Act is available to the mortgagor unless it has been extinguished by the act of parties. Further, the Hon'ble Apex Court held that in India it is only on execution of conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a mortgage deed by itself will not deprive the mortgagor of his right to redemption.
(iii)(2004) 4 Supreme Court Cases 311 [Mardia Chemicals Ltd. and others Vs. Union of India and others] wherein the Hon'ble Supreme Court held as follows in paragraph no.54:
"54.In so far the argument advanced on behalf of the petitioners that by virtue of the provisions contained under sub-section (4) of Section 13 the borrowers lose their right of redemption of the mortgage, in reply it is submitted that rather such a right is preserved under sub-section (8) of Section 13 of the Act. Where a borrower tenders to the creditor the amount due with costs and expenses incurred, no further steps for sale of the property are to take place. In this connection, a reference has also been made by the learned Attorney General to a decision in Narandas Karsondas v. S.A.Kamtam (1977) 3 SCC 247, which provides that a mortgagor can exercise his right of redemption any time until the final sale of the property by execution of a conveyance. Shri Sibal, however, submits that it is the amount due according to the secured creditor which shall have to be deposited to redeem the property. Maybe so, some difference regarding the amount due may be there but it cannot be said that right of redemption of property is completely lost. In cases where no such dispute is there, the right can be exercised and in other cases the question of difference in amount may be kept open and got decided before sale of property."
10.Mr.AR.L.Sundaresan, learned senior counsel appearing for the third respondent/borrower, in support of his contentions relied upon the following judgments:
(i)(1999) 6 Supreme Court Cases 237 [M.C.Mehta Vs. Union of India and others Re:Inder Mohan Bensiwal, Re:Bharat Petroleum Corporation Ltd.]. In this judgment, the Hon'ble Apex Court held that it is not always necessary for a Court to strike down an order merely because the order has been passed against the petitioner in breach of interest of justice. The Court can, under Article 32 or Article 226, refuse the exercise of its discretion of striking down the order, if such striking down will result in restoration of another order passed earlier in favour of the petitioner and against the opposite party in violation of principles of natural justice or which is otherwise not in accordance with law.
(ii)(1999) 8 Supreme Court Cases 511 [U.Nilan Vs. Kannayyan (dead) through LRS.] wherein the Hon'ble Supreme Court held that under Order 34 Rule 5 or Order 21 Rule 92 (1) and Order 21 Rule 90, when an application to deposit the balance mortgage money would be maintainable even after confirmation of sale but during pendency of appeal filed by the judgment debtor against an order passed by an Executing Court rejecting the application for setting aside the sale effected in execution of decree passed in mortgage suit or against an order rejecting the application for restoration of application for setting aside the sale. The Hon'ble Apex Court held that sale is deemed to be absolute not on confirmation of sale but on and from the date of disposal of such appeal.
(iii)2008 (1) CTC 721 [Hanu Reddy Realty India Pvt. Ltd., rep by its Director, Mr.C.Suresh Reddy, New No.18, Bishop Wallers Avenue East, Mylapore, Chennai-600004 and others Vs. Jignesh and others] wherein a Division Bench of this Court held that the Recovery Officer is required to act fairly and in reasonable manner while dealing with the property of defaulters and the Recovery Officer should give sufficient publicity to get better offers and for attracting more purchasers. The power to confirm sale given to Recovery Officer enjoins upon Recovery Officer to see that the property is sold for market price in free auction made with wide publicity.
(iv)2010 (2) CTC 113 [In Re, The Official Liquidator, High Court, Madras] wherein this Court held that the Sale Certificate issued by one who is neither Civil or Revenue Officer would not fall under Section 17 (2) (xii) of the Registration Act and a Sale Certificate issued by a Official Liquidator, in any case it should be made known to the purchaser that he is obliged to pay stamp duty for sale value calculated at rate prescribed by Article 18 read with Article 23 of Schedule I to Stamp Act.
(v)2012 (1) CTC 315 [Kumararaja Paper Mills (P) Ltd., rep by its Director, N.S.Balasubramanian, Srikumar Complex, No.146, Main Road, Tiruchengode-637 211] In this case also, this Court held that only if the Sale Certificate is issued by Revenue Officer in respect of the property conveyed by him for the purpose of deriving income from taxes, duties and other sources for payment of nation's expenses, it needs no compulsory registration. However, the Sale Certificate issued by Authorised Officer of SIPCOT cannot be equated with Sale Certificate issued by Revenue Officer. Therefore, the Sale Certificate issued by the Authorised Officer of SIPCOT is not exempted from registration.
(vi)Un-reported judgment dated 05.03.2013 made in W.P.No.27569 of 2012 and W.P.No.24806 of 2012 wherein we have held that the Authorised Officer has the power to postpone the sale, he has to follow the procedure contemplated under the statute after duly informing the general public regarding the sale of the property.
11.On a careful consideration of the materials available on record and the submissions made by the respective learned counsels appearing on behalf of the parties, it could be seen that there is no dispute that the third respondent borrowed money from the first respondent/Financial Institution in the year 1991 by mortgaging the properties which is the subject matter of these writ petitions. Since the third respondent defaulted in repaying the loan amount, the first respondent filed Original Application in O.A.No.277 of 2000 for recovery of dues from the third respondent. Thereafter, notice under Section 13(2) of the SARFAESI Act was issued on 30.10.2007. On 20.10.2009, the Debt Recovery Tribunal, Delhi decreed the Original Application and the same was challenged by the third respondent before the Debt Recovery Appellate Tribunal, New Delhi. The Debt Recovery Appellate Tribunal, New Delhi disposed of the appeals filed by the first respondent as well as the third respondent. The order of the Debt Recovery Appellate Tribunal was challenged by way of two writ petitions before the High Court of Delhi where the third respondent/borrower withdrew the writ petitions with liberty to file a review petition before the Debt Recovery Appellate Tribunal, Delhi. By order dated 06.08.2010 the Debt Recovery Appellate Tribunal, Delhi directed the third respondent to pay the decreetal amount along with the interest at the rate of 16% per annum with quarterly rests. As per the said order, Debt Recovery Appellate Tribunal found that the first respondent/Financial Institution was entitled to a sum of Rs.10,06,36,973/- as on 31.12.2011.
12.According to the third respondent, they sent a communication dated 28.07.2009 requesting the first respondent to accept one time settlement offer of Rs.111.86 lakhs, but the same was refused by the first respondent by their letter dated 13.08.2009, which was received by the third respondent on 20.08.2009. By the time the refusal letter reached the hands of the third respondent, the second respondent, who is the Authorised Officer of the first respondent had taken possession of the immovable and movable properties on 21.08.2009. Challenging this action, the third respondent filed an appeal under Section 17 of the SARFAESI Act in S.A.No.189 of 2009 before Debt Recovery Tribunal-I, Chennai. As per the direction of Debt Recovery Tribunal-I, Chennai, the third respondent deposited a sum of Rs.4.00 crores with the first respondent. By order dated 05.03.2010 the Debt Recovery Tribunal-I, Chennai, partly allowed the third respondent's appeal filed under Section 17 of the SARFAESI Act by setting aside the action taken by the second respondent so far as it relates to the physical possession of the secured assets and permitted to proceed from the stage of symbolic possession. Thereafter, the second respondent issued the tender cum auction sale notice on 25.03.2010 and fixed the auction sale on 28.04.2010. Thereafter, the third respondent filed R.A.S.A.No.107 of 2010 before the Debt Recovery Appellate Tribunal, Chennai and the Debt Recovery Appellate Tribunal, Chennai by its order dated 07.04.2010 had granted interim injunction restraining the respondents 1 & 2 from proceeding further with SARFAESI action and also directed the third respondent to deposit a sum of Rs.1.00 crore. The third respondent deposited the said amount on 08.04.2010. The Debt Recovery Appellate Tribunal by its order dated 09.03.2011 set aside the orders of Debt Recovery Tribunal-I, Chennai dated 05.03.2010 by allowing the appeal and also the proceedings of the second respondent.
13.Aggrieved over the same, the first respondent filed a writ petition in W.P.No.6710 of 2011 before this Court and this Court by its order dated 06.09.2011 set aside the order dated 09.03.2011 passed by the Debt Recovery Appellate Tribunal, Chennai and allowed the writ petition. Therefore, from the above it is clear that on the date of issuance of sale notice dated 25.03.2010, no order was in force preventing the respondents from issuing sale notice. The Debt Recovery Appellate Tribunal, Chennai granted interim injunction in R.A.S.A.No.107 of 2010 on 07.04.2010. Pursuant to the sale notice dated 25.03.2010 fixing the auction sale on 28.04.2010, the second respondent received bid tenders from the prospective purchasers. Accordingly, the petitioner submitted their bid for a sum of Rs.20,00,10,000/-.
14.The learned counsel appearing for the first respondent submitted that apart from the writ petitioner, the second respondent also received bid from another person. Since, the Debt Recovery Appellate Tribunal, Chennai granted interim injunction on 07.04.2010 restraining the respondents 1 & 2 from proceedings further with SARFAESI action, the tender was not opened on 28.04.2010. Ultimately Debt Recovery Appellate Tribunal, Chennai set aside the order of Debt Recovery Tribunal-I, Chennai dated 05.03.2010 against which the first respondent filed W.P.No.6710 of 2011 and this Court by order dated 06.09.2011 set aside the order of the Debt Recovery Appellate Tribunal, Chennai and allowed the writ petition.
15.According to the learned counsel for the first respondent, after disposal of the writ petition on 06.09.2011, the tenders which were received pursuant to the sale notice dated 25.03.2010 fixing the auction sale on 28.04.2010 were opened on 12.09.2011 and it was found that the petitioner had quoted the highest bid amount of Rs.20,00,10,000/-. Though the learned counsel for the third respondent submitted that the petitioner did not submit his bid along with Earnest Money Deposit, the learned counsel appearing for the petitioner produced a xerox copy of a Demand Draft for a sum of Rs.200 lakhs, which according to the learned counsel, was produced along with the petitioner's tender. This fact was not disputed by the first respondent/Financial Institution. After the opening of the bid on 12.09.2011, the petitioner paid the balance bid amount on 16.09.2011 and the Sale Certificate was issued in their favour on the same day. Therefore, the contention of the learned senior counsel appearing for the third respondent that the second respondent had conducted fresh auction on 12.09.2011 without giving any notice to the general public cannot be accepted for the reason that there was no fresh auction conducted on 12.09.2011 and in fact, the tenders which were received on 28.04.2010 pursuant to the sale notice dated 25.03.2010 could not be opened for the reason of interim order obtained by the third respondent before the Debt Recovery Appellate Tribunal on 07.04.2010. Only the tenders received pursuant to the sale notice dated 25.03.2010 were opened on 12.09.2011 after the disposal of the W.P.No.6710 of 2011 on 06.09.2011. Therefore, there was no fresh auction conducted on 12.09.2011 as contended by the learned senior counsel appearing for the third respondent. Therefore, on the date of opening of the tender on 12.09.2011 and on the date of issuance of the sale notice on 16.09.2011 there was no order prevailing against the respondents 1 & 2 under the SARFAESI Act. Therefore, the Sale Certificate issued on 16.09.2011 in favour of the petitioner is a legally valid document.
16.According to the third respondent, after the disposal of the writ petition on 06.09.2011, since the respondents 1 & 2 had made attempts to take physical possession of the secured assets, they filed writ petition in W.P.No.21820 of 2011 and by order dated 22.09.2011, this Court had granted interim stay restraining the first respondent from precipitating further by filing Section 14 petition and also restrained from taking physical possession of the secured assets. It is also admitted by the third respondent that the fact of issuance of Sale Certificate came to their knowledge through the counter affidavit filed by the respondents 1 & 2 in W.P.No.21820 of 2011. Challenging the sale notice dated 25.03.2010, the third respondent also filed another writ petition in W.P.No.22837 of 2011.
17.On a reading of the counter affidavit filed by the first respondent/Financial Institution, it could be seen in paragraph-9 of the counter affidavit, the first respondent has stated as follows:
"I say that the present petition is also not maintainable in view of the fact that the sale of the secured assets has already been concluded as per the provisions of SARFAESI Act, 2002, subsequent to which a Sale Certificate dated 16.09.2011 has been issued in favour of the successful bidder. Copy of the Sale Certificate dated 16.09.2011 is annexed hereto and marked as Annexure-1."
Further in the counter affidavit they have stated that the third respondent, who is the defaulting borrower cannot pray for exercise of equitable jurisdiction. Further, also stated that the third respondent is a chronic defaulter, who has not only cheated the creditors, but also successfully dragged the recovery proceedings for more than 20 years. With regard to the OTS proposal of Rs.111.86 lakhs given by the third respondent in their counter, in W.P.No.21820 of 2011, the first respondent has stated that since the proposal of the third respondent was totally against commercial interests of the first respondent/Financial Institution, the same was rejected by letter dated 13.08.2009 subsequent to which further proceeding under SARFAESI Act was initiated. Further, they have stated that a bare perusal of the order of the Debt Recovery Tribunal makes it absolutely clear that the financial institution was given absolute clearance to proceed ahead from the stage of action under Section 13(4). They have also stated that the third respondent has failed to discharge its contractual obligations and is instead indulging into dilatory tactics, which resulted into deprivation of the secured creditors from the recovery of their legitimate dues for almost 20 years. Therefore, in the counter affidavit filed by the first respondent/Financial Institution in W.P.No.21820 of 2011, not only they have categorically justified their stand in bringing the property for sale, but also commented upon the conduct of the third respondent. Aggrieved over the order dated 06.09.2011 passed by this Court in W.P.N0.6710 of 2011, the third respondent preferred an appeal before the Hon'ble Supreme Court in S.L.P.No.27587 of 2011 and the Hon'ble Apex Court on 05.01.2012 passed the following order:
"Insofar as the prayer for interim relief is concerned, it is submitted by Dr.A.M.Singhvi, learned Senior Counsel appearing for the petitioners, that in order to avoid a situation where the petitioners may be asked to pay further interest despite their property having been put to auction, they are prepared to deposit with the first respondent the amount which, according to them, is due in terms of decree dated 23rd October, 2009, passed by the Debt Recovery Tribunal as modified by the Debt Recovery Appellate Tribunal vide order dated 6th August, 2010 after adjusting the amount which is already stated to have been deposited with the first respondent. Let the said amount be deposited without prejudice to the rights and contentions of both the parties.
As regards prayer 'B', it is stated that since the alleged sale of the property mentioned in the said prayer is already the subject matter of challenge before the Madras High Court and in view of the protection granted by the Debt Recovery Appellate Tribunal, Delhi and the Madras High Court, at this stage, the petitioner does not press for the relief in terms of the said prayer."
18.The learned senior counsel appearing for the respondent submitted that as per the directions of the Hon'ble Supreme Court, the third respondent had deposited a sum of Rs.8,80,00,000/-. It is brought to the notice of this Court by the learned counsel for the petitioner that the fact regarding issuance of Sale Certificate dated 16.09.2011 was not brought to the notice of the Hon'ble Supreme Court at the time of filing of Special Leave Petition. Further, the learned counsel for the petitioner submitted that there was no direction given by the Hon'ble Supreme Court to the third respondent to deposit the amount and the deposit was made voluntarily and at their request, the Hon'ble Supreme Court permitted them to deposit without prejudice to the rights and contentions of both the parties. Since, the sale was challenged before this Court in the writ petition in W.P.NO.22837 of 2011, the third respondent did not press for the relief in terms of the second prayer before the Hon'ble Supreme Court.
19.It is an admitted fact that the petitioner was not made a party in the writ petitions in W.P.Nos.21820 and 22837 of 2011. But when the matter was taken up for hearing on 14.02.2012, it was brought to the notice of this Court that the respondents 1 & 2 and the third respondent had settled the matter out of Court and filed a memo dated 14.02.2012 to the effect seeking permission of this Court to withdraw the writ petitions. It was also brought to the notice of this Court that the first respondent had repaid the bid amount along with interest with a letter dated 08.02.2012 to the petitioner/auction purchaser. The letter dated 08.02.2012 is extracted hereunder:
"In view of the settlement arrived at between IFCI Ltd. and Sterling Holidays Resorts India Ltd., we will not be able to proceed ahead with the sale in your favour and the same therefore stands cancelled. Accordingly the sale consideration of Rs.20,00,10,000/- (Rupees twenty crore ten thousand only) by cheque No.450620 and interest thereon @ SBI Short-term Deposit rate amounting to Rs.61,34,554/- (Less:TDS Rs.6,13,455) net amount being Rs.55,21,099/- by cheque No.450621, both dated 8th February 2012, both drawn on HDFC Bank, payable at par, is being refunded to you. Since on the request of Ruckmani Khemchand the Sale Certificate was issued in favour of M/s.PM Associates the cheques are being made in favour of M/s.PM Associates in whose favour the Sale Certificate was issued."
20.By letter dated 08.02.2012, the second respondent had cancelled the sale in favour of the petitioner and returned the bid amount together with interest by way of cheque dated 08.02.2012. The learned counsel appearing for the petitioner submitted that after the issuance of the Sale Certificate on 16.09.2011, the sale has become final. Therefore, the respondents 1 & 2 have no authority or power to cancel the sale which was confirmed in favour of the petitioner. The learned counsel appearing for the first respondent fairly admitted that there is no specific authority or power conferred under SARFAESI Act to the Authorised Officer to cancel the Sale Certificate. In the absence of any authority or power conferred to the Authorised Officer to cancel the sale, which was confirmed in favour of the petitioner, that too, after the issuance of the Sale Certificate, cancellation of Sale Certificate by letter dated 08.02.2012 cannot be sustained.
21.That apart, in the judgments relied upon by the respective learned senior counsels appearing for the respondents, it could be seen that the right of redemption provided under Section 60 of the Transfer of Property Act is available to the mortgagor and the said right can be exercised and put into service by Competent Court. In the case on hand, the Sale Certificate was not set aside by a Tribunal or a Competent Court and it was cancelled by the person by whom the said certificate was issued. For cancelling the Sale Certificate, the Authorised Officer must have authority provided under the Act. There is no provision under the Act authorising an officer to cancel the Sale Certificate once issued in favour of the auction purchaser.
22.Under Section 13(8) of the SARFAESI Act, the borrower can make payment of the dues of the secured creditor together with all costs, charges and expenses incurred by him at any time before the date fixed for sale or transfer and if such payment is made, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset. In the case on hand, though the third respondent had an opportunity to make the payment as contemplated under Section 13(8) of the SARFAESI Act, they have not chosen to invoke the said provision. Though the third respondent had challenged the sale notice dated 25.03.2010 by way of writ petition in W.P.No.22837 of 2011, they withdrew the writ petition as settled out of Court. Since the petitioner/auction purchaser was not made a party in the two writ petitions filed before this Court, they filed impleading petitions in those writ petitions to implead themselves as parties. Since the third respondent withdrew both the writ petitions, the petitioner/auction purchaser also withdrew the impleading petitions.
23.Rule 7 of the Security Interest (Enforcement) Rules 2002 deals with issuance of Sale Certificate in respect of movable secured assets. Rule 9 of the Security Interest (Enforcement) Rules 2002 deals with issuance of Sale Certificate and delivery of possession in respect of immovable secure assets. Under Rule 7(2), on payment of sale price, the Authorised Officer shall issue a certificate of sale under the prescribed form specifying the movable secured assets sold, price paid and the name of the purchaser and thereafter, the sale shall become absolute. Under Rule 9(6) on confirmation of sale by the secured creditor and if the terms of the payment have been complied with, the Authorised Officer exercising the power of sale shall issue a certificate of sale of immovable property in favour of the purchaser. But, there is no provision under the Act giving authority to the Authorised Officer to cancel the Sale Certificate issued in favour of the purchaser on his own. In the absence of such a provision under the Act, only a Competent Court or a Tribunal have authority to cancel the Sale Certificate issued by the Authorised Officer.
24.That apart, in the counter affidavit filed in W.P.No.21820 of 2011, the first respondent had justified their action in bringing the property for sale. Further, they have also condemned the conduct of the third respondent. Having taken such a stand in W.P.No.21820 of 2011, now the first respondent is taking a different stand sailing with the third respondent. We are unable to understand the stand of the first respondent/Financial Institution that they found it a commercially prudent decision to accept the offer of payment of Rs.12,50,00,000/- from the third respondent/borrower and therefore, they entered into settlement with them. A memo of compromise was filed before this Court on 14.02.2012 in W.P.Nos.21820 and 22837 of 2011. It is pertinent to note that on the date of filing of the memo of compromise before this Court, the first respondent/Financial Institution realised the entire dues by selling the properties to the petitioner/auction purchaser for a sum of Rs.20,00,10,000/-. Therefore, the stand taken by the first respondent that their decision to settle the matter with the third respondent since they found it a commercially prudent decision cannot be accepted at any point of time. When they realised the entire amount on 16.09.2011 itself, getting further amount from the third respondent for settling the dues which were already settled by selling the properties is against the principles of any law.
25.That apart, the letter of cancellation of sale dated 08.02.2012 by the second respondent was issued without notice to the petitioner/auction purchaser. When the petitioner purchased the property and obtained the Sale Certificate on 16.09.2011, even without notice, the second respondent erroneously without applying the principles of natural justice, cancelled the sale made in favour of the petitioner, that too, when the second respondent have no legal authority to cancel the Sale Certificate. The Authorised Officer cancelled the Sale Certificate without giving an opportunity to the petitioner/auction purchaser.
26.The learned senior counsel appearing for the third respondent submitted that auction was not conducted in a proper manner. Therefore, the order passed by the second respondent dated 08.02.2012 is just and proper. But we are of the view that the third respondent having not challenged the sale notice dated 25.03.2010 cannot now contend, as a respondent, that the sale was not conducted in a proper manner. As already stated, the third respondent withdrew the W.P.No.22837 of 2011, which was filed challenging the sale notice dated 25.03.2010. Therefore, now, as a respondent in the writ petition, the third respondent cannot question the sale which was confirmed in favour of the petitioner. If at all they are aggrieved over the sale of the properties, they should have challenged before the appropriate forum questioning the validity of the sale. Since they failed to do so, the contention of the learned senior counsel for the third respondent is liable to be rejected.
27.With regard to the registration of the Sale Certificate, the learned counsel for the petitioner submitted that registration is not mandatory in view of the judgments reported in (2007) 5 Supreme Court Cases 745 [B.Arvind Kumar Vs. Govt. of India and others] and AIR 2008 Madras 108 [K.Chidambara Manickam Vs. Shakeena and others].
28.Countering the said submissions, the learned senior counsel appearing for the third respondent submitted that the sale will become complete only after the registration of the Sale Certificate and the learned senior counsel relied upon the judgment reported in 2010 (2) CTC 113 [In Re, The Official Liquidator, High Court, Madras] and 2012 (1) CTC 315 [Kumararaja Paper Mills (P) Ltd., rep by its Director, N.S.Balasubramanian, Srikumar Complex, No.146, Main Road, Tiruchengode-637 211].
29.The ratio laid down in 2010 (2) CTC 113 was followed in the judgment reported in 2012 (1) CTC 315. In these judgments, this Court held that the Sale Certificate issued by one who is neither Civil nor Revenue Officer would not fall under Section 17(2) (xii) of the Registration Act and the Official Liquidator can issue Sale Certificate or Sale Deed, but in any case, it should be made known to the purchaser that he is obliged to pay stamp duty for sale value calculated as per the Stamp Act.
30. In the judgment reported in (2007) 5 Supreme Court Cases 745 [B.Arvind Kumar Vs. Govt. of India and others], it is clear that when a property is sold by public auction in pursuance of an order of the Court and bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. The Sale Certificate is issued to the purchaser only when the sale becomes absolute, further, it is clear that the Sale Certificate is merely an evidence of such title. It is also well settled that when an auction purchaser derives title on confirmation of sale in his favour, the Sale Certificate is issued evidencing such sale and title, no further deed of transfer from the Court is contemplated or required. So far as the registration of the Sale Certificate is concerned, under Section 17(2)(xii) of the Registration Act, the Sale Certificate issued by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which requires registration under sub-section 17(1)(b)and(c) of the said Act. In the case on hand, the Sale Certificate was issued by the Authorised Officer, the second respondent. That being the case, the auction purchaser derives title on confirmation of sale in their favour and the Sale Certificate was issued evidencing such sale and title. In respect of the registration of the Sale Certificate issued by the second respondent, since the second respondent is not a Civil or Revenue Officer, the registration of the Sale Certificate is not exempted under Section 17(2)(xii) of the Registration Act. Therefore, we are of the view that though the auction purchaser derived title on confirmation of sale in their favour and a Sale Certificate was issued by the Authorised Officer, evidencing such sale and title, no further deed of transfer is required. In view of the judgment reported in (2007) 5 Supreme Court Cases 745 and the provisions of 17(2)(xii) of the Registration Act, the Sale Certificate issued by the second respondent/Authorised Officer requires registration.
31. In the judgment reported in AIR 2008 Madras 108 [K.Chidambara Manickam Vs.. Shakeena and others], the Division Bench of this Court held that the right of redemption provided to the borrower under Section 60 of the Transfer of Property Act will be available to the borrower before it is foreclosed or estate is sold and on the issuance of the Sale Certificate to the auction purchaser, the sale becomes complete, vesting the right in the property in favour of auction purchaser. In the case on hand, there is no dispute that the auction was confirmed in favour of the auction purchaser and Sale Certificate was also issued in their favour. Thus, the sale became complete and the right in the property vests in favour of the auction purchaser. Since the third respondent/borrower failed to exercise his right of redemption before sale of the property and also in view of the provisions of Section 13(8) of the SARFAESI Act, the borrower/third respondent cannot now (i.e.) after the completion of the sale in favour of the petitioner seek to redeem the property, that too, without the intervention of a Competent Court or Tribunal.
32.In the case on hand, it was not made known to the petitioner/auction purchaser that they are liable to pay stamp duty for the sale value as per the Stamp Act prior to the issuance of Sale Certificate. They were not put on notice that they are liable to pay stamp duty and the Sale Certificate has to be registered. Since the auction purchaser was not informed that they are liable to pay stamp duty and that the Sale Certificate has to be registered, they cannot be now blamed that non registration of the Sale Certificate is fatal to their case. One can understand if the auction purchaser was duly informed that they are liable to pay the stamp duty and the document is also compulsorily registrable. If, in spite of the same, the auction purchaser failed to pay stamp duty and register the document in that case the auction purchaser can be made liable for the non payment of stamp duty and for non registration of the document. In the case on hand, there is nothing on record to show that the petitioner was put on notice with regard to the payment of stamp duty and registration of the document.
33.Therefore, we are of the view that at least in future the Authorised Officers must inform the prospective bidders with regard to the payment of stamp duty and registration of the Sale Certificate even at the time of issuance of sale notice enabling the prospective bidders to know about the stamp duty and registration at the earliest point of time.
34.Therefore, it is clear that an auction purchaser derives title on confirmation of sale in his favour and the issuance of Sale Certificate is only an evidence to prove that the sale was confirmed in his favour conveying the title. Therefore, in the case on hand, by issuance of Sale Certificate on 16.09.2011, it is clearly proved that sale was confirmed in favour of the petitioner/auction purchaser. To prove that the sale was confirmed in their favour, the Sale Certificate dated 16.09.2011 was issued. Therefore, after the confirmation of the sale in favour of the petitioner/auction purchaser, the second respondent Authorised Officer have no authority to cancel the sale on his own. The power of cancelling the sale vests only with the Competent Court/Forum and definitely not with the Authorised Officer. If the Authorised Officer cancels the Sale Certificate on his own, no case will reach finality at any point of time. Therefore, from the above it is clear that the second respondent Authorised Officer has no jurisdiction to cancel the Sale Certificate. The order dated 08.02.2012 was passed by the second respondent when he has no jurisdiction to pass such an order. Therefore, such an act of the second respondent should not be allowed to stand.
35.The purpose of bringing the property for sale is only to recover the dues from the borrower. Once the property was auctioned and the sale was confirmed and Sale Certificate was issued and also money was recovered, the purpose is over. Therefore, the first respondent cannot be termed as a secured creditor and there cannot be a secured debt. By order dated 08.02.2012, the second respondent erroneously, without any authority, cancelled the Sale Certificate and returned the bid amount of Rs.20,00,10,000/- along with interest to the petitioner/auction purchaser.
36.Taking into consideration the judgments relied upon by the respective learned counsels appearing for the parties, we are of the considered view that the proceedings/letter dated 08.02.2012 on the file of the second respondent is liable to be set aside and the petitioner is entitled to physical possession of the properties, which they purchased on 16.09.2011.
37.The petitioner filed a petition in M.P.No.1 of 2012 in W.P.No.4088 of 2012 to initiate necessary proceedings against the respondents for perjury and for suppression of material facts before this Court by striking down the entire defence of the respondents so as to hand over the physical possession of the entire properties.
38.In the affidavit filed in support of the petition, the petitioner has stated that the respondents 1 & 2 suppressed the issuance of Sale Certificate in various proceedings pending before this Court as well as before the Hon'ble Supreme Court when the SLP was filed by the third respondent.
39.Since the learned counsels on either side have not advanced any arguments in this petition, the same is dismissed.
40.So far as the writ petition in W.P.No.1937 of 2012 is concerned, the petitioner has given up the first portion of their prayer (i.e.) to direct the respondents 1 & 2 to register the Sale Certificate dated 16.09.2011. However, since we are setting aside the proceedings/letter dated 08.02.2012 on the file of the second respondent and directing the respondents 1 & 2 to hand over physical possession to the petitioner, the petitioner/auction purchaser is also entitled to effect changes in the revenue records with regard to the ownership of the properties sold to them. But the petitioner has not made the Revenue Authorities as parties in the writ petition. However, it is for the petitioner to move the appropriate authorities for effecting changes in the revenue records with regard to the ownership of the properties purchased by them. Therefore, we find no reason to issue a writ of mandamus to direct the respondents 1 & 2 to effect changes in the revenue records when the revenue authorities are not made as parties in this writ petition. However, the respondents 1 & 2 should give the necessary documents enabling the petitioner to effect changes in the revenue records with regard to the ownership of the property purchased by them. With this observation, the writ petition in W.P.No.1937 of 2012 is disposed of.
41.Since the auction conducted by the second respondent was confirmed in favour of the petitioner/auction purchaser and Sale Certificate was also issued by the Authorised Officer, the petitioner/auction purchaser is entitled to get the Sale Certificate registered in their favour.
42.So far as the writ petition in W.P.No.4088 of 2012 is concerned, the proceedings/letter dated 08.02.2012 on the file of the second respondent is set aside. The petitioner/auction purchaser shall pay the amount returned by the second respondent along with the letter dated 08.02.2012 within two weeks from the date of receipt of a copy of this order. The respondents 1 & 2 are directed to hand over physical possession of the properties to the petitioner/auction purchaser within a period of three months from the date of receipt of a copy of this order. The writ petition in W.P.No.4088 of 2012 is allowed. No costs. Consequently, the connected miscellaneous petitions are closed. M.P.No.1 of 2013 in W.P.No.4088 of 2012 is dismissed.
Index : Yes (K.S.A.,J.) (M.D.,J.) Internet : Yes 23.08.2013 va K.SUGUNA,J. and M.DURAISWAMY, J. va To 1.The Regional Manager, IFCI Limited, Commercial Chambers, 142 Mahatma Gandhi Road, P.B.No.3318, Nungambakkam, Chennai-600 034. 2.The Authorised Officer, IFCI Ltd., No.7, 1st Floor, 2nd Cross, CSI Compound, Mission Road, Bangaluru 560 027. 3.Mr.Mohan, Senior Vice President (Finance) Sterling Holiday Resorts India Limited, No.163, TTK Road, Alwarpet, Chennai-18. Order in W.P.Nos.1937 & 4088 of 2012 and M.P.Nos.1 & 2 of 2012 in W.P.No.1937 of 2012 and M.P.Nos.2 to 4 of 2012 & 1 of 2013 in W.P.No.4088 of 2012 23.08.2013