Madras High Court
R. Arumugasamy vs Narvir Singh And Another (2014) 1 Scc 105 on 18 April, 2017
Author: M.Venugopal
Bench: M.Venugopal, K.Kalyanasundaram
IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on : 27.03.2017 Pronounced on : 18.04.2017 Coram THE HONOURABLE Mr. JUSTICE M.VENUGOPAL And THE HONOURABLE Mr. JUSTICE K.KALYANASUNDARAM Review Petition Nos.82 and 83 of 2016 *** R.P. No.82 of 2016: R. Arumugasamy Managing Director of M/s. R.A. Samy Trading Pvt. Ltd. No.72/2, Kazura Gardens East Coast Road, Neelankarai, Chennai 600 041. ... Petitioner V. 1.The Authorised Officer United Bank of India Southern Region 184/132 Ramakrishna Math Road Mandhaveli, Chennai 600 028 2.The Branch Manager United Bank of India Virugambakkam, Chennai 600 092 3.R.M. Ramanathan ... Respondents (R3 impleaded as per order dated 10.09.2015 in M.P. No.4 of 2015) R.P. No.83 of 2016: R. Arumugasamy Managing Director of M/s. R.A. Samy Trading Pvt. Ltd. No.72/2, Kazura Gardens East Coast Road, Neelankarai, Chennai 600 041. ... Petitioner V. 1.The District Collector Collectorate Kanchipuram District Kanchipuram 631 501 2.The Tahsildar Office of the Tahsildar Sozhinganallur Kancheepuram District. 3.The Authorised Officer United Bank of India Southern Region 184/132 Ramakrishna Math Road Mandhaveli, Chennai 600 028 4.RM.Ramanathan ... Respondents Prayer in R.P.No.82 of 2016: Petition filed under Order 47 Rule 1 of Civil Procedure Code read with Section 114 C.P.C. praying to review the common order dated 09.02.2016 in W.P.No.27520 of 2014 and W.P.No.32716 of 2015. Prayer in R.P. No.83 of 2016: Petition under Order 47 Rule 1 of Civil Procedure Code read with Section 114 C.P.C. praying to set aside the sale dated 23.01.2015 and direct the Auction Purchaser to hand over the title deeds to the Petitioner and receive the sale consideration from the deposit made by the Petitioner. For Petitioner in both the RPs ... Dr. S.N. Amarnath For RR 1 & 2 in R.P.No.82/2016 ... Mr.P.S. Ganesh For R3 in R.P.No.82/2016 ... Mr.S.Parthasarathy Senior Counsel for Mr.R.Parthasarathy For RR 1 & 2 in ... Mr.S.Gunasekaran R.P.No.83/2016 Additional Government Pleader For R3 in R.P.No.83/2016 ... Mr. F.B. Benjamin George For R4 in R.P.No.83/2016 ... Mr.S.Parthasarathy Senior Counsel for Mr.R.Parthasarathy COMMON ORDER
M.VENUGOPAL, J.
Introduction:
The Petitioner has preferred the instant Review Petitions as against the Common Order dated 09.02.2016 in W.P.No.27520 of 2014 and W.P.No.32716 of 2015 passed by this Court.
2.This Court, while passing the impugned Common Order dated 09.02.2016 in W.P.No.27520 of 2014 and W.P.No.32716 of 2015 [filed by the Review Petitioner/Petitioner], at paragraph 16 to 20, had observed the following:
16 In the case on hand, the title deeds were deposited under Form No.D17D by the guarantor with an intent to create security in favour of the bank, as contemplated in Section 58(f) of the Transfer of Property Act, 1882 on 10thDecember, 2009. The said title deeds were accepted by the officers of the Bank in Form No.D17E, dated 10thDecember, 2009, whereunder it was clearly stated that the title deeds were mortgaged with an intent to create security in respect of the said properties comprising of all lands and buildings, structures, erections, fixture and fittings thereon.
17 The security interest is defined, as the right, title and interest of any kind whatsoever upon the property created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31 of the SARFAESI Act. In the case on hand, proper mortgage and assignment was made. Thus, the security interest was created in accordance with the requirement of the definition of security interest. Section 31 of the SARFAESI Act deals with the non application of the provisions of the Act to certain cases, with which we are not concerned.
18 In State of Haryana and others Vs. Narvir Singh and another (2014) 1 SCC 105, the Supreme Court, while examining the question as to whether mortgage by deposit of title deeds is required to be done by an instrument at all, observed that In our opinion, it may be effected in a specified town by the debtor delivering to his creditor documents of title to immovable property with the intent to create a security thereon. No instrument is required to be drawn for this purpose. 19 The contention of the learned counsel for the petitioner that the stay of the confirmation of sale would not come to an end unless the same is specifically vacated by the Court is noted to be rejected. The stay order remains in operation during the pendency of the petition. Once the petition, whereunder interim stay was granted, is dismissed, no interim order survives. The dismissal may be on any ground, whether for want of prosecution or on merit.
20 A reference to the case of A.V.Sreenivasalu Naidu Vs. V.K.Nataraja Goundan and another, AIR 1955 Madras 461, cited by the learned counsel for the petitioner is misplaced. The said matter dealt with the disposal of the case in execution applications filed under the provisions of the Code of Civil Procedure. The confirmation of sale cannot be held as illegal, as the confirmation was made after dismissal of the writ petition on 8thJanuary, 2015. Having held that the security interest was properly created, the subsequent measures taken by the secured creditor Bank by issuance of demand notice and thereafter possession notice under Section 13(4) of the SARFAESI Act, are in accordance with law and cannot be faulted with. We are informed that the dispute is pending before the Debt Recovery Tribunal. The petitioner is at liberty to raise all grounds available under the provisions of law in the pending dispute, if so advised. and consequently, dismissed the Writ Petitions.
3.Petitioner's Submissions:
3.1. The Learned Counsel for the Petitioner contends that this Court had failed to consider the plea of the Petitioner in W.P.No.27520 of 2014 as to whether a property was not given as security to the Bank and further whether any security was created to the Bank by mere depositing the title deeds of the property in the absence of complying with the definition of Section 2(zb) 'Security Agreement' of the SARFAESI Act.
3.2. Advancing his arguments, the Learned Counsel for the Petitioner takes a stand that the word 'Security' is the right title and interest of any kind, whatsoever upon the property created in favour of any secured creditor and includes any mortgage, charged, hypothecation assignment etc. 3.3. The Learned Counsel for the Petitioner proceeds to project an argument that on perusing the definition in Section 2(zb) 'Security Agreement' of the SARFAESI Act, it means an agreement, instrument, or any other document or arrangement under which Security Interest is created in favour of the secured creditor including the creation of mortgage by depositing the title deeds with the secured creditor.
3.4. The Learned Counsel for the Petitioner contends that the definition of Section 2(zb) 'Security Agreement' under SARFAESI Act clearly points out that for creating Security Interest over the property of the creditor, there ought to be an instrument and under such circumstances, it should be registered under Section 17 of the Indian Registration Act, 1908 as a non testamentary instrument creating an interest. But, this was not considered in the impugned order in Writ Petitions.
3.5. The Learned Counsel for the Petitioner brings it to the notice of this Court that this Court, while passing orders in W.P.No.27520 of 2014 and W.P.No.32716 of 2015 dated 09.02.2016, had failed to look into the whole Judgment of the Hon'ble Supreme Court (particularly para 13) in State of Haryana V. Narveen Singh reported in (2014) 1 SCC 105 at special page 111, which clearly clarifies the position and the difference between mere Deposit of Title Deeds with an intention to create the mortgage.
3.6. The Learned Counsel for the Petitioner submits that the definition of 'Security Agreement' as per Section 2(zb) of the SARFAESI Act is itself an unambiguous one. Further, it is represented on behalf of the Petitioner that Section 13(2) of the SARFAESI Act clearly mentions that the secured creditor can take action against the borrower only if the property is given under a security agreement and those property which was not given under a security agreement would not come under the ambit of Section 13(2) of the Act.
3.7. The Learned Counsel for the Petitioner projects an argument that when the Respondent Bank had created a security interest by way of registered mortgage in regard to another property wherein also the deposit of title deeds were given initially and later registered, why this property was not registered.
3.8. The Learned Counsel for the Petitioner contends that in the present case, the property was in 'e-auction' and hurriedly the Bank issued the Sale Certificate to the property in question that the residential property of the Petitioner which is wroth above Rs.14 - 15 Crores and the valuation report of the Bank during 2009 fixed it at Rs.7.5 Crores but sold for a meager sum of Rs.5.50 Crores during the pendency of the Writ Petition along with stay.
3.9. The Learned Counsel for the Petitioner takes an emphatic plea that both the Bank and the Auction Purchaser had connived with each other and further that the Bank had avoided the settlement since the Bank was interested to get the property to the Auction Purchaser.
3.10. Continuing further, the Learned Counsel for the Petitioner invites the attention of this Court to the effect that the Petitioner had deposited a sum of Rs.7 Crores which shows his bona fide and further, the Bank is acting against his interest.
3.11. The Learned Counsel for the Petitioner submits that even in encumbrance certificate, the residential property along with a shop which is a subject matter in W.P.32716 of 2015 no endorsement is made as to the creation of any mortgage in favour of the Respondent Bank even by means of deposit of Title Deeds.
3.12. The Learned Counsel for the Petitioner refers to Letter No.5038/Admn/2012-1, dated 31.01.2012 of Law (Admn) Department, Secretariat, Chennai addressed to the Assistant General Manager, Indian Overseas Bank, Chennai 600 002, the Deputy Secretary to Government addressed to the Assistant General Manager, had, among other things, stated that '... Based on the resolution passed by the State Level Bankers' Committee, in its 119th meeting, a proposal to notify all the Municipal Corporations, Muncipalities and Town Panchayats in Tamil Nadu under Section 58(f) of the Transfer of Property Act, 1882, in suppression of the earlier notifications, is under consideration of the Government'.
3.13. The Learned Counsel for the Petitioner submits that this property was worth Rs.15 Crores in the year 2015 and it was sold for Rs.5 Crores and 51 Lakhs. Apart from that, there was only one bidder and there was no publication and in the instant case, the sale is a fradulant one.
3.14. The Learned Counsel for the Petitioner contends that the residential property comes under Kancheepuram District and therefore, the ingredients of Section 58(f) of the Transfer of Property Act, 1882 would not apply. Besides this, it is the plea of the Petitioner that in G.O.Ms.No.172, Law (Admn) Department, dated 03.08.2004, the Kancheepuram District does not find a place.
3.15. It is represented on behalf of the Petitioner that he obtained a stay order in W.P.No.27520 of 2014 on 17.10.2014 against confirmation of sale and the case came to be dismissed for default owing to non prosecution. Later, a petition was filed on 13.01.2015 to restore the writ petition and on 23.01.2015, the restoration petition was allowed. Moreover, it is projected on the side of the Petitioner that taking advantage of the dismissal of the Writ Petition, the Respondent/ Bank hurriedly conducted the sale. In the meanwhile, i.e. between 08.01.2015 to 21.03.2015 the Bank had called the Auction Purchaser to pay the amount and that on 15.01.2015 the amount was paid and that the Bank issued a Sales Certificate to the Auction Purchaser viz., the 3rd Respondent on 23.01.2015 itself. Also, the Learned Counsel for the Petitioner takes a plea that till 14.01.2015, no encumbrance on the property being created.
3.16. The Learned Counsel for the Petitioner submits that the 'entry form when title deeds are deposited by Guarantor in respect of guarantee obligation' refers to in respect of M/s.R.A.Samy Trading Private Limited, Chennai 17, the Title Deed No.697 dated 24.02.1994 and Title Deed No.686 dated 25.02.1994 and the said documents pertaining to the properties covered thereby were deposited at the office of the Respondent Bank at Virugambakkam Branch on 10.12.2009 by Shri.Arumugasamy. In fact, a reading of recitals of the aforestated entry form indicates clearly that while making the deposit Shri.Arumugasamy had stated that with an intent to create a security interest in respect of the said properties comprising all lands and buildings etc. for repayment of all the moneys now or hereinafter any time to become due to remaining unpaid to the Bank by him as Guarantor(s) in respect of accommodations and/or facilities granted and/or to be granted from time to time to the captioned person/firm/company by this branch Virugambakkam. Further, the said form mentions that ''... the maximum amount to be secured by the mortgage shall for the purpose of Section 79 of the Transfer of Property Act, 1882 but for no other purpose to be limited to Rs.245082000/-.
3.17. The Learned Counsel for the Petitioner refers to the acknowledgement letter relating to deposit of title deeds by a Guarantor addressed to the Bank in respect of A/c. M/s.R.A.Samy Tranding P. Ltd. and submits that the property mentioned in the said letter being Premises No.72/2/KAZURA GARDEN, NEELANKARAI and that the guarantor on record had acknowledged in depositing the title deeds with an intent to create security in favour of the Bank by way of mortgage by Deposit of Title Deeds as contemplated under Section 58(f) of the Transfer of Property Act, 1882. Here also, the maximum amount to be secured by the mortgagor for the purpose of Section 79 of the Transfer of Property Act, 1882 was mentioned as Rs.24,50,82000/- and interest.
3.18. The Learned Counsel for the Petitioner submits that as per the Valuation Report dated 16.12.2013 of the Registered Valuer, the value of the property at Door No.2/799, E.C.R. Road, Kazura Garden 2nd Street, Neelankarai, Chennai 600 041 was valued as under:
Sl. No Description Based on market Value
1.
Value of land Rs.4,90,00,000/-
2. Value of building Rs.1,38,56,000/- (Reference Value) Total value of the property Rs.6,28,56,000/-
Say Rs.6,28,00,000/-
and as such, the Market Value of the Property was Rs.6,28,00,000/- as on 16.12.2013.
3.19. The Learned Counsel for the Petitioner contends that W.P.No.27250 of 2014, the Petitioner, at paragraph (d), had averred as under:
(d)It is submitted that compared to the value of the property against which the security interest is created which is about Rs.60 Crores. The Respondent proceeding against the house property on which no security interest is created which is valued at a peanut cost of Rs.6 Crores. and that the Bank is proceeding against the house property without jurisdiction and as against the mandatory provisions of the SARFAESI Act.
3.20. According to the Petitioner, even in the year 2007, the Valuation of the Property was Rs.7.05 Crores. Further, the Petitioner before the Debts Recovery Appellate Tribunal in AIR.520/2015 had deposited Rs.1.27 Crores + Rs.25 Lakhs and further, he was directed to pay a sum of Rs.3,64,48,141/- and in fact, these amounts were standing to the credit of the Petitioner.
3.21. The Learned Counsel for the Petitioner submits that the Respondent Bank earlier had approved the proposal for compromise settlement in respect of the Petitioner by settling the amount at Rs.13.50 Crores specifying certain terms for the payment etc. In the said letter, at paragraph 2, it was mentioned that 'The above OTS is in no way concern to the auctioned property under SARFAESI Act on 20.10.2014 which is located at No.72/2, Kajura Garden, East Coast Road, Neelankarai, Chennai - 41 standing in the name of Sri.R.Arumugasamy & Smt.Easwari Samy'.
Petitioner's Citations:
3.22. The Learned Counsel for the Petitioner cites the decision Subash Chandra Panda V. State of Orissa and others, I (2009) BC 443 (DB) wherein it is held that 'security interest' has been created in favour of any 'secured creditor'.
3.23. The Learned Counsel for the Petitioner relies on the decision State of Haryana and others V. Narvir Singh and another, (2014) 1 Supreme Court Cases 105 at special page 111, whereby and whereunder, at paragraph 13, it is observed as follows:
13.This Court while relying on the aforesaid judgment in the case of United Bank of India v. M/s. Lekharam Sonaram & Co.,AIR 1965 SC 1591 reiterated as follows:
7. It is essential to bear in mind that the essence of a mortgage by deposit of title-deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain regarding security requires registration under Section 17 of the Indian Registration Act, 1908, as a non-testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered it cannot be used in the evidence at all and the transaction itself cannot be proved by oral evidence either. 3.24. Also, in the aforesaid decision at paragraph 14.2. at page 111, it is held as follows:
14.2. But the question is whether a mortgage by deposit of title deeds is required to be done by an instrument at all. In our opinion, it may be effected in a specified town by the debtor delivering to his creditor documents of title to immovable property with the intent to create a security thereon. No instrument is required to be drawn for this purpose. However, the parties may choose to have a memorandum prepared only showing deposit of the title deeds. In such a case also registration is not required. But in a case in which the memorandum recorded in writing creates rights, liabilities or extinguishes those, the same requires registration. 3.25. The Learned Counsel for the Petitioner refers to the decision of this Court in A.V.Sreenivasalu Naidu V. V.K.Nataraja Goundan and another, AIR 1955 Madras 461 wherein it is observed as follows:
Disposals such as closed, struck off, rejected etc. when dealing with execution applications should ordinarily be deemed to be only for statistical purposes and they do not amount to any final adjudication of the points in controversy. It is not the expression used in the order that concludes the matter but it is the effect of the action of the Court. 3.26. The Learned Counsel for the Petitioner seeks in aid of the decision in K.Raamaselvam V. Indian Overseas Bank, 2009 (5) CTC 385 at page 386, wherein it is observed as follows:
A bare reading of Rule 9(2) makes it clear that three contingencies can arise when an auction takes place. Those are, (i) the bidder offers an amount, which is more than the upset price, (ii) the bidder offers an amount, which is less than the reserve price, and (iii) the bidder offers an amount, which is neither less nor more than the upset price. If the amount offered by the highest bidder is more than the upset price fixed under Rule 8(5) the sale shall be confirmed in favour of such higher bidder. This however, is subject to confirmation by the Secured Creditor. If the bid amount is less than the upset price, no sale shall be confirmed as contemplated under the first proviso to Rule 9(2). The second proviso makes it clear that if the authorised officer fails to obtain a price higher than the reserve price, the sale can be confirmed only with the consent of the borrower and the secured creditor. It is thus obvious that if the price offered is same as the reserve price, it cannot be said that the Authorised Officer has obtained a price higher than the reserve price. A combined reading of all the provisions contained in Rule 9(2) makes it clear that if the price offered is higher than the reserve price, it shall be confirmed by the Authorised Officer, but such confirmation is subject to the further confirmation by the Secured Creditor. If however, price offered is not higher than the reserve price, which means it may be on par with the reserve price or less than the reserve price, the auction can be confirmed only with the consent of the borrower and the Secured Creditor and not otherwise. Learned counsel for the Bank by relying upon the decision of the Supreme Court, has submitted that in normal circumstances, reserve price is fixed to indicate the minimum price at which property can be sold. We do not think that such a contention can be accepted in view of second proviso to Rule 9(2)is to the effect that if the Authorised Officer fails to obtain a price higher than the reserve price it can be confirmed only with the consent of the Secured creditor as well as the borrower and not bereft of such consent. But the learned counsel for the Bank as well as purchaser had submitted that since the proceeding under Section 17 is pending, the question now raised in the writ petition as well raised in the proceedings and in view of such existence of such alternative remedy, the writ petition should not be entertained. [para 9] A fair reading of the provisions contained in Rule 9 makes it clear that if the highest bid is higher than the upset price, such highest bid shall be confirmed by the authorised officer in favour of the highest bidder, which, however, is subject to confirmation by the secured creditor. This provision is apparent from the provisions contained in Rule 9(2). At that stage, obviously a discretion is given to the secured creditor to accept the highest bid or even go in for a fresh bid.
For example, if the secured creditor, on the basis of the relevant materials, comes to a conclusion that the highest bid offered, even though higher than the reserve price, does not reflect the true market value and there has been any collusion among the bidders, the secured creditor in its discretion may refuse to confirm such highest bid notwithstanding the fact that the highest bid is more than the upset price. This is because the secured creditor is not only interested to realise its debt, but also expected to act as a trustee on behalf of the borrower so that the highest possible amount can be generated and surplus if any can be refunded to the borrower. The first proviso in no uncertain terms makes it clear that no sale can be confirmed by the authorised officer, if the amount offered is less than the reserve price specified under the Rule 8(5). However, the subsequent proviso gives discretion to the authorised officer to confirm such sale even if the bid is less than the reserve price, provided the borrower and the secured creditor agree that the sale may be effected at such price which is not above the reserve price. This is obviously so because the property belongs to the borrower and as security for the secured creditor and both of them would be obviously interested to see that the property is sold at a price higher than the reserve price. However, if both of them agree that the property can be sold, even it has not fetched a price more than the reserve price, the authorised officer in its discretion may confirm such auction. 3.27. The Learned Counsel for the Petitioner also cites the decision Nandipati Rami Reddi and others V. Nandipati Padma Reddy and others, AIR 1978 Andhra Pradesh 30, at special page 31, wherein it is observed as under:
When the suit is restored the interlocutory orders and their operation during the period of interregnum are revived.
Once the order of dismissal is set aside, the plaintiff must be restored to the position in which he was situated when the Court dismissed the suit for default. Therefore, it follows that the interlocutory orders, which had been passed before the order of dismissal, would also be revived along with the suit when the order of dismissal has been set aside and the suit has been restored. In view of Rule 9(1) of O.9, the Court can make an order setting aside the dismissal upon such terms as to costs or otherwise as it thinks fit. Unless the Court either expressly or by necessary implication excludes the operation of the interlocutory orders during the period between the dismissal and the restoration, it may be safely presumed that their enforcement during that period was also restored.
4.Contentions of the Respondent Bank:
4.1. In response, the Learned Counsel for the Respondent Bank contends that the Petitioner had approached a secured creditor Bank for taking over of their existing loan facility from SBBJ and for sanction of fresh term loan and cash credit. Further, by means of letter dated 08.12.2009 take over of the term loan of Rs.750.82 Lakhs and cash credit facility of Rs.500 Lakhs from SBBJ was sanctioned and a fresh term loan of Rs.500 Lakhs, cash credit limit of Rs.700 Lakhs was also sanctioned. In fact, the over all credit limit was Rs.2450.82 Lakhs and after taking over of loan was completed and the fresh credit limits were availed by the Petitioner, necessary bank documents were executed.
4.2. The Learned Counsel for the Respondent Bank submits that an Equitable Mortgage pertaining to the property of the Petitioner and the Guarantor was also created by depositing the Title Deeds with an intent to create security.
4.3. The Learned Counsel for the Respondent Bank brings it to the notice of this Court that the Petitioner's father availing the loan facilities had not repaid the principal and interest and since there was a chronic default in repayment, the Petitioner's account was classified as NPA as on 30.06.2013.
4.4. In this connection, the Learned Counsel for the Respondents contends that left with no alternative, the Authorised Officer of the Respondent Bank had initiated proceedings under the SARFAESI Act. It is to be pointed out that an Equitable Mortgage was created in respect of two properties viz., one at T.Nagar and Neelankarai.
4.5. The Learned Counsel for the Respondent Bank invites the attention of this Court to the effect that in regard to the property at Neelankarai, the Authorised Officer had initiated proceedings under SARFAESI Act and sold the same in accordance with the provisions of the Act following the Rules.
4.6. The Learned Counsel for the Respondent Bank submits that the possession notice in regard to the property at Neelankarai was challenged in S.A.No.363 of 2013 before the DRT-II, Chennai and further that the possession notice issued in regard to the property at T.Nagar was challenged in S.A.No.76 of 2013 and the same was dismissed on merits. Further, the Writ Petition No.19531 of 2015 filed by the Petitioner as against the dismissal of S.A.No.76 of 2013 was also dismissed at the admission stage itself and an Appeal was filed before the Debts Recovery Appellate Tribunal.
4.7. The Learned Counsel for the Respondent Bank submits that the grounds raised in Review Petition No.82 of 2016 relates to the order passed in W.P.No.27520 of 2014 and they are nothing but reiteration of the grounds raised by the Petitioner in the said Writ Petition, which was considered by this Court in its order dated 09.02.2016. Further, the Review Petition No.82 of 2016 is barred under Order XLVII Rule 4(2) proviso (b) and under Section 114 C.P.C.
4.8. The Learned Counsel for the Respondent Bank contends that an 'Equitable Mortgage' created by way of Deposit of Title Deeds need not be registered and the Ground Nos.3 to 6 in W.P.No.27250 of 2014 were projected before this Court and they were negatived at the time of passing the common order in Writ Petitions dated 09.02.2016.
4.9. The Learned Counsel for the Respondent Bank submits that in the instant case, there is a security interest and there is a receipt dated 10.12.2009 relating to the acknowledgement of Title Deeds from the party by the Bank and in reality, there was delivery of Title Deeds on 10.12.2009 and the term 'Security Agreement' comes under SARFAESI Act, 2002 and not in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
4.10. The Learned Counsel for the Respondent Bank contends that there is no partial redemption of the mortgage and as per Section 13(1)(a) of the SARFAESI Act, the Petitioner is to pay the entire dues.
4.11. The Learned Counsel for the Respondent Bank submits that only after proper valuation of the property, the reserve price was fixed and in fact, the remedy of preferring an Appeal against the action of the Authorised Officer in bringing the property to sale is provided under Section 17 of the SARFAESI Act, 2002 and that the Petitioner had not approached the Debt Recovery Tribunal by way of an Appeal, but had approached this Court. Therefore, the Learned Counsel for the Respondent Bank contends that the Review Petitions are not maintainable in Law.
Respondent/Bank's Case Laws:
4.12. The Learned Counsel for the Respondent Bank cites the decision of the Hon'ble Supreme Court in Kamlesh Verma V. Mayawati and others, (2013) 8 Supreme Court Cases 320 at special page 323 & 324, whereby and whereunder, it is observed and held as follows:
The principles relating to review jurisdiction may be summarised as follows:
When the review will be maintainable:
(i) Discovery of new and important matter or evidence which, after the exercise of due diligence, was not within knowledge of the petitioner or could not be produced by him;
(ii) Mistake or error apparent on the face of the record;
(iii) Any other sufficient reason.
The words, "any other sufficient reason' have been interpreted in Chhajju Ram, (1921-22) 49 IA 144 and approved by this Court in Moran Mar Basselios Catholicos, AIR 1954 SC 526 to mean "a reason sufficient on grounds at least analogous to those specified in the rule."
Moran Mar Basselios Catholicos v. Most Rev. Mar Poulose Athanasius, AIR 1954 SC 526: (1955) 1 SCR 520; T.C.Basappa v. T.Nagappa, AIR 1954 SC 440, followed Chhajju Ram v. Neki, (1921-22) 49IA 144: (1922) 16 LW 37: AIR 1922 PC 112, approved When the review will not be maintainable:
(i) A repetition of old and overruled argument is not enough to reopen concluded adjudications.
(ii) Minor mistakes of incosequential import.
(iii)Review proceedings cannot be equated with the original hearing of the case.
(iv)Review is not maintainable unless the material error, manifest on the face of the order, undermines its soundness or results in miscarriage of justice.
(v)A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected but lies only for patent error.
(vi)The mere possibility of two views on the subject cannot be a ground for review.
(vii)The error apparent on the face of the record should not be an error which has to be fished out and searched.
(viii)The appreciation of evidence on record is fully within the domain of the appellate court, it cannot be permitted to be advanced in the review petition.
(ix) Review is not maintainable when the same relief sought at the time of arguing the main matter had been negatived. 4.13. The Learned Counsel for the Respondent Bank relies on the decision of the Hon'ble Supreme Court in Haridas Das V. Usha Rani Banik (Smt) and others, (2006) 4 Supreme Court Cases 78 & 79 wherein it is observed as follows:
Section 114 CPC does not even adumbrate the ambit of interference expected of the court. The parameters are prescribed in Order 47 CPC which permit a rehearing on account of some mistake or error apparent on the face of the records or for any other sufficient reason. The former part of the rule deals with a situation attribute to the applicant, and the latter to a jural action which is manifestly incorrect or on which two conclusions are not possible. Neither of them postulate a rehearing of the dispute because a party had not highlighted all the aspects of the case or could perhaps have argued them more forcefully and/or cited binding precedents to the court and thereby enjoyed a favourable verdict. That is amply evident from the Explanation to Order 47 Rule 1.
5. Pleas of 3rd Respondent/Auction Purchaser:
5.1. The Learned Senior Counsel for the 3rd Respondent in R.P.No.82 of 2016/4th Respondent in R.P.No.83 of 2016 (Auction Purchaser) submits that the Review Petitions are to be decided within the parameters of Law and reiterated the submissions which were already made before the Division Bench of this Court at the time of passing of the Common Order in W.P.No.27520/2014 and W.P.No.32716/2015.
5.2. The Learned Senior Counsel for the 3rd Respondent/Auction Purchaser contends that a property can be situated at anywhere and the 'Deposit of Title Deeds' is to be made in a Notified Town and in the present case, on 10.12.2009 there was a creation of mortgage and that the Deposit of Title Deeds were made at the Virugambakkam Branch, Chennai (being a Notified Town in Law) in the Respondent Bank and that on 17.10.2014 in M.P.No.1 of 2014 in W.P.No.27520 of 2014, the Division Bench of this Court granted stay of the confirmation of auction and that the sale took place on 20.10.2014. But, only the confirmation of auction was stayed.
5.3. The Learned Senior Counsel for the 3rd Respondent/Auction Purchaser brings it to the notice of this Court that W.P.No.27520/2014 was dismissed for default on 08.01.2015 and the Writ Petitioner filed a Petition for restoration of the Writ Petition and on 09.01.2015 there was no stay in the subject matter in issue and that the sale was confirmed on 09.01.2015 and that a sale certificate was issued on 23.01.2015. Further, it is represented that when W.P.No.27520/2014 was restored on 23.01.2015, the sale certificate was issued on that day itself.
5.4. The Learned Senior Counsel for the 3rd Respondent (4th Respondent in R.P.No.83/2016) submits that a Review cannot be an 'Appeal' in disguise and the Review is to be decided in accordance with Law. Furthermore, the Petitioner is not entitled to seek Review of the Common Order passed by this Court in W.P.No.27520/2014 and W.P.No.32716/2015 and in fact, a Notification in G.O.(Ms.)No.172, Law (Admn) Department, dated 03.08.2004, the concerns only where the town in which title deeds are to be made and in fact, the notification does not concern a property.
5.5. The Learned Senior Counsel for the 3rd Respondent submits that the title deeds were deposited in Virugambakkam Branch and that the reserve price for the auction was Rs.5.5 Crores and for Rs.5 Crores and 51 Lakhs, the property was taken in the auction.
5.6. The Learned Senior Counsel for the 3rd Respondent submits that earlier W.P.No.4774 of 2014 was filed and a stay was granted and in fact, for the auction sale notice, there were no bids and on 17.02.2014 the said Writ Petition came to be dismissed.
5.7. The Learned Senior Counsel for the 3rd Respondent contends that in respect of valuation of the property, a ground taken in Review Petitions was not taken earlier in the Writ Petitions and therefore, the said plea is a new plea in Review.
3rd Respondent's Decisions:
5.8. The Learned Senior Counsel for the 3rd Respondent/Auction Purchaser cites the decision of the Hon'ble Supreme Court in Thungabhadra Industries Limited V. Government of Andhra Pradesh, represented by the Deputy Commissioner of Commercial Taxes, Anantapur, reported in AIR 1964 SC 1372 at special page 1373, wherein it is observed as under:
There is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by error apparent. A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. 5.9. The Learned Senior Counsel for the 3rd Respondent relies on the decision of the Hon'ble Supreme Court in Delhi Administration V. Gurdip Singh Uban and others, (2000) 7 Supreme Court Cases 296 wherein it is held that 'there is a real definition between a merely erroneous decision and a decision which can be characterised as vitiated by error apparent.' 5.10. The Learned Senior Counsel for the 3rd Respondent seeks in aid of the decision of the Hon'ble Supreme Court in Susheela Naik and another V. G.K.Naik, (2000) 9 Supreme Court Cases 366 wherein it is observed that 'Review of remand order disposed of by treating it almost as appeal, the said Review order is held as not maintainable'.
5.11. The Learned Senior Counsel for the 3rd Respondent draws the attention of this Court to the decision M.Jagadeesan V. K.Selvam, (2010) 2 MLJ 1177, wherein it is held that 'The power of Review was restricted under Civil Procedure Code and by means of review substantial relief's could not be asked and moreover, a Court of Law cannot rehear parties on point of law afresh and also there could be no reappraisal and re-appreciation of evidence based on overall assessment and facts of matters in issue.' 5.12. The Learned Senior Counsel for the 3rd Respondent cites the decision of the Hon'ble Supreme Court in K.J.Nathan V. S.V.Maruthi Rao and other, AIR 1965 SC 430 wherein at paragraph 10, it is observed as under:
10.The foregoing discussion may be summarized thus: tinder the Transfer of Property Act a mortgage by deposit of title- deeds is one of the forms of mortgages whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property. The three requisites for such a mortality are, (1) debt, (ii) deposit of title-deeds; and (iii) an intention that the deeds shall be security for the debt. Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case. The said fact will have to be decided just like any other fact on presumptions and on oral, documentary or circumstantial evidence. There is no presumption of law that the mere deposit of title-deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of property Act. But a court may presume under Section 114 of the Evidence Act that under certain circumstances a loan and a deposit of title deeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at the time the title deeds were deposited there was, an intention to execute a mortgage deed in itself negatives, or is inconsistent with. the intention to create a mortgage by deposit of title-deeds to be in force till the mortgage deed was executed. The decision of English courts making a distinction between the debt preceding the deposit and that following it can at best to only a guide; but the said distinction itself cannot be considered to be a rule of law for application under all circumstances. Physical delivery of documents by the debtor to the creditor is not the only mode of deposit. There may be a constructive deposit. A court will have to ascertain in each case whether in substance there is a delivery of title-deeds by the debtor to the creditor. If the creditor was already in possession of the title-deeds,it would be hypertension to insist upon the formality of the creditor delivering the title-deeds to the debtor and the debtor redelivering them to the creditor. What would be necessary in those circumstances is whether the parties agreed to treat the documents in the possession of the creditor or his agent as delivery to him for the purpose of the transaction. 5.13. Apart from the above decisions, the Learned Senior Counsel for the 3rd Respondent cites the following decisions:
(i)In the decision of the Hon'ble Supreme Court in State of Haryana and others V. Narvir Singh and another, (2014) 1 Supreme Court Cases 105, it is observed and held that 'Ordinarily Mortgage by deposit of title deeds is not registerable if title deeds of the pledged interest are deposited in notified town in view of Section 59 of the Transfer of Property Act that provides exception in respect of MDTD as far as registration thereof is concerned'.
(ii)In the decision State Bank of Mysore V. S.M.Essence Distilleries Private Limited, AIR 1993 Kar 359, it is held as follows:
To create a valid mortgage by deposit of title deeds, there must be a delivery of the title deeds relating to an immovable property by the debtor, to a creditor or his agent, in a notified town with the intention to create a security thereon... An equitable mortgage of a property which lies outside the territories of notified towns, can be validly created by delivering the documents of title to the creditor or his agent in a notified town .... It is now well settled that no Memorandum or writing is necessary to create an equitable mortgage by deposit of title deeds. The equitable mortgage was complete by delivery of the documents with an intention to create security thereon. However, execution of a Memorandum or document in regard to deposit of title deeds is not prohibited.
(iii) In the decision Vijaya Ramakrishnan V. M.S.Aswath Narayana Shetty and another, 2010(2) MWN (Civil) 281 at special page 285, wherein it is laid down as follows:
22.It is to be pointed out that where a Deposit of Title Deeds takes place, it has to be ascertained in the usual manner. As a matter of fact the Territorial Restrictions referred to Section 58 (f) of the Transfer of Property Act has reference only to the delivery of the documents of title, and not to the situation of the property mortgaged. Once the mortgage has been created in a notified Town, the Registration of the Memorandum can be either at the town where the Equitable Mortgage has been created or in the office of the Sub-Registrar within whose jurisdiction, the mortgaged property is situated. However, as long as the Memorandum merely confirms an Equitable Mortgage already created in a notified town, the Registration of Memorandum even outside the notified towns, will be valid as per the decision STATE BANK OF MYSORE V SM ESSENCE DISTILLERIES PVT LTD & OTHERS, AIR 1993 KANT 359, at page 365.
(iv) In the decision of the Hon'ble Supreme Court Janak Raj V. Gurdial Singh and another, AIR 1967 SC 608, it is observed and held that The sale must be confirmed notwithstanding reversal of decree after sale and further, title of purchaser related back to date of sale and not to that of its confirmation.
(v)In the decision of the Hon'ble Supreme Court Sadashiv Prasad Singh V. Harendar Singh and others, (2015) 5 Supreme Court Cases 574, it is held as follows:
The rights of a third party bona fide auction-purchaser in the property purchased by him in a sale in compliance with a Court order/in recovery proceedings under the RDDB Act, 1993 cannot be extinguished except in cases where the said purchase can be assailed on grounds of fraud or collusion. Petitioner's Reply:
6.By means of Reply, the Learned Counsel for the Petitioner submits that the Respondent Bank and the Auction Purchaser are acting in collusion and if a property is sold or to be taken as a security, the Security Interest is to be created and that the 3rd Respondent/ Auction Purchaser is a speculative purchaser and that too for a single bid.
7.It comes to be known that the Petitioner preferred Petition(s) for Special Leave to Appeal (C) No(s).4887-4888/2016 before the Hon'ble Supreme Court as against the Common Order dated 09.02.2016 in W.P.No.27520/2014 and 32716/2015 and while dismissing the S.L.P. on 29.02.2016, the Hon'ble Supreme Court permitted the Petitioner to file Review Petitions before the High Court with a prayer that if, ultimately, the auction is set aside by the High Court, the amount so deposited be paid to the Auction Purchaser along with interest and some compensation determined by the High Court.
8.Pursuant to the orders of the Hon'ble Supreme Court referred to above, the Review Petitioner has deposited a sum of Rs.7 Crores through D.D.No.509364 dated 10.03.2016 drawn on Yes Bank, T.Nagar Branch in the name of the Registrar General of this Court.
9.This Court has heard the Learned Counsel for the Review Petitioner, Learned Counsel for the Respondents 1 & 2/Bank and the Learned Senior Counsel for the 3rd Respondent/Auction Purchaser and noticed their contentions.
Appraisal:
10.At the out set, it is to be pointed out that the definition Section 2(zf) of the SARFAESI Act, 2002 which reads as under:
security interest means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31.
11.Further, Section 2(zb) of the Act speaks of 'Security Agreement' which runs as under:
security agreement means an agreement, instrument or any other document or arrangement under which security interest is created in favour of the secured creditor including the creation of mortgage by deposit of title deeds with the secured creditor.
12.Also, Section 2(zc) deals with 'secured asset' which means the property on which security interest is created. Section 2(zd) of the Act defines secured creditor. A secured creditor is as individual who has the right, on the debtors default, to proceed against collateral and applying it to the payment of the Debtor (vide Black's Law 7th Edn, 1999).
Secured Interest Enforcement:
13.To put it differently, 'secured creditor' means a person holding a mortgage charge or lien on the property to the Debtor or any part thereof as a security for debt due to him from the Debtor. Indeed, as per Section 13(2) of the SARFAESI Act, a secured creditor is at liberty to move against any secured assets and it is not essential that all the secured properties should be put to sale simultaneously. However, if by sale of one property, substantial recovery could be made it is not necessary that other properties ought to be sold or possession be taken under the Act.
14.It is well accepted principle in Law that where there is more than one property mortgage with the secured creditor, it is the choice of a secured creditor as to against which a property, he/it intends to proceed. Indeed, to restrict the rights of a secured creditor, there must be a provision either in statute or in a contract. In an Auction Sale, there is no direct transfer from earlier owner to an 'Auction Purchaser'.
15.Besides this, there is nothing in the SARFAESI Act or the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to preclude a secured creditor from taking measures for recovery of the dues from the mortgage assets because final action has not been taken against the assets of a borrower or primary securities given by him. A reading of Section 13(6) of the SARFAESI Act, does not vest the property absolutely in secured creditor but confers on it, the same right as owner has only for limited purpose of transferring the property.
16.A mere reading of the ingredients of Section 13(6) of the SARFAESI Act, shows that it recognises the fact that where a secured creditor or manager appointed by the secured creditor has sold the secured assets of a borrower, the sale so effected shall vest in the purchaser of such assets all rights in or in relation to those assets as if the sale was made by the borrower himself. The principle is that on having taken possession of the 'secured assets', a secured creditor steps into the shoes of a 'Borrower' and the sale by a secured creditor shall, in Law, be as good as made by the borrower himself.
17.At this juncture, this Court points out that a Court of Law cannot evolve a method/procedure to sell the property and this is the function of an authorised official of the Bank. No wonder, SARFAESI Act is a complete code containing an inbuilt mechanism for Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest. It cannot be brushed aside that a secured creditor is entitled to enforce its secured interest as a matter of right in accordance with Section 13 of the SARFAESI Act and that too without intervention of a Court of Law or Tribunal.
18.It cannot be gainsaid that if the properties mortgaged are more than one, then, the right of secured creditor in law is that he is entitled to proceed against any or all. However, where there is more than one property mortgaged with a secured creditor, it is the choice of a secured creditor as to against which property, it intents to proceed further. That apart, with a view to restrict the rights of a secured creditor, there must be a Section either in a statute or in a contract. In its absence, it cannot be complained of that a secured creditor has no right to proceed against all properties mortgaged by a borrower or guarantor as the case may be.
19.It is to be pointed out that when a loan is given or money is borrowed, there is an obligation on the part of a Borrower to repay and there is a legal right given to the Creditor to recover the amount in case money is not paid in accordance with the agreement and there is default in repayment.
20.In reality, in an Auction Sale, there is no direct transfer from earlier owner to an Auction Purchaser. In fact, there is nothing in the SARFAESI Act or in the RDDBFI Act to preclude a secured creditor from taking measures for recovery of the dues from the mortgage assets because similar action has not been taken against the assets of borrower or primary securities furnished by him.
21.In fact, SARFAESI Act, 2002 is a Special Law and overrides the general law contained in Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It is to be aptly pointed out by this Court that a Banker has a 'General Lien' on all securities deposited with him as Banker, by a customer, unless there be an express contract or circumstance that show an implied contract inconsistent with a 'Lien', as per decision Syndicate Bank V. Vijayakumar and others, (1992) 2 SCC 330.
22.Further, in the decision Singer V. Williams reported in (1921) 1 A.C. At page 41 at special page 57 & 58, it is observed that 'The word securities has no legal signification which necessarily attaches to it on all occasions of the use of the term. It is an ordinary English word used in a variety of collocations ... A security means a security upon something. Securities in the present instance, being in contrast with or separation from possessions, cannot be taken as the same word would be taken if applied for instance to the lodging by a customer of the securities with his bank etc. The term involves the idea of the relation of creditor with debtor, the creditor having a security over property, concern, assets, goods or other things.'
23.At this stage, this Court relevantly points out that SARFAESI Act, 2002 has not defined the term 'Mortgage', but the said term has been defined in the Transfer of Property Act, 1882 and shall have the same meaning for the purpose of the Act as indicated in sub-section (2) of Section 2 of the Act. In fact, in order to prove an existence of 'Equitable Mortgage', the following three essentials are necessary: (1)a debt ; (2) a deposit of Title Deeds; (3) an intention that the deeds shall be security for of debt.
24.It is to be remembered that the deposit of original document constitutes a security for recovery of money by the creditor and in view of Section 59 of the Transfer of Property Act would not require any registration, as opined by this Court. Moreover, if the document in question is a memorandum of an entry for creation of an Equitable Mortgage and had recorded that the concerned person had delivered and deposited the title deeds with the respondent with an intent to create security by way of Equitable Mortgage, such document is only a 'Memorandum' and not a contract to create a 'Mortgage' as the mortgage was already created by deposit of title deeds.
25.No wonder, an 'Equitable Mortgage' continues till the title Deeds are redeemed. The word 'Mortgage' refers to an immovable property, encumbrance as security for payment of loan. A mortgage is a 'Just in Rem'. As per Indian Stamp Act, 1899, a Mortgage is defined as Mortgage Deed' which includes every instrument whereby for the purpose of securing the money any advance or to be advanced by way of loan or in existing or future debt or the performance of an encashment, one person transfers or creates to and in favour of another a right over or in respect of a specified property. Undoubtedly, an intention to create a mortgage to deposit of title deeds is a question of Fact and not Law.
26.It cannot be forgotten that a 'Mortgagor' is a person who takes loan in security, transfers any specific immovable property. A mere Deposit of Title Deeds is not enough, it must be in pursuance of an agreement for security of the loan advance. After all, the test is to see whether it is for security of a loan or the performance of an agreement and when it appears from the deed that intention is to create 'security', it is mortgage, as per decision Bank of India Limited V. Rustom Fakirji Cowasjee, AIR 1955 Bombay 419.
27.In this connection, it is not out of place for this Court to make a pertinent mention that an Equitable Mortgage of a property which lies outside the territories of Notified Towns, can be validly created by delivering the documents of title to a 'Creditor' or his 'Agent' in a Notified Town, vide State Bank of Mysore V. S.M. Essence Distilleries Private Limited, AIR 1993 Karnataka 359.
28.One cannot brush aside a vital fact that a right to redeem is an incident of subsisting mortgage and is inseparable from it so that the right is coextensive with the mortgage deeds. The right subsists till it is effectively extinguished either by the act of parties concerned or by a proper decree of Competent Court.
29.In the decision Nityananda Ghose V. Rajpur Chhaya Bani Cinema Limited reported in AIR 1953 Calcutta 208 at page 209, it is observed and laid down as follows:
In an equitable mortgage, the mortgagee has a right to sue for the mortgage-money within the meaning of S.68(1) (a) and further under such an equitable mortgage the mortgagor binds himself to repay the mortgage-money within the meaning of S.68(1)(a).
30.It is to be pointed out that although there is no Presumption of Law that the mere Deposit of Title Deeds constitute a mortgage, a Court may presume under Section 114 of the Indian Evidence Act, 1872 that under certain circumstances, a loan and a deposit of title deeds constitute a mortgage. Apart from that, a physical delivery of document by the Debtor to Creditor is not the only mode of Deposit, also there may be a Constructive Deposit. In fact, a Court of Law is to ascertain in a given case whether any subsists, there is a delivery of title deeds by the Debtor to the Creditor.
31.It is obligatory on the part of Bank to remove the cloud a touching upon the aspect of 'Equitable Mortgage' and to establish that the said mortgage is in accordance with the provisions of the Law. It is the duty of a Court of Law to see that the price fetched at the 'Auction' is an adequate price even though there is no suggestion of irregularity or fraud. Furthermore, the real criteria is that property should attach a maximum price and whether the property/properties can be adjusted on the basis of offer/offers received with reference to the consideration of market value.
32.It is to be significantly pointed out that Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 provides that 'Before effecting sale of the immovable property referred to in sub-rule (1) of Rule 9, the authorised officer shall obtain a valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property'. However, it is mandatory to have a valuation of property from an approved Valuer before putting it to sale. Besides this, a reading of Rule 8 of the SARFAESI Rules with all its sub-rules in entirety unerringly point out that the 'Valuation of Property' is to be made only after taking possession thereof.
33.As a matter of fact, as per Rule 8(5) of the SARFAESI Act, 2002, an Authorised Officer is to obtain a Valuation Report from an approved Valuer. Also, there must be a consultation with the secured creditor only. After approved Valuer's Report, the Authorised Officer may consult the secured creditor and fixed the reserve price of property. Just because, there is no right expressly provided to the borrower to obtain a copy of a Valuation Report or there is no express provision for the consultation or say of the borrower by the Authorised Officer, on receipt of the notice under Section 8(6) of the Rules. A borrower can raise objections to the Valuation made under 8(5). Further, the issuance of notice is not without any purpose. One of the purposes is to enable the borrower to repay the dues of secured creditor together with costs, charges and expenses under Section 13(8) of the Act. It is to be mentioned that rules only referred to 'Reserve Price' and not an 'Upset Price'.
34.It is to be kept in mind that the term 'Value' refers to a price or cost for sale of a property or a thing which by efflux of time increases periodically.
35.In this connection, it is not out of place for this Court to make a pertinent mention that if minimum reserve price was not indicated and the valuation is a suspicious one, it cannot stand a moment's scrutiny. In deciding a reasonable price, certainly a Valuation Report by an Expert is a must.
36.Indeed, the difference between the Valuation and the Reserve Price is that fixation of an upset price may be an indicative and probable price which the property may fetch from the point of view of intending bidders fixation of reserve price does not preclude the claimant for adducing proof that the land was sold for a low price.
37.It is needless for this Court to point out that there should be an application of mind by the concerned authority while accepting or approving the report of a approved Valuer by fixing upset price, as the failure to do so, may cause a substantial injury to the borrower/ guarantor and that may amount to material irregularity which may ultimately result in vitiating the subsequent proceedings.
38.It is to be ensured that a maximum price is received by a sale. When such a statutory forum is created by law for redressal of grievance that too in a fiscal statute, a Writ Petition should not be entertained ignoring the statutory dispensation, as per order of this Court in W.P.No.6952 of 2008 dated 01.10.2010 [between C.Narendra Kumar V. State Bank of India, Salem and four others].
Right to Appeal:
39.It is to be relevantly pointed out by this Court that the ingredients of Section 13 of the SARFAESI Act pertaining to enforcement of security interest of Section 17 regarding Right to Appeal is attracted only when it is shown other security interest is created in favour of a secured creditor and not a creditor who is unsecured, as opined by this Court.
40.It is to be noted that Section 17(2) of the SARFAESI Act clearly empowers that Debt Recovery Tribunal to decide that any of the measures is referred to in Section 13 taken by the secured creditor for the enforcement of security are in accordance with the provisions of the Law or the Rules made thereunder. In fact, the Debts Recovery Tribunal has power under Section 17(3) of the Act to set aside even a sale transaction and restored possession to a borrower in appropriate cases. Further, the borrowers objections can be gone into in an Appeal in view of the powers conferred under DRT, as per Section 17(2) of the SARFAESI Act.
Glimpse of Case Laws:
41.In the decision Radha Kishan and another V. Firm Jwala Prasad Shiv Prasad and others, AIR 1966 Rajasthan 219 wherein it is observed and held as under:
A document depositing title-deeds would only require registration if independently of the provisions of S.58(f) of the Transfer of Property Act it creates a mortgage.
Where, by a letter, certain title-deeds were deposited by way of security for due repayment of a loan.
Held that the letter did not require registration.
Where title-deeds are deposited by way of equitable mortgage, a memorandum merely stating the purpose for which they are deposited is not an agreement for a mortgage and need not be stamped.
42.At this juncture, this Court worth recalls and recollects the decision UCO Bank, Agartala, Branch V. Dipak Debbarma and others reported in AIR 2007 Guahati 96, wherein it is observed and held that 'The borrower having failed to repay the loan, the Bank initiated proceedings under Section 13(2) and thereafter, Section 13(4) and also to take possession of mortgage properties and that the borrower failed to take recourse to the remedy of filing of an Appeal under Section 17 of the Act, then, the Writ Petition is not maintainable'.
Review in Law:
43.Dealing with the aspect of Review, it is to be pointed out that the Hon'ble High Court has the plenary power who also has the duty to correct any apparent error or mistake in respect of the order passed by it, it is to be taken of that 'Review' which seeks rehearing of the matter is per se not maintainable, considering the ambit of 'Review' which is a restricted one, in Law. The litigant cannot exercise the power of the Review as an alternative method of preferring of an Appeal. Further, a Review and an Appeal cannot go altogether.
44.It is an axiomatic principle in Law that 'Review' is not an 'Appeal' in disguise. A Review Petition has a limited role and cannot be allowed to act as an 'Appeal' in disguise. Under the garb of 'Review', the High Court would not rehear the parties on point of Law afresh. Moreover, rehearing of matter on merits and reappreciation of the arguments/pleas raised by the respective parties in the original order is impermissible in 'Review'.
45.Suffice it for this Court to make a pertinent mention that 'Review Jurisdiction' cannot be pressed into service as an Appellate Jurisdiction. The power of Review is not to be confused with an Appellate Power of the concerned Court. Any endeavour, except the endeavour to correct/rectify an error apparent or an endeavour not placed on any ground adumbrated in Order XLVII of Civil Procedure Code amounts to an abuse of the liberty of a litigant. If a Review Petition does not disclose a ground of Review nor there is any apparent mistake or patent/latent error on the face of record, a Review Application would be dismissed. 'Error apparent on the face of record' is one which strikes on a Court of Law on a mere running of the eye of the record of the case in question. If an error is not self evident, then also, no Review lies. If a detection of an error requires a long drawn process of reasoning and relates to a long deliberation, then, it cannot be termed as an error on the face of record for the purpose of Order XLVII Rule 1 C.P.C., in the considered opinion of this Court.
46.After all, 'a mistake or an error apparent on the face of record' is distinct from an erroneous decision and further it is not permissible for an erroneous decision to be 'reheard' and 'corrected in Review'. A Review is not to be entertained to substitute a view already taken or for arriving at a fresh decision in a case. A mistake apparent on the face of record is not meant to be an error which is to be searched for/fished out. A mere redundancy of earlier and over ruled arguments, an endeavour of a second innings in respect of the already covered grounds are not valid enough for exercising the jurisdiction of a Court of Law in 'Review'.
Discussion:
47.It is to be made mention of that the Deposit of Title Deeds dated 10.12.2009 made by the Petitioner [relating to the residential property concerning the sale transaction] by means of which a creation of Mortgage was made by the Petitioner in favour of the Respondent Bank, comes within the ambit of the definition of Section 2(zb) 'security agreement' of the SARFAESI Act, 2002. Furthermore, it cannot be said by any stretch of imagination that no 'security interest' was created by the Petitioner to and in favour of the Bank.
48.It is to be significantly noted that till the order of dismissing the W.P.No.27520/2014 for default is set aside during the interregnum period, there is no impediment/fetter on the part of the Respondent Bank to proceed with the course of action it had undertaken. This is because of the prime reason that from the date of order of Writ Petition dated 08.01.2015 till date of restoration viz., on 23.01.2015, the W.P.No.27520/2014 is not on the file of this Court as a pending/ alive matter.
49.As far as the present cases are concerned, it is to be pointed out that even in the Respondent/Bank's Lawyer's Demand Notice dated 25.02.2013 addressed to to M/s.R.A. Samy Trading Private Limited, Chennai 600 017 and two others, it was, inter alia, mentioned that '... and also as Additional Security the property at 72/2, Kajura Garden, East Coast Road, Neelangarai, Chennai 41 and another property in No.21, Mangesh Street, T.Nagar, Chennai 17 standing in the name of both the directors and also Hypothecation of Stocks and Books Debts and Movable fixed Assets of the Company with the intention of creating security for the loan taken by you and created equitable mortgage in favour of the Bank and you have also executed necessary documents in favour of the bank'. Further, it is quite evident that the Title Deeds were deposited by the Guarantor by means of an Acknowledgment Letter (Form No.17D) addressed to the Respondent Bank, Virugambakkam Branch, Chennai (being a Notified Town) in respect of A/c. M/s.R.A.Samy Trading Private Limited for Rs.245082000/- with an intention to create security as specified in Section 58(f) of the Transfer of Property Act, 1882 on 10.12.2009. Indeed, the title deeds were accepted by the Bank as per Entry Form (Form No.D17E dated 10.12.2009) specifying the particulars of title deeds deposited whereby and whereunder it was in a crystaline fashion mentioned that the said Title Deeds were mortgaged with a view to create security in respect of the said property.
50.In the upshot of qualitative and quantitative discussions and also, this Court, on going through the impugned Common Order dated 09.02.2016 in W.P.No.27520/2014 and W.P.No.32716/2015 passed by this Court, comes to an inevitable and irresistible conclusion that there are no glaring omissions/latent and patent mistakes of any kind/errors apparent on the face of record. Viewed in that perspective, the Review Petitions fails.
Disposition:
51.In fine, the Review Petitions are dismissed. Before parting with the case, this Court makes it abundantly clear that the dismissal of Review Petitions would not preclude the Review Petitioner to approach the Competent Forum/Tribunal to raise all factual and legal pleas/objections [relating to sale transaction, its inadequacy of price/ underbidding] in the subject matter in issue and to seek redressal of his grievances in the manner known to Law and in accordance with Law, if he so desires/chooses. Liberty is granted to the Petitioner by seeking refund of the deposit of Rs.7 Crores made before this Court by him, by filing necessary payment out application, if necessary and to make use of the same to his aid before the Tribunal.
(M.V. J.) (M.K.K.S. J) 18 .04.2017 Speaking Order Index : Yes Internet : Yes Sgl To
1.The Authorised Officer United Bank of India Southern Region 184/132 Ramakrishna Math Road Mandhaveli, Chennai 600 028
2.The Branch Manager United Bank of India Virugambakkam, Chennai 600 092
3.The District Collector Collectorate Kanchipuram District Kanchipuram 631 501
4.The Tahsildar Office of the Tahsildar Sozhinganallur, Kancheepuram District.
M.VENUGOPAL, J.
AND K.KALYANASUNDARAM, J.
Sgl ORDERS IN REV. PETN. Nos.82 & 83 of 2016 18.04.2017 http://www.judis.nic.in