Rajasthan High Court - Jodhpur
M/S. Dsb Motors Pvt. Ltd., And Anr vs Udaipur Urban Coop. Bank Ltd. And Ors on 15 December, 2021
Author: Pushpendra Singh Bhati
Bench: Pushpendra Singh Bhati
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 6772/2018
1. M/s Dsb Motors Pvt. Ltd., Jamar Kotra Link Road,
Hiranmagri Sector No.6, Udaipur, Through- Its Managing
Director, Shri Basant Kumar Bakaliya, Aged About 60
Years.
2. M/s Classic Automobiles Pvt. Ltd., Jamar Kotra Link Road,
Hiranmagri Sector No. 6, Jawar Kotra Link Road, Udaipur.
Through-Its Managing Director Shri Basant Kumar
Bakaliya.
----Petitioners
Versus
1. Udaipur Urban Co-Operative Bank Ltd. Regd., Office 9C-A,
Madhuban, Udaipur, Through-Its Authorized Officer.
2. S.n.g. Enforcement, 184, Bhupalpura, Main Road,
Udaipur.
3. Bhupesh Patel S/o Sh. Damodar Patel, Resident Of 1-Shiv
Park, Durga Nursery Road, Udaipur.
4. Sarfraz Sheikh S/o Sh. Masood Ahmed Sheikh, Resident
Of 25, Alkapuri, Udaipur.
5. Kuldeep Patel s/o Sh. Sh. Damodar Patel, r/o 1-Shiv Park,
Durga Nursery Road, Udaipur.
----Respondents
For Petitioner(s) : Mr. Manoj Bhandari with
Mr. Aniket Tater.
For Respondent(s) : Mr. Manish Shishodia,
Mr. J.S. Saluja,
Mr. Sanjay Nahar,
Mr. Falgun Buch
Mr. Lalit Parihar
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
Order
15/12/2021
1. This writ petition has been preferred claiming the following
reliefs:
"1. The auction conducted on 16th & 17th April, 2018 in
pursuance of auction notice dated 09.02.2018
(Annex.5) and further the illegal extension dated
17.03.2018 (Annex.6) (published in newspaper on
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18.03.2018) may kindly be declared illegal and may
kindly be quashed and set aside.
2. The auction notice dated 09.02.2018 (Annex.5)
may kindly be declared to be redundant and the
General information dated 17.03.2018 (Annex.6)
(published in newspaper dated 18.03.2018) regarding
deferring the date of auction may kindly be declared
illegal and may kindly be quashed & set-aside.
3. The documents regarding confirmation of sale, if
any, Sale Certificates and registering of same, if any,
may kindly be called from the respondents and may
kindly be declared illegal and may kindly be quashed
and set-aside.
4. The respondent no.1 may kindly be directed to
proceed with the proposal given by the petitioner
companies vide communication dated 08.05.2018
(Annex.14) and implement the same."
2. At the outset, this Court takes note of the fact that at the
instance of the petitioners, an earlier writ petition being S.B. Civil
Writ Petition No.788/2016 was disposed of by this Hon'ble Court
on 15.03.2018. The said order dated 15.03.2018 reads as under:
"The present writ petition comes up for orders on
second stay application moved by the petitioner -
firms.
Vide Order dated 06.07.2017, the liberty was
granted to the petitioner - firms to deposit an amount
of Rs. 8.30 crores with the respondent - bank for
which, the petitioner - firms were granted time upto
31.07.2017. The said amount was not deposited as
directed. Thereafter, the petitioner - firms and the
respondent - bank agreed on an amount of Rs. 9.05
crores as per their Letter dated 22.01.2018, which was
required to be deposited by the petitioner - firms by
25.01.2018. The said letter was received by the
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petitioner - firms on 24.01.2018. Since only one day
time was given to deposit the heavy amount, the
petitioner - firms could not do so. Accordingly, the
present second stay application has been moved
seeking extension of time to permit the petitioner -
firms to deposit the said amount.
Learned counsel for the respondents, however,
has no objection to the extension of time in case, the
petitioner - firms pay enhanced amount of Rs. 9.50
crores as one time amount on or before 09.04.2018.
In view of the above, this Court deems it proper
to dispose of the present writ petition with the
following directions :-
A. The notice under Section 13(2) of the SARFAESI
Act, 2002 dated 05.01.2016 shall stand quashed in
case, the petitioner - firms deposit Rs. 9.50 crores
with the respondent - bank on or before 09.04.2018.
B. In case, the said amount is not deposited within
stipulated period, the present writ petition shall deem
to have been dismissed and the respondent - Bank
shall be at liberty to proceed further against the
petitioner - firms under the SARFAESI Act, 2002.
The present writ petition stands disposed of in
the above terms. "
However, the petitioners failed to abide by the aforementioned
order of this Hon'ble Court and also failed to take the benefit of
the same.
3. Today the learned counsel for the petitioners raises three
issues:
Firstly, that the mandatory notice under the Securitisation And
Reconstruction Of Financial Assets And Enforcement Of Security
Interest Act, 2002 (SARFAESI Act) and the Rules made
thereunder require that no sale of immovable property shall take
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place before expiry of 30 days, and therefore, the auction could
not have place before 30 days from 09.04.2018;
Secondly, the auction has taken place, while prescribing the rates
below the DLC rates prevailing in the area; and
Thirdly, as an alternate remedy, the Hon'ble Supreme Court has
approved the exercise of powers under Article 226 of the
Constitution of India.
4. Learned counsel for the petitioners relied upon the precedent
law laid down by the Hon'ble Supreme Court in Mathew
Varghese Vs. M. Amritha Kumar & Ors., reported in (2014)
5 SCC 610, relevant portion of which reads as under:
"31. Once the said legal position is ascertained, the
statutory prescription contained in Rules 8 and 9 have
also got to be examined as the said Rules prescribe as
to the procedure to be followed by a secured creditor
while resorting to a sale after the issuance of the
proceedings under Sections 13(1) to (4) of
the SARFAESI Act. Under Rule 9(1), it is prescribed that
no sale of an immovable property under the Rules
should take place before the expiry of 30 days from
the date on which the public notice of sale is published
in the newspapers as referred to in the proviso to sub-
rule (6) of Rule 8 or notice of sale has been served to
the borrower. Sub-rule (6) of Rule 8 again states that
the authorised officer should serve to the borrower a
notice of 30 days for the sale of the immovable
secured assets. Reading sub-rule (6) of Rule 8 and
sub-rule (1) of Rule 9 together, the service of
individual notice to the borrower, specifying clear 30
days' time-gap for effecting any sale of immovable
secured asset is a statutory mandate. It is also
stipulated that no sale should be affected before the
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expiry of 30 days from the date on which the public
notice of sale is published in the newspapers.
Therefore, the requirement under Rule 8(6) and Rule
9(1) contemplates a clear 30 days' individual notice to
the borrower and also a public notice by way of
publication in the newspapers. In other words, while
the publication in newspaper should provide for 30
days' clear notice, since Rule 9(1) also states that
such notice of sale is to be in accordance with the
proviso to sub-rule (6) of Rule 8, 30 days' clear notice
to the borrower should also be ensured as stipulated
under Rule 8(6) as well. Therefore, the use of the
expression "or" in Rule 9(1) should be read as "and"
as that alone would be in consonance with Section
13(8) of the SARFAESI Act.
32. The other prescriptions contained in the proviso to
sub-rule (6) of Rule 8 relates to the details to be set
out in the newspaper publication, one of which should
be in "vernacular language" with sufficient circulation
in the locality by setting out the terms of the sale.
While setting out the terms of the sale, it should
contain the description of the immovable property to
be sold, the known encumbrances of the secured
creditor, the secured debt for which the property is to
be sold, the reserve price below which the sale cannot
be effected, the time and place of public auction or the
time after which sale by any other mode would be
completed, the deposit of earnest money to be made
and any other details which the authorised officer
considers material for a purchaser to know in order to
judge the nature and value of the property.
33. Such a detailed procedure while resorting to a sale
of an immovable secured asset is prescribed under
Rules 8 and 9(1). In our considered opinion, it has got
a twin objective to be achieved:
33.1. In the first place, as already stated by us, by
virtue of the stipulation contained in Section 13(8)
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read along with Rules 8(6) and 9(1), the
owner/borrower should have clear notice of 30 days
before the date and time when the sale or transfer of
the secured asset would be made, as that alone would
enable the owner/borrower to take all efforts to retain
his or her ownership by tendering the dues of the
secured creditor before that date and time.
33.2. Secondly, when such a secured asset of an
immovable property is brought for sale, the intending
purchasers should know the nature of the property,
the extent of liability pertaining to the said property,
any other encumbrances pertaining to the said
property, the minimum price below which one cannot
make a bid and the total liability of the borrower to
the secured creditor. Since, the proviso to sub-rule (6)
also mentions that any other material aspect should
also be made known when effecting the publication, it
would only mean that the intending purchaser should
have entire details about the property brought for sale
in order to rule out any possibility of the bidders later
on to express ignorance about the factors connected
with the asset in question.
33.3. Be that as it may, the paramount objective is to
provide sufficient time and opportunity to the
borrower to take all efforts to safeguard his right of
ownership either by tendering the dues to the creditor
before the date and time of the sale or transfer, or
ensure that the secured asset derives the maximum
price and no one is allowed to exploit the vulnerable
situation in which the borrower is placed.
34. At this juncture, it will also be worthwhile to refer
to Rules 8(1) to (3) and in particular sub-rule (3), in
order to note the responsibility of the secured creditor
vis-à-vis the secured asset taken possession of. Under
sub-rule (1) of Rule 8, the prescribed manner in which
the possession is to be taken by issuing the notice in
the format in which such notice of possession is to be
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issued to the borrower is stipulated. Under sub-rule
(2) of Rule 8 again, it is stated as to how the secured
creditor should publish the notice of possession as
prescribed under sub-rule (1) to be made in two
leading newspapers, one of which should be in the
vernacular language having sufficient circulation in the
locality and also such publication should have been
made seven days prior to the intention of taking
possession. Sub-rule (3) of Rule 8 really casts much
more onerous responsibility on the secured creditor
once possession is actually taken by its authorised
officer. Under sub-rule (3) of Rule 8, the property
taken possession of by the secured creditor should be
kept in its custody or in the custody of a person
authorised or appointed by it and it is stipulated that
such person holding possession should take as much
care of the property in its custody as a owner of
ordinary prudence would under similar circumstances
take care of such property. The underlying purport of
such a requirement is to ensure that under no
circumstances, the rights of the owner till such right is
transferred in the manner known to law is infringed.
Merely because the provisions of the SARFAESI Act and
the Rules enable the secured creditor to take
possession of such an immovable property belonging
to the owner and also empowers to deal with it by way
of sale or transfer for the purpose of realising the
secured debt of the borrower, it does not mean that
such wide power can be exercised arbitrarily or
whimsically to the utter disadvantage of the borrower.
35. Under sub-rule (4) of Rule 8, it is further
stipulated that the authorised officer should take steps
for preservation and protection of secured assets
and insure them if necessary till they are sold or
otherwise disposed of. Sub-rule (4), governs all
secured assets, movable or immovable and a further
responsibility is created on the authorised officer to
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take steps for the preservation and protection of
secured assets and for that purpose can
even insure such assets, until they are sold or
otherwise disposed of. Therefore, a reading of Rules 8
and 9, in particular, sub-rules (1) to (4) and (6) of
Rule 8 and sub-rule (1) of Rule 9 makes it clear that
simply because a secured interest in a secured asset is
created by the borrower in favour of the secured
creditor, the said asset in the event of the same
having become a non-performing asset cannot be
dealt with in a light-hearted manner by way of sale or
transfer or disposed of in a casual manner or by not
adhering to the prescriptions contained under
the SARFAESI Act and the abovesaid Rules mentioned
by us."
5. Learned counsel for the petitioners also relied upon the
precedent law laid down by the Hon'ble Supreme Court in Ram
Kishun & Ors. Vs. State of U.P. & Ors., reported in (2012)
11 SCC 511, relevant portion of which reads under:
"17. Therefore, it becomes a legal obligation on the
part of the authority that property be sold in such a
manner that it may fetch the best price. Thus essential
ingredients of such sale remain a correct valuation
report and fixing the reserve price. In case proper
valuation has not been made and the reserve price is
fixed taking into consideration the inaccurate valuation
report, the intending buyers may not come forward
treating the property as not worth purchase by them,
as a moneyed person or a big businessman may not
like to involve himself in small sales/deals."
6. Learned counsel for the petitioners further relied upon the
precedent law laid down by the Hon'ble Supreme Court in
Haryana Financial Corporation & Ors. Vs. Jagdamba Oil
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Mills & Ors., reported in (2002) 3 SCC 496, relevant portion of
which reads as under:
"14. As was observed in Chairman and Managing
Director, SIPCOT v. Contromix (P) Ltd. [(1995) 4 SCC
595 : JT (1995) 6 SC 283] in the matter of sale of
public property, the dominant consideration is to
secure the best price for the property to be sold. This
can be achieved only when there is maximum public
participation in the process of sale and everybody has
an opportunity of making an offer. Public auction after
adequate publicity ensures participation of every
person who is interested in purchasing the property
and generally secures the best price. But many times
it may not be possible to secure the best price by
public auction when the bidders join together so as to
depress the bid or the nature of the property to be
sold is such that suitable bid may not be received at a
public auction. In that event, any other suitable mode
for selling of property can be by inviting tenders. In
order to ensure that such sale by calling tenders does
not escape attention of an intending participant, it is
essential that every endeavour should be made to give
wide publicity so as to get the maximum price. These
are aspects which the Corporations have to keep in
view while dealing with disposal of seized units."
7. Learned counsel for the petitioners also relied upon the
precedent law laid down by the Hon'ble Supreme Court in Divya
Manufacturing Company (P) Ltd. & Ors. Vs. Union Bank of
India & Ors., reported in (2000) 6 SCC 69, relevant portion of
which reads as under:
"7. The Court noted that it cannot shut its eyes to the
fact that initially the property was proposed to be sold
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at the price of Rs 37 lakhs. Thereafter the sale was
confirmed at Rs 85 lakhs which was set aside and at
the intervention of the Division Bench, the amount
was enhanced to Rs 1.3 crores. The Court observed
that as two applicants have come forward with a
proposal to purchase the said property at Rs 2 crores,
the principle laid down in LICA (P) Ltd. (1) v. Official
Liquidator [(1996) 85 Comp Cas 788 (SC) [see below
at p. 79]] and LICA (P) Ltd. (2) v. Official
Liquidator [(1996) 85 Comp Cas 792 (SC) [see below
at p. 82]] applies squarely to the facts of the present
case. The Court also observed that it was conscious of
the fact that there should be a finality even in a
company sale, but so long as possession is not
handed over to the purchaser and the sale deed is not
executed, the Court by virtue of clause 11 of the
terms and conditions for sale can reopen the sale in
the interests of justice. The Court also referred to the
decision in Navalkha and Sons v. Ramanya
Das [(1969) 3 SCC 537] . Considering all the
submissions made by the learned counsel for the
parties, the sale confirmed in favour of the appellant
for an amount of Rs 1.3 crores was set aside with a
direction that Respondents 7 and 8 should
compensate "Divya" by paying Rs 70 thousand each
for the loss suffered by it and directed for resale of
the assets of the Company. That order is under
challenge before this Court.
13. From the aforesaid observation, it is abundantly
clear that the court is the custodian of the interests of
the company and its creditors. Hence, it is the duty of
the court to see that the price fetched at the auction
is an adequate price even though there is no
suggestion of irregularity or fraud. As stated above, in
the present case, the sale proceedings have a
chequered history. The appellant started its offer after
having an agreement with the Employees' Samity for
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Rs 37 lakhs. This was on the face of it under bidding
for taking undue advantage of court sale. At the
intervention of the learned Single Judge, the bid was
increased to Rs 85 lakhs. Subsequently, before the
Division Bench, the appellant increased it to Rs 1.30
crores. At that stage, Respondent 7 "Sharma" was not
permitted to bid because it had not complied with the
requirements of the advertisement. It is to be stated
that on 26-6-1998 the Division Bench has ordered
that offers of Eastern Silk Industries Ltd. and Jay
Prestressed Products Ltd. would only be considered
on 2-7-1998 and confirmation of sale would be made
on the basis of the offers made by the two parties.
Further, despite the fact that the appellant "Divya"
had withdrawn its earlier offer, the Court permitted it
to take part in making further offer as noted in the
order dated 2-7-1998. In this set of circumstances,
there was no need to confine the bid between three
offerors only."
8. Learned counsel for the petitioners further relied upon the
judgment rendered by the Hon'ble Madras High Court in K.
Raamaselvam & Ors. Vs. Indian Overseas Bank & Ors.,
reported in (2010) MLJ 313, relevant portion of which reads as
under:
"10. It is no doubt true, that any illegality in the
auction can be raised in a proceeding under Section
17.
We do not think that such a plea should be
countenanced, in the present case, as the question
now raised depends purely on a question of
interpretation of the Statutory Rule. The existence of
alternative remedy is not considered as an absolute
bar for entertaining a Writ Petition. This is more so, in
view of the fact that the Bank, a public sector
undertaking and even considered as State under
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Article 12 of the Constitution of India, is expected to
act strictly in accordance with the Statute and Rules.
11. The contention of the counsel for the Bank that a
technical objection is being raised is also of little
assistance. It is no doubt true that SARFAESI Act and
Rules have been framed with a view to expedite the
recovery of money due to the Bank. However, since
the provisions have vested wide power, on the
Authorised Officer/Secured Creditor, it is expected
such power should be exercised within strict
parameters indicated in the Statute and the Rules."
9. Learned counsel for the petitioners also relied upon the
precedent law laid down by the Hon'ble Supreme Court in
Navalkha & Sons Vs. Ramajuna Das & Ors., reported in
(1969) 3 SCC 537, relevant portion of which reads as under:
"6. The principles which should govern confirmation
of sales are well-established. Where the acceptance of
the offer by the Commissioners is subject to
confirmation of the Court the offerer does not by
mere acceptance get any vested right in the property
so that he may demand automatic confirmation of his
offer. The condition of confirmation by the Court
operates as a safeguard against the property being
sold at inadequate price whether or not it is a
consequence of any irregularity or fraud in the
conduct of the sale. In every case it is the duty of the
Court to satisfy itself that having regard to the
market value of the property the price offered is
reasonable. Unless the Court is satisfied about the
adequacy of the price the act of confirmation of the
sale would not be a proper exercise of judicial
discretion. In Gordhan Das Chuni Lal v. S. Sriman
Kanthimathinatha Pillai [AIR 1921 Mad 286] it was
observed that where the property is authorised to be
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sold by private contract or otherwise it is the duty of
the Court to satisfy itself that the price fixed is the
best that could be expected to be offered. That is
because the Court is the custodian of the interests of
the Company and its creditors and the sanction of the
Court required under the Companies Act has to be
exercised with judicial discretion regard being had to
the interests of the Company and its creditors as well.
This principle was followed in Rathnaswami
Pillai v. Sadapathi Pillai [(1925) Mad 318] and S.
Soundarajan v. Roshan & Co. [AIR 1940 Mad 42]
In A. Subbaraya Mudaliar v. K. Sundarajan [AIR
1951 Mad 986] it was pointed out that the condition
of confirmation by the Court being a safeguard
against the property being said at an inadequate
price, it will be not only proper but necessary that the
Court in exercising the discretion which it undoubtedly
has of accepting or refusing the highest bid at the
auction held in pursuance of its orders, should see
that the price fetched at the auction is an adequate
price even though there is no suggestion of
irregularity or fraud. It is well to bear in mind the
other principle which is equally well-settled namely
that once the Court comes to the conclusion that the
price offered is adequate, no subsequent higher offer
can constitute a valid ground for refusing confirmation
of the sale or offer already received. (See the decision
of the Madras High Court in Roshan & Co. case)."
10. Learned counsel for the petitioners further relied upon the
precedent law laid down by the Hon'ble Supreme Court in Anil
Kumar Srivastava Vs. State of U.P. & Ors., reported in
(2004) 8 SCC 671, relevant portion of which reads as under:
"12. The aforestated ruling explains the meaning of
the term "reserve price". It indicates the object
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behind fixing the reserve price viz. to limit the
authority of the auctioneer. In the present case, the
Board resolution is meant to guide the officers of the
second respondent. The resolution prescribes the
guidelines for fixing the reserve price. The concept of
reserve price is not synonymous with "valuation of
the property". These two terms operate in different
spheres. An invitation to tender is not an offer. It is
an attempt to ascertain whether an offer can be
obtained with a margin. [See Pollock & Mulla: Indian
Contract & Specific Relief Acts (2001), 12th Edn., p.
50.]"
11. Learned counsel for the petitioners further relied upon the
judgment rendered by Hon'ble Kerala High Court at Ernakulam in
K.T. Unnikrishnan Vs. The Authorised Officer, U.C.O. Bank &
Ors., reported in 2018(1) KLJ 796, relevant portion of which
reads as under:
9. In so far as respondents 7 to 11 are not
amenable for an agreed order, the sustainability of
the sale held in their favour under the Act needs to
be considered on merits. It is beyond dispute that
very wide powers have been conferred on banks
and financial institutions under the Act to realise
the amounts due to them. The said powers include
the power to take over possession of securities
with a right to transfer it by sale as well. As held
consistently by the Apex court, every wide power,
the exercise of which has far-reaching
repercussion, has inherent limitation on it also.
Such powers can be exercised only to effectuate
the purposes of the statutes concerned. The
responsibility is far graver in legislations enacted
for general benefit and common good. Test of
reasonableness is also strict in such cases. The
exercise of such powers have to be tested on the
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touchstone of fairness and justice. That which is
not fair and just is unreasonable and what is
unreasonable is arbitrary. Power to take
possession of a property of the defaulter and
transfer the same by sale requires the authority to
act cautiously, honestly, fairly and reasonably.
Lack of reasonableness or even fairness at either
of the two stages renders the take over and
transfer invalid. The authority should justify the
action assailed on the touchstone of justness,
fairness, reasonableness and as a reasonable
prudent owner. Right to property is a constitutional
right protected under Article 300A of the
Constitution, which mandates that no person shall
be deprived of his property save by authority of
law. When the provisions of the Act and the Rules
made thereunder are analysed and understood in
the background of article 300A of the Constitution,
it is clear that when it comes to the question of
realising the dues of the secured creditors by
bringing the property entrusted with them for sale
to realise money advanced without approaching
any court or tribunal, the secured creditor is a
trustee and he cannot deal with the property in
any manner it likes. The secured creditor, in the
circumstances, is duty bound to ensure that
maximum price is received from the secured asset
and that no one is taking advantage of the
vulnerable possession in which the borrower is
placed on account of the proceedings against him.
In other words, the secured creditor is bound to
ensure that the rights of the owner of the security
is not infringed in any manner. Merely because a
secured interest in a secured asset is created by
the borrower in favour of the secured creditor, the
said asset cannot be disposed of in a casual or
light-hearted manner (See Mathew Varghese v. M.
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Amritha Kumar [(2014) 5 SCC 610]). It is relevant
in this context to refer to the following
observations made by the Apex court in Ram
Kishun v. State of U.P. [(2012) 11 SCC 511]:
"Undoubtedly, public money should be recovered
and recovery should be made expeditiously. But it
does not mean that the financial institutions which
are concerned only with the recovery of their
loans, may be permitted to behave like property
dealers and be permitted further to dispose of the
secured assets in any unreasonable or arbitrary
manner in flagrant violation of the statutory
provisions"
10. The above principles make it clear that though
the recovery of public dues should be made
expeditiously, it should be in accordance with the
procedure prescribed by law and that it should not
frustrate a constitutional right as well as the
human right of a person to hold a property and
that in the event of a fundamental procedural error
occurred in a sale, the same is liable to be set
aside.
11. The case set up by the petitioner has to be
considered in the light of the aforesaid principles.
As noted above, the property of the petitioner has
been sold by the bank for Rs. 85,60,000/-. It is
stated by the petitioner in ground C of the writ
petition that the said property is worth more than
Rs. 3 crores. To substantiate this case, the
petitioner produced Ext.P5 sale deed executed on
2.11.2017, the day previous to the date of sale, in
respect of a property situated in the very same
survey number, measuring 4 cents. The value of
the property shown in the said sale deed is Rs.
40,00,000/-. If the price of the property shown in
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Ext.P5 sale deed is taken as the true price of the
property transacted between the parties to the
said document, the value of the property of the
petitioner which was sold in terms of Ext.P1 sale
notice on the next day would be Rs. 1,28,33,000/-.
In so far as a considerably high percentage of the
value of the property is to be paid towards stamp
duty and registration charges, it is common
knowledge that there is a tendency among the
people in our State to show a lesser price in the
sale deeds to save stamp duty and registration
fees in connection with the execution and
registration of documents. If that reality is taken
into account, it can be easily inferred that the price
of the property transacted between the parties to
Ext.P5 sale deed would be far more than what is
stated therein. Further, as noted above, in terms
of Ext.P6 agreement, a third party has come
forward to purchase the property of the petitioner
for almost twice the price at which the property
was sold by the bank. It is stated by the petitioner
that it is that third party who has made available
the demand drafts of the amounts payable to the
bank, to the petitioner to present the same before
the Court. The said circumstances alone are
sufficient to hold that the price of the property of
the petitioner is far more than the amount at
which the same was sold by the bank. Further,
having regard to the facts and circumstances of
this case and the practices prevailing in the State
in transactions of this nature as also the vulnerable
position in which the petitioner is placed, and the
risk involved for a third party to enter into a
transaction in the nature of Ext.P6 agreement, I
am of the view that the price of the property
agreed between the petitioner and the third party
referred to in Ext.P6 agreement would be far more
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(18 of 23) [CW-6772/2018]
than the price shown in the agreement. True, in
the absence of any formula to arrive at the correct
market price of a property for the purpose of
showing the same as the minimum sale price in a
sale notice, the banks and financial institutions
may commit errors while arriving at the minimum
sale price of the properties to be sold, but such
errors shall not go to the extent it has gone in the
instant case. Even if the price shown in Ext.P6
agreement is taken as the true price of the
property, I have no hesitation to hold that the
bank has acted in an unfair and unreasonable
manner in arriving at the minimum price of the
property for its sale. Needless to say that the
entire proceedings for sale of the property of the
petitioner is thus vitiated. I hold so also for the
reason that the counter affidavit filed by
respondents 7 to 11 indicates that the very same
bank through the very same branch has extended
personal loans to the buyers to purchase the
property, making the whole transaction suspicious.
12. On the other hand, learned counsel for the respondents,
while opposing the petition, relied upon the precedent law laid
down by the Hon'ble Supreme Court in Kanaiyalal Lalchand
Sachdev & Ors. Vs. State of Maharashtra & Ors., reported in
(2011) 2 SCC 782, relevant portion of which reads as under:
"21. In Indian Overseas Bank v. Ashok Saw
Mill [(2009) 8 SCC 366] the main question which
fell for determination was whether the DRT would
have jurisdiction to consider and adjudicate post
Section 13(4) events or whether its scope in terms
of Section 17 of the Act will be confined to the
stage contemplated under Section 13(4) of the
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(19 of 23) [CW-6772/2018]
Act? On an examination of the provisions
contained in Chapter III of the Act, in particular
Sections 13 and 17, this Court held as under: (SCC
pp. 375-76, paras 35-36 & 39)
"35. In order to prevent misuse of such wide
powers and to prevent prejudice being caused to a
borrower on account of an error on the part of the
banks or financial institutions, certain checks and
balances have been introduced in Section 17 which
allow any person, including the borrower,
aggrieved by any of the measures referred to in
sub-section (4) of Section 13 taken by the secured
creditor, to make an application to the DRT having
jurisdiction in the matter within 45 days from the
date of such measures having taken for the reliefs
indicated in sub-section (3) thereof.
36. The intention of the legislature is, therefore,
clear that while the banks and financial institutions
have been vested with stringent powers for
recovery of their dues, safeguards have also been
provided for rectifying any error or wrongful use of
such powers by vesting the DRT with authority
after conducting an adjudication into the matter to
declare any such action invalid and also to restore
possession even though possession may have been
made over to the transferee.
***
39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."
(emphasis supplied by us)"
13. Learned counsel for the respondents also relied upon the judgment rendered by the Hon'ble Bombay High Court in Radhika (Downloaded on 18/12/2021 at 08:31:17 PM) (20 of 23) [CW-6772/2018] Rajesh Agarwal Vs. Union of India & Ors. (Writ Petition (L) No.3880 of 2020, decided on 05.11.2020), relevant portion of which reads as under:
"3. This writ petition has been filed under Article 226 of the Constitution of India by the petitioner seeking to challenge sale of two flats i. e. flat Nos. 801 and 802 situated in Shivtapi Building along with two car parking spaces on the third podium level at Gamdevi, Mumbai (hereinafter referred to as 'the two flats') in favour of respondent Nos. 3 and 4 being declared as the highest/successful bidder in the e-auction conducted by respondent No. 2 Bank. Petitioner is the second highest bidder.
4. Petitioner has challenged the bidding process as being compromised by respondent No. 2 Bank in collusion and connivance with respondent Nos. 3 and 4 resultantly denying the petitioner an opportunity to better the highest bid and has invoked the extra ordinary jurisdiction of this Hon'ble Court.
13. In the case of United Bank of India v. Satyavati Tondon (supra), the Apex Court had the occasion to examine in detail the provisions of the SARFAESI Act and the question regarding invocation of the extraordinary jurisdiction under Articles 226/227 in challenging the actions taken under the SARFAESI Act. While delivering a note of caution with respect to writ filed to challenge the actions taken under the SARFAESI Act, their Lordships made the following pertinent observations, which in our view squarely apply to the present case : (SCC p. 143, paragraphs 42-45).
"42. There is another reason why the impugned order should be set aside. If respondent 1 had any tangible grievance against the notice issued under (Downloaded on 18/12/2021 at 08:31:17 PM) (21 of 23) [CW-6772/2018] section 13(4) or action taken under section 14, then she could have availed remedy by filing an application under section 17(1). The expression "any person" used in section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under section 13(4) or section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.
43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.(Downloaded on 18/12/2021 at 08:31:17 PM)
(22 of 23) [CW-6772/2018]
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance."
14. The law is therefore well settled that where any person is aggrieved by any notice or action pursuant thereto under the provisions of SARFAESI Act, the only remedy available to such person would be to approach the DRT by filing an appropriate application under the provisions of the Act.
15. In the light of the foregoing discussion, we are of the considered opinion that on account of availability of alternative statutory remedy of filing an application under section 17(1) of the SARFAESI Act before the DRT Mumbai being available to the petitioner to challenge the action of respondent No. 2 Bank in confirming the sale of the two flats in favour (Downloaded on 18/12/2021 at 08:31:17 PM) (23 of 23) [CW-6772/2018] of respondent Nos. 3 and 4, we do not think fit to interfere with the petitioner's case in writ jurisdiction."
14. After hearing learned counsel for the parties as well as perusing the record of the case, alongwith the precedent laws cited at the Bar, this Court finds that on merits, the petitioners cannot be permitted to submit anything particularly, when they themselves have violated the aforequoted order dated 15.03.2018 passed by this Hon'ble Court, and thus, the petitioners do not deserve any kind of indulgence by this Court under Article 226 of the Constitution of India.
15. Furthermore, on account of availability of the alternative remedy before the Debt Recovery Tribunal as well as after considering the submissions made on behalf of the petitioners, this Court finds that no extraordinary fact has been brought to the knowledge of this Court, which would entitle the petitioners to any relief in the jurisdiction under Article 226 of the Constitution of India.
16. Moreover, the precedent laws cited by learned counsel for the petitioners are not applicable in the present case.
17. Consequently, the present petition is dismissed. However, in the interest of justice, the petitioners are given liberty to avail their legal remedy before the Debt Recovery Tribunal. All pending applications stand disposed of.
(DR.PUSHPENDRA SINGH BHATI),J.
181-SKant/-
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