Karnataka High Court
M/S Hotel Vandana Palace vs The Authorized Officer Under ... on 21 November, 2011
Bench: K.L.Manjunath, K.Govindarajulu
1
IN THE HIGH COURT OF KA
RNATAKA
CIRCUIT BENCH AT DHAR
WAD
DATED THIS THE 21ST DA
Y OF NOVEMBER, 2011
PRESENT:
THE HON ELE MR JUSTIC
E K.L.MANJUNATH
AND
THE HON'BLE MR. JUSTIC
E K.GOVINDARAJULU
WA NO.6368/2011 (GM-DR
T)
BETWEEN:
M/S HOTEL VANDANA PA
LACE,
NO.73/3, 4 & 5, KANAKA
DASA CIRCLE ROAD,
GANDHI NAGAR, BELGAU
M.
REPRESENTED BY ITS MA
NAGING PARTNER
VITHAL S/O MUNDAPPA
POONJA,
AGE: 60 YEARS, 0CC: BU
SINESS,
R/O NOW AT 1388, VANT
AMURI COLONY,
SEC.NO,7, M.M.EXTENSIO
N, BELGAUM-16.
.APPELLANT
(BY SRI.A.G.MULAWADMAT
H, ADV.)
AND
1. THE AUTHORIZED OFFIC
ER UNDER
SECURITIZATION AND
RECONSTRUCTION OF
FINANCIAL ASSETS AND
ENFORCEMENT OF
SECURITY INTEREST AC
T, 2002, SYNDICATE BA
REGIONAL OFFICE, MA NK
RUTI GALLI,
BELGAUM- 16.
2. SYNDICATE BANK,
A COMPANY CONSTITUT
ED UNDER THE BANK
COMPANIES ACT, 1970, ING
(ACQUISITION AND TRAN
SFER OF UNDERTAKIN
HAVING ITS HEAD OFFIC G)
E AT MANIPAL-5761 19,
2
DIST. UDAPUI,
REPRESENTED BY ITS MANAGIN
G DIRECTOR.
3. SHRI. VASU P. SHETTY S/O PANK
ARA SHETTY,
AGE: MAJOR, 0CC: BUSINESS,
R/O AT EVEREST SHOPPING CENT
RE,
FIRST FLOOR, PLOT NO.105, NEHR
U ROAD,
SANT CRUZ EAST,
MUMBAI-400 055.
4. THE DEBT. RECOVERY TRIBUNAL(K
ARNATAKA),
KRISHI BHAVAN, NRUPATHUNG RO
AD,
BANGALORE-56000 1.
RESPONDENTS
(BY SRI.SURESH S.GUNDI, ADV.
FOR Ri AND R2,
SRI.S.B.SHAIKH, ADV. FOR C/R
3 (CN:2112/2011))
THIS APPEAL IS FILED UNDER
SECTION 4 OF THE
KARNATAKA HIGH COURT ACT,
1961 PRAYING TO SET
ASIDE THE ORDER DATED 19.09.2011 IN
W.P.NO.17372/2007 PASSED
BY THE LEARNED SINGLE
JUDGE REJECTING THE WR
IT PETITION AND BY
ALOWING THE WRIT APPEA
L AS PRAYED IN WRIT
PETITION NO.17372/2007.
THIS APPEAL COMING ON
FOR PRELIMINARY
HEARING THIS DAY, K.L.MANJU
NATH, J., DELIVERED THE
FOLLOWING: -
JUDGMENT
The legality and correctness of the order passed by the learned Single Judge in W.P.No.17372/2007 dated 19.09.2011 is called in questio n in this petition.
2. Heard learned counsel for all the parties.
33. The appellant had borrowed loan from Syndicate Bank in order to construct a hotel in a prominent place in Belgaum. According to the petitioner, the hotel is constructed on the land measuring 1825.25 Sq. meter s with a built up area of 4749.64 Sq. meters consis ting of basement, ground, first, second, third and fou rth floors. The basement used for car parking and utility . The ground floor used for reception hall, centrally air
-conditioned Restaurant cum Bar and Restaurant. In the first floor a party hail and 24 rooms in each of the 2nd, 3rd and 4th floors.
According to him, entire hotel building is well furnished. The appellant had availed a loan of Rs.1,84,70,000/-. At the time of sanctioning the loan, the premises was valued at Rs.3. 16 crores. On the ground that, appellant did not pay the dues payabl e to the bank, by invoking provisions of the Securitizatio n and Reconstruction of Financial Assets and Enfor cement of Security Interest Act, 2002 (hereinafter ref erred to as 'SERFAESI Act , 4 2002) by issuing notice un der Section 13(2) of the SERFAESI Act, 2002 to tak e formal possession of the property and later on the pro perty was brought for sale, The appellant had challenge d bringing the property for sale by filing W.P.No.4144 5/2004, which came to be dismissed on 28.02.20Q5.
Thereafter, again the property was brought for sal e by the bank by issuing sale notice dated 09.03 .2005. Though paper publication was issued by the bank, the property was not sold on account of non participation of the prospective buyers.
4. The respondent No.2 again issued sale notice by publishing in Indian Express newspaper (Engli sh daily) on 28.04.2006 fix ing the date for sale as 08.05.2006. Another pa per publication was iss ued publishing in Marathi dai ly newspaper 'Tarun Bh arat' on 05.05.2006 inviting the tenders from prosp ective buyers and the prospectiv e buyers were required to submit their tenders on or before 06.05.2006 at 2.00 p.m. the appellant had challenging the paper publication dated 28.04.2006 by filing a writ petition, \rhich came to be dis missed as withdrawn since the said writ petition became infruc tuous, in view of sale having been held on 08.05.2006.
5. Pursuant to the paper pub lication dated 28.04.2006 and 05.05.2006 in Indian Express English daily newspaper and Tarun Bharat Marathi daily newspaper respectively, respon dent No.3 became the successful bidder and his bid for Rs.2.16 crores was accepted by the Authorized Of ficer. Accordingly, sale certificate has been issued to respondent No.3 by the Authorized Officer. The legalit y and correctness of the order passed accepting the sale by the Authorized Officer in favour of responden t No.3, the appellant filed an application before the Debt Recovery Tribunal in ASA No.151/2006, which came to be dismissed by the Tribunal on 05.07.2007.
The order passed by the DR T 6 was questioned by the appellant in W.P.No. 17372/2007.
6. The learned Single Judge con sidering that, on an earlier occasion, the wr it petition filed by the appellant came to be dismisse d, and rejected the writ petition without considering the grounds urged by the appellant. Therefore, the pre sent appeal is filed by the appellant challenging the legalit y and correctness of the order passed by the lea rned Single Judge in W.P.No. 17372/2007.
7. The main contention of the appellant before this Court is that the learne d Single Judge committed an error in not considering that the Authorized Officer of the bank without issuing notice as contemplated under Sub Rule 6 of Rule 8 and Rule 9 of SURFACI Act, 2002 has sold the property in favour of respondent No.3 for a meager amount. Accor ding to him, the DRT also committed the same mistake in not considering the 7 aforesaid provisions. The learne d Single Judge without referring to the aforesaid provis ions rejected the writ petition solely on the ground tha t the writ petition filed on carlier occasion has been rejected. Therefore, he contends that, the order passed by the learned Single Judge and the order passed by the DRT and confirmation of the sale by the respondent Nos. 1 and 2 in favour of respondent No.3 has to be set aside.
8. According to him, there was no sufficient time was granted to the prospective buyers to participate in the proceedings.
Therefore, he contends that, though as per the provis ions of Rule 8 and 9, the bank was required to publish the notice in Kannada language, which is the vernac ular and official language of Belgaum. According to him , when the value of the premises was more than Rs.3.O O crores as on the date of sanctioning the loan and when due to improvements were made by the appella nt and on account of escalation in the real estate business, considering that 8 the locality of the hotel of the app ellant, acceptance of sale consideration for Rs.2. 16 cro res is against the principles of natural justice. He further contends that, when the property worth several crores together has to be brought for sale, the Authorized Officer and the bank was required to give proper publicity inviting the tenders from the prospective bidder s. Without doing so, by. taking paper publication in Indian Express daily newspaper in English, which was published on 28.04.2006 and in Tarun Bh arat daily newspaper in Marathi which was published on 05.05.2006 by fixing the last date of receiving the ten ders as 2.00 p.m. of 06.05.2006, within 24 ,hours from the date of publication in Marathi l4guage newspaper has been accepted by the bank, whiqh is contrary to the Sub-Rule 6 of Rule 8 and 9 of SERFAESI Act, 2002. Therefore, he requests the Court to allow the appeal and set aside the other orders of the DRT and lea rned Single Judge and direct the bank to take action in accordance with law by 9 directing the bank to take up pa per publication both in English and Kannada languag e which is vernacular language of Belgauin.( by giving 30 days notice as required under law. He also co ntends that the payment of E.M.D. by respondez4 No.3 is very doubtful, because paper publication m4de in Marathi language on 'A 05.05.2006 by fixing thç last da te of receiving the tender as 2.00 p.m. on 06.0542006 an d when respondent No.3 is a resident of Mumbi having purchased the demand draft on 06.05.2006 could not ha ve been produced the demand draft in the Sjrndicate bank by 2.00 p.m. on the same day at Belgaum which is at distance of 500 Kms from Mumbai. He fu4her co ntends that, even without intimating the appellbnt, the Authorized Officer has received the sale consideration beyond stipulated period of 15 days, which according to him is erroneous and illegal. He further contends tha t, even if, the Authorized Officer has power to àtend time beyond 15 days, he has to give reasons for ex tending the time and no 10 documents are produced by respondent Nos. 1 to 3 in regard to the acceptance of the sale consideration beyond 15 days time from the date of confirmation of sale. On these grounds, he req uests the Court to allow the appeal and set aside the sal e.
9. The learned counsel appearing for respondent Nos. 1 to 3 contend that the appeal filed by the appellant is not maintain able, because the appellant had a right to file an ap peal before the appellate authority against the order passed by the DRT under Section 18 of the SERFAE SI Act, 2002. Without exhausting the remedy of ap peal provided to him under the statute, writ petition filed by him is not maintainable. Therefore, they contend that, he cannot maintain the appeal also.
They further contend that when the property is broug ht for sale for the second or third time, there is no ne cessity for the Authorized Officer to take out publica tion by giving 30 days notice notifying the purchasers to participate in the bid .
11According to them the Rule 8 is applicable only when the sale is conducted by responden t Nos, 1 and 2 for the first time, and when the sale wa s postponed on two occasions and on the first occ asion on account of pendency of the writ petitio n and on the second occasion on account of the non participation of bidders and the sale conducted by respon dent Nos. 1 and 2 is well within the provisions of the Rules. Therefore, they contend that, either Sub Rule 6 of Rule 8 and 9 are not applicable to the facts and circum stances of this case. To support their case, they have relied upon the judgement of DRT, Allahabad in Progressive Enterprises & Others Vs. Nainital Bank Ltd., [(2009(2) D.R.T.C.390(DRAT, All.)].
10. They further contend that, Authorized Officer has the liberty to ext end the time beyond 15 days for payment of balance sal e consideration from the date of confirmation of sale.
The appellant cannot be permitted to contend that the acceptance of balance 12 sale consideration by the Authorized Officer as illegal.
In the circumstances, they reques t the Court to dismiss the appeal.
11. Having heard the counsel for the parties, we consider the following points in thi s appeal:
i) Whether the sale made by respon dent Nos. 1 and 2 in favour of responden t No.3 is in conformity wit the Rule 8 and 9 of the Security and Interest (Enforceme nt) Rules, 2002?
ii) Whether the writ petition was maintainable without filing the appeal to appellate authority as provided under Section 18 of the Act?
iii) Whether learned Single Judge has committed an error in order to interfere with his order?
12. Having heard the counsel for the parties, the following points are not in dis pute in this appeal:
That the appellant had borrowed loan of Rs.1,84,70,000/- from respon dent No.2-bank. He has 13 constructed a hotel by name Va ndana Palace in a prominent place in Belgaum City, whi ch is considered to be a second capital of Karntaka. The description of the area and the nature of constructio n has already been stated by us in the earlier paragraph s. Therefore, there is no necessity for us to reiterate the same.
13. It is also not in dispute that, for non payment of dues payable by the app ellant, the property in question had brought for sale by the bank and the same was questioned by the appella nt by filing a writ petition No.41445/2004, which petition came to be rejected on 28.02.2005. Again the property was brought for sale and the sale cou ld not be materialized on account of non-participation of the bidders. It is also not in dispute that, the offer ma de by the appellant for one time settlement has not been materialized on account of non-performance by the appellant.
1414. Sub Rule 6 of Rule 8 of the Security Interest (Enforcement) Rules, 2002 including proviso reads as hereunder:
"Rule 8 Sale of immvable secured ass ets:
(6) The authonsed fficer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rul e(5):
Provided that f the sale of the suc h secured asset is being effected by either invitin g tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in ver nacular language having sufficient circulation in the locality by setting out the terms of sale , which shall include,-
(a) The descrztion of the immovable pro perty to be sold, including the details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the pro perty may not be sold;15
(d) time and place of public auction or the time after which sale by any other mode shall be completed;
(e) depositing earnest money as may be stipulated by the ecu red creditor;
(f) any other thing which the author ised officer considers it material for a purchaser to know in order to judge the nature and val ue of the property."
15. Rule 9 of the Security Interest (En forcement) Rules, 2002 reads as hereunder:
"9. Time of same, issues of sal e certificate and delivery of possession, etc. (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on wh ich the public notice of sale is published in newspapers as referred to in the proviso to sub-rule(6) or notice of sale has bee n served to the borrower.
(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotat ion or offer 16 to the authorised officer and shall be subject to confirmation by the secured credit or:
Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, spe cified under sub-rule (5) of rule 9: Provided further that if the authorise d officer fails to obtain a price higher tha n the reserve price, he may, with the con sent of the borrower and the secured credit or effect the sale at such price. (3) On every sale of immovable pro perty, the purchaser shall immediately pay a deposit of twenty-five per cent. Of the amoun t of the sale price, to the property shall forthw ith be sold again.
(4) The balance amount of purchase pri ce payable shall paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the imm ovable property or such extended period as may be agreed upon in writing between the parties.
(5) In default of payment within the period mentioned in sub-rule (4), the dep osit shall be forfeited and the property shall be resold and the defaulting purchaser sha ll forfeit all 17 claim to the property or to any part of the sum for which it ipay be subsequently sold.
(6) On confirmation of sale by the secured creditor and if the terms of payme nt have been complied with, the authorised offi cer exercising the power of sale shall issue a certificate of sale of the immovable pro perty in favour of the purchaser in the form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if the thin ks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due ther eon together with such additional amo unt that may be sufficient to meet the conting encies or further cost, expenses and inte rest as may be determined by him:
[Provided that f after meeting the cost of removing encumbrances and con tingencies there is any surplus available out of the money deposited by the purchaser such surplus shall be paid to the pur chaser within fifteen days from the date of finalisation of the sale.] 18 (8) On such deposit of money for discha rge of the encumbrances, the authorised offi cer shallj issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payme nt accordingly.
(9) The authorised officer shall delive r the property to the purchaser free from encumbrances known to the sec ured creditor on dep4dit of money as specif ied in sub-rule (7) abou. (10) The certificate of sale issued und er sub rule(6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the sec ured creditor or not.'
16. From the plain reading of these two rules, it is clear that the respondent-bank wa s required to serve notice of 30 days for the sale of immo vable property by following the sub Rule 5 of Rule 8, which reads as hereunder:
19"Rule 8 Sale of immovable secured assets:
(5) Before effecting sale of the immova ble property referred to in sub-rule(1) of nile 9, the authorised officer shall obtain valuation of the proper ty from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property ari d may sell the whole or any part of such immovable sec ured asset by any of the following methods. -
(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such ass ets; or
(b) by inviting tenders from the pub lic;
(c) by holding public auction; or
(d) by private treaty.
17. In the instant case, no material is placed before the Court that, before bri nging the property for sale, sale notice dated 28.04.
2006 and 05.05.2006, fresh valuation of the property from the approved valuer was obtained by the bank wh en the property worth 20 crores has to be sold. Sub Rule 5 of Rule 8 is mandatory and without complying mandatory provisions, the property could not be brought for sale. Accordingly, provisions of Su b Rule 6 of Rule 8, the bank is required to issue public notice in two leading newspapers (1) in vernacular lan guage having sufficient circulation in the locality by set ting out the terms of sale, which shall include:
(a) The descrztion f theimmovable property to be sold, including the details of the encumbrances known to the secured creditor;
(b) the secured debt for recove ry of which the property is to L5e sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auc tion or the time after which sale bj any other mo de shall be completed;
(e) depositing earnest money as may be stipulated by the secured creditor;
(It? any other thing which the author ised officer considers it material for a purcha ser to know in 21 order to judge the nature and value of the property.
18. In the instant case, such public notice is not issued by giving notice of 30 days as required under rule. The English paper publication was published on 28.04.2006, fixing the time to receive the tenders from the prospective buyers as 2.0 0 p.m. on 06.05.2006. Another publication in Tarun Bharat Marathi language is just one day prior to the rec eiving the tenders from the prospective buyers. The pla in reading of Sub Rule 6 of Rule 8, the paper publica tion in Marathi language cannot be considered as vernac ular language, as the Belgaum is in Karnataka and the vernacular language is Kannada and not Marathi.
Even if, some people speak in Marathi language, the pap er publication published in Tarun Bharat by the responden t Nos. 1 and 2 cannot be considered as sufficient compli ance of provisions of Sub Rule 6 of Rule 8. These facts are not disputed by the learned counsel for the respon dent Nos. 1 to 3.
2219. The respondent Nos.1 and 2 being in possession of the property of the appellant as custodian or trustees, were required to tak e sufficient care before selling the property in public auction. In the instant case, respondent Nos. 1 and 2 hav e failed to discharge their duties as trustees while sel ling the property worth several crores. Respondent No s. 1 and 2 have not placed any material to show how and wh en payment was made by respondent No.3 after the con firmation of the sale. As per the sale notice, respon dent No.3 was required to deposit entire sale consideratio n within 15 days from the date of conformation of the sale. In the counter, the respondent-bank has stated that the respondent No.3 has made the payment within the time allowed by the Authorized Officer. When the sale consideration is Rs.2.16 crores, the bank was required to give details of the payment made by respon dent No.3 in order to hold whether the payment was made within the time stipulated in the sale and whether the time was 23 extended by the Officer by accepting the reasonable cause shown by the purchaser and whether the purchaser is bonafide purchaser or not. Unfortunately, the bank has failed to produce these documents.
Therefore, on the face of it, sale effected by respondent Nos, 1 and 2, based on the paper pub lication dated 28.04.2006 and 05.05.2006 and acc eptance of bid of respondent No.3 on 06.05.2006 is hel d to be bad in law.
20. As stated supra, learned counsel for the respondents have relied upon the judgment of of DRT, Allahabad in Progressive Enter prises & Others Vs. Nainital Bank Ltd., [(2009(2) D.R.T.C.390(DRAT, AZl.)j, we are of the view that the said decision is not applicable to the facts and circum stances of this case, because, the Tribunal has not con sidered the relevant rules properly, without applica tion of mind hurriedly the Tribunal held that, there is no necessity to issue sale notice of 30 days in advance in the second sale. Rule 8 and 9 contemplates the issuance of paper publication of 24 I 30 days and the same cabnot be dispensed with either for second or subsequentsale. It is mandatory on the part of respondent Nos, 1 and 2 to follow the mandatory rules as contemplated under Rul e 8 and take action in accordance with law. Therefore, we are of the view that, the decision relied upon by the respondents counsel, cannot be made applicable to the facts and circumstances of this case.
21. The contention of the respondents that, under Section 18 of the Securi ty Interest (Enforcement) Rules, 2002, the appellant is req uired to file an appeal and without exhausting the sta tute remedy, he cannot be permitted to approach the Hig h Court under Articles 226 and 227 of the Constitutio n of India. The Section 18 of the Act reads as hereunder:
Section 18 of the SERFAESI Act, 2002:
18. Appeal to Appellate Tribuna L- (1) Any person aggrieved, by any order ma de by the Debts Recovery Tribunal [under sectio n 17, may prefer 25 an appeal] along with such fee , as may be prescribed] to an Appellate Tribuna l within thirty days from the date of recezt of the order of Debts Recovery Tribunal.
[Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrow er:J [Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be rec orded in writing, reduce the amount to not less than twenty-five per cent, of debt yeferred to in the second proviso.] 26 (2) Save as otherwiç provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accord ance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 199 3 (51 of 1993) and rules made thereunder."
22. Under Section 18 of the Act, the appellant is required to deposit 5Q% of the am ount of debt due from him, and without depositing suc h amount, he cannot file an appeal. He can make an application seeking permission of the Appellate Tri bunal to reduce the amount to be deposited. Under such circumstance, the Appellate Tribunal can give exemption of depositing 50% provided the appellant depositing 25% of the amount demanded. Therefore, without depositing either 5Q% or 25% as required der Section 18 of the Act, the appellant cannot file an appeal .
2723. When the person has lost the property in a sale consideration by the bank for non payment of more than 5 crores, it is difficult for a person like the appellant to approach the Tribun al to file an appeal by depositing 50% of 25% the am ount. In view of the special circumstances, as the property worth several crores is sold in public auc tion without following the procedure, this Court is of the opinion that, the remedy available under Section 18 of the Act cannot be alternate remedy. Accordingly , we are of the view that, the writ petition filed by the appellant is maintainable. In addition to that, we have noticed that, the learned Single Judge has not dismisse d the writ petition on the ground of maintainability of non exercising the power granted under Section 18 of the Act, but the writ petition is rejected on the gro und that the earlier writ petition challenging the sale notice had been dismissed. The same cannot be a gro und to hold that the writ petition is not maintainable.
2824. The learned counsel for the respondents have also relied upon the judgment of the Hon'ble Supreme Court in Kanaiga lal Laichand Sachdev & Others Vs. State of Mahara shtra & Others in regard to the maintainability of the writ petition without exhausting the appeal remedy. In the aforesaid judgement, it is held that, on account of disputed questions facts, the writ petition filed by the petitioner was not maintainable withou t exhausting the appeal remedy. But in the instant cas e, there is no dispute in regard to the questions of f and all the facts are admitted in this appeal. Th e question arises in this appeal is only whether the bank has followed the rules before selling the property.
Therefore, the aforesaid judgement is not applica ble to the facts and circumstances of this case.
25. Considering the peculiar fac ts of this case and conduct of the officers of the respondent No.2-bank, 29 it only shows that, all is not we ll in this case. The officials of respondent No.2-bank and the respondent No.1 have not discharged their duties as trustees in selling the property and the Court has doubt the bonafide of the officers who sold the property for lesser price for the reasons best known them, and when the property situated in the promi nent area in Belgaum which is a full fledged hotel. Th e property is situated in between 100 ft. right road an d a famous Fort lake in Belgaum. Therefore, the respo ndent-bank has to pay the cost of litigation and on account of the fault of respondent Nos. 1 and 2, respo ndent No.3 is also made to suffer and also the appella nt, and the bank has to bear the cost of the appellant.
26. So far as the last point is co ncerned, the learned Single Judge has not considered the grounds urged by the petitioner in reg ard to the legality and correctness of the sale of the immovable property worth more than 4 to 5 crores witho ut following the Rules 8 .9 30 and 9 of the Security Intere st (Enforcement) Rules, 2002. We are of the opinin tha t all error is committed by the learned Single Jidge in not considering the aforesaid provisions of law.
Therefore, the order of learned Single has to be set aside.
27. In the result, the appeal is allo wed. The sale conducted by respondent No s. 1 and 2 in respect of the Hotel Vandana Palace situated in Belgaum pursuant to the sale proceedings dated 08.05.2006 is hereby set aside. The respondent Nos. 1 and 2 shall re-auction the property by following the pro visions of the SERFAESI Act, 2002 and Rules made therein by giving paper publication as required unde r the provisions of Rule 8 and 9 of the Security Int erest (Enforcement) Rules, 2002. Respondent Nos. 1 and 2 shall refund the amount paid by respondent No.3 alo ng with the cost incurred by the respondents in getting the sale certificates. Since respondent No.3 has enjoye d the property, he is not entitled for any interest or damages. Respondent No.3 31 is granted four weeks time to hand over the possession of the premises to respondent Nos. 1 and 2 and respondent Nos. 1 and 2 shall take possession of the property within four weeks as granted by this Court and take action in accordance with law to sell the property and recover the dues payabl e by the appellant to the respondent No.2. The ba nk has to bear the cost of litigation, which we quantifyi flg at Rs.50,000/-, payable to the appellant.
Sd! TUDGE Sd/ JUDGE MBS/