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Bank of Baroda and Another v. Parasaadilal Tursiram Sheetgrah Privated Limited and Others

Citation

REED 2022 SC 08202

Court

Supreme Court

Subject 

SARFAESI Proceedings – Auction Purchaser - Sale Certificate issued - Appeal – Filed by the Bank - against an Interlocutory Order of stay passed by the High Court in pending disposal of a Writ Petition - Writ Petition was filed by the Respondent Company against the order in appeal by the DRAT - By this order the challenge laid to the Sale Certificate issued in favour of the Auction Purchaser u/s 17 of the SARFAESI Act, 2002 was dismissed on the ground of limitation

Date

August 10, 2022

Bench

N.A.

Applicable Law

Sections 13(2), 13(4), 17, 17(1), SARFAESI Act, 2002

Brief

present proceedings commenced with a challenge to the sale certificate in an application under Section 17 of the Act by the Respondent Company and the Directors. After hearing the Company, its Directors and the legal representatives of the deceased Director, the DRT dismissed the Section 17 application on the ground that it was filed beyond the statutory period of limitation of 45 days. According to Section 17(1), the period of 45 days is mandated to commence from the date on which a measure under Section 13(4) has been adopted, which in the facts of the present case was the date when the secured asset was sold in favour of Respondent No.7.
The above referred order was challenged in review. The DRT by its order dated 08.08.2016 allowed the review on the ground that Sri Rakesh Sharma had expired before the auction had taken place and that his legal representatives were not issued notice. It was rather strange that the DRT not only entertained the Review Petition, but has allowed the same on the aforesaid ground.
The order in review was challenged before the DRAT, which found no difficulty in allowing the appeal on the ground that there had never been an error apparent on the face of record for exercising the review jurisdiction. It was the order of DRAT that was challenged before the High Court in the Writ Petition filed by the Company, its directors and also the legal representatives of the deceased Director. This very same ground was raised, that one of the Directors had expired and that his legal representatives were not given notice before the secured asset was brought to sale.
On the above referred question, the High Court admitted the Writ Petition and proceeded to grant the interim order. The Supreme Court noted that there was only limited question concerned as to whether the High Court was justified in passing the interim order.
This was a case where the Company, with its own independent identity, was contesting the proceedings. It was apparent that the Directors were also contesting the matter by filing the Section 17 application. Even the legal representatives of one of the deceased Directors were party to the application under Section 17. Further, DRAT came to the conclusion that the original order passed by the DRT had been arrived at after a detailed consideration and that there was no justifiable ground for invoking the review jurisdiction. For granting or refusing to grant an interim order, the above referred facts were more than sufficient.
The reason for providing a time limit of 45 days for filing an application under Section 17 can easily be inferred from the purpose and object of the enactment. In Transcore v. Union of India and Another, 2007(1) Bank CLR 1 (SC), the Supreme Court held that the “SARFAESI Act is enacted for quick enforcement of the security”. It was unfortunate that proceedings where a property that has been brought to sale and third-party rights created under the provisions of the Act, had remained inconclusive even after a decade.
For the reasons stated above, the Supreme Court were of the opinion that the High Court was not justified in staying the operation of the order of the DRAT which came to the conclusion that there was no error apparent on the face of record for the DRT to invoke the review jurisdiction and recall its order dismissing the application under Section 17 of the Act.
The Appeal was allowed and the order of the High Court was set aside.

Sanjay Sarin v. The Authorised Officer, Canara Bank and Others

Citation

REED 2022 NCLAT Del 08201

Court

High Court

Subject 

Corporate Insolvency - Loan – Guarantor of loan - Petitioner, who stood as a guarantor to a loan facility, was aggrieved with the recovery action initiated by the bank - against the borrower and himself under the SARFAESI Act, 2002. According to him, once a resolution plan qua the borrower was approved under Section 31 of the IBC, 2016, the bank’s claims stood addressed - It could not have sought recovery for amounts over and above the amount approved by the NCLT, and was seeking a mandamus to that effect - was the petition maintainable for the above reliefs, was the short question before the High Court

Date

August 7, 2022

Bench

Delhi

Applicable Law

Article 226, Constitution of India
Sections 30(2), 30(4), 31, 31(1), 33(3), 238, Insolvency and Bankruptcy Code, 2016
Sections 13, 13(2), 13(4), 14, 17, SARFAESI Act, 2002

Brief

In the present case, the Petitioner approached the High Court aggrieved with: (i) Respondent No. 2’s failure in adhering to the timelines of payments under the resolution plan, since as on date, 15 out of 24 instalments payable to Respondent No. 1 were still pending; and (ii) proceedings initiated by Respondent No. 1 under Section 13(4) of the SARFAESI Act; (iii) the institution of proceedings against the Petitioner by Respondent No. 1 for taking possession of the dwelling unit of the Petitioner and for appointment of a receiver, under Sections 14 of the SARFAESI Act before the Chief Metropolitan Magistrate, Karkardooma District Court.
The law relating to maintainability of a writ petition in matters relating to SARFAESI Act is no longer res integra. The Supreme Court in Phoenix ARC Pvt. Ltd. v. Vishwa Bharti Vidya Mandir and Ors., REED 2022 SC 01201 has held that “where proceedings are initiated under the SARFAESI Act, and the borrower is aggrieved by any of the actions of the bank for which the borrower has remedy under the SARFAESI Act, no writ petition should be entertained”. Similar views have been expressed by the High Court in M/s Trinkeshwar Developers and Builders Pvt. Ltd. v. North Municipal Corporation & Ors., REED 2022 Del 02227, wherein it was held that “a petitioner cannot invoke the writ jurisdiction of the court under Article 226 of the Constitution of India to indirectly seek the relief which the petitioner has failed to obtain otherwise”. As noted above, the Petitioner’s challenge to the action of Respondent No. 1 was already the subject-matter of challenge before the DRT, which was pending adjudication, and therefore, the present writ cannot be entertained.
The Petitioner also raised a grievance regarding the proceedings being in derogation of the Approval Order of the NCLT, and implored for the High Court’s intervention on the ground that there was no other remedy available. This contention was founded on the plea that, with the approval of the resolution plan, the guarantors’ liabilities were also discharged. This contention had been categorically negated by the Supreme Court in Lalit Kumar Jain v. Union of India, REED 2021 SC 05510.
On a bare perusal of the judgment of Lalit Kumar Jain v. Union of India, REED 2021 SC 05510, it was clear that the Supreme Court had, in very clear terms, held that discharge of the corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, did not absolve the guarantor of its liability since it arises out of an independent contract. Thus, the passing of a resolution plan does not ipso facto discharge the personal guarantor. The judgment of the Supreme Court in State Bank of India v. V. Ramakrishnan and Another, REED 2018 SC 08560 also puts forth the aforementioned principle, and is contrary to the proposition canvassed by the Petitioner. As regards the extent of liability of a personal guarantor is concerned, the same would have to be determined in light of the agreement between the borrower, i.e., the corporate debtor, and the personal guarantor, for which the appropriate forum would be the Debt Recovery Tribunal and not the High Court. Thus, if the Petitioner is not absolved of his liability, the proceedings initiated by the bank under the SARFAESI Act cannot be held to be unconstitutional or in derogation of the Approval Order of the NCLT.
In relation to the other grievance raised by Respondent No. 1 qua non-implementation of the resolution plan, it must be noted that the aggrieved party was actually Respondent No. 1, who had not been paid in terms of the resolution plan approved by NCLT.
The High Court also taken note of Section 33(3) of the IBC, which envisages a liquidation process in the event of contravention of a resolution plan. Under this provision, Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues, which are independent of the resolution plan approved by the NCLT. If the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected, may make an application to the Adjudicating Authority for an order for liquidation. Where a resolution applicant succeeds as a corporate debtor, but fails to comply with its assurance in terms of the resolution plan, then subsequent step to be taken has been specified in Section 33(3) of the IBC. This is the scheme under the IBC, and if the Parliament, in its wisdom, has only provided the remedy of a liquidation process under Section 33(3) of IBC as a consequence of non-implementation of the resolution plan by the concerned corporate debtor, the High Court cannot create another remedy just because the afore-noted remedy is not sufficient or suitable for the Petitioner. Therefore, Petitioner’s grievance regarding non-implementation of the resolution plan, too, cannot be a ground for the High Court to entertain the instant petition.
The Appeal was dismissed.

Asset Reconstruction Company (India) Limited v. Tulip Star Hotels Limited and Others

Citation

REED 2022 SC 08501

Court

Supreme Court

Subject 

Corporate Insolvency – Limitation - Appeal – Filed by the Financial Creditor u/s 62 of the Insolvency and Bankruptcy Code 2016 against a common judgment and final order passed by the NCLAT, allowing Company Appeal and holding that the Corporate Insolvency Resolution Process (CIRP) initiated by the Appellant against the Corporate Debtor was barred by limitation

Date

July 31, 2022

Bench

N.A.

Applicable Law

Sections 128, 129, 134, 210, 211, 215, 216, 217, Companies Act, 2013
Sections 5(b), 7, 7(1), 7(2), 7(3), 7(4), 7(5), 7(7), 7(5)(a), 7(5)(b), 8, 9, 10, 12(1), 62, 238, 238A, 239(1), Insolvency and Bankruptcy Code, 2016
Sections 14, 18, 23, Article 137, Limitation Act, 1963
Sections 13(2), 13(4), SARFAESI Act, 2002
Rule 4(1), Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016

Brief

In the present case, the amount of the Corporate Debtor was declared NPA on 1st December 2008. By a letter dated 7th February, 2011, written well within three years, the Corporate Debtor acknowledged its liability and proposed a settlement. This was followed by several requests of extension of time to make payment and revised settlements. On 6th April, 2013, the Corporate Debtor sought extension of time to pay Rs.239,88,27,673 outstanding as on 31st March 2013. On 19th April, 2013, the Corporate Debtor made payment of Rs.17,50,00,000/-. On 1st July, 2013, the Corporate Debtor acknowledged its liability – this was after the Appellant Financial Creditor revoked the settlement invoking the default clause. The Corporate Debtor acknowledged its liabilities in its financial statements from 2008-09 till 2016-17. The application under Section 7(2) of the IBC was filed on 3rd April 2018, well within the extended period of limitation.
The supreme Court observed that an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years.
For the reasons discussed above, the impugned judgment and order was unsustainable in law and facts. The appeals were, accordingly allowed, and the impugned judgment and order of the NCLAT was set aside.

R.D. Jain and Company v. Capital First Limited and Others

Citation

REED 2022 SC 07201

Court

Supreme Court

Subject 

SARFAESI Proceedings - Borrower preferred Appeal feeling aggrieved and dissatisfied with the order passed by the High Court, by which, the Division Bench of the High Court while interpreting Section 14 of the SARFAESI Act, 2002

Date

July 26, 2022

Bench

N.A.

Applicable Law

Sections 11, 12, 15, 16, 17, 17(2), 19, 35, Code of Criminal Procedure, 1973
Sections 2(1)(zd), 13, 13(2), 13(4), 14, 14(1), 14(1A), 14(2), SARFAESI Act, 2002
Rules 2(a), 8, Security Interest (Enforcement) Rules, 2002

Brief

The District Magistrate or Chief Metropolitan Magistrate is not a persona designate for the purposes of Section 14 of the SARFAESI Act. The expression “District Magistrate” and the “Chief Metropolitan Magistrate” as appearing in Section 14 of the SARFAESI Act shall deem to mean and include Additional District Magistrate and Additional Chief Metropolitan Magistrate for the purposes of Section 14 of the SARFAESI Act, 2002.
The Supreme Court held that the powers under Section 14 of the SARFAESI Act can be exercised by the concerned Additional Chief Metropolitan Magistrates of the area having jurisdiction and also by the Additional District Magistrates, who otherwise are exercising the powers at par with the concerned District Magistrates either by delegation and/or special order. The present appeal was accordingly dismissed.

R.S. Infra-Transmission Limited v. Saurinindubhai Patel and Others

Citation

REED 2022 SC 07202

Court

Supreme Court

Subject 

SARFAESI Proceedings – Auction Sale - Subsequent Purchaser preferred Appeal ffeeling aggrieved and dissatisfied with the order passed by the High Court, by which the High Court allowed the said petition preferred by the respondent Nos. 1 and 2 herein – original writ petitioners before the High Court and has set aside the order passed by the DRAT and has consequently confirmed the sale in favour of the original writ petitioners, respondent No.5–subsequent purchaser

Date

July 10, 2022

Bench

N.A.

Applicable Law

Article 300A, Constitution of India
Rules 53, 60, Income Tax Act, 1961 (Second Schedule)
Sections 25, 26, 27, 28, 29, RDB Act, 1993
Section 13(8), SARFAESI Act, 2002

Brief

In the present case, it was required to be noted that by the impugned judgment and order, the High Court had set aside the order passed by the DRAT and has confirmed the sale in favour of respondent Nos. 1 and 2 – auction purchasers by dismissing the application submitted by the judgment debtor under Rule 60 of the Second Schedule of the Income Tax Act, 1961 by observing that as there was a shortfall in the deposit of the amount while exercising the right under Rule 60 and hence, there was non-compliance of the provisions of Rule 60.
However, it was required to be noted that in the sale certificate, the amount mentioned was Rs.1,27,30,527/- including interest as on 30.06.2006. The judgment debtor while exercising the right under Rule 60 deposited Rs.1,27,30,527/- along with Rs. 6,75,000/- for payment to the purchaser as penalty, a sum equal to 5% of the purchase money and also further deposited Rs. 3,01,290/- towards interest @ 15% from the date of sale proclamation to the date of deposit i.e., 25.01.2007. However, it was the case on behalf of the auction purchasers that there was a shortfall in not making the payment of interest from 30.06.2006 to 25.01.2007. However, at this stage, it was required to be noted that as such it was the duty cast upon the Recovery Officer to mention the exact amount in the sale certificate. The Recovery Officer mentioned the amount in the Sale Certificate of Rs.1,27,30,527/- including the interest as on 30.06.2006, however, did not specify any further amount towards the interest for the period between 30.06.2006 till the date of the sale proclamation, i.e., 08.01.2007, which the Recovery Officer ought to have mentioned specifically. The aforesaid mistake and/or inaccuracy on the part of the Recovery Officer led to the shortfall in the deposit of the amount, which was towards the interest for the period between 30.06.2006 to 08.01.2007, otherwise, the judgment debtor had substantially complied with Rule 60. The shortfall was Rs.3,57,647/-. When the judgment debtor deposited the substantial amount of Rs. 1,27,30,527/- and other amounts due and payable under Rule 60 including the penalty and the interest, there was no reason for the judgment debtor not to deposit Rs. 3,57,647/- which was a very small amount as against the amount deposited. At this stage, it was required to be noted that though the Bank filed its reply before the Recovery Officer in response to the application made by the judgment debtor – borrower made under Rule 60 and in which it was stated that there was some shortfall in the amount deposited, but according to the judgment debtor, no calculation sheet was attached to the reply and/or supplied to the judgment debtor.
At the time of hearing of the application under Rule 60 on 09.02.2007, a grievance was made before the Recovery Officer as to why the Bank had not served a copy of the calculation sheet and in the meantime, the judgment debtor had himself deposited a further sum of Rs.2.80 lakhs towards the difference in calculation, if any. The Recovery Officer directed the Bank to supply the calculation sheet and the Bank submitted the calculation sheet before the Recovery Officer on 12.02.2007 and on that day, a sum of Rs.77,647/- was the shortfall, which the judgment debtor deposited on the very next day, i.e., on 13.02.2007. If the Bank would have submitted the calculation sheet earlier along with the reply on 06.02.2007, which was 29th day from the date of auction, the judgment debtor would have deposited the balance shortfall amount. Therefore, in the facts and circumstances of the case, it can be said that there was a substantial compliance/ compliance of Rule 60. If the Recovery Officer would have been accurate in submitting the exact amount in the sale proclamation due and payable on the date of sale proclamation then the eventuality which has arisen in the present case would not have arisen. There was an absurd misconduct on the part of the Recovery Officer for which the judgment debtor should not be made to suffer.
At this stage, it is required to be noted that the right available to the judgment debtor under Rule 60 is a valuable right and the last resort/opportunity to the judgment debtor to save his property. It was a right available to the judgment debtor after his property was sold in a court auction. Therefore, such a valuable right available to the judgment debtor to save his property should not be affected on the technical ground and/or for the mistake and/or the bona fide mistake for which he was not at all responsible. So far as the submission on behalf of respondent Nos. 1 and 2 that according to the Bank, a sum of Rs.4.63 lakhs were the balance amount due and payable against which even subsequently the borrower has deposited Rs. 3,57,647/- and therefore, still there was a shortfall is concerned, the aforesaid had no substance. At this stage, it was required to be noted that on deposit of the aforesaid amount of Rs. 3,5,7647/-, (i.e., Rs.2,80,000/- + Rs.77,647/-) as on 13.02.2007, the Recovery Officer directed the Bank to hand over the original documents pertaining to the impugned properties and file compliance affidavit and thereafter the Bank was allowed to appropriate the decretal amount deposited by the judgment debtor and that on 19.02.2007 itself, the Bank complied with the order passed by the Recovery Officer dated 15.02.2007 and handed back to the judgment debtor the documents pertaining to the properties in question and requested to release the amount deposited, which came to be allowed by the Recovery Officer. At that time, no dispute was raised by the Bank that any further amount was due and payable. The Bank was satisfied with the deposit of the amount by the judgment debtor.
In view of the above discussion and for the reasons stated above, the High Court has committed a grave/serious error in quashing and setting aside the order passed by the DRAT and the Recovery Officer by which the Recovery Officer and the DRAT set aside the sale in favour of the auction purchasers. The view taken by the High Court is too technical. The High Court has not at all considered the facts narrated hereinabove in its true perspective. The High Court has not at all appreciated and considered the fact that for the inaccuracy and/or mistake on the part of the Recovery Officer, the judgment debtor cannot be made to suffer for no fault of his. The High Court has also not properly appreciated and considered the valuable right available to the judgment debtor under Rule 60. As observed and held hereinabove, when the substantial amount was deposited, there was no reason for the judgment debtor not to deposit the shortfall, which as such can be said to be very meagre amount. As and when the judgment debtor was made aware about the shortfall, immediately, the shortfall amount has been deposited by the judgment debtor. Under the circumstances, the impugned judgment and order passed by the High court was unsustainable and the same was set aside. The present Appeal succeeded.

PTC India Financial Services Limited v. Venkateswarlu Kari and Another

Citation

REED 2022 SC 05502

Court

Supreme Court

Subject 

Corporate Insolvency – CIRP - Appeal - The primary legal issue which arose for consideration in the appeal was whether the Depositories Act, 1996 read with the Regulation 58 of the SEBI (Depositories and Participants) Regulations, 1996 has the legal effect of overwriting the provisions relating to the contracts of pledge under the Indian Contract Act, 1872 and the common law as applicable in India

Date

May 11, 2022

Bench

N.A.

Applicable Law

Sections 150, 151, 152, Companies Act, 1956
Sections 7, 10, 11, 12, 12(1), 25, 25(2), 28, 38(1)(e), Depositories Act, 1996
Sections 7, 10, 10(4), 18, Insolvency and Bankruptcy Code, 2016
Sections 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, Indian Contract Act, 1872
Sections 11(2), 14, 16, 16(c), 38(3)(c), Specific Relief Act 1963
Section 106, Transfer of Property Act, 1881
Regulations 58, 58(1), 58(2), 58(3), 58(8), 58(9), Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996

Brief

PIFSL by the letter dated 23rd January 2018 had informed MHPL in terms of Clause 6.1 that there had been an occurrence of default, which had continued and, therefore, they, on 16th January 2018, in exercise of its right under Clause 6.1 of the pledge deed, have applied for transfer of the pledged shares in its name. Consequently, all the rights in the pledged shares, including but not limited to the right of attending general body meetings, voting rights, and rights to receive dividends and other distributions, vested with them as per Clause 2.3(A)(ii)(b)96 of the pledge deed. This intimation to MHPL was without prejudice to any rights or remedies PIFSL has in terms of the pledge deed or security documents executed in pursuance of the bridge loan agreement. PIFSL expressly reserved its right to transfer and sell pawned shares for value providing five days’ notice as required under Clause 6.2 of the pledge deed and Section 176 of the Contract Act. The Supreme Court, without hesitation, therefore held that on becoming the ‘beneficial owner’ in the records of the ‘depository’, the pawnee had complied with the procedural requirement of Regulation 58(8) to enforce the right to sell the shares. Thereafter, such a sale should be made according to Sections 176 and 177 of the Contract Act. Violation of the said provisions, if made by PIFSL, would have its consequences as per the law. Pawn has not been sold and there was no violation of the Contract Act or for that matter the Depositories Act and the 1996 Regulations. PIFSL has not overlooked its obligations under Sections 176 and 177 of the Contract Act by relying upon sub-regulation (8) to Regulation 58, which has an entirely different object and purpose. Recording change in the register of the ‘depository’, whereby PIFSL as the pawnee had become the ‘beneficial owner’, was only to enable the pawnee to sell and transfer the shares in accordance with the Depositories Act and the 1996 Regulations. The object and purpose of sub-regulation (8) to Regulation 58 is not to nullify the obligation of MHPL i.e., the pawnor, and PIFSL i.e., the pawnee, under the Contract Act but to enable PIFSL to exercise its rights under Section 176. It also follows that MHPL was entitled to redeem the pledge before the sale to a third party was made. In view of the aforesaid findings, the Apex Court held that registration of the pawn, that is the dematerialised shares, in favour of PIFSL as the ‘beneficial owner’ did not have the effect of sale of shares by the pawnee. The pledge had not been discharged or satisfied either in full or in part. PIFSL was not required to account for any sale proceeds which were to be applied to the debt on the ‘actual sale’. The two options available to PIFSL as the pawnee under Section 176 of the Contract Act remain and were not exhausted. For the aforesaid reasons, the present appeal was allowed and the impugned order passed by the Appellate Authority dated 20th June 2019 upholding the orders of the Adjudicating Authority dated 6th July 2018 and the emails of the IRP dated 19th February 2018 were set aside. It was held that MHPL was not a secured creditor of the Corporate Debtor, namely NNPIL, to the extent of the value of the 31,80,678 shares. PIFSL had rightly made a claim as financial creditor of the Corporate Debtor without accounting for the value of 31,80,678 shares of NEVPL in its claim petition. Insolvency proceedings against the Corporate Debtor, namely NNPIL, will proceed accordingly. The appeal was allowed.

Sanjay Kumar Agarwal v. ICICI Bank Limited & Another

Citation

REED 2022 DRAT Kol 03202

Court

DRAT

Subject 

SARFAESI Proceedings – Sale of secured assets - Withdrawal of appeal as Respondent Bank has recovered its dues – Appellant was seeking refund of Pre-deposit

Date

March 29, 2022

Bench

Kolkata

Applicable Law

Brief

Since Respondent Bank had recovered the alleged dues by sale of the secured assets and nothing was due and payable. In view of the submission made by the Counsel for the parties, Appellant was permitted to withdraw the appeal.

UCO Bank v. Black Diamonds Petro Products Privates Limited and Others

Citation

REED 2022 DRAT Kol 3204

Court

DRAT

Subject 

SARFAESI Proceedings - Application moved under sections 17(5) and 17(6) of the SAFAESI Act, 2002

Date

March 28, 2022

Bench

Kolkata

Applicable Law

Sections 17(5), 17(6), SARFAESI Act, 2002

Brief

This is an application moved under section 17(5) and 17(6) of the SAFAESI Act, 2002. The counsel for the Applicant submitted that the Debts Recovery Tribunal should have decided the application within four months which was not done in time. Accordingly, direction may be issued for expeditious disposal of the matter.
This was a matter pending before DRT where no Presiding Officer had taken over the charge as yet. However, keeping in view, the provision laid down under sections 17(5) and 17(6) in the interests of justice, DRT was directed to decide the matter expeditiously.

L. Natwarlal and Company and Others v. Dena Bank and Another

Citation

REED 2022 Bom 03230

Court

High Court

Subject 

SARFAESI Proceedings – Auction Sale - Petition filed under Article 226 of the Institution of India - Petitioners were challenging the orders passed by the DRT and DRAT and seeking quashing and setting aside of the impugned orders and the impugned auction sale

Date

March 28, 2022

Bench

Bombay

Applicable Law

Article 226, Constitution of India
Sections 13(2), 13(4), SARFAESI Act, 2002
Rules 8, 8(6), 9, 9(1), Security Interest (Enforcement) Rules, 2002

Brief

In the present case the 30 days notice was given to the Petitioners by Respondent No.1 of its intention to sell the secured asset subject property. In any event, presuming that the mandatory 30 days notice under Rule 8(6) of the said Rules, was not served on the Petitioners, the Petitioners knowing fully well of the requirement of 30 days notice of sale, participated in the sale and had requested for extension of time of confirmation of the sale. Further, the Petitioners were directed to deposit the sale price for the subject property. However, the Petitioners did not comply with the said direction. Their subsequent offer of a higher amount of 5.25 crores was refused by Respondent No.1-Bank as no supporting material was placed by the Petitioners to show that the Petitioners were having liquid cash of Rs.5.25 crores as on the date of offer i.e. November 2010 much after the sale of the subject property on 05.10.2010. Thus, the Petitioners cannot now have any grievance as to the procedure of auction sale of Respondent No.1-Bank or that notice of such sale was not served on the Petitioners. The Petitioners having themselves participated in the sale have waived any right to object to the requirements of the sale not being complied with.
The High Court were of the considered view that there was no merit in the challenge to the impugned orders passed by the DRT and DRAT. Thus, the present Petition was dismissed.

Three Line Properties v. Punjab National Bank and Others

Citation

REED 2022 Ker 03210

Court

High Court

Subject 

SARFAESI Proceedings – Auction sale – Auction Purchaser complaining that despite the lapse of almost a decade, the fruits of its purchase have not been received by it, in full. Petitioner has, therefore, sought for a direction to dispose of M.C.No.177/2017 pending before the Chief Judicial Magistrate

Date

March 27, 2022

Bench

Kerala

Applicable Law

Section 14, SARFAESI Act, 2002
Sections 65A(2), 108(h), Transfer of Property Act, 1882

Brief

The Senior Counsel submitted that the merger of the erstwhile secured creditor with the 1st respondent was a matter which requires consideration and in the absence of any proof of such merger, the Magistrate cannot dispose of the said application under Section 14. On a consideration of the
said contention, it was evident that the merger of erstwhile United Bank of India with the Punjab National Bank was a merger for which documents were available to prove the same and once merger takes place the liabilities and obligations of the erstwhile entity stands transferred to its successor. The change of name from the erstwhile entity to the new entity in the cause title was only a formality to be carried out and the same cannot be a reason to delay the proceedings before the Magistrate for so long.
The Magistrate is bestowed with the authority to entertain the request of the secured creditor for possession of the secured asset under Section 14 of the Act. The said section is, as held in the decision in Authorised Officer, Indian Bank v. D.Visalakshi and Another, REED 2019 SC 09007, a remedial measure for the secured creditor, for taking possession of the secured asset, in furtherance of the enforcement of the security interest.
In view of the above deliberations, the High Court was of the view that there was no merit in the contention raised by respondents 3 to 13. Since, petitioner was a beneficiary of the sale held in 2009 and delay in repossessing properly causes prejudice to it, the petitioner was entitled to seek a direction for a speedy consideration of M.C.No.177/2017, pending before the Chief Judicial Magistrate, Kozhikode.