Atul Modi vs State Bank of India

Hemant Gupta, J.—The challenge in the present writ petition is to a communication dated 03.09.2014 (Annexure P-12) calling upon the petitioner, an auction purchaser, to pay all statutory dues and any other dues on the property, expenses relating to stamp duty, Registration Charges, Conveyance, Lawyer''s Fees etc. as per the conditions of the auction notice. The grievance of the petitioner is that the demand of amount of enhanced compensation was not disclosed in the auction notice, therefore, the same cannot be claimed from the petitioner.

The petitioner relies upon a communication dated 22.04.2011 (Annexure P-6) addressed by Haryana State Industrial & Infrastructure Development Corporation Limited (for short ''HSIIDC'') to the borrower in support of the contention that on failure to disclose the amount of enhanced compensation, the Bank is not competent to claim the same from the petitioner. The relevant clauses from the communication dated 22.04.2011 reads as under:-

"3. That in the event of any financial institution taking over the assets of the Allottee on account of any default in repayment of loans/financial assistance of any sort and selling the same, such financial institution shall pay to the HSIDC its dues as a first charge.

That in the event of sale of the plot to a third party in the above process, it shall be the responsibility of such third party to discharge all such financial obligations towards the price of the plot as may arise subsequently to the sale of the plot and this condition will be made known to the party offering to buy the assets of the allottee. The financial institution shall also inform the buyer that he will be subject to the Estate Management regulations of HSIDC for issue of Letter of Re-allotment in favour of the buyer.

That the financial institution after taking over the assets including the plot, if shall be so, shall confirm from the HSIDC regarding its outstanding against that plot/allottee before putting it to the sale. Further financial institution/bank shall also inform the HSIDC about the sale transaction and request HSIDC for issue of letter of Re-allotment in favour of the buyer."

In the auction notice (Annexure P-1), the property was put to auction on "As is where is basis" and "As is what is basis". The relevant terms and conditions from the auction notice reads as under:-

"1. The property is being sold on "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS"

Particulars specified I respect of the said property I above schedule have been stated to be the best of the information of the Authorized Officer/Bank but Authorized Officer/Bank will not be answerable for any error, mis-statement or omission this public notice.

to 17. xx xx xx xx

All statutory dues payable and any other dues on the property(s), expenses relating to stamp duty, Registration Charges, Conveyance, Lawyers'' Fees etc. will be borne by the auction purchaser."

We have heard learned counsel for the petitioner and find no merit in the present writ petition. In the auction notice there was specific condition that the Bank will not be answerable for any error, mis-statement or omission. The property is being sold on "As is where is basis" and "As is what is basis". There was specific condition that all statutory dues payable and "other dues" will be paid by the auction purchasers. The petitioner has participated in the auction in pursuance of such auction notice (Annexure P-1). Having participated in the auction, the petitioner cannot rely upon a communication addressed to the borrower (Annexure P-6) and not to the petitioner or the Bank. In fact, condition No. 3 of such No Objection Certificate specifies that dues of HSIIDC shall be "first charge". As per condition No. 4, in the event of sale, it is responsibility of the purchaser to discharge all such financial obligations towards the price of the plot as may arise subsequently to the sale of the plot. Condition No. 5 is that the financial institution shall confirm from HSIIDC regarding its outstanding against the plot before putting it to sale. The Bank shall also inform the HSIIDC about the sale transaction and request HSIIDC for issue of letter of re-allotment. It is condition No. 5 which is pressed by the auction purchaser in support of the contention that the claim of enhanced compensation cannot be claimed from the petitioner.

We find that such condition cannot be used by the petitioner for avoiding the amount payable by the petitioner to HSIIDC when condition in the advertisement was specific that all dues shall be payable by the auction purchaser. The dues of the HSIIDC have "first charge" even in terms of communication (Annexure P-6). As a participant of auction, the petitioner was expected to do due diligence before participating in the auction. It could be found out the plot is subject matter of charge of HSIIDC and that the amounts which are due and payable by the auction purchaser. Once the petitioner has accepted the auction conditions while participating in the auction, the petitioner cannot be permitted to dispute the claim of enhanced compensation claimed by the HSIIDC, who has charge over the property as well.

Learned counsel for the petitioner refers to a judgment of the Hon''ble Supreme Court in Special Officer, Commerce, North Eastern Electricity Company of Orissa (NESCO) and Another Vs. Raghunath Paper Mills Private Limited and Another, wherein the expression ''other dues'' appearing in Regulations 13(10) of Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2004, was considered to be referring to security and other charges payable for new connection but not arrears of electricity dues. We do not find that such judgment advances the case of the petitioner any better. Regulations specifically provided that the conditions of payment of arrears prior to sale would not be applicable to the auctions conducted by the State Financial Corporation.

Thus, we do not find any merit in the present writ petition. Consequently, the present writ petition is dismissed with costs of Rs. 10,000/- to be deposited with High Court Legal Services Committee within 30 days.