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Judgment
The appellant has approached this Tribunal by filing this appeal under Section 18 of the SARFAESI Act because the Tribunal below (DRT) has shattered its dreams of acquiring ownership of a piece of land admeasuring 11450 sq. yards. in Village Rajokri, New Delhi-110038, value of which it was claiming to be worth hundred crores odd for a meagre amount of Rs. 15 crores odd.
The impugned order of the DRT passed in the Securitisation Application (S.A.) filed by the appellant under Section 17(1) of SARFAESI Act and which is still pending adjudication, gives the background facts leading to the filing of the S.A. and I.A. No. 97/2019 and passing of the order on this miscellaneous application which is now under challenge in the present appeal is re-produced below:-
"2. By way of the IA No. 97/2019, the applicant prayed to set aside the auction dated 09.01.2019 and consequently allow the applicant to redeem property being Khasra No. 510/1 (2-4), 511/1(5-5), 511/2/1, Village Rajokari, New Delhi-110038 admeasuring 11450 sq. yards. (plot area) (for short "property in question") alongwith construction after paying entire dues of the respondent No. 1 within a reasonable time.
The IA No. 359/2019 has been filed by the respondent No. 1 praying therein to formally permitted the respondent/Secured Creditor to issue sale certification in accordance with Rule 9(6) of the Security Interest (Enforcement) Rules, 2002, in the form given in Appendix-V to these rules in favour of the Auction Purchaser namely Sh. Pradeep Kumar Lather.
Both these IAs are interconnected as in the IA No. 97/2019, the SA applicant is seeking permission to redeem the property in question whereas vide IA No. 359/2019, the respondent FI prayed for permission to issue sale certificate to the successful bidder therefore, both are decided with this common order.
Ld. Counsel for the applicant of SA submitted that applicant is having second charge on the property in question and same is also Registered with the ROC, therefore, applicant may be allowed to redeem the property in question. She also submitted the auction took place on 09.01.2019 however, till date auction purchaser did not deposited the entire auction amount and also authorized officer in an illegal manner provided 90 days time to the auction purchaser to deposit the entire amount of bid. She submitted that as per provision of Section 91 of the Transfer of Property Act, 1882, the applicant of SA being a charge holder, is having right to redeem the property and same was also upheld by the Hon'ble Supreme Court in the matter of Mathew Varghese Vs. M. Amritha Kumar & Os. (2014 (5) SCC 610). She also contended that as per Section 17 of the Registration Act, the registration of the sale certificate is mandatory and sale would be presumed as completed only on the registration and for the said submission, she referred the judgment of Hon'ble Madras High Court in the matter of M/s P.M. Associates Vs. IFCI Limited, WP Nos. 1937 74088 of 2012 and also judgment of Hon'ble Punjab & Haryana Court in the matter of M/s Friends Traders Vs. State of Punjab and others, CWP no. 22010 of 2014, thus, she submitted that still since sale is not registered therefore, the applicant have an opportunity to redeem the property in question. She also submitted that as per the judgment of Hon'ble Supreme Court in the matter of Dwarika Prasad Vs. State of UP & Ors. (2018 (5) SCC 491), the right to redeem of applicant is still subsisting. She also contended that the respondent has declared the successful bidder for a bid of Rs. 19.85 crores whereas the valuation of the property is higher than the bid amount and also the applicant herein is ready to pay entire dues of the respondent No. 1 which is more than the bid amount, therefore, she submitted that prayer of the applicant for the redemption may be allowed. She also informed that applicant may deposit 10% of the entire dues of the respondent No. 1 within 10 days and remaining within 45 days and stated that the respondent F1 has already allowed 90 days time to auction purchaser, therefore, by giving now 55 days will not as such cause any difficulty to the respondent No. 1, thus, she prayed that the IA for redemption may be allowed.
Per contra, Ld. Counsel for the respondent No. 1 has strongly objected on the application i.e. IA No. 97/2019 and submitted that the respondent has also filed an application i.e. IA No. 359/2019 seeking permission for issuance of sale certificate. He also stated that this Tribunal while hearing on the IA No. 97/2019 on 28.02.2019, the applicant of SA sought time to tender the entire outstanding amount to respondent however, the applicant never approached and not proposed any payment till date thus, the present applicant i.e. IA No. 97/2019 is only a dilatory tactics by the applicant with a aim to frustrate the auction of the respondent No. 1. He also stated that sale has already been confirmed on 10.01.2019 therefore, any prayer for redemption is not maintainable at this stage. Even otherwise, he submitted that for the redemption of the property, there is provision under Section 13(8) of the SARFAESI Act, 2002, whereby as per amended provision of Section 13(8) of the SARFAESI Act, 2002, the right of redemption is available at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer, therefore, he submitted that in the present matter, the auction notice was duly published in the leading newspapers on 21.12.2018 and now sale has already been confirmed on 10.01.2019 therefore, the right to redemption has stand extinguished in view of the express provision of Section 13(8) of the SARFAESI Act, 2002. For the said contention, he relied upon judgment of Hon'ble Supreme Court in the matter of Dwarika Prasad Vs. State of Uttar Pradesh and Ors. (2018 SCC Online SC 183). He also stated that the sale certificate as such not required to be registered as held by Hon'ble Madras High Court in the matter of B. Arvind Kumar Vs. Government of India & Ors. (2007) 5 SCC 45, and also in the judgment of Hon'ble Madras High Court in the matter of K. Chidambara Manickam Vs. Shakeena (2008 (1) CTC 660). He also contended that rest of the issue pertaining to the valuation as well as compliance of Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and publication of sale notices has already been decided by this Tribunal and also Ld DRT-III, Delhi in the S.A. filed by the borrower, applicant, a third party, therefore, the same has already attend the finality.
Ld. Counsel for the respondent FI also stated that in the peculiar circumstances of the case, the respondent FI has allowed to the auction purchaser further time of 60 days to deposit the remaining amount of the bid and now the auction purchaser has gave a letter dated 08.03.2019 and shown his willingness to pay the entire bid amount and also seeking confirmation for issuance of sale certificate & registration, however, since the application for redemption of the applicant is pending therefore, the respondent FI seeks a formal permission of this Tribunal to issue sale certificate, thus he submits that the respondent FI may be allowed to issue sale certificate to the successful bidder.
Considered the rival contentions of the parties and also gone through the record.
Record reveals that the applicant has filed the present SA no. 03.01.2019 and prayed for quashing and setting aside the sale notice dated 19.12.2018 by which sale was fixed for 09.01.2019, therefore, admittedly applicant was well aware about the auction dated 09.01.2019 however, the applicant did not participated in the auction, the reason best known to it and now when the auction was successfully conducted for a bid amount of Rs. 19.85 crore then on 24.01.2019, the applicant file the present IA i.e. IA No. 97/2019 for permission to redeem the property. The conduct of the applicant established that the applicant was at the time of auction did not interested to purchase the property in question and it raised various issues on auction only, which were declined by this Tribunal vide order dated 09.01.2019. According to Ld. Counsel for the applicant, in terms of provision of Section 91 of the Transfer of Property Act, 1882, the applicant being a second charge holder is entitled to redeem the mortgage property and she also stated that since still sale had not been registered therefore, in terms of judgment of Hob'ble Madras High Court in M/s P.M. Associates (supra), the applicant is having right to redeem to property. The said contention of the applicant is also not acceptable as the applicant was having ample opportunity to buy the property in question, as property was put on auction on various occasions however, applicant never came forward to purchase the said property, it is only when the auction of the respondent FI got successful, the applicant has come with this application, even with this present IA, applicant did not tender any amount to show his bonafide, therefore, the contention of the applicant for redemption as such is not sustainable thus, the IA No. 97/2019 is hereby dismissed. "(highlighting is by me)
From a reading of the said impugned order of the DRT and the submissions made at the Bar by the learned counsel for the appellant, respondent FI, its borrowers, respondents 2 to 5 and the auction purchaser, respondent no. 6, the position which emerges is that respondent no.1, which is a Financial Institution, had extended facility of crores of rupees to respondents no.2 to 5 herein and to secure the loan re-payment equitable mortgage of the land described by the DRT in the impugned as the 'property in question' was created in favour of respondent No.1 FI. Since the borrowers of respondent no.1 defaulted in repayment of the loan money their account was declared as an NPA and in due course proceedings were initiated under SARFAESI Act for recovery of its dues as provided under Section 13(4). Physical possession of the mortgaged land was taken and then the same was put up for auction.
At that stage the appellant surfaced and approached the DRT with the claim that for repayment of some money under some commercial contract respondent no.2 herein, borrower of respondent no.1 FI, had agreed to create second charge over the land in question in its favour. It was claimed by the appellant in its S.A. that respondent no.1 FI, however, in complete violation of the provisions of law and the claim of the appellant also as a secured creditor of respondent no.2 herein was selling the property in question. In the S.A. the appellant had claimed an interim relief against the proposed auction to be held on 09.01.2019 for which purpose auction notice was given on 19.12.2018 by respondent no.1 FI. The DRT, however, refused to grant any interim relief to the appellant herein in its S.A.
The appellant then thought of buying/redeeming the mortgaged land in question for which purpose it moved another application in its pending S.A. It sought to invoke Section 91 of the Transfer of Property Act for the relief of redemption. The DRT has rejected that application also vide the impugned order dated 30.03.2019. The appellant has accordingly come up in appeal for assailing the said order of DRT and I have no hesitation in rejecting the same as a frivolous appeal and in fact claiming redemption of the mortgage in respect of the mortgaged property is an abuse of process of law.
At the outset when learned counsel for the appellant was asked as to how appellant's prayer for redemption could be entertained even by DRT when the appellant admittedly had not even tendered the entire dues of respondent no.1 as provided under Section 13(8) of SARFAESI Act her response was, and which response was an attempt to mislead this Tribunal, that the appellant was invoking Section 91 of the transfer of property act. While making this submission the learned counsel appears to have ignored the fact that all that Section 91 provides is the categories of people who are entitled to redeem a mortgaged. As far as the substantive right of redemption in respect of the property which is mortgaged in favour of bank or financial institution and which can be enforced under SARFEASI Act is concerned the relevant provision is under Section 13(8) of the SARFEASI Act which clearly provides that if the person claiming a right of redemption pays to the secured creditor its entire dues that inclusive of charges etc, that right has to be exercised before publication of the sale proclamation of the mortgaged asset and that too by paying the dues of the secured creditor.
In the present case the appellant himself has admitted in the grounds of appeal that he had not even tendered the dues of the respondent no. 1, herein. If the be so, there was no occasion for the appellant to have approached the DRT for a direction to the respondent no. 1, herein to redeem the mortgaged in its favour. If the appellant had first approached the financial institution, respondent no. 1, herein, with a request for redeeming the mortgaged in question by accepting its entire dues from the appellant and if then the financial institution had refused to accept that request, the appellant would have then been entitled to have recourse to its legal remedies. Without crossing that stage, it could not have moved any application before the DRT for seeking such a direction to the respondent no. 1, herein. The appellant does appear to be interest in only putting spokes in the enforcement of its rights under the SARFEASI Act by respondent no. 1, herein.
This appeal is accordingly liable to be dismissed with exemplary cost and the same is hereby dismissed with cost of Rs. 1 lacs to be paid to the respondent no. 1, herein. The cost shall be paid to the respondent no. 1 within 2 weeks failing which respondent no. 1 will be at liberty to move an appropriate application before this Tribunal for implementation of the said order of imposition of cost upon the appellant.