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Judgment
The appellants, who are husband and wife and living in Mumbai, are seriously hurt by the way they have been illegally and most arbitrarily deprived of their commercial property in Dharamshala(H.P.) by respondent no.1 Punjab National Bank. The Bank by taking recourse to the stringent provisions of SARFAESI Act has auctioned their property which the appellants had mortgaged in favour of this Bank to secure the repayment of loan given to one partnership Firm by the name of M/s Mega Mart. The appellants seriously regret having mortgaged their property not realising that one day this borrower's partners whom they helped in getting financial assistance from the Bank will back stab them by not repaying the dues of the Bank and allowing their property to be sold so that its sale proceeds could be used by the lending Bank towards discharge of its (borrower's) liability towards the Bank. The grievance of the appellants is that the respondent Bank has taking advantage of the fact that they are living far away in Mumbai has sold their property illegally in favour of respondent no.3 herein.
Feeling aggrieved by the illegal sale of their mortgaged property in Dharamshalathe appellants had knocked the doors of the Debt Recovery Tribunal(DRT) at Chandigarh and had filed one Securitisation Application(S.A.) there under Section 17(1) of SARFAESI Act alleging that they had been deprived of their property illegally by the respondent Bank throwing to the winds all the mandatory requirements of law which it was bound to comply before depriving the appellants of their property. It was also the grievance raised by the appellants that to hold a property is a constitutional right of every citizen of this country and that right cannot be taken away arbitrarily by banks or financial institutions even if the properties sought to be taken away are mortgaged with them and even if their borrowers fail to repay their dues. Compliance of the mandatory Rules framed in 2002 under the SARFAESI Act for sale of mortgaged properties is absolutely necessary and sales conducted in violation of the mandatory Rules of 2002have been held by the highest Court of the land to be void in many of its judgments.
It was also seriously submitted by the learned counsel for the appellants Mr. Dinkar Singh that the appellants were always ready to redeem their property by paying the dues of the Bank but the Bank had illegally deprived them of that right by auctioning their property without even letting them know that their property was going to be sold taking advantage of the fact that they were not residents of Dharamshala but were living far away in Mumbai .
Refuting these allegations learned counsel for the respondent Bank submitted that the property of the appellants was sold only after compliance of all the legal provisions. It was submitted that earlier the appellants had put in the forefront some Company as a tenant in the mortgaged property in question and that Company had also filed an S.A. but without any success and then the appellants themselves came forward to challenge the auction sale of their property in Dharamshala and they have also been rightly non-suited by the DRT and there is no merit n this appeal. Though at one stage counsel for the auction purchaser had appeared in the matter but then disappeared from the scene at the time of final hearing of the appeal.
I have considered the arguments advanced by the counsel for the appellants and the Bank which they reiterated in their written submissions also. I have also examined the DRT's record and I have unhesitatingly come to the conclusion that the appellants' property has been sold illegally. Learned counsel for the appellants had in fact also submitted that even the auction purchaser himself had realised that the auction sale in his favour will not stand the scrutiny of law and had demanded back his money from the bank and has filed a suit also against the Bank for recovery of the auction money and that appeared to be the reason for his not participating in the appeal proceedings at the time of final hearing. He had also submitted that the auction sale was not a genuine sale also for the reason tha the auction purchaser had paid the auction money on 22.04.2016 as reflected the statement of account placed on record by the Bank itself while the sale certificate had already been issued on 11.04.2016. So, there was some hanky panky in the so called auction. The bank officials might have thought that the appellants being residents of Mumbai may never even come to know that their property in Dharamshala had been taken over and sold also.
The most forceful argument advanced by the learned counsel for the appellants relying upon a decision of the Hon'ble Supreme Court in the case of"Mathews Varghese vsM. Amritha Kumar &Ors."reported in 2014(2) SCALE 331 and which argument alone is sufficient to allow this appeal and set aside the auction sale of the appellants property conducted on 28.03.2016 was that the bank had not even issued a notice in their name as required under Rule 8(6) of the Rules of 2002 framed under SARFAESI Act before putting the property to auction what to say of serving the same upon them. It was submitted that the Bank was simply claiming to have published a sale notice for the auction to be held on 28.3.2016 in newspapers on 27.2.2016 but that publication of notice was not a compliance of mandatory Rule 8(6) and Hon'ble Supreme Court in Mathew Varghese's judgement has held that besides publication of sale notice in general in newspapers giving 30 days time to the public at large to come forward to participate in the auctionindividual notice of sale has to be given mandatorily to the borrower also meaning that two notices are contemplated in law.
Rule 8(6) reads as under:-
"Rule 8. Sale of immovable secured assets.-
(6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule
(5):
Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shallinclude,-
(a) The description of the immovable property 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 property may not be sold;
(d) time and place of public auction or the time after which sale by any other modeshall be completed;
(e) depositing earnest money as may be stipulated by the secured creditor;
(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property."
Relevant paras from the judgment in Mathews Varghese's judgment(supra) are as under:-
"23. In order to examine the correctness of the impugned Judgment of the Division Bench, a serious look into Section 13, in particular sub-section (8) of the SARFAESI Act along with Rules 8 and 9 of the Rules, 2002 is required. We, therefore, deem it appropriate to extract Sections 29(zc), 2(zf), 13(1) and (8) of the SARFAESI Act, as well as Rule 8 sub-rules (1), (3), (5) and (6) and also Rule 9(1) which are as under:
'2(zc) 'secured asset' means the property on which security interest is created;
2(zf) 'security interest' means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31;
Enforcement of security interest.- (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act.
(8). If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.
Rule 8. Sale of immovable secured assets.- (1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.
(3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property.
(5) Before effecting sale of the immovable property referred to in sub-rule (1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured 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 assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or
(d) by private treaty.
(6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):
Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,-
(a) The description of the immovable property 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 property may not be sold;
(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 secured creditor;
(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property.
Rule 9. Time of sale, issue of sale 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 which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower.
Under Section 13(1), it is provided that any security interest created in favour of the SECURED CREDITOR may be enforced without the intervention of the Court and Tribunal by such creditor in accordance with the provisions of this Act. The non-obstante clause in the opening set of expressions contained in Section 13(1), as pointed out by Mr. Singh, learned Senior Counsel for the borrowers, is restricted to Section 69 or Section 69A of the T.P. Act. Apart from noting the said statutory impediment, to be noted in Section 13(1), the more important feature to be noted is that a free hand is given to the SECURED CREDITOR for the purpose of enforcing any security interest created in favour of SECURED CREDITOR, without the intervention of the Court or Tribunal. The only other relevant aspect contained in the said sub-section is that such enforcement should be in accordance with the provisions of this Act. A reading of Section 13(1), therefore, is clear to the effect that while on the one hand any SECURED CREDITOR may be entitled to enforce the SECURED ASSET created in its favour on its own without resorting to any court proceedings or approaching the Tribunal, such enforcement should be in conformity with the other provisions of the SARFAESI Act.
Keeping the said stipulation contained in Section 13(1) in mind, it will have to be examined as to what are the other statutory requirements to be fulfilled when enforcement of a right created in favour of any SECURED CREDITOR in respect of a security interest is created. As we are concerned with the sale of property mortgaged by the borrowers, for the present we leave aside any other form or mode of enforcement, except the one relating to the equitable mortgage created in favour of the Bank. For that purpose, we find that sub-section (8) of Section 13 would be relevant.
A careful reading of sub-section (8), therefore, has to be made to appreciate the legal issue involved and the submissions made by the respective counsel on the said provision. A plain reading of sub-section (8) would show that a borrower can tender to the SECURED CREDITOR the dues together with all costs, charges and expenses incurred by the SECURED CREDITOR at any time before the date fixed for sale or transfer. In the event of such tender once made as stipulated in the said provision, the mandate is that the SECURED ASSET should not be sold or transferred by the SECURED CREDITOR. It is further reinforced to the effect that no further step should also be taken by the SECURED CREDITOR for transfer or sale of the SECURED ASSET. The contingency stipulated in the event of the tender being made by a debtor of the dues inclusive of the costs, charges, etc., would be that such tender being made before the date fixed for sale or transfer, the SECURED CREDITOR should stop all further steps for effecting the sale or transfer. That apart, no further step should also be taken for transfer or sale. When we analyze in depth the stipulations contained in the said sub-section (8), we find that there is a valuable right recognized and asserted in favour of the borrower, who is the owner of the SECURED ASSET and who is extended an opportunity to take all efforts to stop the sale or transfer till the last minute before which the said sale or transfer is to be effected. Having regard to such a valuable right of a debtor having been embedded in the said sub-section, it will have to be stated in uncontroverted terms that the said provision has been engrafted in the SARFAESI Act primarily with a view to protect the rights of a borrower, inasmuch as, such an ownership right 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. Therefore, de hors, the extent of borrowing made and whatever costs, charges were incurred by the SECURED CREDITOR in respect of such borrowings, when it comes to the question of realizing the dues by bringing the property entrusted with the SECURED CREDITOR for sale to realize money advanced without approaching any Court or Tribunal, the SECURED CREDITOR as a TRUSTEE cannot deal with the said property in any manner it likes and can be disposed of only in the manner prescribed in the SARFAESI Act. Therefore, the creditor should ensure that the borrower was clearly put on notice of the date and time by which either the sale or transfer will be effected in order to provide the required opportunity to the borrower to take all possible steps for retrieving his property or at least ensure that in the process of sale the SECURED ASSET derives the maximum benefit and the SECURED CREDITOR or anyone on its behalf is not allowed to exploit the situation of the borrower by virtue of the proceedings initiated under the SARFAESI Act. More so, under Section 13(1) of the SARFAESI Act, the SECURED CREDITOR is given a free hand to resort to sale of the property without approaching the Court or Tribunal.
Therefore, by virtue of the stipulations contained under the provisions of the SARFAESI Act, in particular, Section 13(8), any sale or transfer of a SECURED ASSET, cannot take place without duly informing the borrower of the time and date of such sale or transfer in order to enable the borrower to tender the dues of the SECURED CREDITOR with all costs, charges and expenses and any such sale or transfer effected without complying with the said statutory requirement would be a constitutional violation and nullify the ultimate sale.
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 Section 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 authorized 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 effected before the 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 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.
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 authorized officer considers material for a purchaser to know in order to judge the nature and value of the property.
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. In the first place, as already stated by us, by virtue of the stipulation contained in Section 13(8) 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. 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. 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.
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-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 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 authorized 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 underlining 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 realizing 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.
Under sub-rule (4) of Rule 8, it is further stipulated that the authorized 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 take steps for the preservation and protection of SECURED ASSETS and for that purpose can even INSURE such assets, until it is sold or otherwise disposed of. Therefore, a reading of Rules 8 and 9, in particular, sub-rule (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."(emphasis laid)
This legal position laid down by the Apex Court in Mathew Vargehse'sjudgment(supra) that any sale conducted by a secured creditor in violation of Rule 8(6) will be void is being followed in many subsequent judgmentsrendered by the Hon'ble Supreme Court. Refefence is made to one such judgment dated14th March, 2014in "J.RajivSubramaniyan&Anr.Vs M/s. Pandiyas&Ors.",(CIVIL APPEAL NO. 3865 OF 2014) and again in the case of "VasuP.Shettyvs M/s Hotel Vandana Palace &Ors." (Civil Appeal No. 4679 of 2014)decided on 22.04.2014 the views expressed in the said earlier judgments were reiterated. This legal position was not disputed also by the learned counsel for the Bank. He also did not even claim that any notice as provided in Rule 8(6) was prepared in the name of the appellants. His submission was that publication of sale notice in newspapers was sufficient compliance of Rule 8(6). This submission, however, being contrary to the legal position crystallised by the Hon'ble Supreme Court in Mathew Varghese's judgment and J. Rajiv Subramanim's judgment cannot be accepted.
The impugned order dated 20.01.2018 of the DRT may also be noticed to see how and on what reasoning the appellants S.A. has been rejected. That order is accordingly re-produced below:-
"1. The applicant has filed this application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (The SARFAESI ACT, 2002) challenging the action taken by the respondent bank under the SARFAESI Act.
Briefly stated facts are that M/s Mega Mart through its partner Sh. RavinderAggarwal had availed CC limit of Rs 27 lakh and two term loans of Rs 20 lakh each from the Resp. Bank. The Applicants had stood gurantors and mortgaged property in favour of the bank to secure the said facilities. It has been stated that principal borrower had also mortgaged another property being land and building situated at Mohal, MauzaBaghin, The. DharamshalaKangra.
The Applicants shocked to received Notice under Sec.13 (2) on 01.09.2015 demanding payment of Rs 71,07,425/- as on 31.08.2015 (Exh. A1). The borrowers had assured the Applicants that they will deposit overdue amount and would get regularise the account. Thereafter, no notice was received from the bank. It is on 29.05.2016 that one of persons in locality called the Applicants and informed that his property has been sold. After enquiry, it was found that the bank had issued Possession Notice dt. 10.02.2016 but the same was never received by the Applicants. The tenant in the property, who has also filed separate SA bearing No.71 of 2016, informed that the bank had pasted the Possession notice on the outer portion of the property; however, no notice was ever served upon the Applicants. It has also been learnt that the bank had published sale notice in the newspapers on 27.02.2016 for putting the property on sale for 28.03.2016 whereas no sale can be conducted before expiry of 30 days. It has also been learnt that the bank has sold the property. The applicants requested the bank to inform the name of auction purchaser but the same was not disclosed. Therefore, since the bank has not acted as per the provisions made under . The Act, the applicants have the action of the bank be set aside and SA allowed.
The respondent bank in its reply has stated that credit facilities in the shape of Cash Credit and Term Loan were granted to Mega Mart a partnership firm which turned defaulter. It has been stated that out of secured assets one shop at Dharamshala has been sold vide sale certificate dt.11.04.2016 for Rs. 52.93 lakh (Exh. R1). The bank has further stated that it has nothing to do with the Applicant in SA 71 of 2016 who purports to be the alleged tenant of Applicant No.1 MukeshAggarwal. It has been stated that no permission of tenancy was either sought from the bank nor the bank had given any such permission. Moreover, it is nothing but hurdle being created by the Resp. No. 6 in SA 71 of 2016 who is a family friend. It has been further stated that borrowers have not filed any application against the action initiated by the bank. The applications have either been filed by purported tenant or the guarantors/mortgagors. Since no irregularity or illegality has been pointed out by the borrower and the Applicants in the SA, the SA filed just for delay the recovery process be dismissed.
Applicants have marked Exh. A1 to Exh. A9 on their side and the Respondent Bank has marked Exh.R1 to Exh. R8 on its side.
I have heard counsel for the parties which were on the line of their pleadings.
Before the prayer of the applicant could be considered, it is pertinent to mention that there is another SA no. 71 of 2016 which is stated to have been filed by tenant in the property in question and has been dismissed and this SA has been filed by the guarantors/mortgagors. I fully agree with the counsel for the Resp. Bank that the main borrower has not filed any application or objection against the action initiated by the Bank for recovery of its dues which prove that the bank has acted strictly as per the rules and provisions made under the Act. Moreover, the Applicants herein have also failed to point out any irregularity or illegality in the action initiated by the Bank except objecting to initiating action against them when there are other properties of borrower lying as secured assets with the bank. But the applicants have failed to make out case in favour of them to corroborate their contention that under which rule and provision the bank cannot proceed against them if other properties/secured assets are lying with the bank to recover its dues. Since the borrowers, mortgagors/guarantors are jointly and severally liable till the entire dues are paid, the Applicants cannot now run away from their responsibility.
Another plea taken by the applicants that they had given guarantee in good faith and that they had pressed hard to the borrowers to repay the dues are another excuses just being at attempt to delay the recovery process and nothing else as their liabilities is joint and several till the last penny is paid. Since the applicants have executed the guarantee documents and are well aware of the repercussions, they cannot now shirk from their liability.
The Resp. Bank has duly placed on record notice issued to under Sec 13 (2) on 01.09.2015 to the borrowers as well as guarantors through Regd. Post for which even due acknowledgments on the same addresses are also on record. Thereafter, the bank has issued Notice under Sec 13(4) dt.06.11.2015 for which acknowledgments and refusal are also on record. Thereafter the bank engaged the security agency and applied to Distt. Magistrate on 17.12.2015 alonwith affidavit as per rules and thereafter published notices duly complying with the provisions. Not only this, the bank has also placed on record notices issued to the borrowers/guarantors for sale of secured assets on 16.02.2016. The bank has placed on record E-auction sale notice also mentioning therein date, time and auction. Meaning thereby that the claim of the Applicant that no 30 days was given has no weight. Subsequently, after accepting bid, the bank has also confirmed sale and issued sale certificate. From the documents placed on record, I do not find any irregularity or illegality in the action initiated by the bank.
Having examined the averments made by the respective counsel of the parties and documents and evidence filed by them in support of their pleadings, I have come to the conclusion that the action taken by the bank is absolutely in accordance with law just and proper.
Accordingly this SA is dismissed. Any application pending stands disposed of.
Order Dasti to the concerned parties.
File be consigned to record."
A bare reading of this order of the DRT shows that the learned Presiding Officer has not even made any attempt to deal with the case of the security applicants that no notice under Rule8(6) was given to them. Learned Presiding Officer appears to have got prejudiced from the fact that earlier some Company had also filed an S.A. claiming itself to be a tenant which was dismissed. That fact, in my view, was not relevant since there was no material on record to justify the conclusion that that litigant was put up by the appellants. He observations in that regard by the learned Presiding Officer are thus merely conjectural and he ought not to have allowed his thought process to be prejudiced against the appellants. The learned Presiding Officer did not even notice the fact that the notice placed on record of the DRT by the Bank was a notice which was prepared for publication in newspapers and not for being served upon the appellants herein. There is no explanation forthcoming from the side of the Bank in this regard in this appeal. The bank's counsel also did not refute the submission of counsel for the appellants that sale consideration had not been received from the auction purchaser by 11.04.2016 when sale certificate was issued and that as per the statement of account filed by the Bank itself auction purchaser had made some payments on 22.04.2016. This also shows some kind of dubious understanding between the Bankofficials and the auction purchaser. Thus, sale conducted on 28.03.2016 being in clear violation of Rule 8(6) and not appearing to be a fair and genuine transaction has to be declared as null and void and is declared as such. The property in question has to be auctioned again by the Bank after complying with all the relevant Rules and in case the appellants feel that they now get a right to redeem the property in question they will always be at liberty to have recourse to appropriate remedies/steps in that regard. Since the auction of the appellants now stands set aside the Bank shall take over the possession of the property from the auction purchaser if it already stands delivered to him.
This appeal, therefore, succeeds and the impugned order dated 20. 01.2018 passed by the DRT is set aside. Consequently, the auction sale of the appellants' property in Dharamshala will also stand set aside. Since the auction purchaser has already filed a suit for recovery of his auction money against the Bank he can continue to pursue that remedy and obtain appropriate relief from the Court where his suit is going on.
As far as the right of the appellants now to seek redemption of their property as a consequence of the auction sale of their property having been set aside by the present order is concerned, a useful reference on this aspect can be made to the following observations of a Division Bench of the Hon'ble Delhi High Court made in the case of "M/S. Ram MurtyPyaraLal& Ors. vs Central Bank Of India And Others",(W.P.(C) Nos. 13152/2009 & 5317/2010) decided on 01.011.2010 :-
"17. In view of the above, we hold that the right of redemption claimed by the petitioners will depend upon success of the proceedings initiated by the petitioners under Section 17 of the SARFAESI Act. In case, the petitioners finally fail, then it will not have a right of redemption, however, in case the petitioners succeed in the proceedings under Section 17 and orders are passed for setting aside the auction sale in terms of sub-section (2) to (4) of Section 17, then in such a case, it will be open to the petitioners to claim right of redemption. The conclusion which emerges is this that in case the borrower succeeds in its petition under Section 17, then, the DRT can pass orders under sub-sections 3 and 4 of Section 17 cancelling the auction sale proceedings. In case, the auction sale proceedings are cancelled because the action of the bank/financial institution is found to be violative of various provisions of the SARFAESI Act and the Rules framed there under, it is possible that a fresh auction may have to be conducted. In case a fresh auction of the mortgaged property has to be conducted then, a fresh date will be fixed for auction sale and it is at that stage that again Section 13 sub-section 8 will come into play and at which stage, the borrower can seek to exercise its right of redemption of the mortgaged property. Therefore, everything will turn upon the success or failure of the petitioners in the petition under Section 17 of the Act when the same reaches finality. Presently, the stage of the proceedings under Section 17 is that, and as already stated above, the same has been dismissed by the DRT and a statutory appeal under Section 18 is pending before the DRAT. Therefore, if the petitioners succeed in its appeal under Section 18 before the DRAT, the petitioners can exercise a right of redemption because fresh auction sale proceedings may have to be conducted and when so required to be conducted, once again a date will have to be fixed for sale/transfer/auction and before which date, the petitioners can seek to pay all the dues of the bank in terms of Section 13(8) of the SARFAESI Act.
The present petition is therefore disposed of with the aforesaid directions by setting aside the impugned orders of the DRT and DRAT dated 4.3.2008 and 18.9.2009, respectively and holding that the right of redemption will be decided in terms of the success or failure of the petitioners in the proceedings initiated by them under Section 17."
Thus, it will now be open to the appellants, relying upon this judgment of the Hon'ble Delhi Court to seek redemption of their property of which they were deprived of illegally by the respondent Bank in case the respondent Bank decides to put that property to auction again.