Ram Pal & Associates vs Rahul Motors Pvt. Ltd.

S.N.H. Zaidi, J

These appeals have been directed against the order dated 22.12.2009 of DRT-I, Chandigarh whereby S.A. No. 30/2007 has been allowed and the sale of the secured assets in favour of the appellants conducted by the bank has been set aside with the finding that its sale to the auction purchasers was illegal. Although both the appeals were heard separately, yet the same are being disposed of by a common order.

The facts giving rise to these appeals, in brief, are that respondent No. 4 bank had sanctioned a credit facility to respondent No. 1 company qua which respondent Nos. 2 and 3, the proprietorship firms respectively of Smt. Antia Goel and Mr. Krishan Goel, had mortgaged its properties, bearing plot No. 16 (southern side) measuring 78 sq.yds., situate at Scheme No. 19, Tehsil Road, Rohtak and 2/3 share of plot No. 18 measuring 161.33 sq.yds. out of total 242 sq.yds., situate at Scheme No. 19, Subhash Park, Rohtak with constructions standing thereon. Another plot of land measuring 1 Kanal 6 Marla of Khewat No. 662 Min., Khasra No. 125/15/1 Min., (West side), situate in village Bhiwani Jonpal-1, Tehsil & District Bhiwani, registered vide sale deed dated 10.5.1995 in the name of M/s Sahil Motors, Bhiwani, a sole proprietorship firm of Smt. Anita Goel, was also mortgaged with the bank qua the said loan. Since the borrower company defaulted in repayment of the loan, the bank classified the account as Non Performing Asset (NPA) on 5.7.2000 and issued demand notice dated 7.12.2002 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) claiming an amount of Rs. 51,43,791.46. The bank also filed O.A. No. 77/2004 before the DRT on 29.2.2004 for the recovery of outstanding amount. Another notice dated 26.7.2004 was issued by the bank claiming an amount of Rs. 64,23,457/- and when the borrower/mortgagors failed to pay the amount within the stipulated 60 days, a possession notice dated 26.4.2006 qua all the mortgaged properties was issued and symbolic possession of the properties was taken on that date.

The borrower company thereupon approached the bank with letter dated 7.8.2006 for one-time settlement (OTS) and offered to pay a sum of Rs. 62.25 lacs along with interest at PLR from the sale of the mortgaged properties by 31.12.2006. The bank accepted the proposal and conveyed its terms and conditions with its letter dated 22.8.2006, which were intimated by the bank's counsel, Mr. Rohit Sapra, to the borrower company with his letter dated 23.8.2006. As per those terms, 25% of the settlement amount was to be paid within 30 days from the date of intimation and the balance amount by 31.12.2006, the mortgaged properties were allowed to be sold by executing tripartite agreements amongst the bank, borrower and the prospective buyer and the sale proceeds were to be deposited directly with the bank. The borrower company requested. the bank, vide letter dated 28.8.2006, to apportion/distribute the settlement amount amongst the mortgaged properties and to provide the tentative price of each property so that it may negotiate with the prospective buyers. The bank in its reply dated 5.9.2006, however, did not apportion the settlement amount and reiterated the terms of settlement. When the borrower did not deposit 25% of the settlement amount within the stipulated period and no tripartite agreement was executed as per the terms of the OTS, the bank cancelled the settlement, vide letter dated 15.1.2007.

In the meanwhile, mortgaged plot No. 16 of Rohtak was sold out by the mortgagor to respondent No. 6 for Rs. 5.5 lacs, which were deposited with the bank on 21.12.2006. The other mortgaged plot No. 18 of Rohtak was also sold away by its mortgagor for Rs. 15.5 lacs to respondent No. 7 and by 27.3.2007 entire payment in respect of the said plot was deposited with the bank. The mortgaged land of Bhiwani was also proposed to be sold to respondent Nos. 8 & 9 for Rs. 48.40 lacs.

The bank issued notice dated 27.2.2007 for sale of all the mortgaged properties by inviting sealed tenders from the public by 30.3.2007 and published the same in 'The Hindustan Times' and 'Amar Ujala'. The borrower, however, showing its readiness to pay the settlement amount with up-to-date interest and legal charges within 15 days requested the bank, vide letter dated 28.3.2007, to release the title deeds after the deposit of amount and to cancel the notice of sale. In view of this, the receipt and opening of the tenders was postponed and a new date of 13.4.2007 was fixed and a public notice qua it was published in the News papers on 30.3.2007. The borrower, however, failed to pay any amount within 15 days from the date of letter dated 28.3.2007. The bank, therefore, cancelled the settlement and opened the tenders on' 24.4.2007 received by 13.4.2007. The tender of the appellant of Appeal No. 42/2010 qua both plot Nos. 16 and 18 of Rohtak for RS.33.64 lacs and tender of the appellants of Appeal No. 33/2010 for the Bhiwani land for RS.31.21 lacs, being the highest, were accepted and the said properties were duly sold to them on 10.5.2007.

On 25.5.2007, the borrower' 'company and the mortgagors of Rohtak properties filed an application under section 17 of the SARFAES I Act (S.A. No. 30/2007) against the bank impleading only those whom the mortgaged / properties were sold to or intended to be sold by them and challenged the actions of the bank, inter alia, on the grounds that the authorised officer had not complied with the mandatory requirement of the provisions of SARFAESI Act and the rules made there under. It was averred that though the OTS was revived and extended up to 13A.2007 and the borrower was ready to deposit the money on 10A.2007, but the bank did not accept it as such the borrower had committed no default in complying with the terms of OTS and the bank without allowing the borrower and the proposed buyers of Bhiwani property (respondent Nos.8 & 9) to pay the amount, sold out the mortgaged properties. The proposed buyers of Bhiwani property had deposited RsA.40 lacs with the bank on 18.9.2006 out of the alleged sale price of Rs.48.40 lacs and Rs. 44 lacs were deposited on 18.12.2007 during the course of S.A, as per order of the Tribunal below which had observed that it would be dealt with in accordance with the final order in the O.A. The bank's purchasers of Bhiwani property (M/s Rampal & Associates) were later impleaded as the respondents to the S.A., vide order dated 9.1.2008 passed on their application.

The Tribunal below has allowed the S.A. and set aside the auction sale of the mortgaged properties by the order impugned with the findings that the bank had committed illegalities in conducting the sale under the SARFAESI Act and the rules made there under. It has also held that since the object of the bank was to realize its dues and with the payment of RS.67.40 lacs with it, the bank had received more amount than its dues, which would be treated as satisfied. The learned Tribunal below has also observed that the offered amount of Rs. 48 lacs for Bhiwani property was higher than the sale price deposited by respondent Nos.7 to 9 of the S.A. (the appellants of Appeal No. 33/2010) and since the offered amount had been deposited, therefore, the amount of Rs. 8.40 lacs would be treated as the sale consideration for that property. Feeling aggrieved with the aforesaid findings and observations, the auction purchasers of both Bhiwani and Rohtak properties have filed these appeals.

Though the auction purchaser of Rohtak properties was not a party to the S.A., yet Appeal No 42/2010 filed by him has been admitted by this Tribunal as his interest was found to be at par with the auction purchasers of Bhiwani property.

I have heard Ms. Kavita Kapil, the learned counsel and Mr. Ved Prakash, the Special Attorney for the appellants of Appeal No. 33/2010, Mr. Dhananjay Kumar Singh, the learned counsel and Mr. Surya Prakash Rangi, the General Attorney for the appellant of Appeal No. 42/2010, in person, Mr. Muneesh Malhotra, the learned counsel for respondent Nos.1 to 3, Mr. Pallav Saxena, the learned counsel for respondent Nos. 4 and 5, Mr. Jagdeep Kishore, the learned 'counsel for respondent No. 6, Mr. Sanjeev Kakra, the learned counsel for respondent No. 7 and Mr. B. Diwakar, the learned counsel for respondent Nos.8 and 9.

Ms Kavita Kapil has submitted that the appellants of Appeal No. 33 of 2010 had submitted their tender for Bhiwani property pursuant -to "a sale notice published by the bank, which was opened on 24.4.2007 and, being the highest, it was accepted and 25% of the tender amount as well as the balance amounts were duly deposited and after the confirmation of sale, the sale certificate was issued by the bank in their favour. She has also submitted that respondent Nos. 8 and 9 had filed Civil Suit No. 171/2007 against the bank on 16.7.2007 for declaration and permanent injunction on the basis of an alleged sale deed of Bhiwani property dated 13.4.2007 executed by Mr. Sahil, respondent No. 6, but the learned Civil Judge (Junior Division) Siwani Camp-at-Bhiwani while dismissing the application filed for temporary injunction had, by order dated 5.11.2007, held that at the time of creating the equitable mortgage of that property in favour of the bank, Smt. Anita Goel, the mother of Mr. Sahil, was the sole proprietor of M/s Sahil Motors, which was the owner of that property and the plaintiffs have no prima facie case qua that property and since the said order has attained finality, the respondent Nos. 8 and 9 have not acquired any legal title qua that property on the basis of the said sale deed. She has contended that since, as per the averments of S.A., respondent No. 6 had sold Bhiwani property to respondent Nos. 8 and 9 by sale deed dated 13.4.2007, as such on the date of filing of the S.A. on 25.5.2007 the S.A. applicants (respondent No. 1 to 3) were not the owners of that property and no cause of action for filing the S.A. had accrued to them to challenge the actions of the bank taken qua the sale of that property to the appellants. She has pointed out that respondent No. 8 and 9 have not challenged the sale by filing any application under section 17 of the SARFAESI Act.

Mr. Ved Prakash, the Special Attorney, has further contended that the sale deed dated 13.4.2007, executed by respondent No. 6 in favour of respondent Nos.8 and 9, would show that land measuring 3 Kanal 11 Marla, including the mortgaged land measuring 1 Kanal 6 Marla, was allegedly sold to respondent Nos. 8 and 9 for a meagre sum of Rs. 4.44 lacs only, whereas it has been said that the same purchasers had agreed to purchase the mortgaged land of 1K and 6M for Rs. 48.4 lacs, which clearly establishes that it was a sham transaction. He has also contended that the finding of the Tribunal below that the deposit of Rs. 44 lacs as per its order dated 18.12.2007 and the earlier deposit of Rs. 4.4 lacs, i.e., total deposit of Rs. 48.4 lacs by respondent Nos.8 and 9 as offer for Bhiwani property being higher than the auction money deposited by respondent Nos. 7 to 9 (the appellants herein) must be treated as the sale consideration paid by them on behalf of the S.A. applicants and they be treated as the purchasers of that property and the deposited amount be treated as deposit in the loan account towards the repayment of debt, is bad in law and untenable as it has no legal basis.

Mr. Dhananjay Kumar Singh, has submitted that after the borrower had again failed to deposit any amount pursuant to its letter dated 28.3.2007, on the basis of which the bank had postponed the date of receipt and opening of tender from 30.3.2007 to 13.04.2007, the bank had cancelled the revived settlement, vide its letter dated 13.04.2007 and had rightly proceeded to open the bids on 24.4.2007 and on that date the appellant of Appeal No 42/2010 was declared the highest bidder and his bid was accepted whereupon the appellant had duly deposited the sale price within the stipulated period and on 29.5.2007 he was put in possession of the purchased plots.

Mr. Surya Prakash has also contended that since possession notice dated 26.04.2006 was not challenged by the borrower/mortgagors in time, therefore, its validity cannot be assailed in the S.A. which has been filed after the expiry of the period of limitation. It has also been pointed out by him that the sale price paid was more than the reserve price of RS.33.63 lacs.

Mr. Muneesh Malhotra, appearing for the borrower/mortgagors, has contended that the respondent bank had acted against the provisions of the SARFAESI Act and the rules made there under. According to him, the bank after issuing the demand notice dated 7.12.2002 under section 13(2) of the Act had illegally issued another demand notice dated 26.7.2004 and proceeded to take possession of the secured assets on its basis and allegedly issued possession notice dated 26.04.2006 and took the symbolic possession of the properties under section 13(4) of the Act on that date, but the bank had not delivered the possession notice to the borrower, as per the requirement of rule 8(1) of the Security Interest (Enforcement) Rules, 2002, hereinafter referred to as the Enforcement Rules. He has further contended that the reserve price of the secured assets in the sale notice dated 27.2.2007 was also not properly fixed and was fixed at a much lesser price. It has also been submitted by him that the Borrower / mortgagors had approached the bank for OTS through letter dated 7.8.2006 and the bank had accepted the proposal of Rs. 62.25 lacs, in its reply dated.11.8.2006, towards the full and final settlement of the account with certain conditions and it was specified therein that as the party had proposed to pay the settlement amount by sale of the mortgaged properties, the same would be released at the time of sale and, pursuant thereto, two mortgaged plots of Rohtak were sold to respondent Nos. 6 and 7 and the sale proceeds were directly deposited by the purchasers with the bank and respondent Nos. 8 and 9 had also offered to purchase Bhiwani property and had initially deposited Rs. 4.40 lacs as token money with the bank and had also deposited Rs. 44 lacs with it, as ordered by the Tribunal below. It is also pointed out by him that an amount of Rs. 69.40 lacs had thus been deposited with the bank whereas the bank has received only Rs. 64.85 lacs in its auction sale as such the bank's actions in conducting the sale of the mortgaged properties are not sustainable.

Mr. Pallav Saxena, the learned counsel for the respondent bank, while pointing out that the sale proceeds of the secured assets have already been appropriated by the bank, has submitted that the OTS had to be seen in the light of its terms and conditions and as per its terms 25% of the settlement amount of Rs. 62.25 lacs was to be deposited within 30 days from the date of intimation and the balance amount was to be paid by 31.12.2006 and tripartite agreement was to be executed amongst the vendor, the bank and the prospective buyer, but the borrower/mortgagors did not comply with the terms and conditions of the OTS as neither the amounts were deposited within the stipulated time nor any tripartite agreement was executed before selling the properties by them to respondent Nos.6 and 7, as such the S.A. applicants could not take the shelter of the said OTS. He has also submitted that the OTS was withdrawn vide letter dated 15.1.2007 and thereafter the sale notice was issued on 27.2.2007, which was duly published in two newspapers, including one in a vernacular language. Mr. Saxena has contended that any unilateral condition mentioned in a document or instrument submitted with the bank does not amount to waiver of any agreed term or condition of settlement. According to him, the observation of the Tribunal below that Bhiwani property was not mortgaged is factually wrong as all the three properties were duly mortgaged and Bhiwani property was mortgaged by M/s Sahil Motors, through its, sole proprietor Smt. Anita Goel, by depositing its title deed, Mr. Saxena has also pointed out that the OTS was composite and no property-wise settlement was approved by the bank, which had never agreed to distribute or apportion the settlement amount amongst the mortgaged properties. He has also contended that since no consent/permission was ever given by the bank to the mortgagors for the sale of mortgaged properties against the terms of the settlement, therefore, its sale by the borrower/mortgagor to respondent Nos. 6 and 7 is hit by section 13(13) of the SARFAESI Act as admittedly the transactions of sale in favour of them had taken place after the receipt of the notice issued under section 13(2) of the SARFAESI Act without any prior written consent of the bank. According to him, since Rohtak properties were not sold as per terms and conditions of the OTS, therefore, the sale of these properties by the borrower/mortgagor were. violative of section 13(13) of the Act.

Mr. Jagdeep Kishore, the learned counsel for respondent No. 6, has contended that the respondent No. 6 had purchased plot No. 16 by a private treaty, with the mortgagor and had deposited the entire sale consideration of RS.5.5 lacs 'with the bank before 31.12.2006 as per the terms of the OTS, though the sale, deed was executed/registered in February/April 2007. He has further contended "that since the said sale deed has not been challenged by any party, as such respondent No. 6 is the lawful owner of said plot. According to him, the sale conducted by the bank has rightly been set aside by the Tribunal below and respondent No. 6 is entitled for the release of the title deed deposited with the bank in its favour.

Mr. Sanjiv Kakra, the learned counsel for respondent No. 7, pointing out that respondent No. 7 had purchased plot No. 18 of Rohtak for a sale consideration of RS.15.5 lacs from its owner qua which the bank was intimated vide letter dated 18.9.2006 and a sum of Rs. 1.55 lacs was deposited with the bank as token money which was accepted by it vide receipt dated 20.9.2006 and the balance amount was deposited through cheques of RS.5.75 and 8.20 lacs, with the bank with the letter dated 30.3.2007 and the amounts of cheques were credited in the account of the borrower. He has also contended that the sale conducted by the bank in favour of the auction purchasers was violative of rule 9 of the Enforcement Rules as well.

The contention of Mr. B. Diwakar, the learned counsel for respondent Nos.8 and 9, is that these respondents had agreed to purchase Bhiwani property for Rs. 48.4 lacs and had deposited Rs. 4.4 lacs with the bank on 18.9.2006 and the remaining amount of Rs. 44 lacs was also deposited during the course of S.A. pursuant to the Tribunal's order dated 18.12.2007, as such the learned Tribunal below has rightly set aside the sale of that property conducted by the bank after holding respondent Nos.8 and 9 as its purchasers. It has also been pointed out by him that the appellant auction purchasers had not deposited 25% of the bid amount immediately as per file requirement of rule 9(3) of the Enforcement Rules and the authorised officer of the bank had wrongly given them 48 hours to deposit the said amount against the mandate of rules.

After the parties were heard in Appeal No. 33/2010 and the order was reserved and its pronouncement was deferred until the conclusion of arguments in Appeal No. 42/2010, the borrower/mortgagor Krishan Goel had filed an affidavit vide Diary No. 1301 on 7.8.2012 along with copies of applications filed under the Right to Information Act, 2005 (for short, the RTI Act) With the bank and the information supplied by the bank in respect thereof. The said affidavit and its annexure have also been gone through.

I have given my considered thoughts to the submissions of the parties and perused the record. There is no dispute qua the fact that the borrower respondent No. 1 had defaulted in repayment of the loan. It is also not in dispute that the plots of Rohtak were mortgaged by respondent Nos.2 and 3 and an agricultural land of Bhiwani measuring 1 Kanal 6 Marla was also mortgaged with the bank. The classification of the account as NPA and crystallisation of the amount of debt due as claimed in the demand notices dated 7.12.2002 and 26.7.2004 under section 13(2) of the SARFAESI Act are also not in dispute. By issuing subsequent demand notice dated 26.7.2004, the earlier notice dated 7.12.2002 shall be deemed to have been withdrawn.

So far as actions of the bank taken qua the secured assets are concerned, symbolic possession 6f all the mortgaged properties is said to have been taken on 26.4.2006 pursuant to the notice issued under section 13(4) of the SARFAESI Act. Rule 8(1) and (2) of the Enforcement Rules provide for the delivery of possession notice to the borrower and the manner of its publication and say that-

8(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 such conspicuous place.

(2) The possession notice as referred to in sub-rule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. 11

The borrower/mortgagors have alleged the non-compliance of the above sub rules by the bank. The respondent bank has met this objection by only saying in paragraph 3 of its reply to the S.A. that the issuance of possession notice under section 13(4) of the Act is a matter of record. It has neither filed any documentary evidence to show as to how the possession notice was delivered to the borrower as required by rule 8(1) nor has filed any proof of affixation of possession notice or its publication in any newspaper. I am, therefore, of the view that compliance of rules 8(1) and (2) of the Enforcement Rules is not made out from the material available on record. The failure on the part of the secured creditor qua the delivery of possession notice to the borrower and its due publication, as per the aforesaid rules, makes the subsequent actions taken by the bank as invalid.

It is also one of the contentions of Mr. Malhotra that the authorised officer of the respondent bank had not properly fixed the reserve price of the secured assets in the sale notice and had fixed it at a much lower price, which is violative of rule 8(5) of the Enforcement Rules. The said sub-rule provides that -

(5) Before effecting sale of the immovable property referred to in sub rule (1) of rule 9, the authorised officer shall obtain valuation report 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 modes:-

(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying such asset; or

(b) by inviting tenders from public; or

(c) by holding public suction; or

(d) by private treaty.

The above sub-rule makes it mandatory for the authorized officer to obtain the valuation of the immovable secured asset from an approved valuer for fixing the reserve price of the property before proceeding to sell it. It appears that the authorised officer had obtained the valuation report from Sharma Architects, Rohtak, an approved valuer, as would appear from the copy of valuation report dated 13.1.2006 provided to the borrower/mortgagor by the bank, with its reply to the RTI application dated 16.5.2012. A perusal of the said report would show that value of plot No. 16 of Rohtak including the construction standing thereon was assessed as Rs. 9,81,000/- plot No. 18 of Rohtak along with its constructions Was valued at Rs. 33,21,000/- and the total value of Bhiwani land and building on it was assessed as Rs. 39,00,000/-. The authorised officer had, however, fixed the reserve price of plot No. 16 as RS.6,86,000/-, of plot No. 18 as Rs. 26,77,000/- and of the Bhiwani property as Rs. 31,20,000/- in the sale notice dated 27.2.2007. It is thus evident that he had fixed the reserve price of the mortgaged properties at a much lower price than its fair market price assessed by the valuer in its report. There is nothing on record to show as to why the reserve price of those properties was fixed below its valuation obtained from the approved valuer. The reserve price fixed by the authorised officer in the sale notice was thus improper and unacceptable. The action of the bank taken qua the sale of the mortgaged properties pursuant to such fixation of reserve price was, therefore, against rule 8(5).

The sale notice dated 27.2.2007 issued by the respondent bank was published in the newspapers on 28.2.2007 whereby sealed tenders for the sale of mortgaged properties were invited from the public by 30.3.2007 and, as per the terms of sale set out therein, a Demand Draft (DD) of the value of 5% of the reserve price of the property was to be deposited with the tender. It is an admitted fact that the date notified for the receipt and opening of the tenders was postponed and a new date of 13.4.2007 was fixed in place of 30.3.2007, as the borrower/mortgagors had shown an intention; vide letter dated 28.3.20007, to deposit the settlement amount with interest within 15 days. The postponed date was also notified by a public notice published in the newspapers on 30.3.2007.

The case of the bank is that on failure of the borrower/mortgagors to deposit the settlement amount, as per its letter dated 28.3.2007, the tenders received by 13.4.2007 were opened on 24.4.2007 and the tenders of the appellants, being the highest, were accepted. Though, as per the information supplied by the bank under the RTI Act vide reply dated 26.3.2012, 5% of the reserve price of Bhiwani property was deposited with the tender through Draft NoA05653 dated 13.4.2007 of RS.1,56,050/-. However, according to another reply dated 17.5.2012 (Annexure R-5) given by the bank, the amounts were deposited by the auction purchaser, as per the following details-

5% for Rs. 1,56,050/- vide DD No. 405653 dated 14.4.2007

20% for Rs. 6,25, 000/- cash on 25.4.2007 ---Total 25%

by cash for Rs. 6,49, 950/- on 14.5.2007

by cheques dated 14.5.2007 credited on 24.5.2007 for Rs. 16,90,000/- after explicit prior approval From A. O. --- Total 75%

Total Rs. 31,21,000/-

The above information raises a very serious doubt in respect of the legality of the sale of Bhiwani property, as the sealed tender received on 13.4.2007 could not accompany the draft of file earnest money of 14.4.2007, which was of a day later than the date fixed for the receipt of tenders. This circumstance indicates that either the tender was not filed on 13.4.2007 as notified in the public notice dated 30.3.2007 or the DD was not deposited with the tender filed on 13.4.2007 and it was filed subsequently on 14.4.2007 against the terms of sale. Thus the sale of Bhiwani property in favour of the appellants of Appeal No. 33/2010 on the basis of such tender deposited by them is not sustainable in law.

The action of the respondent bank taken qua the sale of Bhiwani property, being not in conformity with rule 8(5) of the Enforcement Rules, vitiates the sale. Moreover, the finding of the Tribunal below that respondent Nos.8 and 9 shall be treated as the purchasers of the said property and the amount of Rs. 48.4 lacs deposited by them shall be treated as the sale consideration is also not tenable, because in the absence of any valid sale deed of the property in their favour, they cannot be held/treated as the owners of that property. The sale deed dated 13.4.2007 executed by respondent No. 6 in their favour has already been held to be bad in law by the learned Civil Judge (Junior Division), Bhiwani in his order dated 5.11.2007 passed in Civil Suit No. 171/2007 as M/s Sahil Motors, through its sole proprietor Smt. Anita Goel, was found to be the owner of that property at the time of its mortgage with the bank. Since the said order has attained finality, therefore, respondent No. 6 had no power to sell the said property and the sale deed executed by him in favour of respondent Nos. 8 and 9 did not confer any title upon them qua the said property. Moreover, the contention of the appellant appears to have force that the alleged sale deed dated 13.4.2007 of 3 Kanal and 11 Marla for Rs. 4.4 lacs only in favour of respondent Nos.8 and 9 as against their offer to purchase 1 Kanal and 6 Marla out of that property for Rs. 48.4 lacs shows that the said sale deed was a sham document.

The contention of Mr. Malhotra that after the OTS was revived and extended upto 13.4.2007 the borrower had visited the bank on 10.4.2007 to deposit the requisite money in terms of its letter dated 28.3.2007 but the bank did not accept the money is, however, not acceptable in the absence of any document in respect thereof on record. I am, therefore, of the view that the revived OTS had come to an end after the expiry cif 15 days from 28.3.2007 due to failure of deposit of amount by the borrower/mortgagors within that period, as such they cannot take the shelter of OTS.

The sale of the mortgaged properties, as per the terms of the OTS, was required to be made by executing a tripartite agreement amongst the bank, the borrower/mortgagor and the prospective buyer but indisputably Rohtak plots were not sold by executing any tripartite agreement and the mortgagors had sold those plots to respondent Nos.6 and 7 on its own for which no prior written consent of the bank was obtained. Sub-section (13) of section 13 of the SARFAESI Act prohibits the borrower to transfer, by way of sale, any of the secured assets referred to in the notice issued under section 13(2) after its receipt without prior written consent of the secured creditor. Acceptance of the amounts by the bank deposited with it by the alleged purchasers cannot be accepted as the consent contemplated in section 13(13) of the Act. I am therefore, of the considered view that the alleged sale of Rohtak plots in favour of respondent Nos.6 and 7 are hit by section 13(13) of the SARFAESI Act and the said transactions, being in violation of the mandate of law, do not confer any legal title upon the said respondents qua those plots.

In view of the foregoing discussion, I have come to the conclusion that the learned Tribunal below has rightly held that the bank had acted in contravention of the Enforcement Rules in selling the mortgaged properties to the appellants. The order impugned setting aside the auction sale in favour of the appellants, therefore, does not suffer with any infirmity and the instant appeals qua it are liable to be dismissed. However, the order impugned upholding the sale of Rohtak properties in favour of respondent Nos.6 and 7 as well as treating respondent Nos.8 and 9 as the purchasers of Bhiwani property and also treating the amount of Rs. 48.4 lacs deposited by them with the bank as the sale consideration for that property is not sustainable and requires to be set aside.

Consequently, these appeals challenging the order impugned, whereby the auction sale in favour of the appellants has been set aside, are dismissed and the respondent bank is directed to return, within two weeks, the sale consideration deposited by the appellants to them with interest @ 9% p.a. from the dates of its deposit. The order impugned upholding the sale of plot Nos.16 and 18 of Rohtak in favour of respondent Nos.6 and 7 respectively and treating respondent Nos. 8 and 9 as the purchasers of Bhiwani property is set aside. The amounts deposited by respondent Nos. 6 to 9 with the respondent bank be also returned to them along with interest @ 9% p.a. from the date of deposit within two weeks.

The respondent bank shall be at liberty to proceed against the secured asset for the enforcement of its security interest in accordance with law. Parties to suffer their own cost of these appeals.

Copy of this order be furnished to the parties as per law.