State Bank Of India vs GNJ Impex

S.N.H. Zaidi, J

The instant application has been filed by the appellant for permitting it to open the bids received qua the property in question and to proceed further to sell the property as per the rules. No reply to that application has been filed by the respondent despite sufficient time was allowed to it. The facts giving rise to this application, in brief, are that after the appellant Bank came in possession of the mortgaged property, it proceeded to sell it and published notice dated 9.4.2012 for sale inviting bids. The borrower/respondent filed I.A. No. 327/2012 in his S.A. No. 18/2011 before the DRT for directing the Bank to delete Clauses 9, 12 and 13 of the sale notice and also for fixing the reserve price of the property at Rs. 10 crores instead of Rs. 6.47 crores, as mentioned in the notice. The DRT did not accept the plea of fixing the reserve price at Rs. 10 crores, but vide order dated 21.5.2012, observed that since Clauses 9, 12 and 13 have been challenged as arbitrary in nature, the sale proceedings shall continue but the confirmation of sale shall be subjected to further direction of the Tribunal. As no bid was received, the auction scheduled for 21.5.2012 accordingly failed. Thereafter, the property was again put to sale vide notice dated 6.8.2012, containing the same terms and conditions, including similar Clauses 9, 12 and 13, which had again been challenged by the respondent through I.A. No. 739/2012 and the learned DRT, vide impugned order dated 7.9.2012, quashed the said notice dated 6.8.2012. Feeling aggrieved, the Bank filed this appeal. While admitting the appeal, this Tribunal allowed the appellant-Bank to receive the bids as per sale notice dated 6.8.2012 but restrained it from opening it until the next date. The hearing of the matter has, however, been proponed on the application of the appellant-Bank.

I have heard Mr. S.L. Gupta, the learned Counsel for the appellant as well as Mr. Sanjeev Bhandari, the learned Counsel for the respondent. The dispute between the parties is in respect of Clauses 9, 12 and 13 of the sale notice, which read as under:

The balance 75% of the sale price shall be paid by the purchaser on or before 15th day (during Banking hours) of confirmation of sale by the Authorized Officer or such extended period as agreed upon in writing by and solely at the discretion of the Authorized Officer.

The Authorized Officer is not bound to accept the highest tender/bid or any or all tenders and reserves the right to accept or reject any or all the tenders/bids without assigning any reason thereof.

In case all the tenders are rejected, Authorized Officer can negotiate with any of the tenders or other parties for sale of the property by Private Treaty.

Mr. Gupta has submitted that though the said terms are in accordance with the Security Interest (Enforcement) Rules, 2002, yet the appellant undertakes that it would not resort to any of the aforesaid terms in proceeding with the sale of the secured asset. He further submitted that the auction had once been failed as no bid was received, but this time three bids have been received, out of which two are from public sector undertakings, namely, M/s. Oriental Insurance Company Ltd. and Dena Bank whereas the third one is from a private person. He also submitted that the said public companies are pressing upon the appellant for taking necessary steps regarding sale of the property immediately as the bidders have deposited 10% of the reserve price of Rs. 647 lacs along with their bids as earnest money as per the terms of the notice and if immediate steps are not taken in this regard, the bidders may withdraw their bids which would frustrate the recovery of the public money and as such the appellant intends to open the bids to complete the sale.

Mr. Bhandari has submitted that since the borrower/respondent had no sufficient means to pay the dues of the appellant-Bank, it had given the possession of the secured asset to the Bank for sale and the respondent does not want to cause any hindrance in its sale but the appellant-Bank must act in accordance with the provisions of the SARFAESI Act and the rules made thereunder. He also submits that Clauses 9, 12 and 13 of the sale notice are not in accordance with the Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002.

Since in the appeal the question relating to the alleged illegality of the aforesaid clauses of the sale notice is to be adjudicated, therefore, it would not be appropriate to express any view in respect thereof at this stage. However, since the appellant/applicant has undertaken that it would not resort to any of the aforesaid disputed clauses of the sale notice and the respondent also does not want to stall the sale, therefore, I do not find any reason as to why the appellant/applicant be not permitted to open the bids and to proceed with the sale of the secured assets in accordance with the rules. It would always be open to the respondent to challenge the action of the secured creditor if it is taken against the provisions of the SARFAESI Act or the rules made thereunder.

Consequently, this application is allowed and the appellant/applicant is permitted to open the received bids and to proceed with the sale of the secured asset in accordance with law, which shall be subject to the decision of this appeal. Copy of this order be furnished to the parties as per law.