SULTANA RAHMAN vs CANARA BANK AND 2 ORS

 AM Bujor Barua, J.

1.Heard Mr. KN Choudhury, learned Senior counsel for the appellant. Also heard Mr. R Dey, learned counsel for the respondent Canara Bank.

The petitioner being one of the Directors of the respondent No.2 company stood as a guarantor for a loan availed by the said company for a

financial assistance amounting to Rs.3.50 crores from the respondent Canara Bank as per the sanction letter dated 28.03.2008. The financial

assistance was further extended for an additional amount of Rs.57 Lacs and, as a result, the total loan obtained was Rs.4.07 crores. The loan was

secured by creating an equitable mortgage, amongst others, of 1katha 10 lechas of land of Dag No.29(old), 12(new) of KP No.166(old), 385(new) at

Sahar Ulubari second part of Mouza Ulubari in the district of Kamrup(Metro), which was registered in the name of the petitioner.

But, in course of time, the respondent No.2 company could not repay the loan in the required manner, resulting in the original application No.75/2010

being filed by the respondent Canara Bank before the Debt Recovery Tribunal, Guwahati (in short, DRT, Guwahati). The petitioner being a guarantor

was arrayed as a defendant in the said original application. The DRT, Guwahati gave a final consideration to the OA No.75/2010 by its judgment and

order dated 23.02.2012. By the judgment and order of 23.02.2012, a recovery certificate for an amount of Rs.5,43,60,738/- was ordered to be issued,

jointly and severely against all the defendants therein which also included the present petitioner. It was also ordered that the respondent Canara Bank

would provide the recovery officer with the contractual rate of interest for further calculation of interest pendente lite and future interest and that the

charge of the amount under the certificate be kept alive on the mortgaged property shown in the schedule to the original application, which admittedly

also includes the land of the petitioner indicated hereinabove. The said judgment and order is stated to have been passed ex-parte against the

defendants therein and the petitioner upon being aware of the said order had taken steps for filing appropriate application for a stay of the order

passed by the DRT in the original application, but such applications stood rejected.

In the resultant situation, a proclamation of sale dated 20.09.2013 in respect of the land of the petitioner was issued under the signature of the

Recovery Officer II of the DRT, Guwahati. As per the proclamation, the on-line auction of the property involved was fixed on 30.10.2013, between

3PM and 4PM at the Tribunal’s e-auction platform.

In the e-auction held on 30.10.2013, one Ms. Anita Gupta was declared to be the successful bidder on 31.10.2013 and although the auction process

was completed, but the sale of the auction property was confirmed in favour of the aforesaid person on 02.01.2014.

Although an appeal was preferred before the Debt Recovery Appellate Tribunal, at Kolkata, (in short DRAT, Kolkata) against the judgment and

order of DRT, Guwahati, but the same was not admitted. In the meantime, the auction purchaser could not take physical possession of the auctioned

property as the land of the petitioner is not partitioned and it was not physically possible for the petitioner to partition the same. Although an application

was filed by the auction purchaser on 18.03.2014 before the Recovery Officer praying for cancellation of the sale confirmation and refund of the

amount of Rs.1,81,80,200/- being the auction value of the land, but the Recovery Officer by an order of 24.03.2014, the said application of the auction

purchaser was rejected.

In the aforesaid circumstances, the appellant preferred WP(C)No.359/2015 for a direction to the respondent Bank from giving effect to the sale of

the land made in favour of the auction purchaser. The stand in the writ petition was that the appellant is ready and willing to pay the entire amount to

the Bank and, therefore, a direction be given to the DRT, Guwahati to pass necessary order for refunding the entire amount deposited by the auction

purchaser and further to recall the confirmation of the sale proclamation. Further stand had also been taken that the appellant is an old ailing lady and

the auction property is her homestead land. It was also the stand of the appellant that the DRT Guwahati having refused to set aside the sale

proclamation had acted in violation of Article 14, 21 and 300 A of the Constitution of India.

The respondent Bank, through their affidavit-in-opposition took a stand that the appellant being a guarantor had failed to repay the loan and further

also did not appear in the original application in the DRT, Guwahati and had for the first time moved against the ex-parte order of the DRT, Guwahati

dated 23.02.2012, only after her land was attached. It was also the stand of the respondent Bank that the appellant being one of the guarantors was

jointly and severely liable under the contract to repay the entire outstanding amount of the loan and she cannot segregate her liability and that her

liability would be absolved only upon liquidation of the entire amount.

The said writ petition was given a final consideration by the judgment and order dated 20.02.2018. In the judgment and order, it was recorded that

by an order dated 14.08.2017, the appellant was granted one month’s time to deposit the amount of Rs.1,81,80,200/- before the Registry by means

of a Bank draft in favour of the auction purchaser, so as to enable the Court to pass further order in the matter. But inspite of such opportunity being

given, the petitioner could not deposit the required amount. The learned Single Judge also arrive at a conclusion that the sale of the land of the

appellant having been confirmed and the respondent Canara Bank having withdrawn the auction amount from the Recovery Officer, it does not have

any surviving interest in the matter, save and except, to ensure that the possession of the property is handed over to the auction purchaser.

The learned Single Judge relied upon the decision in Nawab Zain-ul-Abdin Khan Vs. Mohd. Asgar Ali Khan reported in (1887) 15 IA 12, wherein

it has been held that a bona fide purchaser for value in an auction sale is treated differently than a decree holder purchasing such properties. In case

of auction, even if a decree is set aside, the interest of the bona fide purchaser in an auction sale is saved. The said decision was also approved by the

Supreme Court in Gurjoginder Singh Vs. Jaswant Kaur reported in (1994) 2 SCC 368. Further, reliance was also placed in Janatha Textiles Vs. Tax

Recovery Officer reported in (2008) 12 SCC 582, wherein the Supreme Court has held that the interest of the 3rd party auction purchaser continues

to be protected notwithstanding that the underlying decree is subsequently set aside.

Accordingly, the learned Single judge arrived at a conclusion that even if the judgment and order of the DRT, Guwahati is set aside, still the

auction sale of the mortgaged property which has attained a finality on the confirmation of sale in favour of the auction purchaser cannot be interfered

with. Unless, of course, it can be shown that the auction process itself was vitiated by fraud or collusion. As there was neither any allegation of fraud

nor the appellant had established any collusion and the liability of the borrower having not been denied, no merit was found in the writ petition. Against

the judgment and order of the learned Single Judge dated 20.02.2018, the present appeal has been preferred.

The only ground urged upon in the appeal by Mr. KN Choudhury, learned Senior counsel for the appellant that in the present case as the

possession of the auctioned land could not be handed over to the purchaser, therefore, the appellant under Section 60 of the Transfer of Property Act,

1882 still has the right to redeem the mortgage.

Section 60 of the Transfer of Property Act is as follows:

Right of mortgagor to redeem.â€"At any time after the principal money has become 1[due], the mortgagor has a right, on payment or tender, at a

proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver 2[to the mortgagor the mortgage-deed and all documents

relating to the mortgaged property which are in the possession or power of the mortgagee], (b) where the mortgagee is in possession of the mortgaged

property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to

such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an

acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right

conferred by this section has not been extinguished by act of the parties or by 3[decree] of a Court. The right conferred by this section is called a right

to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect

that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to

reasonable notice before payment or tender of such money. Redemption of portion of mortgaged property.â€"Nothing in this section shall entitle a

person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining

due on the mortgage, except 4[only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in

whole or in part, the share of a mortgagor.

On a perusal of Section 60 of the Transfer of Property Act, it is seen that the mortgagor has a right to require a mortgagee to: (i) deliver to the

mortgagor, the mortgaged deed and all other documents related to the mortgaged property; (ii) where the mortgagee is in possession of the mortgaged

property to deliver possession thereof to the mortgagor and (iii) to retransfer the mortgaged property to the mortgagor or to such person as the

mortgagor may direct, at the cost of the mortgagee, upon payment or tender of the mortgaged money by the mortgagor to the mortgagee.

In the instant case, there is nothing on record to indicate that the petitioner at any stage had made payment or tendered the payment to the

mortgagee Bank of the mortgaged money. As the condition precedent of Section 60 of the Transfer of Property Act 1882 is not satisfied, therefore,

no interference is justified on the basis of Section 60 of the Transfer of Property Act.

Further, it is also noticed that Section 60 of the Transfer of Property Act does not refer to a situation where the mortgaged property has been sold

in an auction and such auction has been confirmed and the auction purchaser had already deposited the full amount of the auction value. From the said

point of view also the provisions of Section 60 of the Transfer of Property Act, 1882 cannot be invoked in the present case for interfering with the

judgment and order dated 20.02.2018 of the learned Single Judge. It is more so, in view of the law laid down in Nawab Zain-ul-Abdin Khan Vs.

Mohd. Asgar Ali Khan (supra) and Janatha Textiles Vs. Tax Recovery Officer (supra).

In view of the above, the appeal is found to be devoid any merit and the same stands dismissed.