w w w . L a w y e r S e r v i c e s . i n



M/s. Beauline Global Services (P) Ltd., rep. by its Managing Director, Tuticorin v/s Indian Bulls Housing Finance Ltd., rep. by its Authorised Officer & Another


Company & Directors' Information:- GLOBAL FINANCE CORPORATION LTD [Active] CIN = U67120WB1982PLC035160

Company & Directors' Information:- GLOBAL FINANCE CORPORATION LTD [Active] CIN = L67120WB1982PLC035160

Company & Directors' Information:- GLOBAL I T SERVICES PRIVATE LIMITED [Active] CIN = U72200DL2004PTC127805

Company & Directors' Information:- GLOBAL E-SERVICES PRIVATE LIMITED [Active] CIN = U17116MH1947PTC005768

Company & Directors' Information:- GLOBAL FINANCE CORPORATION LTD. [Strike Off] CIN = U65929TR1987PLC002685

Company & Directors' Information:- BULLS FINANCE LIMITED [Strike Off] CIN = U08031KA1994PLC016707

Company & Directors' Information:- H R GLOBAL FINANCE LTD [Active] CIN = U65999WB1995PLC067446

Company & Directors' Information:- BEAULINE GLOBAL SERVICES PRIVATE LIMITED [Strike Off] CIN = U74999TN2012PTC085382

Company & Directors' Information:- R K GLOBAL FINANCE PRIVATE LIMITED [Active] CIN = U74899DL1994PTC062475

Company & Directors' Information:- G M GLOBAL FINANCE PVT LTD [Active] CIN = U67120WB1996PTC078416

Company & Directors' Information:- S K GLOBAL SERVICES LIMITED [Strike Off] CIN = U74140WB2008PLC130221

Company & Directors' Information:- K & S GLOBAL SERVICES PRIVATE LIMITED [Active] CIN = U93000DL1996PTC082621

Company & Directors' Information:- I - GLOBAL SERVICES PRIVATE LIMITED [Active] CIN = U72900GJ2010PTC059452

Company & Directors' Information:- GLOBAL INDIAN CORPORATION PRIVATE LIMITED [Active] CIN = U51909MH2017PTC301380

Company & Directors' Information:- GLOBAL FINANCE CORPORATION LTD [Not available for efiling] CIN = U65929AS1987PTC002685

Company & Directors' Information:- S S BULLS PRIVATE LIMITED [Strike Off] CIN = U67120OR2010PTC011705

Company & Directors' Information:- GLOBAL SERVICES (C & F ) PRIVATE LIMITED [Active] CIN = U60300MH1982PTC027712

Company & Directors' Information:- M. K. GLOBAL SERVICES PRIVATE LIMITED [Strike Off] CIN = U72300MH2014PTC259803

Company & Directors' Information:- GLOBAL INDIA SERVICES PRIVATE LIMITED [Strike Off] CIN = U74120MH2013PTC242295

Company & Directors' Information:- R & J FINANCE SERVICES PRIVATE LIMITED [Active] CIN = U67190DL2014PTC264122

Company & Directors' Information:- INDIAN FINANCE CO. LTD. [Dissolved] CIN = U99999MH1921PTC000902

    W.P.No. 4066 of 2014 & M.P.Nos. 1 & 2 of 2014

    Decided On, 25 March 2014

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE S. RAJESWARAN & THE HONOURABLE MR. JUSTICE S. VAIDYANATHAN

    For the Petitioner: M.K. Kabir, Senior Counsel for T. Jayaraman, Advocate. For the Respondents: R1, J.S. Sivanandaraj, R2, F.B. Benjamin George, Advocates.



Judgment Text

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for the issue of writ of certiorari to of certiorarified mandamus to call for the records of the 1st respondent dated 17.01.2014 for re-auctioning the properties described in the Public Notice for auction sale dated 17.01.2014 on 18.02.2014 or any other date forfeiting the amount of Rs.4,45,00,000/- deposited by the Petitioner towards 25% of the sale price in auction held on 30.08.2013 and direct the 1st respondent to give an opportunity to the petitioner to deposit the balance 75% of the sale price after clearance of the encumbrance stated by the 2nd respondent in its letters dated 24.12.2013 and 18.01.2014. (amended as per order dated 04.03.2014 made in M.P. Nos.3 and 4 of 2014)

S. Vaidyanathan, J.

The writ petition was filed originally with the following prayer:-

'to issue a writ of mandamus to forbear the 1st respondent from re0auctioning the properties described in the Public Notice for auction sale dated 17.01.2014 on 18.02.2014 or any other date by forfeiting the amount of Rs.4,45,00,000/- deposited by the Petitioner towards 25% of the sale price in auction held on 30.08.2013, without giving an opportunity to the petitioner to deposit the balance 75% of the sale price after clearance of the encumbrance stated by the 2nd respondent in its letters dated 24.12.2013 and 18.01.2014'.

2. The above prayer stood amended pursuant to the order of this Court dated 04.03.2014 made in M.P.Nos.3 and 4 of 2014 and the same is as follows:-

'to issue a writ of certioratified mandamus to call for the records of the 1st respondent dated 17.01.2014 for re-auctioning the properties described in the Public Notice for auction sale dated 17.01.2014 on 18.04.2014 or any other date forfeiting the amount of Rs.4,45,00,000/- deposited by the Petitioner towards 25% of the sale price in auction held on 30.08.2013 and direct the 1st respondent to give an opportunity to the petitioner to deposit the balance 75% of the sale price after clearance of the encumbrance stated by the 2nd respondent in its letters dated 24.12.2013 and 18.01.2014'.

3. The learned Senior Counsel for the petitioner by referring to the facts leading to the filing of this writ petition has submitted that

(I) On 27.07.2013, the 1st respondent Company, having its registered office at New Delhi and its local office at Chennai, issued a Public Notice for auctioning the properties mentioned in the schedule, which has been mortgaged by M/s Exim Rajathi India Private Limited and M/s Rajathi Properties Holding Pvt. Ltd., in exercise of the powers conferred under section 13 (4) of the Securitasation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called as the SARFAESI Act), fixing the upset price as Rs.17,75,00,000/-. The petitioner submitted its bid for the purchase of the scheduled properties on 30.08.2013, quoting the price of Rs.17,80,00,000/-, which was accepted by the 1st respondent and as per the terms of the notice, the petitioner deposited 25% of the sale price with the 1st respondent. The 1st respondent by its letter dated 30.08.2013, granted time to the petitioner to deposit the balance 75% of the sale price on or before 14.09.2013. Since the petitioner could not make the payment within the stipulate time, it sought time till 15.10.2013 and the period was also extended by the 1st respondent vide its letter dated 14.09.2013. In the said letter of the 1st respondent dated 14.09.2013, for the first time read that the Company undertakes to deliver the possession of the property in question after clearing the encumbrances known to the company and this was a marked deviation from its original stand, wherein it had stated that it had no knowledge of any subsisting encumbrances.

(ii) It is the further contention of the learned Senior Counsel for the petitioner that the pendency of the proceedings before the Debt Recovery Tribunal No.II, Chennai in I.A.No.329 of 2013 inO.A.No.146 of 2013 came to the knowledge of the petitioner, only when he applied and got encumbrance certificate on 01.10.2013. Subsequently, on 10.10.2013, the petitioner requested the 2nd respondent to advance the balance sale consideration, so that it can remit the same with the 1st respondent. On 16.10.2013, the petitioner informed the 1st respondent about availing of term loan from the 2nd respondent and sought for extension of time till 15.11.2013 and the 1st respondent on 23.10.2013, also granted extension of time till 15.11.2013, subject to forfeiture, if the amount is not deposited within such time. Hence, the petitioner on 04.11.2013 informed the 1st respondent that discharge certificate copy to be furnished otherwise the 2nd respondent will not be in a position to sanction loan. However, the 1st respondent on 11.11.2013, without reference to the mail dated 04.11.2013, informed that, if the balance sale price is not remitted on or before 15.11.2013, the advance amount will be forfeited and this was followed by another letter dated 23.11.2013. On 28.11.2013, the petitioner informed the 1st respondent that the 2nd respondent is ready to sanction loan by 15.11.2013, provided the documents sought for by it are produced for verification. Subsequently, the 1st respondent extended the time for remitting the amount till 16.12.2013 and annexed the order passed in O.A.No.117 of 2013, which was a dispute pertaining to the SBI Overseas Branch and Feather Touch Enterprises. However, the 1st respondent did not furnish the copy of the order dated 12.08.2013 passed in I.A.No.329 of 2013 in O.A.No.146 of 2013, which was reflected in the Encumbrance Certificate issued by the Sub Registrar Office, Tiruvottiyur.

(iii) Further, according to him, since the amount was not deposited, on 30.12.2013, the 1st respondent forfeited 25% of the sale price deposited on 30.08.2013 by the petitioner, despite a certificate was issued by the 2nd respondent seeking time upto 31.01.2014 for getting clearance from the Head Office. On 09.01.2014, the petitioner informed the 1st respondent about its failure to inform the order passed in I.A.No.329 of 2013 in O.A.No.146 of 2013 and the petitioner was always ready and willing to register the property, provided the clarification sought for is provided by the Bankers. Despite the same, the 1st respondent issued a sale notice dated 17.01.2014 through E Auction for the property on 18.02.2014 fixing the Reserve Price at Rs.17,20,00,000/-. On 18.01.2014, the 2nd respondent informed the petitioner about the pendency of the Attachment Order and for clearance of the same, however, the 1st respondent stated that attachment order was vacated on 23.08.2013 and hence it had appropriated the advance amount paid amounting to Rs.4 crores and 45 lakhs.

Challenging the said sale notice dated 17.01.2014, according to the learned Senior Counsel for the petitioner, the petitioner has come forward with this writ petition.

4. The 1s respondent had filed a detailed counter affidavit by filing a vacate stay petition.

5. The short point involved in this case is as to whether the action of the 1st respondent in re-auctioning the properties described in the Public Notice dated 17.01.2014, by forfeiting 25% of the amount deposited as sale price in the auction, without giving an opportunity to the petitioner to deposit the balance 75% of the sale price, after clearance of the encumbrance, is correct or not?

6.1 According to the learned counsel appearing for the 1st respondent, the writ petition is not maintainable in law, as the petitioner has got alternative remedy. He further contended relying on the counter affidavit filed that, on 03.06.2013 and 11.07.2013, the auction of the schedule property failed, as no bids were received equal to or in excess of the Reserve Price and since M/s Exim Rajathi India Private Limited and others have not paid the amount due to Punjab National Bank, the Bank filed O.A.No.146 of 2013 and obtained an ex-parte order from the Debt Recovery Tribunal No.II on 19.7.2013 and the 1st respondent is the 18th respondent in that O.A. In I.A.No.308 of 2013, a direction was issued to the 1st respondent to deposit the surplus sale proceeds to the credit of relevant O.A. pending before the Tribunal. The Ex parte order have created no encumbrance on the schedule property. The order was communicated to the 1st respondent on 30.07.2013, which is after the date of publication of sale notice of the schedule property.

6.2 It is the further contention of the learned counsel for the 1st respondent that on 27.07.2013, the sale notice of auction of schedule property on 30.08.2013 was published in two dailies, Chennai Edition Viz., Dina Malar and Times of India, in conformity with Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter called as Enforcement Rules), wherein, it has been specifically stated that the property would be sold on 'as is where is and as is what basis'. Further, the learned counsel has submitted that on 27.07.2013, when the publication was effected, there were absolutely no encumbrances on the schedule property and in terms of this advertisement, the 1st respondent has done the act strictly in conformity with the Rules, as the rules only require them to disclose all the encumbrances known to it on the date of sale notice.

6.3 it is the further contention of the learned counsel for the first respondent that on 30.07.2013, the Counsel for the Punjab National Bank issued a notice in O.A.No.146 of 2013 to the 1st respondent, together with a copy of an ex-parte order passed by the DRT II on 19.07.2013. On 05.08.2013, the DRT II passed an ex-parte common order in I.A.Nos.329, 330, 331, 332, 333 and 324 of 2013 in O.A.No.146 of 2013 filed by Punjab National Bank against M/s Exim Rajathi India Private Limited and 18 others. The relevant portion of the order communicated to the 1st respondent is as follows:-

'…Till such time, R10/D10, R14/D14 and R15 are restrained from selling, alienating or creating 3rd party interest over the properties described in the Schedule to the instant applications'.

6.4 Further, according to the learned counsel for the 1st respondent, on 12.08.2013, the letter was issued by the DRT II to the relevant Sub Registrar about the common order and there was an interim injunction against R10, 14 and R15 in O.A.No.146 of 2013 and it is clear that the order is not the one of attachment and it has not been passed against the 1st respondent and the 1st respondent had no knowledge until the same was raised by the petitioner vide letter dated 09.01.2014.

6.5 It is further submitted by the learned counsel for the 1st respondent that the relevant entry was done after the sale notice on the schedule property was issued by the 1st respondent on 27.07.2013. On 23.08.2013, the 1st respondent appeared before the DRT II in I.A.No.308 of 2013 and filed an affidavit explaining that the 1st respondent has the first charge over the schedule property and auction price fixed for the schedule property will not be sufficient to cover the dues owed by the borrower. The affidavit also contains an undertaking that if at all there is any surplus from the auction of the schedule property, the same would be deposited before the Tribunal. Based on the aforesaid affidavit, the DRT II discharged the 1st respondent from I.A.No.308 of 2013, thereby expressly allowed the 1st respondent to auction the schedule property. None of the orders passed by the DRT II in I.A.No.308 of 2013 created any encumbrance whatsoever on the schedule property or restrained the 1st respondent in any way proceeding with the auction of the schedule property and as such, according to the 1st respondent, the said order expressly allowed the 1st respondent to proceed with the auction.

6.6 Further, according to the learned counsel for the 1st respondent, the writ petitioner has not come with clean hands. On 30.08.2013, the petitioner made a bid of Rs.17 crores and 80 lakhs and agreed to deposit 25% of the sale price immediately in the event of their bid being accepted and the balance 75% within 15 days of confirmation of sale. The petitioner also inspected the schedule mentioned property and they have been provided with all relevant information asked for by them. Having clearly accepted, as could be seen from the bid form, it is the contention of the learned counsel for the 1st respondent that it is not open to the petitioner to raise any issues pertaining to the schedule property and the petitioner is stopped from doing at this distance of time.

6.7 The 1st respondent’s counsel further stated that the said sale confirmation again reiterates that the sale is on as is where is and as is what basis. The time granted by the 1st respondent to pay the money on or before 14.09.2013 did not materialize and the petitioner instead of making the payment sought time till 15.10.2013. The time was granted, again, time was granted for payment of 75% of the balance by 15.10.2013, this time also the petitioner did not adhere to the time factor but sought time. Another letter dated 16.10.2013 was alleged to have been sent to the 1st respondent seeking extension of time till 15.11.2013 and the time was also granted till 15.11.2013, however the petitioner had not complied with the condition in paying the balance of 75% of the sale price. The petitioner failed to make the payment on or before 15.11.2013. Since the petitioner sought for further extension of time, time was granted till 16.12.2013, with a bona fide belief that the petitioner would at least make the payment this time, keeping in mind the further costs that would accrue to the borrower if the property is put for auction again and the time that would take for them to re-auction the schedule property.

6.8 Further, according to the learned counsel for the 1st respondent, the petitioner again failed to make the payment during the extended time before 16.12.2013. As the petitioner failed to make the deposit of the balance 75% of the sale price for the 4th time, though periodically time was extended and the petitioner was give 3months time in that process, they were constrained to issue forfeiture notice forfeiting deposit of 25% of sale consideration deposited by the petitioner and informing that the 1st respondent would be free from re-auctioning the property as per Rule 9(5) of the Rules.

6.9 That apart, according to the learned Counsel for the 1st respondent, on 17.01.2014, the 1st respondent issued a sale notice for re-auction of the schedule property on 18.02.2014. In the meantime the petitioner wrote a letter dated 09.01.2014 seeking cancellation of the forfeiture and sought for further extension of time. For the first time in the letter, the petitioner informed about the DRT order reflecting on the encumbrance certificate of the schedule property. The 1st respondent replied by letter dated 24.01.2014 re-affirming the forfeiture.

6.10 The learned counsel for the 1st respondent strenuously contended that the petitioner with a malafide intention has approached the Court on 13.02.2014 at the 11th hour by misrepresenting to stall the re-auction.

6.11 That apart, according to the learned counsel for the 1st respondent, on 18.02.2014 the property was auctioned successfully, however in terms of the order of this Court, the 1st respondent has not confirmed the sale despite the fact that the auction purchaser has brought a demand draft for 25% of the sale consideration. it is further contended that there was no encumbrance at all and that the 1st respondent only had the knowledge so the so called encumbrance of the schedule property, when informed by the petitioner in January 2014. The petitioner did not raise this issue for 5 months. It is further submitted that the DRT II vide orders dated 19.07.2013 and 23.07.2013, expressly allowed the 1st respondent to auction the schedule property. The schedule property has now been auctioned four times and currently one buyer succeeded at the last auction and has issued a draft for 25% of the sale price and he is ready to pay 75T of the balance amount and in view of the interim order granted by this Court, sale certificate could not be issued and property could not be vested with the successful bidder.

7. In support of the above contentions, the learned counsel for the 1st respondent has relied on the following Judgments:-

(i) Paragraph Nos.30 and 31 of the Judgment reported in 2012 (5) CTC 413 (R. Shanmugachandran vs. The Chief Manager, Indian Bank), which read as follows:-

30. We also wish to point out that there are two kinds of default that the highest bidder in an auction could commit. The first type of default is when he fails to deposit 25% of the bid amount immediately after being declared the highest bidder. The next or second type of default that could be committed by the highest bidder is the stage at which he is required to pay 75% of the bid amount, after depositing 25% on the date of the auction.

31. If the default committed by the highest bidder falls under the first category, Rule 9(3) indicates the action to be taken. If the default falls under the second category, Rule 9(5) prescribes the forfeiture of the entire deposit of 25%. Therefore, in cases falling under the second category, there is no other option except forfeiture of the 25% of the bid amount. In other words, there is a distinction between forfeiture of the earnest money and the forfeiture of the deposit of 25% made under Rule 9(3). The forfeiture of the deposit of 25% made under Rule 9(3), is taken care of by Rule 9(5). But the forfeiture of the earnest money deposit is not taken care of by the Rules and hence the Bank may have to fall back upon the terms and conditions of sale.'

(ii) Paragraph No.17 of the decision of this Court in the case of ICICI Bank Ltd. CMA Group vs. Mr. P. Veerendar Chordia reported in 2010-2 LW-649, which read as follows:-

'17. Section 17(1) makes it abundantly clear that any person (including borrower) aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorised officer may make an application to the Debs Recovery Tribunal. Therefore, not only the borrower but any person who is aggrieved of the actions of the secured creditor has recourse to appeal to the Debts Recovery Tribunal under Section 17(1) of the SARFAESI Act. Since the respondent, a third party to the loan transaction, has entered into a Memorandum of Understanding with the secured creditor/Bank for the purchase of the mortgaged property and the order of forfeiture came to be passed against him by the secured creditor/Bank, after having initiated the proceedings under the SARFAESI Act and having agreed to sell the property under private treaty, it will definitely fall within the jurisdiction of Debts Recovery Tribunal being a ‘sale’ within the meaning of Section 13(4) of the SARFAESI Act read with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 and therefore, the respondent is completely justified in approaching the Debts Recovery Tribunal for redressal of his grievance under Section 17(1) of the SARFAESI Act. Therefore, the Debts Recovery Tribunal-III, Chennai is completely within its jurisdiction in entertaining the appeal filed by the respondent/purchaser under Section 17 (1) of the SARFAESI Act. This point is answered accordingly'.

(iii) Paragraph Nos.23, 37 and 38 of the decision of this Court in W.P.No.5760 of 2013 in the case of N. Suresh vs. The Indian Bank, Chennai, which read as follows:-

'23. In Law, it is the 'Caveat Emptor' [Purchaser Beware]. If the sale is vitiated by fraud, the buyer can sue the seller to set aside the sale and to recover the price. As per Section 55(2) of the Transfer of Property Act if the title is restricted viz., subject to statutory charge there cannot be a covenant of higher title. To put it differently, if the title is subject to certain restrictions, there cannot be a covenant for enjoyment of a higher title.

37. Be that as it may, as far as the present case is concerned, the Petitioner has taken part in the Auction Bid in respect of the property in issue on 21.11.2012 for Rs.18.80 Lakhs and stood as the highest bidder, has been accepted by the Respondent/Bank and further, he has been declared as the successful bidder in respect of the sale. Even the Tender Cum Auction Sale Notice dated 19.10.2012 clearly contains a condition that the property shall be transferred/conveyed on 'as is where is' basis and 'as is what is' condition by means of a sale certificate in the name of the Purchaser only. He has also remitted the EMD of Rs.4,70,000/- being the Earnest Money which has been duly acknowledged by the Respondent/Bank. However, he has not paid the 75% of the balance amount of Rs.14,10,000/-. Inspite of all clarifications provided by the Respondent/Bank, the Petitioner has failed to pay the balance 75% of the sale amount and ultimately, through the impugned order dated 11.02.2013, the Bank has forfeited the Earnest Money Deposit of Rs.4,70,000/- remitted by the Petitioner on 21.11.2012.

38. In the instant case, in the upshot of discussions, it is latently and patently clear that it is the Petitioner’s duty as an intending purchaser to satisfy himself as to the encumbrance, cloud or shroud surrounding the property in question before taking part in the Auction Bid conducted by the Respondent/Bank on 19.10.2012. It is not open to the Petitioner, after taking part in the Auction Bid held on 19.10.2012 and also after remitting an Earnest Money of Rs.4,70,000/-, to come out with a plea that there are encumbrances over the property which were not notified in the Auction Notice. On the facts of the present case, we are of the considered view that the Bank has clearly, in Clause 2 of the Terms and Conditions of the Auction Notice, spelt out its stand that the property brought in Auction Sale through Notice dated 19.10.2012 shall be transferred/conveyed on 'as is where is' basis and 'as is what is' condition by means of a sale certificate in the name of the Purchaser only. Only with the open eyes, the Petitioner has taken part in the Auction Bid, held on 19.10.2012. After taking part in the Auction held on 19.10.2012, we are of the considered view that, it is not open to the Petitioner to question the impugned order dated 11.02.2013 of the Respondent/Bank in forfeiting 25% of the bid amount paid by him on 21.11.2012. As such, we unhesitatingly held that the Writ Petition filed by the Writ Petitioner is not maintainable, in law. Consequently, the Writ Petition fails'.

(ii) In the Judgment in the case of United Bank of India vs. Satyawati Tondon reported in (2010) 8 Supreme Court Cases 110, the Hon’ble Supreme Court has held as follows:-

'44. …While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

………

50. In Punjab National Bank v. O.C. Krishnan and others (2001) 6 SCC 569, this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed:

'5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act'). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.

6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.'.

………

52. In City and Industrial Development Corporation v. Dosu Aardeshir Bhiwandiwala and others (2009) 1 SCC 168, the Court highlighted the parameters which are required to be kept in view by the High Court while exercising jurisdiction under Article 226 of the Constitution. Paragraphs 29 and 30 of that judgment which contain the views of this Court read as under:-

'………

30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:

(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;

(b) the petition reveals all material facts;

(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;

(d) person invoking the jurisdiction is guilty of unexplained delay and laches;

(e) ex facie barred by any laws of limitation;

(f) grant of relief is against public policy or barred by any valid law; and host of other factors.

The Court in appropriate cases in its discretion may direct the State or its instrumentalities as the case may be to file proper affidavits placing all the relevant facts truly and accurately for the consideration of the Court and particularly in cases where public revenue and public interest are involved. Such directions are always required to be complied with by the State. No relief could be granted in a public law remedy as a matter of course only on the ground that the State did not file its counter-affidavit opposing the writ petition. Further, empty and self-defeating affidavits or statements of Government spokesmen by themselves do not form basis to grant any relief to a person in a public law remedy to which he is not otherwise entitled to in law.'.

………

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.'.

8. However, the learned Senior counsel for the petitioner contended that the writ petition is maintainable and an alternative remedy is not a bar for entertaining the writ petition, more particularly, when the facts are not in dispute. For this, he relied upon the decision of the Apex Court in the decision reported in 1999 (4) SCC 450 in the case of Hindustan Petroleum Corporation vs Dolly Das. He further contended that since there was an encumbrance and there was an order of attachment of the immovable property pursuant to the orders of the DRT II, Chennai, the 1st respondent’s auction in not disclosing these details as contemplated under Rules 8 and 9 of the Rules is bad. He further stated that when the petitioner was ready and willing to pay 75% of the balance amount of sale consideration, the forfeiture of 25% of the deposit made on 12.08.2013 is bad.

9. In support of the above contentions, the learned Senior Counsel for the petitioner has also relied upon the following decisions:-

(i) Paragraph Nos.8 to 11, 13 to 16 and 19 and 21 of the Judgment of this Court in the case of Chemstar Chemicals & .. vs. The Commercial Tax Officer made in W.P.No.6354 of 2010 dated 07.10.2010, which read as follows:-

'8. Before going into the claim of the petitioner on facts, the first aspect to be considered is about the maintainability of this writ petition. The relief sought for herein is admittedly for directing the second respondent bank to refund the sale advance of Rs.25,20,000/- to the petitioner. The property is brought for sale through public auction invoking the relevant provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter shortly referred to as 'SARFAESI Act'). The second respondent bank has on the failure of the third respondent to make payment, invoked Section 13 of the Act which deals with ‘Enforcement of Security Interest’ and has under Section 13(4)(a), taken possession of the secured assets and obtained orders. In so far as this writ petition is concerned, it is not against the action of the second respondent bank in bringing the property for auction which is one of measures taken by the bank under section 13(4) of the Act, but only for certain relief arising out of and in the course of auction proceedings. Though it is seriously contended by the learned counsel for the second respondent bank by relying upon Section 17 of the Act and by relying upon the latest unreported judgment of the Supreme Court dated 26.7.2010 inUnion Bank of India v. Satyawati Tondon and others, that the remedy available to the petitioner is only to go before DRT which is constituted under the Act for entertaining any appeal under section 17 of the Act, the same in the considered view of this Court, cannot be legally countenanced.

9. Section 17 makes it very clear that the appeal remedy available before the DRT is only against any of the measures referred to in sub section (4) of section 13 taken by the secured creditor or his authorised officer and not in respect of the dispute arising out of the same pursuant to the action taken under section 13(4). The judgment cited on the side of the second respondent bank, is the case where the defaulting borrower was issued with notice under section 13(4) of SARFAESI Act and immediately after receipt of the notice, the borrower filed the writ petition for restraining the bank from taking coercive action pursuant to the alleged illegal notice issued under Sections 13(2) and 13(4) and one of the grounds raised by the respondent bank therein is the availability of alternative remedy under Section 17 of the Act. The Division Bench did not consider the objection regarding the availability of the alternative remedy and allowed the writ petition by granting prohibitory order as sought for by the petitioner therein. The same was challenged before the Supreme Court. The Supreme Court has considered the claim of the appellant bank both in law and on facts and has arrived at a conclusion that as the writ petition is filed against the notice issued under sections 13(2) and 13(4), ignoring the availability of the statutory remedy before the DRT, the same is not maintainable. While doing so, the Apex Court has also expressed serious concern about the fact that the High Court has been continuously ignoring the availability of statutory remedies under the DRT Act and SARFAESI Act while exercising its jurisdiction under Section 226 of the Constitution of India which have serious adverse impact on the right of banks and other financial institutions to recover their dues. The Supreme Court has at the end of its judgment cautioned the High Courts to exercise their discretion in future in such matters with greater caution, care and circumspection. Though this Court is bound to follow the observation of the Supreme Court, the same is in my considered view, inapplicable to the facts of the present case. Unlike the case dealt with by the Supreme Court, the relief sought for herein is not against the measure taken under section 13(4). In so far as the petitioner herein is concerned, he is only the third party, who participated in the auction held in pursuance of the action taken under Section 13(4) of SARFAESI Act and is not the person aggrieved against the action taken under Section 13(4) of the Act. Further, what is challenged before this Court is the procedural violation in the manner of auction so held, not the auction itself.

10. As a matter of fact, our High court in the judgment reported in 2010 (5) CTC 449 in Sheeba Philominal Merlin and another v. The Repatriates Co-op. Finance and Development Bank Ltd, Chennai-17 and others, has after discussing the issue of alternative remedy and after referring to the judgment of the constitutional bench of the supreme court reported in 2010 (2) CTC 84 in State of West Bengal and others v. The Committee for Protection of Democratic Rights, West Bengal and others and 2010 (5) SCALE 184 inSecretary, Cannanore Muslim Educational Association, Kanpur v. State of Kerala,held that 'High Court is conferred with wide power under Article 226 of the Constitution of India to reach injustice whenever it is found and as injustice is writ large and glaring, necessarily the judicial arm of this Court has to reach there and it cannot be prevented by plea of availability of alternative remedy'. Our High court has also referring to other earlier judgment of the Supreme Court reported in AIR 1958 SC 86 inState of Uttar Pradesh v. Mohammad Noohheld that availability of alternative remedy is not an absolute bar for exercising the writ jurisdiction and it is only a self-imposed restraint on its power and whenever there is contravention in violation of the principles of natural justice, the extraordinary power under Article 226 of Constitution of India can be invoked despite the fact of availability of alternative remedy.

11. The Supreme Court has also in the judgment reported in 2010(5) MLJ 1125 (SC) in Haryana Financial Corporation and another v. Rajesh Gupa, entertained the writ petition for the relief to refund the amount illegally forfeited and has held the order of forfeiture of earnest money deposited by the highest bidder, on his default to pay the balance amount as arbitrary and illegal and has ordered the refund of forfeited amount. That being the legal and factual position, the plea of availability of alternate remedy raised on the side of the second respondent bank is devoid of any merits and deserves no acceptance.

………

13. It is not in dispute that the petitioner has submitted his tender in full after complying with all formalities and has been declared as the successful bidder and paid the advance amount. However, the petitioner thought fit not to proceed with the purchase of the property by raising the issue that the property was under attachment by the sales tax department. The petitioner has come forward with such contention for the first time in his letter dated 26.3.2010, wherein, it is specifically stated that he came to know about the order of attachment only after obtaining encumbrance certificate on 18.3.2010. In the reply dated 27.3.2010, the second respondent did not mention anything about the encumbrance but advised the petitioner to pay the balance amount of Rs.75,75,000/- on or before 26.3.2010, as per the tender condition. There is absolutely no whisper in the reply notice as to whether the document containing encumbrance was made available on 5.3.2010 in the course of verification of the documents by the participants. It is throughout the stand taken by the petitioner that he came to know about the attachment of the property by the sales tax authority only after 11.3.2010 and only after obtaining encumbrance certificate on 18.3.2010 and had he been aware of the same before auction, he would not have participated in the auction. But, the second respondent has only in the counter filed herein, come forward with its plea that the document containing encumbrance is made available along with the documents of title and the same was also inspected by the petitioner and the petitioner is well aware of the existence of encumbrance as early as on 5.3.2010 and he participated in the bid and he cannot be permitted to withdraw from the auction and seeks refund of sale tax advance. However, the petitioner has in para 4 of the reply affidavit categorically denied that no encumbrance certificate was made available at the time of inspection and the encumbrance was disclosed to the petitioner only on 18.3.2010. Such stand is sought to be again denied by the second respondent bank by contending that the petitioner has raised the plea of non-availability of encumbrance particulars on 5.3.2010 only in his reply affidavit to the counter filed by the second respondent.

14. Be that as it may, the learned senior counsel for the petitioner has in the course of his argument, drawn the attention of this Court to the relevant provision of Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 which deals with the procedure for bringing the immovable secured assets for sale which is extracted hereunder:

'8(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'.

15. The reading of Rule 8(6) makes it very clear as to what are the relevant particulars to be furnished in the sale notice, as per which the description of the property to be sold among other particulars including the details of the encumbrances and 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 shall be known to the secured creditor by setting out the same in the public notice. As rightly argued by the learned senior counsel for the petitioner, the very purpose of inspection of the documents is to enable the intending purchaser to know the nature, condition and value of the property and also other encumbrances or burden upon the property. Though the learned counsel for the second respondent has attempted to argue that as the attachment is not an encumbrance as referred to under Rule 8(6)(a) and the same was not one of the material factors which the bank is bound to disclose under rule 8(6)(f) of the Act, such contention certainly deserves no consideration. It cannot be disputed that the order of attachment is one of the material factors which is likely to influence the mind of intending purchaser to proceed or not to proceed with his participation in the auction.

16. Even assuming it is to be true that the encumbrance certificate is made available for inspection on 5.3.2010, the same is as rightly pointed out by the learned senior counsel for the petitioner, would not amount to strict compliance with mandatory Rule 8(6) of the Act, as per which the particulars of the encumbrance if any or any other factor which the authorised officer considers it material for an intending purchaser to be aware as referred to in Rule 8(6)(a) and (f) are to be disclosed in the public notice regarding sale. In this case, except the description of the property, no other particulars about the attachment of the property by the sales tax department is set out in the public notice.

………

19. The Supreme Court also in the other judgment reported in 2010 (5) MLJ 1125 (SC) in Haryana Financial Corporation and another v. Rajesh Gupta has in the identical circumstances, held that on the failure of the Corporation to disclose the fair description of the property to the buyer, the order of forfeiture of earnest money is arbitrary and unfair and directed the Corporation to refund the forfeited amount.

20. The learned counsel for the second respondent has also cited an authority reported in I 2001 (BC) 708 in HI-Q Electronics Private Limited v. Branch Manager, Tamil Nadu Industrial Investment Corporation Limited and others, wherein, the case is arising out of Section 29 of State Financial Corporation Act, 1951 and the property was under attachment by the sales tax department and the successful bidder by reason of such attachment, sought for refund of the amount and the same was rejected by the bank and the bid amount was forfeited. When the same was challenged before our High court, the learned Single Judge rejected the contention of the writ petitioner therein that non-disclosure of the fact regarding the letter from the Sales Tax Department to the petitioner amounts to fraud and on that basis, the petitioner can ignore the same. Our High Court was not inclined to interfere with the auction sale which was already confirmed mainly in view of clause 16 of the terms and conditions under which it is the duty of the intending purchaser to verify the dues payable on the property on the principle of 'Caveat emptor'. In my considered view, the judgment of the learned Single Judge referred to above, is not applicable to the facts of the present case for the simple reason that there is no such similar clause of terms and conditions herein. On the contrary Rule 8(6) of the Act makes it mandatory that the sale notice shall contain all the particulars including encumbrances if any and any other material factor which the authorised officer considers it material for a purchase in respect of the property as referred to in Rule 8(6)(a) and (f) and the effect of the failure to comply with such mandatory requirement is already dealt with by our Hon’ble Division Bench in the judgment reported in 2010 (4) CTC 627 wherein, our High court has held that the same is against the interest of the participants and hence, set aside the order of forfeiture.

21. Thus, the petitioner is by applying the same ratio referred to above, entitled to ignore the auction sale of the property burdened with an order of attachment by the sales tax department and as and when he exercises his right not to proceed further, the respondent bank is bound to refund the amount deposited by him and this Court is hence, inclined to grant the relief as sought for by the petitioner herein.'

(ii) Paragraph Nos.23, 25 and 26 of the Judgment reported in (2010) 1 SCC 665 in the case of Haryana Financial Corporation and another v. Rajesh Gupta, which read as follows:

'23. In our opinion, the appellants cannot be given the benefit of Clause 5 of the advertisement. The appellant Corporation cannot be permitted to take advantage of their own wrong. Clause 5 undoubtedly permits the forfeiture of the earnest money deposited. But this can only be, if the auction purchaser fails to comply with the conditions of sale. In our opinion the respondent has not failed to comply with the conditions of sale. Rather, it is the appellant Corporation which has acted unfairly, and is trying to take advantage of its own wrong.

24. In view of the aforesaid, we are of the considered opinion that the appellants/Corporation cannot be permitted to rely upon Section 55 of The Transfer of Property Act, 1882. The appellant Corporation failed to disclose to the respondent the material defect about the non-existence of the independent 3 'Karam' passage to the property. Therefore, the appellant Corporation clearly acted in breach of Section 55 (1) (a) and (b) of The Transfer of Property Act, 1882.

25. The aforesaid Section provides as under:

55. (1) The seller is bound

(a) to disclose to the buyer any material defect in the property or in the seller’s title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;

(b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power;

A mere perusal of the aforesaid provision will show that it was incumbent upon the appellants Corporation to disclose to the respondent about the non-existence of the independent passage to the Unit. It was also the duty of the appellant Corporation to inform the respondent that the passage mentioned in the revenue record was not fit for movement of vehicles. The appellant also failed to produce to the buyer the entire documentation as required by Section 55(1)(b) of the aforesaid Section. We are therefore satisfied that the appellants Corporation cannot seek to rely on the aforesaid provision of The Transfer of Property Act, 1882.

26. In our opinion, the reliance on Section 29 of the State Financial Corporations Act, 1951 is wholly misplaced. The aforesaid Section pertains to action which the Corporation can take against the Unit which had defaulted in payment of loan. In such circumstances the Corporation has the power to sell the property that has been hypothecated or mortgaged with the Corporation. Respondent herein is an auction purchaser and therefore cannot be confused with the defaulting unit'.

(iii) Paragraph Nos. 17, 18 and 23 of the Judgment reported in 2012 (5) CTC 413 R. Shanmugachandran (Deceased) vs The Manager, which read as follows:-

'17. In Jai Logistics v. The Authorised Officer, Syndicate Bank (2010 (4) CTC 627), a Division Bench of this Court, to which one of us was a party (D. Murugesan, J), had an occasion to consider the effect of Rule 8(6)(f) of the Security Interest (Enforcement) Rules, 2002. It was held therein that the auction purchasers should also be put on notice of the encumbrances relating to the property, in the light of the said rule. Therefore, on the basis of the aforesaid decisions, it is contended by the learned counsel for the writ petitioner that the forfeiture of the Earnest Money Deposit by the respondent-Bank was illegal.

18. But, in the case on hand, we have seen from the auction sale notice that in the last column of the table under the schedule to the notice, the Bank has indicated the pendency of a partition suit at the instance of a minor son of one of the guarantors on the file of the District Munsif Court, Erode. The auction sale notice was issued on 28.6.2010. The last date for submission of tender forms was 31.7.2010 and the tenders were to be opened and auction conducted only on 02.8.2010. Therefore, all the participants had a time of more than 30 days to undertake a search in the records of the Sub-Registrar and conduct an enquiry that was required to be made by a prudent purchaser, especially in the light of the disclosure made in the auction notice that there was a partition suit pending at the instance of a minor son of one of the guarantors. The petitioner relies upon two encumbrance certificates, one dated 09.8.2010 relating to item No.1 and another dated 04.8.2010 relating to item No.5. It appears that the mortgage was created in favour of the respondent-Bank in December 2000. The encumbrance certificate relating to item No.1 dated 09.8.2010 does not disclose any encumbrance before the date of creation of mortgage. It appears that there was a sale agreement dated 22.01.1997, but the same was cancelled on 19.01.1998. Therefore, as on the date of creation of the mortgage, namely 08.12.2000, there was no encumbrance insofar as item No.1 is concerned.

…………

23. The obligation of the Authorised Officer to include in the public notice issued under Rule 8(6), the details of the encumbrances known to the secured creditor, is actually traceable to Clause (a) under the proviso to Rule 8(6). Since the obligation to disclose encumbrances is inbuilt in Clause (a) of the proviso itself, there is no necessity even to fall back upon Clause (f) under the proviso to Rule 8(6). Clause (f) may relate to matters other than encumbrances, such as pendency of suits etc., subject to the condition that the secured creditor is aware of the same. In this case, the secured creditor appears to be aware of the pendency of a partition suit and they have disclosed the same in the last column of the table given in the auction sale notice. Therefore, the secured creditor has actually fulfilled the requirement of Clause (f) under the proviso to Rule 8(6).'

(iv) Paragraph No.4 of the Judgment reported in 2010 (4) CTC 627 in the case of Jai logistics vs. The Authorised Officer, Syndicate Bank, which reads as follows:

'4. On the other hand, the learned counsel for the respondent-bank would submit that even when the sale notice was issued, the bank was not aware of the encumbrance and therefore only the publication did not carry the encumbrance. As far as the bank is concerned, it is entitled to forfeit the earnest money deposit in the event the balance sale consideration is not paid in time. The auction bidder cannot have any right to seek for either the amount deposited towards earnest money to be refunded or to purchase the land after the clearance of encumbrance by the bank or financial institution. The learned counsel would rely upon the judgment of the Supreme Court in United Bank of India v. Official Liquidator and others, (1994) 1 SCC 575 and particularly, paragraphs 13 and 14 in this regard.'

(v) Paragraph No.27 of the Judgment reported in (1999) 1 SCC 741 U.P. State Co-operative Land vs Chandra Bhan Dubey and Ors, which reads as follows:

'27. In view of the fact that control of the State Government on the appellant is all pervasive and the employees had statutory protection and therefore the appellant being an authority or even instrumentality of the State would be amenable to writ jurisdiction of the High Court under Article 226 of the Constitution. It may not be necessary to examine any further the question if Article 226 makes a divide between public law and private law. Prima facie from the language of the Article 226 there does not appear to exist such a divide. To understand the explicit language of the Article it is not necessary for us to rely on the decision of English Courts as rightly cautioned by the earlier Benches of this Court. It does appear to us that Article 226 while empowering the High Court for issue of orders or directions to any authority or person does not make any such difference between public functions and private functions. It is not necessary for us in this case to go into this question as to what is the nature, scope and amplitude of the writs of habeas corpus, mandamus, prohibition, quo warranto and certiorari. They are certainly founded on the English system of jurisprudence. Article 226 of the Constitution also speaks of directions and orders which can be issued to any person or authority including, in appropriate cases, any Government. Under clause (1) of Article 367 unless the context otherwise requires, the General Clauses Act, 1897, shall, subject to any adaptations and modifications that may be made therein under Article 372 apply for the interpretation of the Constitution as it applies for the interpretation of an Act of the Legislature of the Dominion of India. 'Person' under Section 2(42) of the General Clauses Act shall include any company, or association or body of individuals, whether incorporation or not. Constitution in not a statute. It is a fountain head of all the statutes. When the language of Article 226 is clear, we cannot put shackles on the High Courts to limit their jurisdiction by putting an interpretation on the words which would limit their jurisdiction. When any citizen or person is wronged, the High Court will step in to protect him, be that wrong be done by the State, an instrumentality of the State, a company or a cooperative society or association or body of individuals whether incorporated or not, or even an individual. Right that is infringed may be under Part III of the Constitution or any other right which the law validly made might confer upon him. But then the power conferred upon the High Courts under Article 226 of the Constitution is so vast, this court has laid down certain guidelines and self-imposed limitations have been put there subject to which High Courts would exercise jurisdiction, but those guidelines cannot be mandatory in all circumstances. High Court does not interfere when an equally efficacious alternative remedy is available or when there is established procedure to remedy a wrong or enforce a right. A party may not be allowed to by-pass the normal channel of civil and criminal litigation. High Court does not act like a proverbial ‘bull in china shop’ in the exercise of its jurisdiction under Article 226.'

(vi) Paragraph No.27 of the Judgment reported in (2013) 10 SCC 83 (General Manager, Sri Siddeshwara Co-operative Bank Limited vs. Ikbal and others), which reads as follows:-

'27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented'.

10. We have heard the learned counsel on either side and we have also gone through the materials available on record as well as the Judgments cited by the counsel on either side.

11. The DRT II, on 05.08.2013 has passed a common order in I.A.Nos.329 to 324 of 2013 in O.A.No.146 of 2013 directing M/s Exim Rajathi Pvt Ltd and 18 others, including the 1st respondent herein to furnish security and they are restrained from selling, alienating or creating a third party interest over the property described in the schedule to the instant application. The Registry was also directed to forward the common order to the Sub Registrar Office, with a request to make necessary entries in the relevant register and not to effect any registration in respect of the properties described in the schedule to the instant application. Pursuant to this order, the Sub Registrar, Tiruvottiyu has made an entry in the records. There was no order against the 1st respondent herein who was the 18th respondent. By an order dated 23.08.2013 the Tribunal passed an order recording the submissions of the 1st respondent herein, in I.A.No.308 of 2013 wherein it has been specifically stated that in the event of R18 namely the 1st respondent herein selling the schedule property, he was directed to go ahead with the auction and recording the undertaking given by the 1st respondent herein that they would deposit the surplus amount if any out of the sale proceeds of the schedule property before the DRT to the credit of the OA R18/1st respondent was discharged from I.A.No.308 of 2013.

12. Further, the petitioner, in the bid for purchase of the schedule property has affirmed that in the event of the bid being accepted, they would deposit 25% of sale proceeds after adjusting the earnest money deposit and thereafter they would pay the balance 75%. This bid form was accepted on 30.08.2013. The terms and conditions of public auction was also accepted by the petitioner wherein it has been stated that the balance 75% of the purchase price shall be paid by the purchaser to the Authorised Officer of the Company on or such 15th day of confirmation of sale of the schedule property or such extended period as agreed upon between the parties. The relevant clauses viz., clause 10 and 12 of the terms and conditions are extracted below:

'10. The said immovable properties described in the Schedule to the Auction Notice shall remain and be at the sole risk of the Purchaser in all respects including loss or damage by fire or theft or other accidents and other risk from the date of the confirmation of the sale by the undersigned Authorized Officer. The Purchaser shall not be entitled to annul the sale on any ground whatsoever.

……

12. For all the purposes, sale of the said properties is strictly on 'as is where is basis and as is what basis'. The Company is not aware of any encumbrances of any nature whatsoever on the aforesaid properties'.

13. The petitioner has sought for time as could be seen from the various averments made by both the petitioner as well as the respondents and the time was periodically extended by one month every time. The petitioner did not pay the amount. When the 1st respondent has forfeited the 25% deposited by the petitioner, it has come forward with this present writ petition. There is no reason why the Indian Overseas Bank was made as a party to this proceedings. The Punjab National Bank has initiated the proceedings. If at all there is any one who is a necessary and proper party, it should be the Punjab National Bank and not the Indian Overseas Bank. For the best reasons known to the petitioner and to get a good conduct certificate the petitioner has made the IOB a party. Knowing that PNB has initiated the original proceedings, after that the petitioner should have made the PNB a party.

14. The Indian Overseas Bank, the 2nd respondent herein did not file any counter and the learned counsel for the 2nd respondent submitted that they are only a formal party and they ought not to have been made as a party to the proceedings at all. Merely because an opinion was given by the Indian Overseas Bank to the petitioner, it will not give the petitioner a right to make that Bank as a party to the proceedings. The conduct and the colour of the petitioner would come to light is the main reason for nor making the Punjab National Bank as a party to the proceedings is the contention of the first respondent and the same, is well founded.

15. Whether the 2nd respondent is a necessary party or not and whether the Punjab national Bank should be made as a party or not need not be gone into this writ petition, as the various averments made in this Judgment would throw light on the conduct of the petitioner. As the petitioner did not deposit the amount within 15 days, on 14.09.2013, the petitioner wrote a letter to the 1st respondent stating that in view of intervening festival and holidays, they need time till the middle of October, so that they can mobilize 75% of the amount, which works out to Rs.13 crores and 35 lakhs and the time was granted till 15.10.2013. Thereafter, the petitioner sought time till 15.11.2013 as the petitioner need to get a legal opinion and that there are about 190 documents handed over to them. This E Mail was followed by the letter dated 16.10.2013. The 1st respondent by letter dated 23.10.2013 granted time till 15.11.2013 and the petitioner did not avail this opportunity. Again, time was extended ill 15.11.2013 for payment of the amount. The petitioner did not pay the amount, but, wrote a letter dated 28.11.2013 stating that due to Dusserah and Diwali holidays on a continuous stretch, the banks were on leave and could not process the loan. None of the Nationalized Banks have declared one month holiday at a stretch to celebrate Dusserah and Diwali in Tamil Nadu is the contention of the learned counsel for the 1st respondent. This contention of the 1st respondent sounds logic. Further, the petitioner also further stated that for the legal clearance by the bank panel advocates, the Bank had requested for production of discharge certificate from SBI for the loans availed by M/s Feather and Touch. The document sought for by the petitioner was given and the time for extension of deposit of 75% towards purchase of the property in auction was given upto 16.12.2013 by the 1st respondent by letter dated 3.12.2013 and a copy of the order dated 25.10.2006 passed by the Debt Recovery Tribunal II, Chennai in SR.no.2893 of 2006 in O.A.No.117 of 2003 was also forwarded to the petitioner. As no amount was forthcoming, the 1st respondent issued a letter dated 30.12.2013, forfeiting the Earnest Money Deposit towards the purchase of property in question. In that letter, they have given various details as to how the time was periodically given to the petitioner and the same was not utilized, but misused by the petitioner in making bald allegations stating that there were no encumbrance and they need no objection certificate from Punjab National Bank etc. On perusing the various documents filed in the typed set of papers, it is crystal clear that there was no encumbrance at all.

16. The Debt Recovery Tribunal Ii, Chennai, by order dated 23.08.2013 has given clean chit, permitting the first respondent to go ahead with the auction and directed to realise their money and in case of excess of sale proceeds, a direction was given to deposit before the Tribunal. However, the learned Senior Counsel for the petitioner had relied on a letter of the Registrar, Debt Recovery Tribunal II, Chennai dated 18.01.2014, wherein it is stated that the interim injunction granted on 5.8.2013 was lifted and the Sub Registration Office, Tiruvottiyur, was directed to delete the entries relating to the attachment of the property.

17. For the sake of convenience, the extracts of the provisions of the Security Interest (Enforcement) Rules, 2002 which deals with the procedure for bringing the immovable secured assets for sale reads as follows:

'8(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 of the said Rules, reads as follows:-

'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 be

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fore 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. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9: Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. (3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty-five per cent of the amount of the sale price, to the authorized officer conducting the sale and in default of such deposit, the property shall forthwith be sold again. (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties. (5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may be subsequently sold. (6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the form given in Appendix-V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. (8) On such deposit of money for discharge of the encumbrances, the authorised officer may issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly. (9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not.' 18. The learned Senior Counsel for the petitioner wanted to rely upon the provisions viz., Rule 8(6)(a) of the Rules and contended that the petitioner ought to have been told about the encumbrances known to the secured creditor. From the narration of events mentioned above, there was no encumbrance at all. Even otherwise, the 1st respondent was not aware of the entry made in the Registry. Further, as could be seen from rule 9, the petitioner could have paid the entire amount and asked the first respondent to lift the so-called encumbrance if any. Dodging and not paying the balance amount of 75% of sale consideration, frustrating the entire auction, is the conduct of the petitioner. The provisions of the Acts and Rules cannot be read in isolation. It has got to be read together. From a reading of Rule 9 of the rules, it is clear that the balance amount purchase price will have to be paid by the purchaser on or before 15th day of confirmation of the sale of the immovable property. Rule 9(4) also says that there may be an extended period as agree upon in writing by both parties. In the case on hand, the time was periodically extended after 15th day viz., 14.09.2013 to 15.10.2013, 15.11.2013 and 16.12.2013. The petitioner did not raise any objection with regard to encumbrance and did not come forward to pay the amount. If the petitioner had already paid the 75% of the amount and if there was an encumbrance, as contended by the petitioner, the petitioner could have asked the first respondent to lift the encumbrance at the cost of the 1st respondent. Instead of doing so, trying to blame the first respondent is not acceptable and not justified. We have to call it as delayed tactics on the part of the petitioner; it is the petitioner who was dodging and trying to induce the 1st respondent to accept a lower price and usurp the property clandestinely. Hence we are of the view that the petitioner is not entitled to any relief on merits in this WP. This finding on merits was invited by the learned Senior Counsel for the petitioner. As we have dismissed the case on merits, we have not rendered any finding about the maintainability of the Writ Petition as preliminary issue. 19. Though we thought of giving benefit to the petitioner by directing the 1sts respondent to return 25% of the bid amount already paid, even though the petitioner is not legally entitled to, so that the first respondent can go ahead and finish the deal with the new buyer, the act of the petitioner made us not to give such relief, but to impose a cost of Rs.25,000/- (Rupees twenty five thousand only) on the petitioner to be payable to the Cancer institute, Madras, within a month. 20. Before concluding, we would like to extract the following observation made by the Hon’ble Supreme court in its decision in 'S.P. Chengalvaraya Naidu (dead) by L.Rs., Appellants –versus- Jagannath (dead) by L.Rs. and others, Respondents' reported in AIR 1994 SC 853, in para 7: '7. ……The principle of 'finality of litigation' cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.' 21. In the result, this writ petition is dismissed with a cost of Rs.25,000/- (Rupees twenty five thousand only) to be paid by the petitioner to the Cancer Institute, Madras within a period of one month from the date of receipt of a copy of this order. The petitioner should hand over a copy of the receipt for having paid the costs to the Registrar General of this Court within the time granted supra. Connected miscellaneous petition is closed.
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