Dismissed

K Rajarajan v. Indian Overseas Bank

DRT21 Dec 2022SA/334/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal disposed of an application seeking to set aside a bank auction sale of immovable properties. The court rejected the applicant's plea for a fresh valuation and dismissed the sale challenge, finding no illegality or irregularity in the bank's enforcement measures.

What did the court decide?

The main sales application and the interim application for fresh valuation were dismissed with no order as to costs.

K Rajarajan versus Indian Overseas Bank — Company and Corporate | DRT (2022)

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IN THE DEBTS RECOVERY TRIBUNAL-I, CHENNAI

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Dated this 21^st Day of December, 2022

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PRESENT: SHRI A.S.JAYACHANDRA

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Presiding Officer

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IA Nos.1025, 1379, & 1380/2022

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SA No.334/2022

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Mr.K.Rajarajan, S/o Mr.A.Kannan, 92-93, Vinayagar Street, Dr.MGR Nagar, Mudaliarpet, Pondicherry – 605004.

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. . . Applicant

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Versus

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The Authorised Officer,

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Indian Overseas Bank, Asset Recovery Management Branch, 3^rd Floor, Central Office Annex Building, 763, Anna Salai,

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Chennai – 600002.

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Dr.K.Saravanan, M/s. Saravana Hospital, Alpet, Gundusalai Road, Cuddalore, 607001.

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Dr.S.Kavitha, W/o Mr.K.Saravanan, Alpet, Gundusalai Road, Cuddalore, 607001.

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M/s.Kun Commercial Vehicles Pvt. Ltd., Rep. by its Managing Director Mr.V.Venkadesh, C-48, 2^nd Avenue, Anna Nagar East, Chennai – 600102. . . . Defendants

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Counsel for Applicant	:-	Mr.A.Arokia Satheesh
Counsel for D1	:-	Ms.Ananda Gomathy
Counsel for D2 & D3	:-	Mr.D.Krishna Pradeep
Counsel for D4	:-	Mr.A.S.Vijayabaskar

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: - O R D E R - :

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By this final order, the petition under Section 17(1) of the SARFAESI Act along with the IAs filed are being disposed of together, in the peculiar facts and circumstances of the case. This is a case involving debt of Rs.155,00,99,256/- and thus retained on the files of this Tribunal.

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The applicant herein challenges the auction sale held on 14.06.2022 consequent to the sale notice dated 24.05.2022 issued by the 1st Defendant Bank and prays for setting aside the same.

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1.2 The defendants 2 to 4 are the auction purchasers. There are three IAs pending adjudication as under which are filed by the applicant.

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a) IA No.1025/2022 - seeking stay of further proceedings pursuant to the sale held on 14.06.2022.

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b) IA No.1379/2022 - with a prayer for a direction to the 1st Defendant Bank to produce the copy of the valuation reports of the schedule property.

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c) IA no.1380/2022 - with a prayer to appoint a Government approved and IBBI certified valuer to take a fresh valuation of the properties.

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1.3 Upon notice, the respondents appeared through their counsel and filed their counter. Ld. Counsel for Defendant No.2 & 3 had filed the order of the Hon’ble High Court of Madras in WP No.23052/2022 wherein it directed the registering authority to

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2.0 Facts leading to the Securitisation Application :- Applicant is the proprietor of

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M/s.Raja Rajan Motors. He obtained a cash credit loan of Rs.79 Lakhs and Term loan of Rs.16 Lakhs on 29.12.2003 by offering collateral security of immovable property situated in Cuddalore. The cash credit loan was enhanced from time to time upto Rs.300 Lakhs by 22.09.2011. The bank had further renewed the limits upto 600 Lakhs and Rs.61 Lakhs respectively by 24.03.2014. The applicant had also started a partnership firm by name M/s.Rajarajan automobiles in the year 2006 with his wife as a partner, for which cash credit loan of Rs.67 Lakhs and term loan of Rs.11 Lakhs along with a letter of guarantee for Rs.50 Lakhs were obtained by the Defendant No.1 on 20.11.2006. These accounts were also renewed by enhancing the loan facilities from time to time which details are superfluous on record.

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2.1 However, the applicant had floated the third partnership firm by name M/s. Rajarajan and sons in the year 2007, which had also obtained certain loans for purchase of loan, construction of show room and other developmental works. Applicant was having the dealer ship from Mahindra & Mahindra Limited and also Bajaj Auto Limited.

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2.2 M/s.Mahindra & Mahindra, encashed the bank guarantee on 24.11.2014. M/s.Bajaj Auto Limited also encashed the bank guarantee by which the business of the applicant crumbled.

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2.3 It is also pleaded that the first defendant bank had linked all the three business loan accounts and did not allow each of the firm to operate separately and thus the

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business collapsed and the accounts became NPA. The bank initiated recovery proceedings in OA No.7/2016 before the DRT which was decreed.

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2.4 After receiving the demand notice in the proceedings, the applicant had made 13 fervent requests with the 1st Defendant Bank between 01.04.2016 till 16.12.2021, for amicable settlement.

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2.5 The first defendant offered the OTS proposal for Rs.32 Crores on 25.02.2020. The same could not be complied due to the Covid - 19 situation. The bank issued willful default showcase notice dated 09.07.2021 and the applicant had deposited 1.975 Crores in no lien account of the prospective buyers on 28.12.2021 and 31.12.2021. It is alleged that the ARMB Branch of the 1st defendant asked the applicant to pay the balance since the 10% of the OTS amount is not deposited. OTS amount was Rs.32 Crores. For renewal of OTS the deposit was asked to be complied. It is pleaded that after the demand notice dated 24.11.2014, willful default notice was issued on 09.07.2021. The bank found out the irregularities after a gap of 8 years and a complaint was also made by the bank without any basis.

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3.0 It is further alleged that the first defendant bank issued the sale notice dated 24.05.2022 and sold the immovable properties for an amount of Rs.7,96,16,000/-, whereas the fair market price is Rs.17,01,00,000/-. Another property was sold for a sum of Rs.6,22,57,000/- whereas the fair market price stood at Rs.21,62,61,000/-. It is alleged that only if the 1st Defendant bank had sold the properties through the Recovery Officer, it would have fetched a better price. Thus being aggrieved by the sale held on 14.06.2022 the present SA is filed on the following grounds.

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4.0 Grounds :-

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4.1 The applicant contends that the sale notice dated 24.05.2022 is barred by limitation, since the possession notice is dated 04.02.2015. It is also pleaded though no specific period of limitation is prescribed under the SARFAESI Act, yet the sale ought to have been completed within a reasonable time.

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4.2 The reserve price of Item No.5 in the sale notice has decreased from Rs.14.06 Crores as on 12.02.2016 to Rs.7.96 Crores by 24.05.2022. Likewise item No.6, which valued Rs.10.70 Crores on 12.02.2016 is reduced to Rs.6,22,57,000 as on 24.05.2022, forgetting the true market value. The sale of both the properties by a mere increase of Rs.1.00 Lakh to a single bidder indicates that the entire transaction is not fair and reasonable.

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4.3 It is also pleaded that the sale held by the Authorised Officer without resorting to the sale under the Recovery Certificate is illegal. The parallel proceedings are permissible only when the OA is pending and not after the Recovery Certificate having been issued. Before heralding the sale no notice was issued to the borrower.

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4.4 Defendant No.1 had conducted the sale after accepting the OTS and sold the property at throw away price, after a gap of eight years. The Authorised Officer has arbitrarily fixed the reserve price at the nominal lowest, when the market value of the property is three times more than the reserve price.

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4.5 The authorised officer has not complied Rule 8(5) to (7) of the Security Interest and (Enforcement) Rules. There was no clear 15 days time from the date of service of the sale notice and that the sale notice was not affixed at the conspicuous place.

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4.6 The authorised officer did not obtain the valuation report from an approved valuer under the wealth tax act. On these grounds, the applicant has filed the IA for direction to produce the valuation reports obtained by the bank in IA No.1380/2022.

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5.0 Contention of the 1st Defendant :-

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5.1 In the counter affidavit filed by the authorised officer, it is stated that classification of the applicant as a willful defaulter has nothing to do with the present SA. It is the case that the sale notice dated 24.05.2022 was delivered to the applicant on 30.05.2022 and the sale was conducted on 16th Day of the receipt of notice. The mandatory period is compiled since the notice was despatched on 27.05.2022.

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5.2 It is submitted that the properties are not undervalued; the reserve price is fixed by the bank after obtaining the valuation reports. The upset price and the market value price cannot be considered as a benchmark for the reserve price, since both are not synonymous.

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5.3 It is submitted that the bank obtained the valuation reports on 22.12.2021 from the certified valuer and that the applicant himself had sent an e-mail admitting the value of the properties as per the reports obtained by the defendant No.1 Bank. It is submitted that there are no legal infirmities in the sale conducted and prays for dismissal of the SA by producing certain documents.

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5.4 The bank had also filed the other valuation reports on 31.10.2022 which are dated 07.05.2022 concerning the properties in Pidagam Village, Villupuram Taluk and Gundusalai (or) Semmandalam Bye-Pass, Uthramanikkam Village, Cuddalore Municipality Taluk and District.

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Orders on IA No.1379/2022 :-

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Since the bank had filed the valuation reports dated 07.05.2022 separately and also the valuation reports under typed set documents dated 10.10.2022, one obtained by Mr.N.Kuppa Rao, Cuddalore, the approved valuer and the other valuation report from Mr.S.Sengutuvan, the IA filed seeking direction for producing the valuation reports is compiled by the bank. Furthermore, in the documents filed by the defendant No.1 bank, a communication addressed by the very applicant dated 08.07.2021 clearly shows that the Villupuram property was fetching Rs.8.02 Crores and Gundusalai property is fetching Rs.6.13 Crores has very much admitted by the very applicant. It is pertinent that the applicant himself had added in writing to his typed letter the following which is addressed to the bank is as follows:-

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“Kindly appreciate that assets value has been gone down due to Covid, so we are not able to pay interest for the period from old sanction till today.”

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In view of the above no fruitful purpose will be served by calling all the valuation reports from the date of loan transaction till the sale held except such of the valuation reports, which are produced and relevant. Therefore no directions can be issued as prayed for in the IA and IA thus stands disposed of requiring no further orders.

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6.0 Case of Defendants 2 to 4 :-

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6.1 On 08.09.2022, the auction purchasers contended that they will sail with the version of the bank and that they do oppose the petition as devoid of merits.

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7.0 Arguments advanced by the Applicant:-

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7.1 The Ld. Counsel for the applicant vehemently contends that his client has made out a case calling for setting aside the sale transaction as illegal based on:-

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(a) That the bank had not obtained the latest valuation reports before conducting the sale.

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(b) That the item 5 of the sale notice had the value of reserve price of 14.60 crores as on 12.02.2016 and the bank had valued the reserve price as under:-

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E-Auction Date	Reserve Price in Rs.
12.02.2016	14,60,00,000
25.11.2016	15,06,00,000
07.02.2019	11,86,86,900
28.03.2019	10,68,18,200
01.10.2019	11,05,25,300
24.05.2022	7,95,16,000

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As regards item No.6, it is pointed out as under:-

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E-Auction Date	Reserve Price in Rs.
12.02.2016	10,70,00,000
25.11.2016	14,42,00,000
07.02.2019	13,63,63,700
28.03.2019	12,27,27,300

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E-Auction Date	Reserve Price in Rs.
01.10.2019	10,10,10,200
24.05.2022	6,22,57,000

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Accordingly to the Ld. Counsel, this itself shows that the properties were sold in a very unfair manner to the detriment of the secured creditor.

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7.2 It is also argued that the e-auction held on 14.06.2022 is bad in law since there was no clear 15 days time allowed from the service of notice. The Ld. Counsel further submits that there was no affixture carried out as required under the Rules and that the sales tax dues are not mentioned in the encumbrances, which makes the sale as opposed to the SARFAESI Act and Rules.

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7.3 He has relied on the counter document filed by the bank to submit that the properties are not properly identified and the photos with regard to the valuation reports are different. The valuers are not approved under the Companies Act amended provisions of 2017. Therefore he prays that a fresh valuation be ordered by this Tribunal for which IA No. 1380/2022 which will be taken up for orders along with the main SA.

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7.4 Ld. Counsel Mr.Sathish had relied on the Division Bench Ruling of the Hon’ble Madras High Court in the matter of M/s.Palpap Ichinichi Software International Limited Vs. Indian Bank in WP No.21987 of 2010 dated 16.09.2011 . The Ld. counsel points out to para - 16 of the ruling wherein it is held that when the land value is increasing day by day it is strange on the part of the authorised officer to obtain a valuation report by reducing the market value by about sixty lakhs that too, after a period of two years and one month from the date of earlier valuation reports. It is argued that this Tribunal cannot remain a mute spectator to such transactions and the same is liable to be set aside.

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7.5 It is also argued that in the circumstances fresh valuation reports are to be obtained to find out the malafides in the valuation reports obtained by the 1st Defendant Bank. The IA No.1380/2022 is filed to appoint a Government approved and IBBI Certified valuer to take fresh valuation of the sold properties for the purposes of this Tribunal to render justice.

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8.0 Arguments advanced by the 1st Defendant:-

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The Ld. Counsel appearing for the 1st Defendant had submitted that there is no irregularity or illegality in the acts of the 1st Defendant Bank. Firstly it was submitted that the earlier transactions to sell the property had failed. Only two properties could be sold. As regards the period of clear notice it is submitted that the sale notice is dated 24.05.2022 and the same was posted on 28.05.2022, for which documents are filed on record. The postal track report shows that the notice was delivered on 30.05.2022. Considering the auction held on 14.06.2022, there has been a clear 15 days notice. It is argued that there is no violation of 15 days time as required under Rule 9(1) of SI(E) Rules 2002. It was argued with the help of rulings that the fixation of upset price is only from the point of intending bidders. The Ld. Counsel argued that the words ‘value’ and ‘upset price’ are not synonymous, but have entirely different meanings. The fixation of the reserve price does not affect the rights of the parties. It was also argued that small errors which will not prejudice the borrowers will not make the mountain out of a mole, to set aside the sale transactions.

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8.1 It is further pointed out that the 1st defendant had filed an additional affidavit disclosing the date of affixture carried on. Such affixture was done on 27.05.2022 and the documents filed by the 1st Defendant shows that the Bank had followed all the norms under SIE Rules. She further submits that the IA filed by the applicant seeking

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appointment of valuer cannot be entertained at this stage since it serves no purpose in a fiat accompli. This court cannot gather evidence by appointing the Court Commissioner or the approved valuer. She prays for dismissal of the SA as well as the IA.

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8.2 The Ld. Counsel relies on the following Rulings:-

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(a) Pegasus Assets Reconstruction P. Ltd. Vs. Haryana Concast Limited & Ors reported in MANU/SC/1489/2015 – To urge that it would not be proper to undermine the value of such auction sale confirmed; the price of immovable property keeps on varying depending upon the market conditions . . . . (Para’s 32 & 33)

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(b) Anil Kumar Srivastava Vs. State of UP & Ano. reported in MANU/SC/0658/2004 – To point out that the fixation of reserve price does not affect the rights of parties.

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(c) Varimadugu Obi Reddy Vs. B. Sreenivasulu & Ors reported in 2022 Live Law (SC) 967 – To explain that an inadvertent error in description of the properties causing no prejudice to the parties needs to be ignored (Paras 36 & 37)

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(d) Dhanalakshmi Bank Ltd. Vs. Saritha Furniture Mart reported in AIR (2006) KER 1975 – To suggest that the court has power to fix an upset price or reserve price and urged that in the instant case the Authorised Officer of the Bank.

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(e) The Kirlampudi Sugar Mills Ltd. Vs. The Recovery Officer, reported in Indian Kanoon Doc/23390667 – Where the ruling of Anil Kumar Srivastava (Supra) is followed and further urged that when no malafides are pleaded, valuation cannot be interdicted.

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9.0 Points for determination :-

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In the context of the above, facts, pleadings and the submissions made on either side, the following points arise for determination in this matter.

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(A) Whether the Tribunal is justified in appointing the approved valuer as requested in the IA No.1380/2022?

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(B) Whether the concluded sale held on 22.06.2022 is opposed to the scheme of SARFAESI Act and the Security Interest (Enforcement) Rules 2002?

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10. Answers to the Points for determination: -

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10.1 Point (A): - As regards the IA seeking appointment of a Government approved IBBI certified valuer to take fresh valuation, the Ld. Counsel for the Applicant submits that Item No.1 of the property situated in Pidagam Village is sold for a meagre amount of Rs.7,96,16,000/- whereas the fair market price indicated is Rs.17,01,00,000/-. Likewise another item No.2 of the property situated in Uthramanikkam, Cudallore Taluk is sold for a mear sum of Rs.6,23,57,000/-, whereas the fair market price was Rs.21,62,61,000/as on the date of the sales. It is argued that, since the Authorised Officer of the Bank is mandated to be present, to identify the property, at the time of valuation, the photographs produced by the valuer do not show the presence of the authorised officer. Therefore, the valuation report cannot be held to be valid under Rule 8(7) of the SIE Rules. In this context, the Ld. Counsel submits that fresh valuation be ordered by appointing the Government approved valuer.

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10.2 This contention is repelled by the Ld. Counsel submitting that no appointment of commissioner could be made by the court or the quasi judicial bodies to gather the

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evidence in support of any of the parties, who are obligated to present their evidence in support of their contentions.

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10.3 Having given careful thought to the contentions on either side, it is seen from the definitions at Rule No.2(d) of the SI(E) Rules, 2002 that “approved valuer” means a person registered as a valuer under Section 34 AB of the wealth tax act 1957 and approved by the board of directors or board of trustees of the secured creditor, as the case may be. This definition is to be properly understood in the context of there being the appellation of approval by the board of directors or board of trustees of the secured creditor. Such of the valuers approved and registered with the authorities could only evaluate the properties for the purposes of SIE Rules. It is seen from the valuation reports that the valuers are approved by the secured creditors. It is for the secured creditor to have satisfied with regard to the registration of such valuer under the wealth tax Act as provided under the Rules. If once, the secured creditor is satisfied with regard to the eligibility of such valuer to be empanelled and approved, none else can impeach such empanelment or approval by the secured creditor. This Tribunal is asked to appoint a Government approved or IBBI certified valuer to take fresh valuation. Such an appointment would be beyond the scope of the SARFAESI Act and SIE Rules which govern the subject in the lis. It is common prudence that the appointment of local commissioner or an expert by the adjudicating authority cannot be allowed to gather the evidence. Suffice it to say that the IA lacks merits for the above reasons and hence this Tribunal is of the considered opinion that such a direction for appointment cannot be issued especially in the peculiar facts of the case which discussion also follows apart from the reasons cited above. Hence point A is answered in the negative and consequently IA stands dismissed.

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10.4 Point No.B :- The Ld. Counsel for the applicant canvassed in the grounds that the Possession Notice was issued on 04.02.2015 and the sale notice was issued on 24.05.2022. It is argued that the reasonable period had elapsed and therefore such sale is barred under limitation. The SARFAESI Act deals with the issuance of demand notice under Section 13(2), which specifies 60 days opportunity to the borrower failing which the secured creditor would be entitled to exercise all or any of the rights under 13(4). It is stated that the secured creditor may take possession of the properties and resort to the measures provided under clause (a) to (d) under Section 13(4). Section 13(4)(b) provides for sale for realising the secured asset. There is no prescribed period limiting the time gap from the date of taking possession and the date of sale of such secured asset. Therefore, it is argued that there being no specific period in the SARFAESI Act, article 137 of the limitation act will be applicable. Such an argument cannot be accepted since the SARFAESI Act and the rules made thereunder is a complete code in itself.

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10.5 The main thrust of the arguments of the Ld. Counsel is that the item no.5 in the sale notice, which was valued at Rs.14,60,00,000/- as on 12.02.2016 is reduced to Rs.7,96,00,000/- by 24.05.2022 and likewise the item No.6 is reduced from Rs.10,70,00,000/- from 12.02.2016 to Rs.6,22,57,000/- as on 24.05.2022 is bad in law is to be looked into. It is submitted that the sale has taken place by a mere increase of Rs.1 Lakhs by a single bidder. This aspect is to be looked into from the context of the facts. It is not in dispute that the borrower had addressed a letter dated 08.07.2021 addressed to the ARM Branch of the 1st Defendant. He has stated in clear terms by adding the hand written portion to the letter to the effect that “kindly appreciate that the assets value has gone down due to the covid, so we are unable to pay the interest for the period from the date of sanction till today”. He has quoted the fair market price of Gundu salai property at Rs.6.13 Crores and Villupuram property at Rs.8.20

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Crores. This letter nails the contention of the applicant. In this context, the ruling of the Hon’ble Supreme Court in Anil Kumar Srivastava (Supra) throws light on the subject with regard to the variation of the upset price and the reserve price. Para - 12 & 13 of the ruling is reproduced for the benefit of understanding the concept of valuation of the properties.

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“12. The aforestated ruling explains the meaning of the term 'reserve price'. It indicates the object behind fixing the reserve price viz. to limit the authority of the auctioneer. In the present case, the board resolution is meant to guide the officers of the second respondent. The resolution prescribes the guidelines for fixing the reserve price. The concept of reserve price is not synonymous with 'valuation of the property'. These two terms operate in different spheres. An invitation to tender is not an offer. It is an attempt to ascertain whether an offer can be obtained with a margin. [See: Pollock & Mulla on Indian Contract & Specific Relief Acts (2001) 12th Edition. Page 50].

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13. Valuation is a question of fact. This Court is reluctant to interfere where valuation is based on relevant material. [See: Duncans Industries Ltd. v. State of U.P. & others reported in (2000) 1 SCC 633]. The difference between valuation and upset price has been explained in the case of B.Susila & another v. Saraswathi Ammal & others reported in [AIR 1970 Madras 357] in which it has been held that fixation of an upset price may be an indication of the probable price which the land may fetch from the point of view of intending bidders. However, notwithstanding the fixation of upset price and notwithstanding the fact that a bidder has offered an amount higher than the reserve/upset price, the sale is still open to challenge on the ground that the property has not fetched the proper price and that the sale be set aside. That the fixation of the reserve price does not affect the rights of the parties. Similarly, in the case Dr. A.U.Natarajan & another v. Indian Bank, Madras reported in [AIR 1981 Madras 151] it has been held that the expressions "value of a property" and "upset price" are not synonymous but have different meanings. That the term "upset price" means lowest selling price or reserve price. That unfortunately in many cases the word "value" has been used with reference to upset price. That the sale has to commence at the higher price and in the absence of bidders, the price will have to be progressively brought down till it reaches the upset price. That the upset price is fixed to facilitate the conduct of the sale. That fixation of upset price does not preclude the claimant from adducing proof that the land is sold for a low price.”

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The applicant has not adumberated to controvert that the similarly situated properties had fetched more than the sold value on that, during such period to which the properties were sold in auction.

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10.6 In a matter of concluded sale, the Tribunals and the law courts do not interfere as a matter of policy, if such auction or sale does not suffer from any illegality or irregularity. Reliance is rightly placed by the Ld. counsel for the Defendant No.1 in Pegasus Assets Reconstruction Ltd. (Supra) , wherein the Hon’ble Supreme Court had held as under:-

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“32. On considering the submissions of parties, we find that the sale confirmed in favour of M/s. Venus Realcon for Rs.32 crores does not require any interference particularly at the instance of Petitioner-Vinod Rajaliwala. There was no illegality or irregularity established against the conduct of auction and once it is found that the offer of Rs.32 crores was a fair offer in a competitive bid conducted fairly and the offer has been accepted and the sale confirmed, it would not be proper for this court to undermine the value of such auction sale conducted not only by the secured creditor but also by the Official Liquidator who was permitted to be associated with the whole process of finding out of valuation as well as the conduct of sale. M/s. Venus Realcon has rightly placed reliance upon the judgments of this court in the case of Valji Khimji & Co. vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. 2008(9) SCC 299 and Vedica Procon Private Limited vs. Balleshwar Greens P. Ltd., 2015(8) SCALE 713. In Valji Khimji, the law was enunciated in Paragraph 28 in the following words:

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“If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulation, but where the auction-sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction- sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they are themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction-sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs.10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.”

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33. In Vedica Procon’s case (supra) the aforesaid view was noticed and after considering many judgments in Paragraph 39, the Court approved the view taken

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in Navalkha and Sons vs. Sri Ramanya Das & Ors., 1969 (3) SCC 537 that there is a discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of sale is made. However, once the Company Court is satisfied that the price is adequate, the subsequent higher offer cannot be a ground for refusing confirmation. The price of immoveable property keeps on varying depending upon the market conditions and availability of a buyer. Such fluctuations may attract fresh higher offers but normally such offers cannot be made the basis for reopening the confirmed sale which was otherwise valid. In the present case, we are satisfied that the sale made in favour of M/s. Venus Realcon does not require any interference. There is no good reason why the full price paid by Venus Realcon should be ordered to be refunded with interest etc. and possession which was delivered to Venus Realcon at the time of sale should be disturbed after passage of so much time. In such circumstances, while granting leave in SLP(C) Nos.117-118, the consequent Civil Appeals are hereby dismissed but without any order as to costs. The money deposited in this case by the intervener M/s. Himalayan Infra Projects Private Limited should be refunded to it forthwith along with interest accrued thereupon.“

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10.7 On the other hand the Ld. counsel for the applicant had relied on the ruling of the Division Bench of Madras High Court in M/s.Palpap Ichinichi Software International Limited (Supra) to submit that when the land value was increasing day by day, it was strange that Authorised Officer obtained valuation report to reduce the market value by Rs.60 Lakhs after a period of two years. It is a case distinguishable by facts. It was a case where there were no bidders in the second auction, the Authorised Officer in all fairness should have postponed the auction. It was a case where the bank was the secured creditor and that the secured creditor bank itself had purchased the property by reducing the value of the property. There were no bidders in that case. In the present case, the reduction of the upset price is in accordance with the market fluctuations which is also expressly admitted by the borrower for which he had written a letter commented earlier while answering Point (A). This is not a case where the secured creditor himself has purchased the property from the borrower. There was a slight increase than the reserve price; the ruling of Pegasus (Supra) discussed above is applicable. Furthermore there were no higher offers. The ruling of the Hon’ble Madras High Court is thus to be understood in the context of the law laid down by the Hon’ble Supreme Court of India.

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10.8 The other contentions that the measures under SARFAESI Act could have not been initiated when the recovery proceedings are going on cannot be accepted since the secured creditor can invoke either of the provisions for the efficacious and expeditious recovery of the debts. The doctrine of election is already settled by he Hon’ble Supreme Court of India in Transcore Vs Union of India reported in 2008(1)SCC 125 in favour of secured creditors

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10.9 The other points canvassed in support of the case of the applicant that the valuation reports on which the secured creditor relied, to sell the property would render the sale void is to be looked at from the logic proposed. The Ld. Counsel submits that since the photographs taken at the spot by the valuer do not indicate the presence of the Authorised Officer, leads to non-identification of the property. This logic cannot be accepted since there is no detailed mandated procedure for evaluation of the properties by the approved valuer. Rule 8(5) of the SIE Rules mandates that before effecting sale of the immovable property, the authorised officer to obtain the valuation of the property by the approved valuer in consultation with the secured creditor fix the reserve price and may sell the whole or any part of such property. There is no mandate that the authorised officer shall be present at the spot, while the photographs being taken by the approved valuer. In this context the recent rulings of the Hon’ble Supreme Court in the Varimadugu (Supra) clearly guides. When the participants in the e-auction are not misguided because of such errors in the description of the property there would be no ambiguity with regard to the property sold. Therefore this Tribunal cannot sail with the argument that the non presence of the authorised officer in the photographs furnished by the bank along with the valuation report or with the affixture report would render the sale in-operative. The authorised officer has filed an additional affidavit with regard to the date of affixture carried out concerning the sale notice.

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10.10 Having gone through the material placed by either side in support of their contentions and the law governing the subject, this Tribunal is unable to find any irregularity or illegality in the measures taken by the authorised officer. Hence the point (B) is answered with a finding that there is no illegality to interfere with the concluded sale. Consequently the following order:-

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IA No.1380/2022 filed by the applicant stands dismissed.

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SA No.334/2022 is dismissed as having no merits.

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Parties to bear their own costs.

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(Dictated to PS, typed in computer, corrected, signed and pronounced by me on this 21^st day of December, 2022)

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Sd/(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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