Partly allowed

R R Info Park Pvt. Ltd. v. Asset Reconstruction Company India Limited

DRT19 Jul 2023SA/4/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal held that the auction sale was defective due to insufficient 15-day notice under Rule 9(1) of SIE Rules for a subsequent sale. However, instead of quashing the sale, the Tribunal allowed the applicants to retain the property by depositing the sale consideration with interest, prioritizing the completion of the transaction.

What did the court decide?

Applicants directed to deposit sale consideration of Rs. 228 Crores with interest to retain property; alternatively, Defendant No.1 permitted to execute registration in favor of Defendant No.2.

R R Info Park Pvt. Ltd. versus Asset Reconstruction Company… — Company and Corporate | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 19^th Day of July, 2023

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PRESENT: SHRI A.S.JAYACHANDRA

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Presiding Officer

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S.A. No.4 of 2023

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M/s.R.R. Info Park Pvt. Ltd., Rep. By its Director Mr.Ravi Raman, R.R.Skyline, Plot Nos.18,19 and 20(SP), Ambattur Industrial Estate, Chennai – 600058. 2. Mr.R.Ravi, S/o Mr.V.Raman, 54, Beach Road, Kalakshetra Colony, Chennai – 600090. . . . Applicant/s Versus 1. Asset Reconstruction Company (India) Limited, Regd. Office at: ‘The Ruby’, 10^th Floor, No.29, Senapati Bapat Marg, Dadar (West), Mumbai – 400028. . . . Defendant No.1 2. Chettinad Academy of Research and Education, Regd. Office at:Chettinad Towers, 5^th Floor, No.503, Anna Salai, Chennai – 600006. Amended as per Order passed by this Tribunal in IA No.87/2023 on 09.06.2023. . . . Defendant No.2

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Appearance :-

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Counsel for Applicant	:-	Ld. Sr. Counsel Mr.Pramod Khatawi Along with Counsel Mr.S.Shivashankar, Mr.B.Gurumurthy, Mr.NS.Thanu Madhan Of M/s.NATLEGAL.
Counsel for D1	:-	Ld. Sr. Counsel Mr.Srinath Sridevan, Along with Ms.A.Sella Visalakshi & Himanshu Parmar.S
Counsel for D2	:-	Ld. Sr. Counsel Mr.M.S.Krishnan
		Along with Mr.T.Balaji, M.Praveen Kumar
		And R.I.Ramesh.

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: - O R D E R - :

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1.1:- The Applicants challenge the sale notice dated 14.02.2023 issued under Section 13(4) of the SARFAESI Act in this prolix application filed under Section 17(1) of the Act. The sale of the immovable property was scheduled on 03.03.2023.

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1.2 This Tribunal by an order dated 02.03.2023 had passed an order of stay of the scheduled auction subject to certain conditions. It was also made clear that non compliance of the conditions would render the stay a non-est in law. The applicants have not complied with the conditions and the Defendant No.1 proceeded with the auction.

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1.3 Defendant No.2 is the successful bidder and is impleaded in consequence thereof. Both the defendants contested and pray for dismissal of the application.

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2.0 Brief Facts of the Case :-

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2.1 First applicant is the borrower and the 2nd applicant is the guarantor. The first applicant availed the credit facilities under a consortium with different banks and had mortgaged movable and immovable properties to secure the credit facilities of Rs.270 Crores and the repayment was to commence from November, 2007. The accounts were declared NPA and there were demand notices issued from time to time by the banks and the assignees. The demand notices by the consortium dated 15.12.2010 and 24.02.2012 and DRC was issued dated 13.12.2012. One assignee by name ARCIL issued demand notice on 15.03.2022 and another assignee JM FRC issued another demand notice dated 20.05.2022 for different sums. Certain facts are pleaded concerning the different claim amounts, which are not necessary and do not fall for consideration within the scope of Section 17(1) of the SARFAESI Act for the present application.

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2.2 Suffice it to say that the applicant challenges the sale notice dated 14.02.2023 (Mentioned as 14.02.2022 in Para-6 of the application) issued by the Defendant No.1 to the applicants as per the recitals found in the sale notice for recovery of Rs.423,20,24,818.26p being the total outstanding dues as on 13.12.2022.

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3.0 Grounds urged :-

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3.1 The law laid down by the Hon’ble Supreme Court in AIR 1966 SC P 153 in Panduranga Doni Vs. Maruthi Hari Jadhaw and the Section 3 of the limitation act and another case law reported in 2019 (14) SCALE P 38 in Gaurav Har Govind Bhai Dhave Vs. ARCIL on limitation and certain case laws concerning the limitation or elaborately mentioned in the grounds. The diffusive and the totally unconcerned case law which is

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beyond the purview of Section 17(1) is elaborated in the grounds for challenging the sale notice. Many paragraphs of different rulings are reproduced. However the relevant grounds in assailing the impugned notice is made clear in the written submissions filed on 03.07.2023. The relevant grounds urged in challenging the sale notice are:-

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(a) That the lender banks and the Asset Reconstruction Companies have made several attempts to sell the secured asset.

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(b) The sale notice suffers from many infirmities. The valuation report as required under Rule 9(1) of the Security Interest (Enforcement) Rules are not followed to fix the reserve price. The valuation report is not by an approved valuer, such a report is not furnished. Secured creditors were not consulted while the valuation report was obtained. The ruling in Vasu P Shetty Vs Vandana Palace and Ors 2014(5) SCC 60 makes it clear that statutory requirement is mandatory and infraction thereof renders the sale void.

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(c) The Defendant No.1 has not caused publication in two leading newspapers as required under sub-rule 6 of Rule 8 read with Rule 9(1) of SIE Rules. The 15 days mandatory period is not followed. Sale notice published in business standard dated 16.02.2023 provided only 14 days time. The vernacular publication in Dina Thanthi dated 17.02.2023 provided only 13 days period which is in violation of Rule 8(6) and Rule 9 of the SIE Rules.

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(d) Though it is the sixth attempt in selling the properties, the mandatory requirement of service and affixture of the notice and publication of such notice of not less than 15 days as provided under Section 9(1) is not followed. There was no service of notice by all the three modes as required under law.

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(e) The Rules 8 & 9 of the Rules are mandatory in nature and call for strict adherence thereto. Any sale conducted without complying with any of them will be unconstitutional and, therefore, null and void.

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(f) Rule 8(4) of SIE Rules is not followed.

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3.2 The relevant points for consideration in this application are found in the written submission filed by the applicants and the elaborate case law discussed at length in the grounds urged in the application do not touch the scope of the subject on hand.

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3.3 Upon notice the Defendant No.1 had filed the detailed objections. The Defendant No.2 is impleaded by an order dated 09.06.2023 in IA No.87/2023 and consequently the Defendant No.2 has also filed the counter.

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4.0 Contentions of the Defendants :-

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4.1 The Defendant No.1 in its counter denied the contents of Paras 5.1 to 5.97 of the application except the expressed admissions. It is contented that the application is sheer abuse of process of law. The issues raised in Paras 5.1 to 5.97 are nothing but the issues raised in OA No.121/2011 and SA No.4/22. It is pointed out that the applicants had not complied with the order of stay dated 02.03.2023. Certain facts are also discussed. It is submitted that OA No.121/2011 is decreed by the Ld. DRT-III on 13.12.2012 in favour of the lender banks and recovery certificate is also issued. These applicants have not made any payments. By virtue of the assignment deeds, assignees are now enforcing. All the efforts in the past did not materialise for want of buyers.

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4.2 It is further averred that there have been attempts to avert the sale by M/s. Hanudev investments private limited. The auction sale proposed by M/s.JM Financial Asset Reconstruction was challenged in SA No.42/2019 and the said SA came to be withdrawn. Thereafter in the year 2020 applicants proposed for One Time Settlement and because of the default committed by the Applicants, the OTS was revoked in the year 2021.

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4.3 When the lenders attempted to sell by auction notice dated 30.10.2022, M/s. Hanudev investments private limited filed COS No.1906/2022 before the Ld. Commercial Court, Egmore, which refused to grant a stay. The suit was later dismissed on 31.01.2023. M/s.Hanudev Investments Private Limited is controlled by the Applicant No.2 and his wife who tried to sabotage the auction process.

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4.4 The sale notice dated 30.10.2022 is also challenged in SA No. 434/2022 and the same was dismissed on 09.01.2023. The issues raised by the applicants in this petition concerning limitation and the legality of the sale notice under SARFAESI Act were answered while dismissing SA No.434/2022.

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4.5 In the present SA the stay order was not complied by the applicants, therefore the auction took place on 03.03.2023. Sale Certificate is also issued to the successful bidder and the possession is handed over and complete. The issues already dealt in SA No.434/2022 cannot be re-agitated since the same was not appealed. The sale notice is valid and is not barred by limitation.

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4.6 It is also contended that the allegations of sale notice having not been sent by RPAD and that only 13 days time was given resulting in violation of Rule 8(6) r/w Rule

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9(1) of SIE rules are denied as false and frivolous. The notice was issued through courier RPAD and e-mail. The authorised officer had sent the e-mail dated 14.02.2023. Sale intimation was sent on 14.02.2023 through blue dart courier and the same reached the 2nd applicant on 15.02.2023, it was also sent through RPAD. In addition, notice was affixed on the property on 15.02.2023, which fact was intimated through e-mail along with the photos of affixture.

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4.7 It is also stated in the counter that e-mail was sent on 14.02.2023 through courier. E-mail was received by the applicant No.2 who is the Director of the 1st Applicant and 15 days clear time was followed and there is no violation of Rule 8(6) of SIE Rules.

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4.8 The allegation that the present claim in the sale notice must relate to the claim made on subsequent issuance of demand notice dated 15.03.2022 is denied. This Defendant submits that the action taken under SARFAESI Act is for itself and for consortium lenders as adjudicated in the recovery certificate. The allegations made by the applicants relying on Section 18 of the SARFAESI Act are not applicable to the instant case. The other members of the consortium expressly agreed as per the JLM Meeting held on 01.07.2022. The Defendant No.1 had denied each and every allegation made in the grounds, which are out of the scope of Section 17(1) and the same are not recapitulated.

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5.0 The Defendant No.2 filed the counter affidavit submitting that the present application is abuse of process of law and the applicants are misleading the Tribunal. The stay order granted by this Tribunal is not complied by the applicants and the sale took place in favour of this defendant who was the successful bidder. The sale

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notice was published in the web site and also in the newspapers. This applicant deposited EMD of Rs.18 Crores on 27.02.2023. On 03.03.2023 Rs.39 Crores were deposited, the balance amount of Rs.168,75,00,000/- was deposited on 09.03.2023 and the sale certificate was issued in its favour on 13.03.2023. This defendant is put to harassment having duly complied with the conditions of the sale. This defendant had spent huge sums and purchased the subject property. The applicants are resorting to vexatious litigations having not complied with the stay order. It is contended that this defendant is given to knowledge that the applicants have not complied with the provisions of Section 13(8) any time before the publication of notice. The status quo order passed by this Tribunal be vacated and dismiss the present application.

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6.0 The applicant and the defendant No.1 had relied on the documents filed by either side, which will be discussed in the course of this order.

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7.0 After completion of the pleadings, the matter was heard. After careful perusal of the application and the counters filed and after listening to the Ld. Sr. Counsel and the Counsel appearing on either side the following two points arise for consideration in this application, which are:-

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(i) “Whether the impugned sale notice dated 14.02.2023 is opposed to the provisions prescribed under the SARFAESI Act and the Security Interest (Enforcement) Rules?

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(ii) If so, what relief?”

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8.0 Contentions of the Applicants :-

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8.1 The Ld. Sr. Counsel appearing for the Applicant Shri. Promod Khatavi and Shri.B.Gurumurthy pointed out that the sale notice dated 14.02.2023 had fixed the sale to be held on 03.03.2023. According to him, the same is not in accordance with the provisions of Rule 9 of the Security Interest (Enforcement) Rules, 2002. Rule 9(1) reads as under:-

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‚9. Time of sale, issues of sale certificate and delivery of possession, etc.— (1) No sale of immovable property under these rules shall take place before 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.

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PROVIDED FURTHER that if sale of immovable property by any one of the methods specified by sub-rule(5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.‛

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8.2 According to Rule 9(1), the sale has not taken place at the first instance; the subsequent sale is required to be conducted again. In such an event, the authorised officer is mandated to serve, affix and publish notice of sale of not less than 15 days to the borrower for any subsequent sale. It is pointed out that notice was served to the borrower on 17.02.2023. This period is less than 15 days. Therefore, it violates the proviso to Rule 9(1). He also points out that publication of notices in vernacular language is dated 17.02.2023 and in English newspapers is 16.02.2023, which also is less than 15 days. According to him, affixture was never done. The other grounds to challenge the sale is that the property is valued approximately Rs.600 Crores for which the applicant has filed a separate valuation report at his behest, which shows the market value at Rs.591,76,00,000/-. This valuation report is dated 08.06.2023 i.e. after filing of

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the application. He contends that since the reserve price fixed by the authorised officer is Rs.180 Crores, he contends that the property is grossly undervalued. It is also his contention that there is violation of Section 13(9) of the SARFAESI Act. The Ld. Sr. Counsel submits that the ruling relied by the counsel for Defendant No.1 in S.Karthik and Others Vs. N.Subash Chand Jain and Others reported in (2022) 10 SCC 641 , is not applicable to the present case since Rule 9 of SIE Rules is amended with effect from 18.10.2018 and the law laid down by the Hon’ble Supreme Court therein never differed from the ruling of Vasu P. Shetty Vs. Hotel Vandana Palace and Others reported in AIR 2014 SC 1947 . According to the Senior Counsel Shri. Pramod Khatavi, there has been no impediments from the end of the applicant though the sale notice was challenged thrice. The statutory period as provided under Rule 9 read with Rule 8(5) & (6) are not adhered to. The secured creditor was not consulted before obtaining the valuation report. The Ld. Sr. Counsel submits that the entire transaction is vitiated for non compliances of statutory mandate. It is also submitted that for counting the clear fifteen days time, we must exclude the date of sale. He relied on the following rulings:-

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I Mathew Verghese Vs. M.Amirtha Kumar (2014)5 SCC Page No.610 II P.Magudeeswaran Vs. The Authorised Officer, Lakshmi Vilas Bank - WP No.8020 of 2017 before Madras High Court.

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III Vasu P. Shetty Vs. M/s. Vandana Palace & Others [Reported in (2014) 5 SCC Page No.660]

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IV Judgement rendered by the Hon’ble High Court of Kerala in the case of E.K.Rajan Vs. The Authorsied Officer - WP (C) No.27485 of 2021.

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8.3 It is argued that though the applicant had questioned the sale notices in the past, the same cannot be held as causing impediment to the process of the sale. The attempts made by the Defendant No.1 to sell the property did not fructify due to no response from the auction purchasers. Therefore, it is argued that the case of S.Karthik

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cannot be equated with the facts of the present case. It is also argued that the ruling of the Supreme Court in S.Karthik was the subject with regard to the sale that took place in 2012. Since the ruling is distinguishable based on facts, this Tribunal is persuaded to distinguish the case law. The case law in P.Magudeeswaran (Supra) is relied to follow that the first and last day of the month is to be excluded in understanding the usage of words ‚not being less than one month‛. This ruling is relied to urge that the words used in Rule 9(1) should be understood in the context of Para-31 of the ruling, which reads as under:-

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‚30. Proviso, to Rule 9 (1) of the Rules, makes it clear that if sale fails, for any reason, which could be due to any unavoidable circumstances like the one stated supra, the sale is required to be conducted again and the authorised officer shall serve, affix and publish notice of sale of not less than 15 days, to the borrower, for any subsequent sale. In the light of the judgments, cited supra, as per the proviso to Rule 9(1) of the Rules, inserted with effect from 03.11.2016, 15 days clear notice is required to the borrower, which on the facts and circumstances of the case, has not been done.

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Mere publication of notice of sale in newspapers alone is not sufficient. Notice of sale, has to be served on the borrower. In the case on hand, notice for sale, fixed on 6/12/2016 is stated to have been served. But when the sale could not take place, on 6/12/2016, Bank has adjourned the same to 7/12/2016, and that there is no notice on the borrower. The word 'or' used in Rule 9(1), has to be read as 'and' which requires sufficient notice to the public, as well as to the borrower.

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The procedure regarding service, affixture and public notice of sale, as contemplated in Sub-Rule (1) of Rule (9) of the Security Interest (Enforcement) Rules, 2002, has to be repeated, when sale has to be effected on any subsequent date, but with a clear notice of sale of not less than 15 days to the borrower. When the statute contemplates a procedure, which has been now declared as mandatory, the same has to be done, in the manner and not otherwise. On this aspects, few decisions can be considered,

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(i) In T.Ramamoorthy v. The Secretary, Sri Ramakrishna Vidyalaya High School, etc. & Others reported in 1998 Writ. LR 641, at Paragraph 6, held as follows:

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"If the statutory provision enacted by the Legislature prescribed a particular mode for terminating the service or dismissing the teaching or a non-teaching staff of a

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school, it can and has to be done not only in that manner alone, but it cannot be done in any manner too. This principle that where a power is given to do a certain thing in a certain way, things must be done in that way and not otherwise and that the other method of performance is necessarily precluded, is not only well settled, but squarely applies to this case also in construing the scope of the power as also its exercise by the management under Section 22 of the Act."

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(ii) In U.P. State Bridge Corpn. Ltd. v. U.P. Rajya Setu Nigam S. Karamchari Sangh, [(2004) 4 SCC 268], the Hon'ble Supreme Court, at Paragraph 12, held as follows:

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Although these observations were made in the context of the jurisdiction of the civil court to entertain the proceedings relating to an industrial dispute and may not be read as a limitation on the Courts powers under Article 226, nevertheless it would need a very strong case indeed for the High Court to deviate from the principle that where a specific remedy is given by the statute, the person who insists upon such remedy can avail of the process as provided in that statute and in no other manner.

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(iii) In Captain Sube Singh v. Lt. Governor of Delhi [(2004) 6 SCC 440], the Hon'ble Supreme Court, at Paragraph 29, held as follows:

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In Anjum M.H. Ghaswala, a Constitution Bench of this Court reaffirmed the general rule that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. (See also in this connection Dhanajaya Reddy v. State of Karnataka.) The statute in question requires the authority to act in accordance with the rules for variation of the conditions attached to the permit. In our view, it is not permissible to the State Government to purport to alter these conditions by issuing a notification under Section 67(1)(d) read with sub-clause (i) thereof.

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(iv) The Hon'ble Supreme Court in State of Jharkhand v. Ambay Cements reported in 2005 (1) CTC 223, at Paragraph 27, held as follows:

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"27. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation and where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case of obtaining prior permission is

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mandatory, therefore, non-compliance of the same must result in cancelling the concession made in favour of the grantee-the respondent herein."

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(v) In Pandit D Aher v. State of Maharashtra reported in 2007 (1) SCC 437, the Hon'ble Supreme Court, at Paragraph 19, held as follows:

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"When an employee, by reason of an alleged act of misconduct, is sought to be deprived of his livelihood, the procedure laid down under the sub rules are required to be strictly followed. It is now well settled that a judicial review would lie even if there is an error of law apparent on the face of the record. If statutory authority uses its power in a manner not provided for in the statute or passes an order without application of mind, judicial review would be maintainable. Even an error of fact for sufficient reasons may attract the principles of judicial review."

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8.4 Reliance is placed on Vasu P. Shetty and urged that the provision of Rule 9(1) is mandatory in nature and it is for the benefit of the borrower and this applicant had never waived such right. The rights are recognised under the ruling. He relied on Para - 17 of Vasu P. Shetty, which reads as under.

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17. This Court, after interpreting the provisions of Rule 9, returned a categorical opinion that the said provision is mandatory in nature. It was further held that even though this Rule is mandatory, that provision is for the benefit of the borrower. The Court held that it is a settled position in law that even if a provision is mandatory, it can always be waived by a party (or parties) for whose benefit such provision has been made. The provision in Rule 9(1) being for the benefit of the borrower and the provisions contained in Rule 9(3) and Rule 9(4) being for the benefit of the secured creditor (or for the benefit of the borrower), the secured creditor and the borrower can lawfully waive their rights. These provisions neither expressly nor contextually indicate other wise. Obviously, the question whether there is waiver or not depends on the facts of each case and no hard and fast rule can be laid down in this regard.

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8.5 The ruling of Mathew Vargese is pressed into service to urge that unless the statutory period of notice is given to the borrower no sale or transfer can be resorted to by the secured creditor.

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39(14). A right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the

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provisions of a statute. (Vide Lachhman Dass v. Jagat Ram and State of M.P. v. Narmada Bachao Andolan ) Thus, the condition precedent for taking away someone’s property or disposing of the secured assets is that the authority must ensure compliance with the statutory provisions.

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Para 40 of the above ruling is also brought to the notice to urge that the right to hold the property is a constitutional as well as human right and if the procedure occurred the sale is to be set aside.

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The above principles laid down by this Court also makes it clear that though the recovery of public dues should be made expeditiously, it should be in accordance with the procedure prescribed by law and that it should not frustrate a Constitutional Right, as well as the Human Right of a person to hold a property and that in the event of a fundamental procedural error occurred in a sale, the same can be set aside.

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8.6 The ruling of the Hon’ble Kerala High Court in the case of E.K.Rajan is cited, which held that the provisions of Rule 9(1) of SIE Rules must be followed. He relies on the ruling to urge that Mathew Vargese conferred a power to the borrower to redeem the property till the sale took place and that the sale held on 15th day of service is held as not obeying the mandate of sub provisio to Rule 9(1) which commended ‚Notice of not less than 15 days‛.

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Paras 15 to 18 of the above ruling read as under:-

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‚15. While rendering the judgement in Mathew Varghese case, the provisions of section 13(8) of the Act gave power to the borrower to redeem the property till the last minute before the sale takes place. It is after noticing the aforesaid statutory right that the Supreme Court held that there must be 30 days' clear notice before the sale takes place. However, in 2016 an amendment was brought to section 13(8) of the Act and the right to redeem the property was made available only till the date of publication of notice for public auction (see the decision of this Court in Sree Gokulam Chit and Finance Co. Pvt. Ltd. v. Emil and Eric Hospitality Services and Others (2021 (6) KLT 673). The said amendment was brought into force by Act 44 of 2016 with effect from 01-09-2016. In spite of the aforesaid amendment having been brought into effect from the date as aforementioned, Rule 9 of the Rules, when amended with effect W.P.(C)

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No.27485/21 from 04-11-2016, still stipulated that there must be a 30 days clear notice for the sale at the first instance and also a notice of not less than 15 days for subsequent sales. The intention is clear that the notice of 30 days in the first instance and the notice of 15 days for subsequent sales cannot be tampered with.

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In the instant case on a perusal of Ext.R(d) acknowledgement card, it can be assimilated that the notice of sale was served on the petitioner only on 23-112021. The sale that took place on 08-12-2021 was thus on the 15 th day of service of notice. The statutory requirement of 15 days clear notice or "notice of not less than 15 days" is not seen to be satisfied. The situation would be different if the delay in service of notice was on account of the petitioner's default or that petitioner evaded the service of notice till 23-11-2021. There is no pleading in the counter affidavit of the respondent that the petitioner had evaded service of notice till 23-11-2021. It is also not pleaded by the respondent that notice was issued to the petitioner sufficiently early to satisfy the statutory requirement of 15 days' clear notice.

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A reading of the proviso to Rule 9(1) of the Rules makes it explicit that the authorised officer must serve, affix and publish the W.P.(C) No.27485/21 notice of sale of not less than 15 days to the borrower, for any subsequent sale. The word 'serve' relates to personal service of notice, affixture relates to the notice being affixed on the property and the publication relates to the publication of notice in the newspaper dailies. The conjunction 'and' employed in the proviso also indicate the mandatory nature of all three methods of notice. Further, in spite of the amendment to section 13(8) of the Act, the proviso to Rule 9(1) mandates the three methods of serve, affix and publish the notice to be carried out, with 15 days clear notice. In the instant case, there is a failure on the part of the respondent to serve notice of not less than 15 days upon the petitioner. Therefore the notice of sale is bad in law. Ext.P3 and the consequent sale are therefore liable to be set aside.

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The decision in S. Karthik & Others v. N. Subhash Chand Jain and Others (AIR 2021 SC 4559) is clearly distinguishable in law as well as on facts. In the said decision, the Supreme Court was considering a case of sale that took place in 2012 in which the proviso to Rule 9(1) was not in existence. As the law then stood, the notice of sale required only 30 days notice and there was no reference to such a notice period for any subsequent sales. Further, W.P.(C) No.27485/21 factually, the borrower, in that case, had managed to delay the conduct of sale by methods solely attributable to the borrower. It was in such circumstances, that the Court held that there was no necessity to provide 30 days' notice for the second sale. In the instant case, the proviso to Rule 9(1) of the Rules incorporated in 2016 mandates notice of not less than 15 days to be served

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on the borrower for subsequent sales. Thus the said decision is inapplicable to the facts of the present case.‛

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9.0 Contentions of Defendant No.1

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9.1 The Ld. Sr. Counsel Mr.Srinath Sridevan appearing for Defendant No.1 points out that the service of notice by e-mail was compiled on 14.02.2023 and affixture was carried on 15.02.2023, the publication in English daily is dated 16.02.2023 and the Tamil daily is on 17.02.2023. Sale is held on 15th day and he submits that the sub-proviso to Rule 9(1) does not speak of publication at all. The Ld. Counsel submits that after reading the provisions of Rule 6(2), Rule 8(2) and 8(6) of the SIE Rules, he submits that the rigours of the entire process like service, affixture and publications is not to be insisted on in subsequent sale. Even if the publication in the local daily is held as insufficient notice of clear 15 days, there is no mandate under the proviso to Rule 9(1) that the publication is ordered in vernacular and English daily. The Ld. Sr. Counsel appearing for Defendant No.1 heavily relied on S.Karthik and Others Vs. N.Subash Chand Jain and Others to submit that the Hon’ble Supreme Court Bench of three Ld. Judges after considering Mathew Varghese case, had held that the borrower who was only interested in protracting the litigation and aimed to unsettle the successful auction purchaser emerged cannot be allowed to scuttle the completed process.

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‚121. If we look at the facts in the present case, it would show that, every attempt has been made to frustrate the purpose of theSARFAESI Act. The respondent Bank was required to indulge in three rounds of litigations, out of which, the two have reached upto this Court.

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Though the auction purchaser emerged as the successful bidder, in the bids held on 20.7.2012, and though the sale was confirmed on 21.7.2012, and though the sale has been registered in his favour on 14.9.2012, for a period of last 9 years, he could not enjoy the fruits of the said sale. Not only that, but the

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appellants continued to enjoy the rent of the properties, the ownership of which vests in the auction purchaser.‛

¶105

9.2 The Ld. Sr. Counsel points out that on 02.03.2023 a conditional order was passed staying the sale notification and these conditions were not complied in this case and the sale had taken place. The auction purchaser is impleaded as second defendant. The applicants did not remit the 5% of the debt amount on or before 11.00 AM on 03.03.2023 and the remaining 15% within 60 days thereof. Rule 8(5) of the SIE Rules and sub-rule 6 show that public notice is to be issued as per Appendix IV-A to be published in two leading newspapers. He further points out that Rule 9 gives a waiver to the publication in the newspapers and specifically draws a line between the public and the borrower. It gives a loud clear definition that in the eventuality of the sale fails under any of the methods, specified under Rule 8(5) then the authorised officer is required to ‚serve, affix and publish notice of sale‛ of not less than 15 days to the borrower means all the three methods are towards the borrower and not to the general public. It is submitted that the present challenge made is with regard to the 7^th time auction. According to him applicants were served by courier on the 7^th time on 14.02.2023. The 15 days clear notice is followed, the applicant approached the Tribunal on 24.02.2023. That shows that he was very much aware of the intended sale within ten days of the service of notice. He got an opportunity to stop the auction subject to paying 5% of the debt and 60 days time was given by this Tribunal to deposit 15% of the balance debt amount. These rights protected by the Tribunal were not utilised by the applicants therefore the present sale cannot be set aside on technicalities.

¶106

9.3. The Ld. Sr. Counsel appearing for Defendant No-1 had further argued that the applicants herein are ineligible for any countenance by this Tribunal for they have been trying to stop the recovery with malafide intentions. He points out that earlier the

¶107

¶108

auction prior to assignment in the year 2011 was challenged in SA-169/2021 and the same was dismissed by the Tribunal in February 2012. Likewise two attempts to sell the property at the pre assignment stage during September 2012 and January 2013 failed. It is also pointed out M/s Hanudev Investments Pvt Ltd in C.S.(Comm.Div.) No.636 of 2018, had try to stop the auction to be held on 17.09.2018 and the Hon’ble Madras High Court allowed the lenders to sell the mortgaged properties by an order dated 20.12.2018. Again the proposed sale to be conducted on 01.03.2019 was challenged by M/s Hanudev Investments Pvt Ltd and the re-auction was found to be in-conformity with the earlier order.

¶109

9.4 While elaborating the efforts to stop the sale, it is also submitted that the very applicants herein have filed SA-42/2019 before the Ld DRT-III and the same was dismissed as withdrawn. Another suit filed by M/s Hanudev Investments Pvt Ltd in COS1906/2022 was dismissed by the Ld Commercial Court, Egmore vide order dt 31.01.2023 as becoming infructuous. Further attempt was made by the same applicants in SA No.434/2022 filed before this Tribunal and the same was dismissed on merits by an order dated 09.01.2023.

¶110

9.5. The Ld. Senior Counsel had also relied on the documents showing the dates of publication in the two dailies including vernacular. The defendants had also filed the company master data showing that the Applicant No-1 company consisted of Directors Ravi Raman (Applicant No-2) and Ganesh Venkateshwaran.

¶111

9.6. The Ld. Sr. Counsel had also relied on Haru Das Gupta Vs The State of West Bengal (1972) 1 SCC-639 to urge that where a period of time running from a given day or event to another day or event is prescribed by law or fixed by contract and the question arises whether the computation is to be made exclusively or inclusively of the first mentioned or last mentioned day, regard must be had to the context and the

¶112

¶113

purpose for which the computation has to be made. It held that ‚The rule is well established that where a particular time is given from a certain date within which an act is to be done, the day on that date is to be excluded.‛

¶114

9.7. The Ld senior counsel also demonstrated that the Applicant No-1 and 2 are the part and parcel of M/s. Hanu Dev Investment Pvt. Ltd which is a shadow of Applicant No-1 company that has been impeding the process of recovery from time to time and therefore he submits that the ruling in S.Karthik supra squarely applies to the instant case and therefore the application be dismissed.

¶115

10.0 CONTENTIONS OF DEFENDANT NO-2

¶116

10.1. The Ld counsel appearing for D2 and the auction purchaser submits that the words used ‚to the borrower‛ under rule 8(6) of the SIE Rules speak of notice and its service to the borrower of 30 days while the proviso to Rule 9(1) of SIE Rules does not speak of appendix IV A, which is the format of sale of notice of immovable properties. It is submitted that the format provided is applicable to Rule 8(6) only and since the Rule 9(1) or its proviso does not have the mandatory effect since no format of the notice is made out in the SIE Rules. The Ld. Counsel appearing for defendant No-2 submits that the proviso to rule 9(1) is only a directory and not mandatory. He submits that the notice of sale published had lured the Defendant No.2 and as a bonafide purchaser huge investments were made and the sale cannot be set at naught for technical reasons. He also points out the sale certificate is issued.

¶117

10.2. The Defendant No.2 in its written arguments submits that the notices being spoken to at Rule 8 and sub proviso to Rule 9(1), gives a waiver to the publication in the newspapers and specifically draws line between the public and the borrower. It is submitted that if the sale fails under sub rule 5 of Rule 8 the authorised officer is

¶118

¶119

required to serve, affix and publish the notice of sale which means all the three methods of service are given to the borrower and not the general public when the first instance fails. The question of publication does not arise exclusively to the borrower. It is pointed out that the present SA is the seventh attempt.

¶120

10.3. It is further argued that on the failure of the applicants to redeem, the rights of the 3^rd parties are flown which are now crystallised by the sale certificate in favour of second defendant. This defendant submits that the sale notices dt 14.02.2023 is published in the website of D1 and in the English newspaper on 16.02.2023. Huge sum is mobilised by Defendant No-2 which had complied all the terms of sale. The prayer of the applicant on the technicalities be not entertained under vexatious litigation of the applicants who could not pay even 5% of the debt as per the interim order before the auction was set into motion.

¶121

11.0 ANSWERS TO POINT NO-1.

¶122

11.1 While answering Point No-1, the scope of this Tribunal is constricted to the point as to, ‚whether the measures taken by the Defendant No-1 is in accordance with the act and the SIE Rules.‛ Admittedly the earlier sale notices issued did not fructify. The provisions of Rule 9(1) of the security interest Rules come into play:-

of sale of not less than fifteen days to the borrower, for any subsequent sale.‛

¶127

11.2. The proviso to sub rule 1 of Rule 9 makes it mandatory that in the event where the sale is to be so conducted again, the authorised officer shall serve, affix and publish notice of sale of not less than 15 days to the borrower for any subsequent sale. By the documents furnished by the defendant no-1, the date of sale notice is 14.02.2023. The auction was to be held on 03.03.2023. It is to be noted that this comprises of a threefold duty;

¶128

SERVICE:-

¶129

a) The notice is served by E-mail as per the documents filed at annexure 8 of D1. After perusal of the document at Page No-70, it is seen that one Abhishek Kumar had sent the E-mail on 14.02.2023 at 7.04 pm.

¶130

b) The service by way of courier is heavily relied by the Defendant No-1 at Page-71 to 73. Though at Page no-71 the name of the consignee is mentioned as Ravi Raman which was delivered on 15.2.2023 was received by one Muniyan. The Ld. Counsel for D1 submits that this Muniyan is the person found at the time of delivery and the same cannot be denied. The other notice sent to Applicant No-1 is delivered on 15.2.2023.

¶131

c) It is pointed out that the Applicant No-1 had left the address and the postal receipts are filed. The service to the applicant No-2 by post has also come back with remark of addressee having left.

¶132

d) It is only through Blue dart courier tracking report, it is seen that notice is delivered on 15.02.2023 to the addressee.

¶133

When perused, the notice sent through the courier is not served on the person of Applicant No.2 i.e. Mr.Ravi Raman, but served on one Mr.Muniyan. But considering the provisions of Rule 2(A), the notices sent through electronic mode is permitted and

¶134

¶135

therefore it cannot be said that the applicants had not been served with clear 15 days time under this mode.

¶136

AFFIXTURE:-

¶137

The document at Page-75 shows that the affixture is carried on 15.02.2023 at 9.36 AM. Page-76 of the defendants documents shows that the enlarged photo at Page-75 affixed at the gate and also clearly indicates about the intended sale on the sheeted compound. Date of service is taken as 15.02.2023.

¶138

It is vehemently argued by the applicant counsel that the affixture was not carried out and that the applicants submit that the contention of the Defendant No.1 with regard to the affixture of notice cannot be believed. In the documents filed by the Defendant No.1 vide Page-75 of the typed set, the said document is self-explanatory and that the affixture was carried out on 15.02.2023. Mere denial of non-affixture will be a self-serving testimony of the applicant and the documents filed by the Defendant No.1 cannot be ignored, which is supported by the affidavit of the Authorised Officer. It is also stated in the affidavit of the Authorised Officer dated 25.04.2023 that the carrying out of the affixture was also intimated to the applicant vide e-mail dated 15.02.2023 to the effect that the notice was affixed on the site is supported by a document at Annexure -10 in the affidavit. Therefore, this Tribunal cannot ignore the fact that affixture was carried out in accordance with the rules. The self-serving testimony of the applicant cannot be the basis to hold that the affixture was not carried out in the backdrop of the documentary evidence.

¶139

PUBLICATION:-

¶140

It is not in dispute that the publication is effected in:-

¶141

(i) English daily Business Standard Dt. 16.02.2023

¶142

¶143

(ii) Vernacular Daily Thanthi dated 17.02.2023.

¶144

The auction was conducted on 03.03.2023.

¶145

From the above, it is clear that if the date of publication is excluded:

¶146

(i) Publication in English daily gives 14 days time.

¶147

(ii) Publication in Tamil daily gives 13 days time to the borrower.

¶148

11.3 From the above, it is clear that the service and affixture is in accordance with the SIE Rules. Whereas the documents on record will establish that the publication is not affording a clear 15 days, as required under the Rule 9(1) and its sub-proviso.

¶149

11.4 Ld. Sr. Counsel for the Applicants urge that the Ruling in S.Karthik supra is not applicable to the present case. He canvasses that S.Karthik’s case dealt with unamended provisions of Rule 9 of the SIE Rules and therefore he submits that the Ruling in Mathew Varghese (Supra) of the Hon’ble Supreme Court comes into play. He also submits that the very ruling distinguishes the Mathew Varghese case. He submits Para - 55 to 57 of S.Karthik’s case is ponderable.

¶150

The most relevant observation of this Court could be found in paragraph 53 of the judgment in the case of Mathew Varghese (supra), which reads thus:

¶151

‚53. We, therefore, hold that unless and until a clear 30 days' notice is given to the borrower, no sale or transfer can be re sorted to by a secured creditor. In the event of any such sale properly notified after giving 30 days' clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable to the borrower, the secured creditor cannot effect the sale or transfer of the secured asset on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure pre scribed above will have to be followed

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¶153

afresh, as the notice issued earlier would lapse. In that respect, the only other provision to be noted is sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as sub-rule (8) is concerned, the parties referred to can only relate to the secured creditor and the borrower. It is, therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under Rule 8 read along with Rule 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Sections 13(1) and (8) of the said Act.‛ (Emphasis supplied)

¶154

This Court, in unequivocal terms, held that unless and until a clear 30 days' notice is given to the borrower, no sale or transfer can be resorted to by a secured creditor. It further held that in the event of any such sale properly notified after giving a 30 days' clear notice to the borrower did not take place as scheduled for reasons, which cannot be solely attributable to the borrower, the secured creditor cannot effect the sale or transfer of the secured asset on any subsequent date by relying upon the notification issued earlier. This Court held that once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed will have to be followed afresh.

¶155

In the light of these observations, we have to consider the factual position in the present matter.

¶156

11.5 In order to support his contentions, the Ld. Sr. Counsel for the applicant relied on the unreported ruling of the Hon’ble Kerala High Court in WP No.27485/2021 in the matter of E.K. Rajan Vs Authorised Officer (DD 18.05.2022) . At the cost of repetition Paras 17 of the said Ruling is emphasised, which reads as under:-

¶157

‚17. A reading of the proviso to Rule 9(1) of the Rules makes it explicit that the authorised officer must serve, affix and publish the W.P.(C) No.27485/21 notice of sale of not less than 15 days to the borrower, for any subsequent sale. The word 'serve' relates to personal service of notice, affixture relates to the notice being affixed on the property and the publication relates to the publication of notice in

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¶159

the newspaper dailies. The conjunction 'and' employed in the proviso also indicate the mandatory nature of all three methods of notice. Further, in spite of the amendment to section 13(8) of the Act, the proviso to Rule 9(1) mandates the three methods of serve, affix and publish the notice to be carried out, with 15 days clear notice. In the instant case, there is a failure on the part of the respondent to serve notice of not less than 15 days upon the petitioner. Therefore the notice of sale is bad in law. Ext.P3 and the consequent sale are therefore liable to be set aside.‛

¶160

11.6 On the other hand, the Ld. Counsel appearing for D1 subscribes to the view that the notice to the borrower under the substituted proviso to sub-rule (1) of Rule 9 had not expressly provided any statutory notice though it is mentioned as serve, affix and publish the sale notice. He submits that publication becomes immaterial when notice is served through the other modes. It is his argument that the maxim ‘expressio unius est exclusio altering’, (the express mention of one thing implies the exclusion of another) will come to play since the appendix to the Rules at VI A (referring to Rule 8(6) i.e. a format of sale notice - is not provided in the very Appendix concerning the notice to be issued under sub-proviso to sub-rule 1 of Rule 9. However, he argues that the noncompliance of 15 days had not caused any prejudice to the applicants. Furthermore, the Ld. Sr. Counsel appearing for the Defendant No.1 had invited the attention of this Tribunal to the various litigations resorted to by the Applicants and its shadow in the name of M/s.Hanu Dev Investments Private Limited by giving details of the earlier litigations, which had thrown a spoke into the wheels of recovery proceedings earlier. He relies on S.Karthik’s case and submits that the earlier efforts by the Authorised Officer to sell the property was thwarted by the Applicants to frustrate the recovery and in such an event, this Tribunal is asked to identify the blame created by the borrower if such undue interference and attempts to scuttle the process of sale is attributable to the borrower, such borrower is frowned upon and the technicalities are to be ignored.

¶161

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11.7 The arguments by the Defendant that the legal maxim ‘expressio unius est exclusio altering’ does not arise for consideration since Rule 9(1) after the amendment Act, 2018 has not excluded anything and particularly the notices. The Ruling of the Hon’ble Kerala High Court in E.K.Rajan case at Para-17 assumes the significance. It held therein that Rule 9(1) makes it explicit that the Authorised Officer must serve, affix and publish the notice of sale of not less than 15 days to the borrower, for any subsequent sale. The word ‘serve’ relates to personal service, ‘affixture’ relates to the notice being affixed on the property and the ‘publication’ relates to the publication of notice in the news papers dailies. It noted that the conjunction ‘and’ employed in the proviso also indicate the mandatory nature of all three methods of notice. Therefore, the application of legal maxim becomes out of place. It is mandated that all the three modes of notice to take effect becomes mandatory.

¶163

11.8 As regards the law laid down by the Hon’ble Supreme Court in S.Karthik case, it is urged by the applicants that the same is not applicable to the present case since the ruling was rendered on the unamended provisions of Rule 9(1) of SIE Rules. The Ld. Counsel for the Defendant No.1 submits that the ruling squarely applies to the present case. In the identical situation, the Hon’ble Kerala High Court had noted the following, which will guide this Tribunal. (Para - 18 of E.K. Rajan)

¶164

‚18. The decision in S. Karthik & Others v. N. Subhash Chand Jain and Others (AIR 2021 SC 4559) is clearly distinguishable in law as well as on facts. In the said decision, the Supreme Court was considering a case of sale that took place in 2012 in which the proviso to Rule 9(1) was not in existence. As the law then stood, the notice of sale required only 30 days notice and there was no reference to such a notice period for any subsequent sales. Further, W.P.(C) No.27485/21 factually, the borrower, in that case, had managed to delay the conduct of sale by methods solely attributable to the borrower. It was in such circumstances, that the Court held that there was no necessity to provide 30 days' notice for the second sale. In the instant case, the proviso to Rule 9(1) of the Rules incorporated in 2016 mandates notice of not less than 15 days to be served

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¶166

on the borrower for subsequent sales. Thus the said decision is inapplicable to the facts of the present case.‛

¶167

11.9 In view of the ruling of the Hon’ble Kerala High Court, paving the way to understand S.Karthik’s case, it is imperative to hold that the provisions to Rule 9 are mandatory in nature. Such Rule being the provision enacted for the benefit of the borrower has to be followed.

¶168

11.10 It is to be noted with regard to M/s.Hanudev Investments Limited, of which the 2nd Applicant is also a Director therein, the sale notice itself had made it clear at the Page - 2 of the Sale Notice, the following:-

¶169

‚In addition to the above mentioned outstanding dues of the Consortium, there is a pari passu charge for an amount of Rs.50,00,00,000 (Indian Rupees Fifty Crore Only) along with interest (if any) in favour of one Hanudev Investments Private Limited as set forth in the order of the Hon’ble Debts Recovery Tribunal, Chennai dated 13.12.2012 in OA No.121 of 2011. In accordance with the orders of the Hon’ble HighCourt dated 20.12.2018 in OA No.854-855 of 2018 in CS No.636 of 2018, JM Financial Asset Reconstruction Company Limited has been permitted to proceed with the present sale, and JM Financial Asset Reconstruction Company Limited has given consent to Arcil to proceed with the sale of the aforesaid property for itself and the Consortium, with disclosure of the aforesaid order. Hanudev Investments Private Limited’s paripassu charge will be cleared proportionately in accordance with order of Debts Recovery Tribunal, Chennai dated 12.12.2012 in OA No.121 of 2011.‛

¶170

Having noted the above, it is clear that the Defendant No.1 while issuing the sale notice had taken cognizance of certain rights of M/s.Hanudev Investments Private Limited which were also followed by the Defendant No.1 as per the orders of the Hon’ble High Court in OA 854-855/2018. The recognition of the rights by the Hon’ble High Court concerning M/s.Hanudev Investments Private Limited, which is honoured by Defendant No.1 shows that the said M/s.Hanudev Investments Private Limited, of which the Applicant No.2 is the Director had not been clapping single handed in the wind to sabotage the rights of the secured creditor. The vindication of certain legal rights by the

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¶172

said entity cannot be treated as creating a hurdle in the process of recovery resorted to by the Defendant No.1. The other applications filed under Section 17(1) of the SARFAESI Act by the present applicants if looked into would show that SA No.169/2011 was dismissed and SA No.42/2019 was dismissed as withdrawn, SA No.434/2022 challenged was dismissed on merits. The party agitating certain rights on different causes of action among which one was recognised by the Hon’ble High Court of Madras as noted by the Defendant No.1 itself shows that the Applicants had made efforts to legally challenge the sale attempts by the Defendant No.1, but the same cannot be held as attempt to delay the conduct of sale, solely attributable to the applicant/ borrowers. Therefore with utmost respect to the law laid down by the Hon’ble Supreme Court in S.Karthik case and further taking guidance from the ruling of Hon’ble Kerala High Court in E.K.Rajan, this Tribunal is of the opinion that S.Karthik’s case is distinguishable on facts.

¶173

11.11 Suffice it to say that the Defendant No.1 had not complied with the clear 15 days notice from the dates of publication, which renders the sale conducted defective and as opposed to the sub-proviso to Rule 9(1) of the SIE Rules. In the circumstances, the Point No.1 is answered holding that the sale notice is violative of Rule 9(1) of SIE Rules.

¶174

12.0 POINT No.2 :-

¶175

12.1 Relief :-

¶176

While moulding the relief, the provisions of Section 17(3) of the SARFAESI Act needs to be taken note of:-

¶177

‚1 7(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of

¶178

¶179

section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made there under, and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower or other aggrieved person, it may, by order,-

¶180

(a) declare the recourse to any one or more measures referred to in sub-section(4) of Section 13 by the secured creditor as invalid; and

¶181

(b) restore the possession of the secured assets to the borrower or restore the management of the secured assets to the borrower, as the case may be, and

¶182

(c) pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.‛

¶183

The said proviso at Para (c) above, empowers the Tribunal to pass such other directions as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor.

¶184

12.2 It is also worthwhile to quote the observations of the Hon’ble Supreme Court in S.Karthik’s case at Para 118, 119 and 120, which cannot be ignored while granting the reliefs in the Petitions filed under Section 17(1) of the SARFAESI Act. The relevant paragraphs are:

¶185

‚118. It is further relevant to note that, this Court in the case of Dwarika Prasad (supra) and in the case of Shakeena (supra) held that the right to redemption stands extinguished on the sale certificate getting registered.

¶186

We will have to take into consideration the purpose with which theSARFAESI Act came to be enacted. Unlike international banks, the banks and financial institutions in India did not have power to take possession of securities and sell them. It was, therefore, noticed, that it had resulted in slow pace of recovery of defaulting loans and mounting levels of nonperforming assets of banks and financial institutions.

¶187

¶188

It was also noticed that there were certain areas in which the banking and financial sector did not have a level playing field as compared to other participants in the financial markets in the world. It was further noticed that the existing legal framework relating to commercial transactions had not kept pace with the changing commercial practices and financial sector reforms. As such, theSARFAESI Act was enacted with the purpose for securitization and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the Court.‛

¶189

12.3 The sale certificate is issued and Possession is handed over to the Defendant No.2. The Sale Certificate is not registered.

¶190

12.4 Having noted the above though the point no.1 is answered in favour of the Applicants, this Tribunal cannot shut its eyes with regard to the observation of the Hon’ble Supreme Court that the existing legal framework relating to commercial transactions had not kept pace with the changing commercial practices. Therefore, relief striking down the sale simplicitor without conditions would not be appropriate since huge amount of public money is involved. As provided under Section 17(3)(c) certain directions appropriate and necessary to the emerging situation is to be properly incorporated, while moulding the relief.

¶191

12.5 Section 17(3) of SARFAESI Act, having empowered under Sub-para (c) that the Tribunal may pass other directions that the Tribunal deems fit in such circumstances, the present application is being disposed of by passing the following order:

¶192

: - O R D E R - :

¶193

The Application filed by the applicants SA No.4/2023 is disposed of with following conditions:-

¶194

a. The Applicants are directed to deposit the entire sale consideration of Rs.228 Crores with the Defendant No.1 [being the sale price deposited by the Defendant

¶195

¶196

No.2] herein within 30 days from the date of this Order along with interest @9% p.a. from the date of auction till the date of such deposit.

¶197

b. After such deposit, the secured asset be put to the Possession of applicants. If the entire mount so deposited the Defendant No.1 is directed to refund to Defendant No.2 within two days.

¶198

c. If the amount is not deposited within 30 days, the Defendant No.1 is permitted to execute the Registration of the Sale Certificate in favour of Defendant No.2.

¶199

d. It is also made clear that no extension of time to deposit the amount will be entertained.

¶200

e. In the event of the applicant depositing the above amount directed, the sale certificate issued by the Defendant No.1 in favour of D2 shall stand cancelled and further in such an event, the interest part on the above amount is directed to be paid to the Defendant No.2 towards the cost of this litigation.

¶201

f. The applicants and Defendant No.1 shall bear their own costs.

¶202

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

¶203

(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 19^th Day of July, 2023)

¶204

R R Info Park Pvt. Ltd. v. Asset Reconstruction Company India Limited

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R R Info Park Pvt. Ltd. v. Asset Reconstruction Company India Limited

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