Dismissed

Anand Estates v. India Resurgence Arc Private Limited

DRT4 Aug 2025SA/1/2023

Case brief

AI extract

What is this about?

The Tribunal disposed of two applications challenging a sale notice and subsequent certificate under the SARFAESI Act. Rejecting claims of undervaluation and registration defects, the court held the applicant's failure to comply with a stay order rendered setting aside the sale impractical. The concluded sale was upheld as valid.

What did the court decide?

The sale notice, sale certificate, and concluded sale were upheld; the applications were dismissed with costs to each party.

Anand Estates versus India Resurgence Arc Private Limited — Insolvency and Bankruptcy | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUANL – I AT CHENNAI

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DATED THIS 4^th DAY OF AUGUST, 2025

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Present: Shri A. S. JAYACHANDRA Presiding Officer

SA No.1/2023

And

SA No. 16/2023

Between

Anand Estates

Rep. by its Partner, Mrs. A. Padma Manohar, No. 28, New Bangaru Colony, West K.K. Nagar, Chennai – 600 078.

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. . . Common Applicant

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And

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1. The Authorised Officer,

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India Resurgence, ARC Private Limited, 3^rd Floor, Unit – 304, Piramal Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013.

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2. M/s. Gemini Industries & Imaging Limited (under Liquidation)

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Represented by the Official Liquidator Madras High Court, 2^nd Floor, UTI Building, Rajaji Salai, Chennai – 600 001.

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3. M/s. Prasad Properties and Investments Private Limited.,

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Rep. by its Resolution Professional, Mrs. Sripirya Kumar, Old No. 224A, New No.346/1, Avvai Shanmugam Salai, Gopalapuram, Chennai – 600 086.

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4. M/s.Team Diva Realtors Pvt. Ltd.

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At Door No.39, P.S. Sivagamy Salai, Mylapore, Chennai- 600 004. . . . Common Defendants

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COMMON ORDER

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Since the identical facts and grounds are urged arising out of the common cause of action in both the SAs filed under section 17 (1) of the SARFAESI Act by this common order, both are being disposed of.

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GENESIS OF THE CASE.

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1.1 The applicant is the co-borrower cum mortgager. The amount of debt is Rs.230,45,79,696/- as on 31.10.2022. The applicant has challenged the sale Notice dated 15.12.2022 in SA No.1/2023 issued by the Defendant No.1. The Defendants 2 and 3 are the principal borrowers and defendant No.2 is under liquidation. Defendant No.4 is the auction purchaser.

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1.2 The applicant had obtained an interim order of the stay against the sale notification subject to some conditions of deposit vide order dated 20.1.2023 since the sale was fixed to be held on 23.01.2023. The said conditions were not complied. There emerged a successful bidder. The auction purchaser was also brought in as a party as Defendant No. 4.

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1.3 In SA No.16/2023, the same applicant challenges the sale certificate issued dated 13.02.2023 emanating from the sale notice dated 15.12.2023 which he claims to have been put to knowledge only on 27.03.2023 and to pass such other reliefs.

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BRIEF FACTS :-

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2.0. In brief, the common facts are M/s. Gemini Industries (D2) had obtained certain finances from the financier namely Diwan Housing Finance Corporation Ltd. It is pleaded in SA No.1/2023 that the said financial institution, seems to have merged with Defendant No. 1 ARC consequent to the orders of NCLT, Mumbai. The ARC(D1) sanctioned certain loans to D2. In security whereof, this applicant had mortgaged the property. This applicant claims that the loan amount was paid by the principal borrower partly but skipped certain EMIs. Demand Notice dated 12.05.2014 was issued which followed the possession notice. In the meantime, the borrower had entered into a lease agreement dated 23.08.2008 for 29 years and 11 months. The applicant is perplexed to have received the sale notice which he challenged.

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2.1. The grounds to challenge the sale notice are that the ARC had no rights to continue the proceedings initiated by the, the then DHFL. The encumbrances reflected from the revenue records regarding the lease are not mentioned in the sale notice making it invalid. The third defendant facing moratorium and thus the sale notice is opposed to law. The sale notice is opposed to Rule 8(7) of the Security Interest (Enforcement) Rules, 2002 in so far as no affixture having been carried out. The valuation of the property is not matching and lower than 50% of the prevailing market value. There was no proper service of notice by the authorized officer. The provisions under Section 13(8) of the Act are not followed. The exact dues are not mentioned in the sale notice. Description of the property is improper. Dues were not crystallized. There was no registration as required under the Act concerning the security interest. Correct statement of account is not furnished. The classification of NPA is bad in law. There is no valid registration of the assignment deed as required under the Registration Act and particularly Section 28 as amended by the Tamilnadu State Amendment Act.

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3.1. In the grounds urged challenging the sale certificate in SA 16/2023, the Tribunal finds similar grounds concerning the validity, registration of the assignment deed and further apprehended that the property is sold under private treaty. The other grounds are similar as that is found in the earlier SA. It is also urged that the sale is opposed to the law laid down concerning the Registration of Assignment Deed and the property having been sold at rock bottom prices.

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CASE OF THE RESPONDENT NO. 1 :-

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4.1. In the voluminous counter enclosing the documents the defendant No. 1 while refuting the allegation in SA 1/ 2023 submits that the present SA is not maintainable, having suppressed the material facts. It is submitted that Rs.50 crores were sanctioned in the year 2013 and applicant is a defaulter. The applicant failed in challenging the possession notice. This applicant has signed the loan agreement and the documents with M/s DHFCL. The name of the lender DHFCL is re-christened as M/s Piramal Capital and Housing Finance Ltd which had assigned the debt in favour of this respondent vide deed dated 02.08.2022. The same is registered in Bombay and also in Tamilnadu. The monthly installments were not honoured and one cheque got bounced. Demand Notice was issued on 12.03.2014 by DHFCL. Since the same was not complied possession notice was issued on 24.09.2014 which was challenged and the Ld. DRT-2 had dismissed the said SA. The applicant had also challenged the orders of the Ld. CMM and the SA was also dismissed by the ld. DRT. The tenant also challenged the measures initiated to take possession in TSA 17 and 18 of 22 and the same are pending for final disposal.

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4.2. It is also submitted that by virtue of Section 5 (b) of the SARFAESI Act, the respondent No. 1 having acquired the financial assets, is empowered to initiate and continue the proceedings. The Rule 9(7) is strictly followed. The property involved in the sale notice is mortgaged by the Applicant and not by the 3^rd defendant and therefore

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section 14 of IBC does not come into play. The notices were duly sent and the same was received by the Applicant on 19.12.2022 for which the AD cards are produced. The market value of the property is Rs.19.50 crores as per the valuation Report date 30.11.2022. This applicant had offered to settle by One Time Settlement at Rs. 18 crores through the email and therefore the property alleged as undervalued is incorrect to the very standards of the Applicant. The publication of the sale notice was also carried out. The time for redemption is also afforded. The stay order of the Tribunal is also not complied. The amount due is Rs.230,45,79,696/- as on 31.10.2022. There has been no charging of exorbitant interest. The property is properly described. All the sub-rules under Rule 8 are followed. There was a proper stamp duty and proper registration at the jurisdictional Registrars. All the other grounds are denied. This respondent had placed 24 Documents in support of the contention.

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5.1 In the counter filed in SA 16/2023, the first respondent apart from urging the similar contentions had also pleaded that the allegation of violation of Article 300 of the Constitution is denied. The applicant cannot challenge sale certificate having not complied the interim order of the stay. All the grounds in the Appeal are denied and the first Respondent had also filed voluminous Documents.

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CONTENTIONS OF DEFENDANTS 2 AND 3:-

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6.1. The Defendant No. 2 is represented by the official liquidator had filed the status report. It is reported that the movable assets of the Defendant No. 2 is sought to be resold since the bidder has not paid the balance sale consideration fixed by the Hon'ble High Court and the EMD is also sought to be forfeited.

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6.2. The Defendant No. 3 has not filed any counter.

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CONTENTIONS OF AUCTION PURCHASER – D4 IN BOTH THE SAS:-

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7.1. While replying to SA No. 1/2023 the auction purchaser had denied the facts up to the sale notice for want of knowledge and contends that the applicant was aware of the default and there upon the property was sold and rights of this applicant is being invaded by the SAs. The sale certificate having been registered, the right of redemption does not arise. The physical possession is taken over already pursuant to the orders of CMM in the year 2019. It is contended that applicant had filed SA No. 68/2014 which was dismissed on 18.06.2015. It is also urged that the recent ruling of the Hon'ble Supreme Court in Celir LLP is relied and another ruling in ITC vs. Blue Coast Hotels Ltd . is also pressed into service. Certain Documents are also filed.

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7.2 Urging similar contentions in the counter filed in SA 16/2023, the auction purchaser refutes the grounds urged and emphasizes that when once the sale certificate is executed the rights of the petitioner extinguishes.

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POINTS FOR DETERMINATION:-

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8.1. After perusal of the pleadings and documents filed by either side and after hearing the Ld. Counsel for the parties, the following points arise for determination in both the SAs.

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(i) Whether the sale notice is liable to set aside as prayed for in the SA No. 1/2023 as opposed to Law.

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(ii) Whether the SA 16/2023 is maintainable in challenging the sale certificate?

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(iii) Whether the concluded sale is liable to set aside as illegal and invalid in Law for the grounds urged? If so what order?

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ANSWERS ON POINTS FOR DETERMINATION:-

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9.1 Heard the Ld. Counsel Sh. Srinivasan appearing for the petitioner in both the cases. Heard the Defendants through their Ld. Counsel Sh.Praveen and Sh.Suresh, Sh. Navaneethkrishnan and Sh.Anish, Sh.Suresh Babu. The written submissions are also filed.

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SA No.1/2023:-

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10.1 The Ld. Counsel for the Applicant though had questioned the legality of the measures prior to the sale notice, the aspect up to the issuance of the Possession Notice and its legality is already dealt by the Ld. DRT-II, Chennai. In SA 68/2014 filed by the Borrower and also the present Applicant along with another, the Possession Notice dated 24.09.2014 is challenged The same is disposed by the order dated 18.06.2015. It is found from the said order that the Petitioners had also challenged the action taken by the secured creditor under Section 14 of the SARFAESI Act in SA No.68/2015. Thus, noting that the Applicants had challenged the further measures in SA No.68/2015, SA No.68/2014 was disposed by an order dated 18.06.2015 as becoming infrutuous. It is also seen from the documents furnished by the Defendant No.1 that the SA No.68/2015 is disposed by the Ld. DRT-II, by a speaking order. It has dealt the legality and validity of the Orders of the Ld. CMM dated 07.03.2015 and came to a conclusion that the Orders of Ld. CMM cannot be interfered noting that all the requirements under Section 14(2) of the Act was compiled by the Defendant No.1.

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10.2 Since the Orders of the Ld. DRT-II, Chennai dated 18.06.2015 in SA No.68/2014 and the Order of the same date in SA No.68/2015 having become final, this Tribunal cannot revisit with regard to the validity, correctness and propriety of the measures prior to the issuance of sale notice.

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10.3 However, the Ld. Counsel Sh. Srinivasan appearing for the Applicant submits that the sale notice is liable to be set aside by urging several grounds. It is contended that the other co-borrower facing the IBC Proceedings will invalidate the sale notice. It is to be taken from the pleadings that Defendant No.2 is already under liquidation. Defendant No.3 who is not contesting is alleged to be facing the IBC Proceedings. The counter of the Defendant No.1 is very clear that the properties sold under the Sale Notice do not belong to either of the said Defendants. The properties involved in the present SAs belong to the Applicants. Therefore, the contention that there will be a legal impediment on the sale of property belonging to the Applicant cannot be accepted.

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10.4 The major ground upon which Ld. Counsel Sh. Srinivasan assails the sale notice is that the property is undervalued. He has also vehemently submitted that the interest portion is highly exorbitant and the debt is inflated. The principal amount is Rs.48 Crores and the substantial part namely Rs.10 Crores were already cleared. Now showing the debt at an inflated amount of Rs.230 Crores cannot be allowed.

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10.5 The Ld. Counsel for the Defendant No.1 submits that the debt is of the year 2013 and by the letter of the principal borrower dated 01.03.2014 [Defendant No.1] had requested the lender to defer the sale of the properties. The Demand Notice was not complied and the Possession Notice was also issued. It is submitted that the proper accounts are maintained by the Defendant No.1 and the Applicant having not paid the debt in time, the interest part accrued and as on the date of the assignment of the debt in favour of this ARC. The amounts are truly reflected at Rs.221,46,73,322/- as on 31.05.2022. However, the quantum of debt shown in the sale notice cannot be looked into at this stage and the Applicant having not replied to the demand notice and having not raised these issues in SAs No.68/2014 and 68/2015 cannot plead the same in the present SAs challenging the sale notice and the concluded sale.

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ANOMALIES URGED REGARDING REGISTRATION OF THE ASSIGNMENT DEED:-

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10.6 In the course of arguments, the ld. counsel for the applicant submits that the defendant No .1 cannot maintain the sale notice and the measures under the SARFAESI Act for the reasons that the assignment deed is not registered as required under registration Act. It is pointed out that the properties sold is situate in Tamilnadu particularly in Chennai, but the assignment deed is registered at Sub-Registrar, Kurla – II of Mumbai Suburban District.

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10.7 The Ld. Counsel Srinvasan relies on the ruling of the Hon'ble Madras High Court in Veena Textiles Limited Vs. Authorised Officer MANU/TN/1383/2014 to urge that the property in question being situated in the State of Tamilnadu cannot be proceeded under SARFAESI Act. He further submitted that though the subsequent registration in Tamilnadu as pleaded, cannot cure the initial defects. The Ld. Counsel relies on para 14 of the above ruling which read as under:-

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“It is further to be noted that after knowing fully well that the deed of assignment executed on 25.05.2011 is not valid in the eye of law, the parties to the said document have once again entered into another deed of assignment on 04^th October, 2012, at Kumarapalayam of Tamil Nadu State and got it registered at the Sub-Registrar office of Kumarapalayam. Therefore, if at all the first respondent can initiate any proceeding against the petitioners, such right should commence only from the date of the said deed of assignment dated 04.10.2022 and not before that. Admittedly, in this case, the impugned proceedings has emanated consequent upon the said invalid and non est assignment deed on 25.05.2011 only and therefore, it can not be sustained. Therefore, we are of the view that the impugned proceedings are liable to be quashed. Accordingly, the Writ Petition is allowed and impugned proceedings is set aside. It is to the first respondent to proceed afresh against the petitioners, if so warranted, based on the deed assignment dated 04^th , October, 2012. In accordance with law and on such initiation of proceedings, the petitioners are entitled to canvass their contentions in accordance with law. Since we have set aside the impugned proceedings the petitioners are entitled for re-delivery of possession, as the

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possession was admittedly taken in pursuant to the impugned proceedings. Such re-delivery shall be made within a period of two days from the date of receipt of copy of this order. No costs. Consequently, connected miscellaneous petition are closed.”

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10.8 On the other hand the Ld. Counsel for the Defendant No.1 in order to quell the doubts raised by the Applicant in the DB ruling of Veena Textiles (Supra) had relied on the latest ruling of another Division Bench of Hon'ble Madras High Court in M/s.Pondicherry Oxy-Acetylene Private Limited Vs. M/s. Religare Finvest Limited & Ors in WP No.14480/2024 dated 05.06.2024. The relevant observations are:-

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“4. The second ground is not argued. Regarding grounds (iii) and (iv), the learned counsel for the petitioner relied upon a judgment of the Division Bench of this Court in the case of M/s.Veena Textiles Limited v. The Authorised Office, IFCI Limited, Chennai and another [W.P.No.8761 of 2014, dated 01.08.2014]. The judgment relied upon by the petitioner is in respect of the property which is within the State of Tamil Nadu, but registered at Calcutta. Therefore, the Division Bench held that the Assignment Deed executed at Calcutta in respect of a property situated in Tamil Nadu and got registered before the Registering Authority, Calcutta, is void, as such transaction is void in terms of Section 28 of the Registration Act. In this case, the Deed of Assignment was executed by the Finance Company in favour of the 2nd respondent which is registered as an Asset Reconstruction Company in terms of Section 3 of SARFAESI Act. Section 28 of Registration Act as amended by State of Tamil Nadu Act 19 of 1997 with effect from 27.03.1997 reads as follows :

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“28.Place for registering documents relating to land – Save as in this Part otherwise provided ~~

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(a) every document mentioned in clauses (a), (b), (c), (d) and (e) of subsection (1) and subsection (2) of section 17 insofar as such document affets immovable property and in clauses (a), (b), (c) and (cc) of section 18, shall be presented for registration in the office of a SubRegistrar within whose subdistrict the whole or some portion of the property to which such document relates is situate in the State of Tamil Nadu; and

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(b) any document registered outside the State of Tamil Nadu in contravention of the provisions of clause (a) shall be deemed to be null and void.”

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5.As per Section 28 of the Registration Act, every document in respect of immovable property shall be presented for registration in the office of Sub~Registrar where the whole or some portion of the property in respect of

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which the said document relates, is situated. In other words, if a property is to be registered in the SubRegistrar-s Office within the State of Tamil Nadu, whole or atleast some portion of the property to which the document relates, shall situate in Tamil Nadu. In the present case, the Deed of Assignment is in respect of several properties in different places of Tamil Nadu as well as properties in Puducherry. It is not disputed by the petitioner that several properties which are shown in the Schedule to the Deed of Conveyance lie within the jurisdiction of SubRegistrar-s Office, Konnur at Chennai. When a Deed which is required to be registered under Section 17 of the Act contains several properties lying within the jurisdiction of different SubRegistrar-s Offices in the State of Tamil Nadu, it is permissible that the said document can be registered in any SubRegistrar-s Office within whose jurisdiction atleast one property lie. On the facts admitted, this Court is unable to find any illegality or irregularity in the Deed of Assignment which is registered in Chennai which is in the State of Tamil Nadu. Section 28 cannot be interpreted in any other manner applying any principles of law relating to interpretation of Statute. Therefore, the judgment relied upon by the petitioner-s counsel has no other application and this Court is unable to appreciate the ground raised by the petitioner by referring to Section 28 of the Registration Act. The 2nd respondent as an Asset Reconstruction Company steps into the shoes of the lending finance institution by virtue of the Deed of Assignment questioned before this Court. Since the Deed of Assignment is valid and cannot be challenged on the ground that the Deed of Assignment insofar as the petitioner-s property is void, this Court finds no merit in the writ petition.”

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10.9 The Ld. Counsel for the Defendant No.1 Sh.Suresh relying on the above paragraphs submit that since the property is also registered in the State of Tamilnadu, the Judgement in Veena Textiles (Supra) falls into oblivion. Per-contra, Ld. Counsel Sh.Srinivasan for the Applicant submits that since the date of assignment registered at Mumbai is 02.08.2022. The sale notification challenged is dated 15.12.2022. The subsequent registration in Tamilnadu is dated 16.05.2023. He submits that the subsequent registration does not cure the illegality found as on the date of the sale deed and this cannot be treated as a curable defect. On the other hand the Ld. Counsel submits that by way of abundant caution, the assignment deed is also registered in the State of Tamilnadu and the same falls under the law laid down in the subsequent ruling of the Hon'ble DB in M/s.Pondicherry (Supra) .

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10.10. It is to be kept in mind that the amendment to Section 28 of the Indian Registration Act by way of amended Act of State of Tamilnadu Act No.19/1997 had come into effect from 27.03.1997, which is also quoted in the ruling of M/s.Pondicherry (Supra) . This being a amendment by the State of Tamilnadu to the Indian Registration Act, the aspect of Law vis-à-vis, the SARFAESI Act is to be understood. The judgement in M/s.Pondicherry(Supra) does not speak of the validation of subsequent registration. In the ruling of the Hon'ble Supreme Court in Hemaraj Ratnakar Salian Vs. HDFC Bank Ltd. 2021 SCC Online 611 at Para-17 had observed as under:-

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“17. Section 35 of the SARFAESI Act provides an overriding effect over “anything inconsistent contained in any other law”, in the following manner “35. The provisions of this Act to override other laws. The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.” Section 35 is critical to this case and we will examine the conflicting views on Section 35. _ _ _ _ _ _ “

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10.11. The Hon'ble Supreme Court though dealing with the validity of tenancy in case of an un-registered document, had given thought to the eminence of Section 35 of the Act. It has discussed the emergence of this law in Bajarang Shyamsunder Agarwal v.

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Central Bank of India & Anr. (AIR [2019] SC 5017) at Para-12 as under:-

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“12. Before we proceed further, the circumstances which led to the enactment of the SARFAESI Act deserve close scrutiny. The SARFAESI Act was enacted in response to a scenario where slow paced recovery and staggering amounts of nonperforming assets were looming over the banks. In order to overcome the practical reality, and keep in pace with the changing commercial world, Narasimham Committee I and II and the Andhyarujina Committee were constituted by the Central Government to provide solutions for the issues plaguing the banking system of the country. The present Act is a culmination of the suggestions made by the aforesaid committees intended to enable the bank to resolve the issue of liquidity and aim for the reduction in the number of non performing assets. The Preamble to the Act emphasises upon the efficient and expeditious recovery of bad debts. This is also evident from the scheme of the Act.”

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10.12. The ruling of Hon'ble DB in M/s.Pondicherry (Supra) is specific with regard to the non – violability of the Registration. It has held that if the property is situated in Tamilnadu concerning the secured interest and if the registration is carried out, the ruling in Veena Textiles (Supra) is complied, which is seen from Para-5 of the Pondicherry Ruling mentioned above. This Tribunal keeps in mind the Section 35 of the SARFAESI Act and further the Defendant No.1 having carried out the registration in Tamilnadu also, cannot be held as having violated the amended provisions of Section 28 of the Indian Registration Act as applicable to the State of Tamilnadu in Celir LLP Vs. Bafna Motors (Mumbai), (2024) 2 SCC 1 . While discussing the distinction and the specialty of the SARFAESI Act at Para-65 of the ruling, the Hon'ble Supreme Court held that “. . . . .if the general law is allowed to govern the manner as sought to be

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argued by the borrowers, it will defeat the very object, the purpose as well as the clear language of the amended Section 13(8).” Taking note of the object of the SARFAESI Act in the background of rulings of the Hon'ble Supreme Court “in Hemaraj (Supra), Banjarang Shyamsundar (Supra) and Celir LLP (Supra) and further the property situate in Tamilnadu having been registered by the Defendant No.1, it would be very difficult to set aside the sale notice and the concluded sale especially in the context of the Applicant having not complied the interim order of stay and having allowed the sale to take place which also is challenged. Thus the compliance of Section 28 (State amendment) by the Defendant No.1 and non-compliance of the stay order by the Applicant and the Applicant having allowed the sale to take place involving the interest of the bonafide purchaser, and in the back drop of the registration of the assignment deed at Mumbai initially, it cannot be said that the subsequent registration would enable the Applicant to claim the relief of setting aside the sale notice and the subsequent act of the sale. It is relevant to observe in view of Section 35 of the SARFAESI Act, which makes it a distinct code in itself, the subsequent registration enures

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and supplements the earlier registration. The same cannot be held as fatal but a curable defect.

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VALUATION OF THE PROPERTY :-

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10.13. The puissant argument by the Ld. Counsel for the Applicant Sh. Srinivasan is that the property in question is sold at rock bottom price and for a song. The Ld. Counsel for the Defendant No.1 Sh.Rajesh submits that the property is valuated and the market value of the property is less than Rs.19.50 Crores. He relies on the valuation report dated 30.11.2022. He submits that the reserve price is fixed keeping in view of the procurable market value, the market conditions, the location of the property having no proper ingress and egress. It is pointed out in the counter that the Applicant himself through an e-mail had offered to settle under One Time Settlement by offering a sum of Rs.18 Crores, which was not adhered to. These facts according to the Ld. Counsel for D1 establishes that the market value fixed in the sale notice cannot be held as improper.

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10.14. It is also submitted by Defendant No.1 that the property is sold in the public auction for a higher sum of Rs.23.80 Crores, vide sale certificate produced along with the documents of the Defendant No.1. The sale notice fixes the reserve price at Rs.19.50 Crores.

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10.15 The contention of the Applicant is that the property is worth Rs.175 Crores and the sale is held at Rs.23.80 Crores is liable to be set aside. To canvass this contention the Ld. Counsel Sh.Srinivasan has produced private valuation report. The valuation report is perused. It consists of 23 grounds of land and 1090 Sq.ft with certain buildings. The guideline value as assessed by the private valuer of the Applicant, the per ground is valued at Rs.500 Lakhs as on the date of assessment, that is 18.01.2023. It also shows that in the year 2017, the same was at Rs.80.40 Lakhs per ground. Within six years per ground value is projected by this valuer almost more than five times. Per-

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contra, the valuation report furnished by the 1^st Respondent along with the documents filed is seen at Page-307 of SA No.16/2023. The opinion is arrived at a methodology described in the valuation report and the Applicant’s valuation report does not show the methodology. The market value is arrived as per the report that they followed the market value of the land plus building approach on the basis of comparable approach. The building is valuated on the depreciated replacement cost approach. The total fair market value of the land and building is Rs.27.97 crores and the realizable market value is Rs.24.67 crores. The distress value is shown as Rs.19.48 Crores. It is seen that accessibility is through a 30 feet vide Road and the property has relatively flat terrain, contagious and irregular in shape.

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10.16 In this context, the moot point is to find out the reliability of the valuation report furnished by the Applicant. No doubt the valuer of the Applicant had shown the property worth about Rs.175 Crores, which includes buildings. The total area of the property as per the e-auction sale notice measures 23 grounds and 1090 Sq.ft. along with the buildings. The valuation report relied by the Applicant and the details given under the caption “valuation of land” (Page-82 of the SA 16/2023) is perused. The guideline value is shown as 3350 per Sq.ft. The valuation report furnished by the Defendant shows that the land area in total is 59,255 Sq.ft. The market value per Sq.ft. is projected as Rs.3338 per sq.ft.

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10.17. The valuation report furnished by the Applicant only shows that it is done by the guidelines and the local market enquiries. The guideline value is Rs.3350/- per Sq.ft. However, according to the market enquiries the per ground value is taken as Rs.500 Lakhs and came to a fancy figure of Rs.117.27 Crores. If the guideline values per sq.ft. is taken at Rs.3350/-, as seen from the valuation report of the Applicant himself, the same does not differ much with the market value per sq.ft. projected by the Defendant No.1.

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10.18 Apart from the above, the Applicant has not produced any reliable material like the sale deeds of the similarly located properties in the area to evidence that the land was sold at much higher price than the guideline value. Thus, it cannot be said that the property was undervalued especially in the back drop of Applicant himself approaching the Defendant No.1 for One Time Settlement offering Rs.18 Crores to settle the issue of the mortgage. This fact is not denied by the Applicant. In totality of the circumstances, this Tribunal is not inclined to sail with the argument of the Applicant that the property would have fetched a sum of Rs.175.39 Crores.

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10.19 As regards the Registration of the CERSAI, which is disputed, the Defendant had produced the certificate, which shows the original borrower had the CERSAI certification. (Page No.22 of the Counter of the Defendant No.1 in SA No.16/2023)

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10.20 Further arguments of the Ld. Counsel for the Applicant is that the sale deed did not notify the buildings and it is improperly described. After perusal of the description of the immovable property as in the sale deed the buildings and compound walls are described. The same does not invalidate the sale notice.

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10.21. The Ld. Counsel for the Applicant had submitted that the amount of debt shown is inflated, exorbitant and the sale notice concluding the sale is thus liable to be set aside. He had relied on the following rulings.

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(a) Central Inland Water Transport Corportion Vs. Brojo Nath Ganguly AIR (1986) SC 1571.

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(b) Ram Kishun Vs. State of UP (2012) 11 SCC 511.

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(d) Star Trace Engineering Division and Ano. Vs. The Registrar, DRT-II, Chennai & Ors. DB WP No.21546/2023 DD 23.11.2023.

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(e) H.P.Krishna Reddy Vs. Canara Bank AIR (1984) Kar 228.

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10.22 It is to be borne in mind that the Applicant is the co-borrower / guarantor. It is not in dispute that this Applicant was issued with the demand notice. Much water passed under the bridge. The liability aspect is not in dispute. The Defendant had furnished the statement of accounts along with the documents at Page-437 of the counter. This Tribunal is exercising the powers under Section 17(1) of the Act. The correctness of the account or charging of the interest cannot be looked into in the limited jurisdiction to examine the legality, validity and correctness of the measures. The ruling in Central Inland Water Transport Corporation (Supra) has dealt with at Para70 (emphasized by the Applicant) speaks of the contract of employment, whether unconscionable and further the bargaining powers and inequality of power bargaining. The same is distinguishable by facts. In the ruling of Mathew Varghese (Supra) it is no doubt held that the Rule of 30 days mandatory notice from the fresh date of sale is to be followed failing which, such sale would be invalid. The ruling of Ram Kishun (Supra) had held that public money should be recovered expeditiously and the financial institutions cannot be permitted to behave like properly dealers in unreasonable and arbitrary manner without caring for the provisions. In the ruling of H.P. Krishna Reddy (Supra), holds that if it is proved that the bank has charged interest in violation of the RBI Guidelines, the court could grant the relief notwithstanding Section 21A of the Banking Regulation Act. The same is not concerning the SARFAESI Act and hence of no use to the Applicant. Following the ruling of Ram Kishun , the test of arbitrariness and violation of laws is the subject matter, which this Tribunal is answering the Points for Determination. It is already held that the reserve price of the property is based on the valuation reports and the guidelines value per Sq.Ft. is almost matching in both the reports. The galloping rates assessed by the valuation report of the Applicant does not show the circumstances and reasons for arriving at the same in five multiples. There is no reliable and acceptable document to show the higher rates per Sq.ft. to arrive at 117 Crores as per the version of the Applicant. Suffice to say that the rulings urged by the

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Ld. Counsel except Star Trace Engineering Division do not come to the help of this Applicant as they are all distinguishable on facts.

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10.23 The Ld. Counsel for the Applicant submits that the property is not properly described. On going through the description of the property, which also speaks of the super structures found thereon having been mentioned in the sale notice, the same does not invalidate the sale notice.

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10.24 For the aforesaid reasons, on the Point No.1 for determination, this Tribunal is unable to hold that the sale notice issued is opposed to law. Furthermore the sale having been completed, the relief becomes infructuous and hence the Point No.1 is answered in the negative and against the Applicant.

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POINT NO.2:-

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WHETHER THE SA 16/2023 IS MAINTAINABLE IN CHALLENGING THE SALE CERTIFICATE?

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11.1. The Ld. Counsel for the Applicant submits that in view of the ruling in Star Trace Engineering Division (Supra), the sale certificate could be challenged. The issuance of sale certificate is not a measure, but a consequent Act, which does not fall under the provisions of Section 17(1) of the Act as held by our Hon'ble DRAT, the sale certificate is not a measure to be questioned under Section 17 of the SARFAESI Act as held in RA(SA) 186/2018 dated 22.08.2022 and RA No.15/23 dated 24.11.2023. However considering the Applicant having already challenged the sale notice, which proceedings are clubbed together to be disposed by the common order, the same can be looked into while answering the Point No.3.

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POINT NO.3:-

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WHETHER THE CONCLUDED SALE IS LIABLE TO SET ASIDE AS ILLEGAL AND INVALID IN LAW FOR THE GROUNDS URGED? IF SO WHAT ORDER?

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12.1 The Ld. Counsel for the Defendant No.1 & 4 rely on Celir LLP Vs. Bafana Motors 2024 (2) SCC 1 and the Ld. Counsel for the 4^th Respondent Sh.Suresh Babu also relied on Celir LLP Vs. Sumathi Prasad 2024 SCC Online SC 3727 . It is held that the bank is duty bound to follow the provisions of law as any other litigant. The authorized officer cannot in a manner so as to keep the sword hanging on the neck of the auction purchaser as found in Para-105 of the 1^st Ruling. In this ruling the Ld. Counsel for Defendant No.4 submits that the rights of the borrower to redeem the property was available till the sale or transfer as per the unamended provisions. However the amended provisions of Section 13(8) had made it clear that the rights of the borrower to redeem the secured asset stands extinguished on the very day of the publication of the notice. (Para-110.3 of the ruling is read out by the Ld. Counsel for the Defendant No.4). He submits that in view of the above rulings, the Applicant cannot challenge the concluded sale.

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12.2 The Ld. Counsel for D1 also relied on the Celir LLP Vs. Sumathi Prasad 2024 SCC Online SC 3727 and submits that Paras 144 to 150 be looked into. Suffice to say that the Defendant No.1, which had produced voluminous documents in both the cases had produced the acknowledgement of sale notice at Page – 318 onwards and paper publications dated 19.12.2022 at Pages 330 & 331, affixture of sale notices at Page-332 in their counter in SA No.16/2023. The sale notice is perused along with the publications thereof. The sale notice is published on 19.12.2022 in the English and Tamil Dalies. The Possession is already taken. The Applicant having published the sale notices, the rights of redemption is lost. In Para-218 in of the ruling of Sumathi Prasad it is held

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“218. Any sale by auction or other public procurement methods, once already confirmed or concluded ought not to be set aside or interfered with lightly except on the grounds that go to the core of such sale process, such as either be collusive, fraudulent or vitiated by inadequate pricing or over bidding. Mere irregularity or deviation from the rule, which does not have the fundamental procedural error, does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an action, which either could have been taken earlier before the sale was conducted and confirmed or no substantial injury has been caused on such account of irregularity.”

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12.3. In view of the above and after having looked into the question of legality of the sale notice, this Tribunal finds the following inexorable points as under:-

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(a) The Applicant has not complied with the interim orders in SA No.1/2023 dated 20.01.2023 and allowed the sale to take place.

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(b) The grounds urged regarding the mis description of the property and particularly the fixing of the reserve price are not based on any reliable material to believe the grounds.

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(c) The aspect of the overcharging of the interest cannot be looked into in the petitions under Section 17(1) of the SARFAESI Act.

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(d) The concluded sale and the issuance of Sale Certificate is not demonstrated as opposed to the provisions of the Act and the Security Interest (Enforcement) Rules, 2002.

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(e) Section 35 of the Act has over riding effect as held in the subsequent decisions of the Hon'ble Supreme Court.

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(f) Para-218 of the Celir Vs. Sumathi Prasad (Supra) only allows setting aside the concluded sale on the grounds of collusion, fraud or inadequate pricing. Mere irregularity or deviation from a rule, which does not have any fundamental procedural error does not take away the foundation authority for such proceeding.

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12.4 For the aforesaid reasons, this Tribunal does not find any reasons to set aside the sale held and the sale certificate issued thereon. Consequently the following

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: - O R D E R - :

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Both the SAs 1/2023 and 16/2023 stands dismissed. The parties to bear their own costs. All the pending IAs if any also stands disposed off. The interim order granted merges with the final order. Copy of the order be communicated to the parties concerned.

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(A.S.JAYACHANDRA)

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PRESIDING OFFICER

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DRT-I, CHENNAI

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(Dictated to PS, typed by him in the System, corrected, signed and pronounced by me on this 4^th Day of August, 2025)

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Anand Estates v. India Resurgence Arc Private Limited

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Anand Estates v. India Resurgence Arc Private Limited

Case brief

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