Dismissed

N.G Vijayalakshmi v. the State Bank of India

Kerala HC5 Mar 2018WA/417/2018

Case brief

AI extract

What is this about?

The High Court of Kerala allowed a writ appeal challenging a single judge order that dismissed a petition seeking to quash a notice for selling a secured asset via private treaty after public auction failures, rejecting the claim of illegal unilateral reserve price revision.

What did the court decide?

Writ appeal dismissed; judgment of the learned Single Judge upholding the private treaty sale stands affirmed.

N.G Vijayalakshmi Vs the State Bank of India — Execution and Attachment | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE THE CHIEF JUSTICE MR.ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU

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MONDAY, THE 5TH DAY OF MARCH 2018/14TH PHALGUNA, 1939 WA.No. 417 of 2018 IN WPC. 38297/2017

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AGAINST THE JUDGMENT IN WP(C) 38297/2017 of HIGH COURT OF KERALA DATED 28-11-2017

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APPELLANT/PETITIONER IN WPC:

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N.G VIJAYALAKSHMI W/O. K.P.R PILLAI AGED 78 YEARS THARANGAM HOUSE MANNIKATH ROAD RAIVPURAM, KOCHI- 14

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BY ADV.SRI.SAJEEV KUMAR K.GOPAL

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RESPONDENTS/RESPONDENTS:

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THE STATE BANK OF INDIA STRESSED ASSETS RECOVERY BRANCH M.G. ROAD, ERNAKULAM- 682 011 REPRESENTED BY THE CHIEF MANAGER

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THE AUTHORIZED OFFICER THE STATE BANK OF INDIA STRESSED ASSETS RECOVERY BRANCH M.G ROAD, ERNAKULAM- 682 011

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R BY SRI.S.EASWARAN, SC, SBI

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Antony Dominic, C.J. & Dama Seshadri Naidu, J.

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W.A.No.417 of 2018

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Dated this the 5^th day of March, 2018

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JUDGMENT

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Antony Dominic, C.J.

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The appeal arises from the judgment of the learned Single Judge dismissing Writ Petition No.38297 of 2017. The appellant, the guarantor of a loan availed by the defaulter, filed the writ petition at a time when the secured asset was brought to sale in a proceedings under the SARFAESI Act, seeking to quash Ext.P2 notice and to declare that the said notice issued to effect the sale of the secured asset by private treaty is illegal and against Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the 'Rules' for short). By the judgment under appeal, the learned Single Judge dismissed the writ petition. It is this judgment which is challenged before us.

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We heard the counsel for the appellant and the learned counsel appearing for the respondent bank.

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Before us, the main contention raised by the learned

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W.A.No.417 of 2018 2

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counsel was with regard to the unilateral downward revision of the reserve price by the bank. Counsel contended that it is clear from the provisions of Rules 8 and 9 of the Rules framed under the SARFAESI Act that any revision of the reserve price was permissible only with the consent of the defaulter. It was argued that, admittedly the appellant had not consented to the revision of reserve price and that any sale effected on the basis of the reserve price so fixed is illegal and the learned Single Judge should have held in favour of the appellant. This plea of the appellant was resisted by the learned counsel for the bank and according to it, the revision of the reserve price and the sale of the property in favour of the third party, who is not before this Court, is fully justified.

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We have considered the submissions made. On facts, we

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find that initially 2,02,00,000/- was fixed as the reserve price of the property in question. With that reserve price, sale was attempted on three occasions but for want of buyers, it had to be adjourned. Finally, the bank reduced the reserve price to 1,81,00,000/-. Accordingly, sale notice was issued and on this

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W.A.No.417 of 2018 3

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occasion also, the sale had to be adjourned for want of bidders. Again, sale was attempted on 6.9.2017 and the outcome of the sale was not different. In such circumstances, the bank had to sell the property by private treaty as provided in Rule 8(5)(d) of the Rules for `1,81,00,000/- which was the reserve price fixed for the property. As regards the contention that the bank had unilaterally revised the reserve price without obtaining the consent of the defaulter, according to us, there is nothing illegal in such a course of action adopted by the bank. Rule 8(5) of the Rules provides that before effecting the sale of immovable property, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of the immovable secured asset by anyone of the methods specified in Rule 8(5). Rule 9(2) says that sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor. The first proviso to this Rule says that if the

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W.A.No.417 of 2018 4

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sale price is less than the reserve price specified under Rule 8(5), the sale under Rule 9 shall not be confirmed. The second proviso says that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and secured creditor effect the sale at such price. These are the only provisions in Rules 8 and 9 dealing with fixation of reserve price. These rules do not recognise any role to the defaulter and as far as the revision is concerned, the secured creditor is entitled to revise the reserve price in the manner as provided in the Rules and there is nothing preventing such a revision.

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We agree with the learned counsel for the appellant that in Rajiv Subramaniyan v Pandiyas [(2014) 5 SCC 651], the Apex Court has held that the secured creditor has expected to make bona fide measures to ensure that there is maximum yield from the secured assets of the borrowers. While we have no doubt that this is too well settled principle of law, in so far as the facts of this case are concerned, we do not think that the secured creditor has failed to adhere this legal principle.

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We are not impressed that the appellant has made out a case

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W.A.No.417 of 2018 5

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for interference and according to us, the learned Single Judge is fully justified in declining interference. Therefore, the writ appeal

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is dismissed.

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Sd/-Antony Dominic Chief Justice

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Sd/- Dama Seshadri Naidu Judge

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css/

N.G Vijayalakshmi v. the State Bank of India

Case brief

What is this about?

What did the court decide?

N.G Vijayalakshmi v. the State Bank of India

Case brief

What is this about?

What did the court decide?

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