An ingenious litigant defeating the very purpose for which the SARFAESI Act : SC

SEPTEMBER 23, 2021   

Ace Concrete Private Limited (hereinafter referred to as 'the borrower') was a company engaged in the manufacture and sale of ready mixed concrete. The borrower had availed loans from respondent No.5 –Indian Overseas Bank. Borrower was, therefore, classified as 'Non­Performing Asset (NPA)' on 1.4.2011. On 20.2.2012, the appellants and respondent Nos. 2 to 4 filed a Securitisation Application being S.A.69 of 2012 before the Debts Recovery Tribunal­III, Chennai. The DRT granted an interim stay restraining the respondent Bank from proceeding further with the First Sale Notice dated 21.1.2012. An amount of Rs.1 crore came to be deposited before the DRT, Chennai, in S.A. No. 227 of 2012. This was on the pretext of an ongoing investigation by the CBI with regard to some fraudulent activities of the Officers of the respondent Bank. A sum of Rs.12 crore was paid to the respondent Bank against the sale of mortgaged property. The Madras High Court has restrained the Bank and the auction purchaser from taking physical possession of the mortgaged properties. It has also directed the Debts Recovery Appellate Tribunal, Chennai, to dispose of M.A. No.227 of 2012. C.R.P. PD. No.4410 of 2013 came to be dismissed by the High Court vide order dated 3.12.2013. The same was challenged by the appellants and respondent Nos. 2 to 4 before the DRAT, Chennai. The DRT, Chennai, allowed S.A. No.227 of 2012 and set aside the Second Sale Notice dated 9.7.2012 and consequent sale of the mortgaged properties and imposed cost of Rs.50,000/­ on the Bank for willfully violating the provisions of law. The DRAT, Chennai, allowed both the appeals and set aside the order dated 25.6.2018 passed by the DRT, Chennai. The auction purchaser also challenged the said order dated 6.9.2019. Vide the impugned common order dated 18.11.2019, all the four writ petitions were disposed of. SC observed Section 13 Rule 8 , 9 Of SARFASI Act -  transaction became a nonperforming asset - issued notices - no sale of an immovable property should take place before 30 days -  purpose - the secured asset derives the maximum price, and no one is allowed to exploit the vulnerable situation . Mortgagor debtor - right to redeem the property - if the tender is made by the borrower at the last moment before the sale or transfer - secured asset should not be sold or transferred - right to redemption stands extinguished on the sale certificate getting registered. The right to redemption stands extinguished on the sale certificate getting registered. Appeal Dismissed .

KARTHIK & ORS. 

 VERSUS 

SUBHASH CHAND JAIN & ORS.    

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