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Gujarat High Court · body

2009 DIGILAW 673 (GUJ)

ZARIFKHAN J. PATHAN v. ICICI BANK LIMITED

2009-10-12

D.A.MEHTA

body2009
( 1 ) RULE. In light of the controversy involved in the petition and the view that the Court is inclined to adopt, the petition is taken up for final hearing and disposal today. Learned advocates appearing for respondents are directed to waive service of rule. ( 2 ) BEFORE proceeding with narrating the facts and the contentions of respective parties it is required to be noted that after hearing the parties Civil Application No. 11176 of 2009, whereby Samrat Namkin Private Limited, the applicant therein, has been permitted to be impleaded as respondent No. 2 in the main petition in light of the facts which will be recorded hereinafter, stands allowed. Hence, learned advocate appearing for respondent No. 2 has also been heard at length. ( 3 ) IT is necessary to note that the petition was heard at length yesterday, viz. 11. 11. 2009, and as the Court working hours were over the matter was kept overnight part heard with intimation to the learned advocates that the matter shall be proceeded with peremptorily at 10:30 a. m. Learned advocate for respondent No. 1-Bank, who was addressing the Court on 11. 11. 2009 when the day was over has not turned up when the matter has been called out and a request for passing over the matter has been turned down in the circumstances. It is necessary to also note that at 11:30 a. m. when the court commenced the judgment after hearing learned advocate for respondent No. 2 and learned Senior Advocate appearing for the petitioner in rejoinder, learned advocate for respondent-Bank is yet absent. Thereafter, when the judgment was almost over learned advocate turned up and informed that the matter had been transferred to another learned advocate and hence, he did not remain present. No appearance has been filed by any other advocate and none has remained present. ( 4 ) THE petitioners herein are directors of one private limited company by the name of Zarf Dairy Private Limited. Respondent-Bank took over the account of unpaid loan of the Company to the tune of Rs. 1. 65 crores and odd from Bank of Baroda sometime in 2003. A further loan of Rs. 2. 85 crores was also advanced by respondent-Bank. Various movable and immovable properties were hypothecated / mortgaged with respondent-Bank. Two such immovable properties being land bearing sub-plot No. 16 paiki admeasuring 400 sq. 1. 65 crores and odd from Bank of Baroda sometime in 2003. A further loan of Rs. 2. 85 crores was also advanced by respondent-Bank. Various movable and immovable properties were hypothecated / mortgaged with respondent-Bank. Two such immovable properties being land bearing sub-plot No. 16 paiki admeasuring 400 sq. yards with the construction of residential bungalow situated at Village Maktampura, Taluka, City Registration District Ahmedabad belonging to the petitioner No. 1 and land bearing sub-plot No. 18 admeasuring 513 sq. yards alongwith the residential bungalow situated at Village Maktampura, Taluka, City Registration District Ahmedabad belonging to the petitioner No. 1 and 2. ( 5 ) IT is not in dispute that the Company failed to discharge its liability and hence, action was initiated under provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Securitisation Act) by respondent-Bank. After statutory notice under Section 13 (2) of the Securitisation Act followed by notice under Section 13 (4) of the Securitisation Act dated 06. 11. 2008 the petitioners undertook to hand over the possession of the properties in question to respondent-Bank on 08. 01. 2009. On 10. 01. 2009 a public notice inviting bids for holding public auction on 21. 01. 2009 was issued but no bids in response were received. On 30. 07. 2009 the petitioners, through the Company made an offer of settling the account on a one time basis by paying Rs. 2. 01 crores towards all outstanding dues. On 31. 07. 2009 the said offer was revised to the tune of Rs. 2. 25 crores. Respondent-Bank made a counter-offer to increase the offer by the Company by another sum of Rs. 24,00,000/ -. On 04. 08. 2009 the petitioners received a letter intimating the petitioners that the properties in question were sought to be sold to a prospective buyer who had made an offer to the tune of Rs. 2. 15 crores and the bank intended to accept the said offer. The petitioners were invited to either confirm the said sale or offer a higher price failing which, the respondent-Bank would conclude the sale in favour of the prospective buyer. On 06. 08. 2009 the petitioners informed the bank that the petitioners were not interested in confirming the sale in favour of the prospective buyer and made a counter-offer for a sum of Rs. 2. 18 crores. On 06. 08. 2009 the petitioners informed the bank that the petitioners were not interested in confirming the sale in favour of the prospective buyer and made a counter-offer for a sum of Rs. 2. 18 crores. The petitioners also reiterated the offer made by the Company to settle the account at a sum of Rs. 2. 25 crores. However, on 10. 08. 2009 respondent-Bank rejected the offer of the petitioners and also rejected the offer of One Time Settlement made by the Company. According to respondent-Bank, the offer made by the petitioners did not disclose the payment schedule and did not offer a reasonable amount and hence, the rejection. At this stage the petition has been preferred. ( 6 ) LEARNED senior advocate appearing for the petitioners initially assailed the act of respondent-Bank in rejecting the offer made by the petitioners submitting that no valid reasons were advanced for rejecting the highest offer made by the petitioners and the property of the petitioners could not be disposed of for a lesser amount as the respondent-Bank was trying to do. It was also contended that respondent-Bank had failed to comply with statutory requirements of Rules 8 and 9 of the the Security Interest (Enforcement) Rules, 2002 (the Rules) in as much as no notice under sub-rule (6) of Rule 8 of the Rules had been issued and there was nothing on record to indicate even compliance with provisions of sub-rule (5) of Rule 8 of the Rules. A grievance was also made that the notice issued on 06. 10. 2008 (Annexure-C) was a common notice, both under sub-rules (1) and (6) of Rule 8 of the Rules and hence, could not be treated to be a valid notice in eyes of law. Learned counsel, therefore, submitted that respondent-Bank be directed to sell the property to the petitioners at a sum of Rs. 2. 18 crores or at such reasonable price which the Court thinks proper considering the facts of the case. Simultaneously, it was pleaded that respondent-Bank be restrained from parting with the property in question in favour of either respondent No. 1 or any other person. ( 7 ) ON behalf of respondent-Bank learned advocate submitted that notice dated 06. 10. 2008 was admittedly a possession-cum-sale notice in terms of Section 13 (4) of the Securitisation Act read with Rule 8 (1) and 8 (6) of the Rules. ( 7 ) ON behalf of respondent-Bank learned advocate submitted that notice dated 06. 10. 2008 was admittedly a possession-cum-sale notice in terms of Section 13 (4) of the Securitisation Act read with Rule 8 (1) and 8 (6) of the Rules. This would indicate sufficient compliance with the statutory requirement and sub-rule (6) of Rule 8 of the Rules did not envisage necessarily a separate notice. If there was a substantial compliance with the Rules the technical plea raised by the defaulting borrower and/or guarantor should not be accepted. It was submitted that pursuant to the said notice respondent-Bank also published a public notice in newspaper for holding a public auction by inviting bids from prospective buyers, but as there was no response respondent-Bank called upon the petitioners to settle the account by making a reasonable offer. That while the offer for settlement was being considered respondent No. 2 had approached respondent-Bank for purchasing the property and accordingly respondent-Bank informed the petitioners on 04. 08. 2009 that an offer had been received from a prospective buyer for purchasing the property in question for a sum of Rs. 2. 15 crores and the bank intended to accept the said offer. The bank also informed the petitioners to either confirm the bid or improve upon the bid failing which, the offer made by respondent No. 2 would be confirmed and sale certificate issued to the prospective buyer in accordance with the provisions of law. It was therefore submitted that the response of the petitioners by not agreeing to confirm the bid in favour of respondent No. 2 and improving the bid only by Rs. 3 lakhs to the tune of Rs. 2. 18 crores was not acceptable to the bank and the bank was within its right to reject such improved bid. Referring to the further affidavit-in-reply dated 03. 11. 2009 it was submitted that the bank had received a total sum of Rs. 2. 15 crores from the prospective buyer and, therefore, the rejection vide communication dated 10. 08. 2009 was justified. Learned advocate for the respondent-Bank also referred to the communication addressed to the Police Inspector, Vejalpur Police Station, Ahmedabad by the Manager of respondent-Bank on 09. 02. 2009 to contend that not only there was no co-operation from the borrower and/or the petitioners but in fact the Manager of respondent-Bank was being threatened. 08. 2009 was justified. Learned advocate for the respondent-Bank also referred to the communication addressed to the Police Inspector, Vejalpur Police Station, Ahmedabad by the Manager of respondent-Bank on 09. 02. 2009 to contend that not only there was no co-operation from the borrower and/or the petitioners but in fact the Manager of respondent-Bank was being threatened. This was referred to for the purpose of emphasising the conduct of respondent-Bank in not accepting the offer made by the petitioners. ( 8 ) ON behalf of respondent No. 2, who claims to be the purchaser of the property (albeit incorrectly), it was contended that respondent No. 2 had made the entire payment and the cheques tendered by respondent No. 2 were encashed by respondent No. 1-Bank as accepted in further affidavit filed by the Bank on 03. 08. 2009 itself and, therefore, the sale was complete in favour of respondent No. 2. Referring to communication dated 22. 07. 2009, appearing as Annexure-R2 to the affidavit-in-reply filed by respondent No. 2, it was submitted that an order of confirmation of sale had already been issued in favour of respondent No. 2 by bank and hence, the petition had been rendered infructuous and was required to be rejected. It was submitted that when sub-rules (1), (5) and (6) of Rule 8 of the Rules are read together the only requirement which emerges therefrom was that before sale there should be a notice of 30 days and there was no requirement of separate notices under sub-rule (1) and sub-rule (6) of Rule 8 of the Rules. It was therefore submitted that a consolidated notice under both the sub-rules issued on 06. 10. 2008 was permissible and no further notice was envisaged. That notice with regard to sub-rule (6) of Rule 8 of the Rules need not contain all the details as laid down by Madras High Court in the case of M. M. Gupta Vs. M/s. Maars Software International Ltd. and Ors. , AIR 2007 (Madras) 5. Learned advocate for respondent No. 2 therefore submitted that the said respondent was a bona fide purchaser who had tendered the full amount which had been accepted by the bank, sale confirmed in its favour and, therefore, the petition be rejected. M/s. Maars Software International Ltd. and Ors. , AIR 2007 (Madras) 5. Learned advocate for respondent No. 2 therefore submitted that the said respondent was a bona fide purchaser who had tendered the full amount which had been accepted by the bank, sale confirmed in its favour and, therefore, the petition be rejected. ( 9 ) IN the event respondent-Bank had merely rejected the offer made by the petitioners with valid reasons possibly no intervention would have been called for. The court does not intend to lay down any general proposition that in each and every case where either the borrower or the guarantor objects to sale by a private negotiation and/or makes a counter-offer the secured creditor is duty bound to accept such an offer. The same would eventually turn on facts of each case. ( 10 ) IN the facts of the present case it is not in dispute that in the first instance the Company offered to settle the account for a sum of Rs. 2. 25 crores. The bank did not receive any offer in response to public advertisement inviting bids for conducting a public auction. Public auction therefore could not be held. Respondent No. 2 came with an offer of Rs. 2. 15 crores and the bank, after calling upon the petitioners to improve the bid and receiving improved bid of Rs. 2. 18 crores, refused to consider the same only on the ground of payment schedule not having been mentioned. The bank could have called upon the petitioners to furnish such a schedule, or the bank could have informed the petitioners that the prospective buyer has already made payment in full on 03. 08. 2009 and hence, if the petitioners intended to outbid prospective buyer the petitioners should make an upward offer and make payment immediately. The bank did nothing of the sort and vide communication dated 10. 08. 2009 not only rejected the revised offer made by the petitioners at Rs. 2. 18 crores but also rejected the offer made by the Company to settle the account for a sum of Rs. 2. 25 crores. This conduct does not indicate that the decision making process on the part of respondent-Bank was governed by prudent norms of a seasoned banker. In fact the action seems to be based on some other consideration than interest of the bank. 2. 25 crores. This conduct does not indicate that the decision making process on the part of respondent-Bank was governed by prudent norms of a seasoned banker. In fact the action seems to be based on some other consideration than interest of the bank. If the borrower was ready and willing to make the payment of Rs. 2. 25 crores to settle the account the bank was required to negotiate further in this direction and not dispose of the property for a lesser amount of Rs. 2. 15 crores. Assuming for the sake of argument that the payment schedule proposed by the borrower and/or the petitioners was not acceptable to the bank, the bank could have called upon the said persons that considering the period during which the liability was sought to be discharged the bank did not find it acceptable to loose out on interest component for the said period. Unfortunately, the communication dated 10. 08. 2009 does not indicate any such application of mind. ( 11 ) THERE can be no dispute with the proposition that when pitted against substantial justice technical pleas as to procedure do not merit acceptance. But that is not to mean that when a secured creditor is enjoined by law to follow a prescribed procedure the secured creditor can give a go bye to statutory provisions and mix up the provisions by issuing a consolidated notice when the provisions require two separate notices at two different stages. There has to be strict compliance considering the fact that the secured creditor is dealing with property of a borrower or a guarantor. The authorized officer is merely a custodian of the property and cannot exercise the rights of an owner. "8. Sale of immovable secured assets.-- (1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. (2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. (2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. (3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property. (4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of. (5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, 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 such immovable secured asset by any of the following methods:-by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or by inviting tenders from the public; by holding public auction; or by private treaty. (6) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include, --The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; the secured debt for recovery of which the property is to be sold; reserve price, below which the property may not be sold; time and place of public auction or the time after which sale by any other mode shall be completed; depositing earnest money as may be stipulated by the secured creditor; any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property; (7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorised officer deems if fit, put on the web-site of the secured creditor on the Internet. (8) Sale by any method other than public auction or public tender, shall be on such terms as may be settled between the parties in writing. 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. , -- (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. (2) The sale shall be confirmed in favour of the purchase 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: provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9: provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. " ( 12 ) IN so far as the action under provisions of the Rules is concerned, the record reveals that respondent-Bank has consistently failed to comply with the statutory requirements. Under Rule 8 of the Rules provision has been made for sale of immovable secured asset and an elaborate procedure has been prescribed. Sub-rule (1) of Rule 8 of the Rules stipulates that in case of the secured asset being an immovable property the authorized officer, after taking possession is enjoined to deliver the possession notice prepared as nearly as possible in the form set out in Appendix-IV to the Rules, such notice being delivered to the borrower and also by affixture on the outer door or at a conspicuous place of the property in question. Such a possession notice has to be published under sub-rule (2) of Rule 8 of the Rules in two leading newspapers. Sub-rules (3) and (4) of Rule 8 of the Rules stipulate that the authorized officer, as a custodian of the property, shall take steps to take care of the property as an owner of ordinary prudence would, and such preservation and protection shall be continued till the secured asset is sold or otherwise disposed of. Sub-rules (3) and (4) of Rule 8 of the Rules stipulate that the authorized officer, as a custodian of the property, shall take steps to take care of the property as an owner of ordinary prudence would, and such preservation and protection shall be continued till the secured asset is sold or otherwise disposed of. ( 13 ) UNDER sub-rule (5) of Rule 8 of the Rules it is provided that before effecting a sale of the immovable property referred to in sub-rule (1) of Rule 8 of the Rules the authorized officer shall -- (i) obtain a valuation of the property from an approved valuer; (ii) fix the reserve price of the property in consultation with the secured creditor; AND (iii) thereafter sell the whole or any part of the property by any of the methods prescribed in clauses (a) to (d ). Sub-rule (6) of Rule 8 of the Rules enjoins upon on authorized officer to mandatorily serve the borrower a notice of 30 days for sale of immovable secured asset under sub-rule (5) of Rule 8 of the Rules. The Proviso thereunder stipulates that in case of sale being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall publish a public notice in two leading newspapers setting out the terms of sale which, inter alia, shall include the six items enumerated therein. This is followed by sub-rules (7) and (8) of Rule 8 of the Rules which provide for affixition on a conspicuous part of the property every notice of sale and for sale by any other method, namely, method other than public auction or public tender, to be on the terms settled between the parties in writing. ( 14 ) RULE 9 of the Rules provide for the time of sale, issuance of sale certificate and delivery of possession, etc. Under sub-rule (1) of Rule 9 of the Rules an embargo has been placed statutorily that no sale of immovable property under the Rules shall take place before the expiry of 30 days from the date on which the public notice of sale is published in newspaper as referred to in Proviso to sub-rule (6) or notice of sale has been served to the borrower. Under sub-rule (2) of Rule 9 of the Rules the sale is required to be confirmed in favour of the highest bidder and subject to confirmation by the secured creditor themselves subject to two conditions/ exceptions set out by the two Provisos falling thereunder. The first Proviso again places an embargo on the authorized officer not to confirm a sale for an amount which is lesser than the reserve price specified under sub-rule (5) of Rule 8 of the Rules. The second Proviso again carves out an exception that in the event the authorized officer is not in a position to obtain a higher price, namely, higher than the reserve price, the authorized officer may, with the consent of the borrower and the secured creditor, effect the sale at such price. ( 15 ) FOR the present it is not necessary to refer to other sub-rules of Rule 9 of the Rules. Suffice it to state that they lay down the procedure for issuing a sale certificate and delivery of possession, including the point of time when such certificate is to be issued and possession handed over. ( 16 ) THUS, a plain reading of the aforesaid Legislative scheme indicates that when a secured asset in the form of immovable property is required to be sold by a secured creditor in the first instance the secured creditor is required to inform not only the borrower but the public in general that possession of such property has been taken over and this becomes clear when one considers the format of the notice set out in Appendix-IV of the Rules. Appendix-IV relatable to POSSESSION NOTICE referred to in Rule 8 (1) of the Rules provides for a notice of having taken over possession of an immovable property and does not relate to a notice for taking over possession. In other words, the notice is post the event of taking over of possession and not a notice prior to taking over of possession. This becomes abundantly clear from Paragraph No. 2 of the prescribed format which says "notice is hereby given to the borrower and the public in general that the undersigned had taken possession of the property" indicating that the possession having been taken over the parties are put to notice. This becomes abundantly clear from Paragraph No. 2 of the prescribed format which says "notice is hereby given to the borrower and the public in general that the undersigned had taken possession of the property" indicating that the possession having been taken over the parties are put to notice. The next paragraph makes it clear that the borrower and the public in general are cautioned against dealing in the property in question as the same is subject to the charge of the secured creditor. Thus, the notice envisaged by sub-rule (1) of Rule 8 of the Rules is not a notice for sale of the property but is a notice for the purpose of cautioning the borrower and the public in general that the possession now vests with the secured creditor and no person may deal with the said property. Therefore, the contention on behalf of the respondent-Bank as well as respondent No. 2 that a consolidated notice under sub-rules (1) and (6) of Rule 8 of the Rules can be issued cannot be accepted. In the facts of the case even if one ignores the part of the notice which refers to the sale to take place subsequently even then at the highest what can be stated in favour of the respondent-Bank is that only a notice under sub-rule (1) of Rule 8 of the Rules, namely, a possession notice has been issued without there being compliance with requirement of issuing the notice stipulated by Rule 8 (6) of the Rules. ( 17 ) ON a conjoint reading of sub-rules (3), (4) and (5) of Rule 8 of the Rules it becomes clear that there would be a time gap between the point of time when the possession notice has been issued and when the property is put up for sale considering the duties cast upon the authorized officer by the Rules. ( 18 ) SUB-RULE (5) of Rule 8 of the Rules stipulates that an authorized officer is under a mandate to obtain valuation of the property from an approved valuer and fix a reserve price before effecting sale of the property by any of the modes prescribed vide clauses (a) to (d ). Sub-rule (6) of Rule 8 of the Rules casts further duty on the authorized officer to serve the borrower a notice of 30 days for sale of the immovable property under sub-rule (5 ). Sub-rule (6) of Rule 8 of the Rules casts further duty on the authorized officer to serve the borrower a notice of 30 days for sale of the immovable property under sub-rule (5 ). This means that after following the procedure set out in sub-rule (5) of Rule 8 of the Rules the authorized officer is required to issue a notice with a clear period of 30 days between the two termini, namely, issuance of notice and putting the property to sale. The intention being that the borrower may either; (i) arrange within that period to discharge entire outstanding liability; or (ii) come up with a better price or may ensure that some other purchaser offers a price better than the value of the property. If one considers Proviso to sub-rule (6) of Rule 8 of the Rules it becomes clear that while selling the property by a public auction or by inviting public tenders certain basic details have to be published by way of a public notice in two leading newspapers to ensure that best available price is obtained while disposing of the secured asset. Taking a clue therefrom one can safely say that if the authorized officer has taken a decision to dispose of the property by private treaty the notice envisaged by sub-rule (6) of Rule 8 of the Rules would have to contain basic details to enable the borrower to better such offer upon private negotiation. The secured creditor, who is a financial institution, cannot be permitted to conduct itself like a private trader. All its acts have to be transparent and when challenged the record must reveal such transparency. ( 19 ) IN the present case, admittedly, the respondent-Bank put up the property for auction sale by issuing the public notice. Even if one may concede, for the sake of argument, that having issued a public notice there was sufficient compliance with requirement of sub-rule (6) of Rule 8 of the Rules yet when one peruses the public notice issued in the newspaper on 10. 01. 2009 it becomes clear that the statutory requirement of notice period of 30 days remains unfulfilled. The advertisement was published on 10. 01. 2009, last date for receiving the offers was 20. 01. 2009 and last date for opening the tenders was 21. 01. 2009. The dates clearly speak for themselves that the period was only 10 days. 01. 2009 it becomes clear that the statutory requirement of notice period of 30 days remains unfulfilled. The advertisement was published on 10. 01. 2009, last date for receiving the offers was 20. 01. 2009 and last date for opening the tenders was 21. 01. 2009. The dates clearly speak for themselves that the period was only 10 days. Therefore, even the contention, on behalf of the respondent-Bank, that there was substantial compliance with the requirement of the provisions cannot be accepted. ( 20 ) DURING course of hearing learned advocate for the respondent-Bank placed reliance on Condition No. 8 as published in public notice on 10. 01. 2009 to contend that it was open to the Bank to sell the property either by way of auction or by way of private treaty as permitted by sub-rule (5) of Rule 8 of the Rules. Merely because the Bank itself put in such a condition it is not possible to accept the stand of the bank that it is open to the bank to re-write the provisions of the Rules in a given case. At the cost of repetition it is required to be stated that sub-rule (5) of Rule 8 of the Rules permits the authorized officer to sell the immovable property by any of the modes prescribed, but for the said purpose a public notice is warranted when the property is to be sold by inviting public tenders or by public auction, and where the property is to be sold by a private treaty the notice to the borrower must specify so because sub-rule (6) of Rule 8 of the Rules specifically says a notice of 30 days for sale of immovable secured asset under sub-rule (5) of Rule 8 of the Rules has to be served. In other words, the authorized officer having chosen one of the modes set out in sub-rule (5) of Rule 8 of the Rules has to specifically inform the borrower the mode and the manner in which the property is to be disposed of. In other words, the authorized officer having chosen one of the modes set out in sub-rule (5) of Rule 8 of the Rules has to specifically inform the borrower the mode and the manner in which the property is to be disposed of. ( 21 ) WHEN one reads Rule 8 (8) of the Rules it becomes clear that such a sale has to be on the terms negotiated in writing and the authorized officer cannot be permitted to use the provision of employing any one of the methods of sale so as to mean that the authorized officer can change the mode and manner of sale at his sweet will. ( 22 ) THIS position becomes clear when one reads sub-rules (1) and (2) with the two Provisos thereunder of Rule 9 of the Rules which permit sale of a property below reserve price only by following the procedure laid down therein. In other words, if the property is to be sold by private treaty as stipulated by Rule 8 (5) (d) of the Rules the same has to be independent and not as an option after the property is put up for public auction. This does not mean that once put up for public auction a secured asset cannot be sold by private treaty, but for the said purpose the authorized officer shall have to show compliance with the requirement of sub-rule (6) of Rule 8 of the Rules in this regard. ( 23 ) SIMILARLY, the second Proviso to sub-rule (2) of Rule 9 of the Rules is also indicative of the fact that the borrower has to be kept informed at all stages where the property is to be disposed of, on failure of an auction procedure, when the authorized officer intends to sell the property below reserve price. ( 24 ) IN this context the contention raised on behalf of respondent No. 2 based on Madras High Court judgment in case of M. M. Gupta (supra) requires to be considered. In the said case it was not a case of putting up the property for auction sale but was a sale to one of the parties by way of a private treaty considering the fact that the said party had a right of preemption and was in the possession of the property in question. In the said case it was not a case of putting up the property for auction sale but was a sale to one of the parties by way of a private treaty considering the fact that the said party had a right of preemption and was in the possession of the property in question. This is apparent when one reads the circumstances considered to be mitigating circumstances, as set out in Paragraph No. 7 of the judgment. Hence, the said judgment cannot support the case of respondent No. 2. ( 25 ) SIMILARLY, reference to judgment of Madhya Pradesh High Court in case of Smt. Godawari Shridhar Vs. Union Bank of India and Anr. , AIR 2009 Madhya Pradesh 13, made at a belated stage, also cannot carry the case of respondent No. 2 any further. Suffice it to state that the discretion vested in the authorized officer under second Proviso to sub-rule (2) of Rule 9 of the Rules is for the purpose of selling the property at a price below the reserve price but the discretion is not in relation to the authorized officer choosing not to seek consent of the borrower for selling at such lesser price. The said judgment also cannot sustain the action of respondent-Bank. In fact, this is not even the case of respondent-Bank. ( 26 ) THE contention based on the communication addressed to the Police Inspector by the Manager of respondent-Bank also need not be considered because there is nothing on record to show the progress of the said proceedings. In any view of the matter, even if those proceedings are progressing in so far as the present matter is concerned, the same would not have any bearing and on the basis of such alleged conduct of the petitioners, respondent-Bank, as an institution, cannot conduct itself in violation of statutory provisions. The Bank cannot dispose of a secured asset as a personal vendetta in contravention of statutory requirements merely because of an alleged offence of delivering a threat by the petitioners. The Bank cannot equate itself with its Manager, an employee. ( 27 ) COMING to the contention raised on behalf of respondent No. 2 that there is confirmation of sale made in favour of respondent No. 2 vide communication dated 27. 07. The Bank cannot equate itself with its Manager, an employee. ( 27 ) COMING to the contention raised on behalf of respondent No. 2 that there is confirmation of sale made in favour of respondent No. 2 vide communication dated 27. 07. 2009 (Annexure-R2), suffice it to state that in Paragraph No. 3 of the communication itself the said communication states that the said acceptance is subject to the order of confirmation of the sale. Similarly, the last paragraph of the said communication indicates that respondent No. 2 was to send a written acknowledgment accepting the terms and conditions stated therein. Therefore, by mere payment, which is admittedly held as deposit by respondent-Bank, the contract is not complete and there is no sale confirmed in favour of respondent No. 2. ( 28 ) IN this context one may usefully refer to affidavit-in-reply dated 09. 09. 2009 of respondent-Bank wherein in Paragraph No. 12 the respondent-Bank has merely referred to the communication dated 03. 08. 2009 without stating at any place that any order of confirmation of sale had ever been made by the authorized officer. Similarly, as noted hereinabove, in the further affidavit-in-reply dated 03. 11. 2009 all that is stated is the amount has been received from respondent No. 2 and the bank is holding the said sum. There is no statement at any stage in the stand adopted by respondent-Bank that the sale has been confirmed. ( 29 ) THIS has to be also considered and appreciated in context of the fact that notice was issued by the High Court on 17. 08. 2009 making it returnable on 20. 08. 2009 and on said day learned advocate appearing for respondent-Bank only prayed for time to file counter-affidavit. If the sale had been confirmed, as contended by respondent No. 2, respondent-Bank would have categorically made the statement in this regard. To the contrary respondent-Bank permitted an order of status-quo qua the subject property being made by the Court indicating that no confirmed sale had taken place and the matter was only at the stage of consideration. Hence, this contention raised on behalf of respondent No. 2 also does not merit acceptance. To the contrary respondent-Bank permitted an order of status-quo qua the subject property being made by the Court indicating that no confirmed sale had taken place and the matter was only at the stage of consideration. Hence, this contention raised on behalf of respondent No. 2 also does not merit acceptance. ( 30 ) IN light of what is stated hereinbefore, it is apparent that the contentions raised on behalf of respondent-Bank based on provisions of Section 17 of the Securitisation Act also need not come in way in so far as the petition is concerned. Even if an alternative statutory remedy is available the Court is not precluded from exercising its discretionary jurisdiction in entertaining the petition wherein the challenge to action of the respondent establishes that the same is in violation of statutory provisions. ( 31 ) IN the circumstances, the action of respondent-Bank in rejecting the offer of settlement as well as the tentative decision to dispose of the property in favour of respondent No. 2 for a sum of Rs. 2. 15 crores cannot be sustained. Respondent-Bank is directed to return the amount of Rs. 2. 15 crores deposited by respondent No. 2 within a period of three working days from today along with interest at the rate applicable to a savings account, without waiting for a certified copy of this judgment. Learned advocate for the respondent-Bank is directed to intimate the respondent-Bank about this direction to ensure compliance by respondent-Bank. ( 32 ) RESPONDENT-BANK is further directed to undertake the process of disposal of the property in question once again in accordance with law, after complying with statutory requirements from the stage of possession notice under Section 8 (1) of the Rules. It will be open to respondent-Bank to consider the proposal of settlement made by the Company and negotiate further terms in this regard, if respondent-Bank so desires. ( 33 ) THE petition as well as Civil Application are accordingly allowed in the aforesaid terms. RULE made absolute to the aforesaid extent. There shall be no order as to costs.