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2015 DIGILAW 630 (CAL)

Shyamal Sarkar v. United Bank of India

2015-07-29

JOYMALYA BAGCHI

body2015
JUDGMENT : Joymalya Bagchi, J. 1. Both the writ petitions are taken up for hearing analogously as they involve common questions of fact and law. 2. In W.P. No. 32315(W) of 2014, the writ petitioner has challenged the impugned decision dated 26.08.2014 passed by respondent no. 2 herein rejecting the confirmation of auction sale. 3. The factual matrix giving rise to instant case is to the effect that a proceeding under Section 13 of the SARFAESI Act was initiated in respect of a secured asset and a sale notice in respect thereof was issued wherein, inter-alia, it was provided as follows:- "9. The successful bidder shall deposit 25% of bid amount (after adjusting EMD) within 48 hours from declaration as successful bidder and balance 75% amount must be payable within 15 days. On failure to pay, the sale price as stated all deposits including EMD shall be forfeited without further notice. However, extension of further reasonable time to make the balance 75% payment in exceptional situations shall be at sole discretion of authorised officer." 4. The petitioner participated in the aforesaid auction notice and was declared highest bidder. The petitioner deposited security deposit in terms of the auction notice to the tune of Rs. 17.5 lakhs with respondent no. 2 herein, the assignee of the debt by respondent no. 1/bank. In terms of Clause 9, balance consideration was to be paid within 15 days of confirmation of the sale. Admittedly, the sale was confirmed by letter dated 14.05.2014. Bank draft dated 22.07.2014 was tendered to respondent no. 2 beyond the stipulated time frame. In view of the fact that the balance consideration sum had not been tendered within the stipulated time frame as aforesaid, the respondent no. 2 by impugned letter dated 26.08.2014 cancelled the confirmation of the sale. Subsequently, another notice for sale of the secured asset was issued on 09.12.2014 which is the subject matter of challenge in the subsequent writ petition being W.P. No. 33137(W) of 2014. 5. Mr. Anant Kumar Shaw, learned counsel appearing for the petitioner, submits that the auction sale was duly confirmed in his favour and the same was illegally cancelled by the impugned letter dated 26.08.2014 notwithstanding the fact that the balance consideration was received by the respondent no. 2 albeit belatedly. He further submits that respondent no. 5. Mr. Anant Kumar Shaw, learned counsel appearing for the petitioner, submits that the auction sale was duly confirmed in his favour and the same was illegally cancelled by the impugned letter dated 26.08.2014 notwithstanding the fact that the balance consideration was received by the respondent no. 2 albeit belatedly. He further submits that respondent no. 2 had by conduct condoned the delay in paying the balance sum and had accepted the same. He further submits that after repeated representations had been made for handing over the possession and issuance of sale certificate, the respondent no. 2 cancelled the confirmation of sale on a false and frivolous plea. He further drew my attention to the letter of cancellation wherein, inter-alia, it has been stated that after confirmation the borrower had approached respondent no. 2 to release the secured asset on payment of higher amount than what was offered by the auction purchaser. Hence, cancellation was an illegal and irrelevant considerations and the subsequent sale notice and all consequential steps taken with regard thereto are liable to be quashed. 6. In response, Mr. Debasish Karmarkar, learned counsel appearing for respondent nos. 2 and 3, submits that the balance consideration was belatedly tendered and not accepted by respondent no. 2. The bank draft had not been encashed. He further submits that Clause 9 in the sale notice was in consonance with the Rule 9 Sub-Rule (3) & (4) of the Security Interest (Enforcement) Rules, 2002 ("Rules, 2002" for short) and admittedly there was no extension of time to pay balance sum in writing by and between the parties as envisaged in Rule 9(4) of the said Rules. He further submits that pursuant to the subsequent sale notice, the secured asset has already been sold to respondent nos. 6 and 7 in W.P. No. 33137(W) of 2014. He accordingly prays for dismissal of the writ petition. 7. Mr. Souradipta Banerjee, learned counsel appearing on behalf of the respondent nos. 6 and 7, supports the contention of respondent no. 2. 8. The issue which falls for decision is whether the cancellation of the confirmation of sale of the secured asset in favour of the writ petitioner vide impugned letter dated 26.08.2014 is valid or not. 9. I have perused the impugned notice dated 26.08.2014. 6 and 7, supports the contention of respondent no. 2. 8. The issue which falls for decision is whether the cancellation of the confirmation of sale of the secured asset in favour of the writ petitioner vide impugned letter dated 26.08.2014 is valid or not. 9. I have perused the impugned notice dated 26.08.2014. It appears that the sale was cancelled, inter-alia, for the following reason:- "However you have failed to deposit the sale price as per the terms of aforesaid sale notice and therefore you have committed default. Due to the said default committed by you in payment of sale price according to the terms of sale notice the competent authority in capacity as a secured creditor has rejected the confirmation of sale in your favour." 10. No doubt, it has also been stated in the said notice that borrower had subsequently approached the respondents to release the secured asset on payment of a higher price. However, such stance of the borrower is an incidental fact quoted in the letter of cancellation and not the principle ground for cancellation. The primary premise for cancellation as quoted above is the default on the part of petitioner/auction purchaser to pay the balance consideration within the stipulated period, i.e. 15 days from confirmation of the sale. 11. Clause 9, in fact, articulates the statutory requirement laid down in Rule 9 Sub-Rule (3) and (4) of the Rules 2002. Hence, I am of the view that such condition was a mandatory pre-requisite of the sale notice and could not have been relaxed by either of the parties. Save and except the manner provided in sub-rule (4) of Rule 9, that is, by an agreement in writing. Admittedly there is no such written agreement in writing by and between the parties to extend the time to deposit balance consideration money. I am unable to accept the submission of Mr. Shaw that such a relaxation may be inferred from the conduct of the parties in the absence of a written agreement as envisaged in Rule 9(4) of the Rules, 2002. That apart, belated tender of the balance sum by the petitioner in the form of a bank draft in favour of respondent no. 2 would not amount to acquiescence particularly when respondent no. 2 did not encash the said draft. That apart, belated tender of the balance sum by the petitioner in the form of a bank draft in favour of respondent no. 2 would not amount to acquiescence particularly when respondent no. 2 did not encash the said draft. Accordingly, I do not find any reason to interfere with the impugned letter dated 26.08.2014 cancelling confirmation of sale in favour of the petitioner in the facts of the instant case. I am further informed that the borrower failed to deposit a higher price as promised and respondent no. 2 accordingly issued subsequent sale notice dated 09.12.2014 and the asset was sold to respondent nos. 6 & 7 pursuant thereto. 12. Consequently, the challenge to the subsequent sale notice and sale to respondent nos. 6 & 7 in W.P. No. 33137(W) of 2014 also fails. 13. In view of the aforesaid discussion, W.P. No. 32315 (W) of 2014 and W.P. No. 33137 (W) of 2014 are dismissed. 14. However, in view of letter dated 26.08.2014 wherein the bank had offered to return the security deposit, bank is directed to refund the said deposit to the petitioner within a period of fortnight from date of communication of this order, failing which the said amount shall carry interest at the rate of 10% p.a. thereon from the date the amount is liable to be paid in terms of this order till the date of actual payment. 15. There shall be no order as to costs. Writ petitions are dismissed.