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2019 DIGILAW 470 (KER)

Rajesh Sivasankara Pillai v. Federal Bank Ltd.

2019-06-20

DEVAN RAMACHANDRAN

body2019
JUDGMENT : In the environs of a rather quotidian writ petition, assailing the measures taken by a Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity), is an interesting question posed before this Court, as to whether, under the mandate of Rule 9 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the 'Rules' for short), a subsequent sale of a secured asset can be done without the Bank having to publish a sale notice without a 30 day time window. 2. The afore question becomes imperative for consideration in this case because Sri.Titus Mani Vettom, the learned counsel appearing for the petitioners, submits that the action of the Bank in having sold a certain property, belonging to his clients and concededly offered by them as a secured asset against a loan availed of by them from the said Bank, pursuant to Ext.P1 sale notification with only a time delay of 19 clear days between the date of publication of the same and the date of sale, is an affront on the provisions of the Act and the Rules; and therefore, that the sale is rendered non-est and legally incompetent, thus that his clients are not required to invoke the alternative statutory remedy to challenge the same under the provisions of the SARFAESI Act. 3. I have heard Sri. Titus Mani Vettom, the learned counsel for the petitioners; Sri. A. Antony, the learned standing counsel appearing for the respondent – Bank and Sri. K. Sasikumar, the learned counsel appearing for the 3rd respondent - auction purchaser of the property. 4. As I have indicated above, the sole reason why this Court has been exhorted by the petitioner to consider the validity of the sale, conducted by the respondent – Bank pursuant to Ext.P1 notice issued by it under the provisions of the SARFAESI Act, without invoking alternative statutory remedies, is that the said sale, having been admittedly conducted with a mere 19 days time delay from when the sale notice was published, is null and void in law. Sri.Titus Mani Vettom, the learned counsel for the petitioners, asserts vehemently that this sale is contrary to Rule 9(1) of the Rules and therefore, that the sale is without consequence and rendered nugatory. Sri.Titus Mani Vettom, the learned counsel for the petitioners, asserts vehemently that this sale is contrary to Rule 9(1) of the Rules and therefore, that the sale is without consequence and rendered nugatory. Therefore, if this Court is to find in their favour on this one issue then the reliefs sought for in this writ petition may become worthy of consideration of this Court; but if it is to the contrary, I will be constrained to hold that this writ petition is not maintainable because of the well established principles of constraints in jurisdiction of this Court, while acting under Article 226 of the Constitution of India, when alternative statutory remedies are available. (see Union Bank of India v. Satyawati Tondon ( (2010) 8 SCC 110 ) and followed recently in Authorised Officer, State Bank of Travancore and Another v. Mathew K.C. [ 2018 (1) KLT 784 ]) 5. Sri. Titus Mani Vettom, commenced his submissions by showing me Rule 9(1) of the Rules and its proviso, which reads as under:- “9. Time of sale, issues of sale certificate and delivery of possession, etc.- (1) No sale of immovable property under these rules, in first instance 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) of rule 8 or notice of sale has been served to the borrower: provided further that if sale of immovable property by any one of the methods specified by sub-rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.” 6. He contends that, as is unambiguously discernible from the afore extracted Rule, no sale of immovable property could have been done by the Bank unless 30 days had expired from the date on which the public notice of sale was published. He contends that, as is unambiguously discernible from the afore extracted Rule, no sale of immovable property could have been done by the Bank unless 30 days had expired from the date on which the public notice of sale was published. He then explained that the public notice mentioned in Rule 9(1) is, in fact, the notice as specified in Sub Rule 6 of Rule 8, which provides as under:- “8 xxxxxxxxx (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,- (a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; (b) the secured debt for recovery of which the property is to be sold; (c) reserve price, below which the property may not be sold; (d) time and place of public auction or the time after which sale by any other mode shall be completed; (e) depositing earnest money as may be stipulated by the secured creditor; (f) any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property. 7. The submissions of Sri.Titus Mani Vettom, therefore, is that the provisions of Rule 9(1) of the Rules would apply to every sale under the SARFAESI Act and therefore, that the public notice, as specified in Rule 8(6) afore, will have to be published by the Bank before each such sale and further that they will have to wait for 30 days thereafter, before the public auction is conducted. He thus asserts that the present sale, which concededly was conducted a mere 19 days after Ext.P2 sale notice was published, is non est and null in law; and therefore, that this writ petition is maintainable. 8. In answer to the afore submissions of Sri.Titus Mani Vettom, the learned standing counsel for the respondent – Bank, Sri. He thus asserts that the present sale, which concededly was conducted a mere 19 days after Ext.P2 sale notice was published, is non est and null in law; and therefore, that this writ petition is maintainable. 8. In answer to the afore submissions of Sri.Titus Mani Vettom, the learned standing counsel for the respondent – Bank, Sri. A. Antony, began by asserting that it is ineluctable from Rule 9(1) of the Rules that the prescriptions therein, is solely for a sale conducted by a Bank or a Financial Institution “in first instance”. He unequivocally concedes that Rule 9(1) mandates that “every sale of immovable property under the Rules in the first instance” shall be done only after the expiry of 30 days from the date on which the public notice is published. He then points out that as is indubitable from its proviso, subsequent sale of such immovable property only warrants a publication in terms of Rule 8(6) without the rigour of a minimum time period for the conduct of the sale, with the only other statutory requirement being that a sale notice shall be issued to the borrower before 15 clear days of the actual sale. In effect, the submissions of Sri.A.Antony is that the mandatory statutory stipulation for the Bank having to wait for a minimum of 30 days, before the sale is conducted after publication of the notice under Rule 8(6), applies only when the secured asset is sold for the first time or is attempted to be sold “at the first instance” and not for the subsequent instances. 9. Sri. K. Sasikumar, the learned standing counsel appearing for the 3rd respondent -Travancore Devaswom Board, submits that he does not have much to comment on the legal issues involved in this case but that his client has bona fide participated in the auction conducted by the Bank and bid for the property. He adds that since his client is a Public Authority, they cannot wait ad infinitum for the fruits of the sale; and therefore, prays that this Court allow the registration of the sale deed, because his client has already paid the entire sale consideration of nearly Rs.8.40 Crores, more than three months ago. 10. He adds that since his client is a Public Authority, they cannot wait ad infinitum for the fruits of the sale; and therefore, prays that this Court allow the registration of the sale deed, because his client has already paid the entire sale consideration of nearly Rs.8.40 Crores, more than three months ago. 10. Now that I have recorded the rival contentions of the parties as afore, I will proceed to analyze them from the limited province of this Court to ascertain if the sale is null and void and consequently if this writ petition is deserving of further orders. 11. There is no doubt that the jurisdiction of this Court is being invoked by the petitioners seeking to have the sale, conducted by the respondent - Bank in favour of the 3rd respondent, set aside solely on the ground that it has been done contrary to the mandatory prescription of Rule 9(1) of the Rules. All other contentions, which are only corollary, and being concededly capable of being considered only by the alternative statutory Forum, is not being touched upon by me and I therefore, confine my views herein on this one legal issue. 12. The afore extracted provisions of Rule 9(1) of the Rules do not leave any room for doubt that when a Bank or Financial Institution attempts to sell immovable property, claimed by them as being secured asset/s, “in the first instance”, they will have to wait for 30 days after the public notice of such sale, as referred in Rule 8(6), is published in newspapers or until such notice of sale has been served on the borrower. Obviously, the rigour of this Rule is that the Bank will have to mandatorily wait for 30 days from the date on which the public notice is published and the notice is served on the borrower before they can conduct the sale and this is undisputed in this writ petition and there is, therefore, no contest about it. 13. However, the controversy and disputation is with respect to subsequent sale, when the first sale does not fructify. 14. 13. However, the controversy and disputation is with respect to subsequent sale, when the first sale does not fructify. 14. The Bank maintains that a subsequent sale has to be done solely as per literal reading of the proviso to Rule 9(1), wherein the rigour, of having to wait for 30 days after the public notice is published, has been conspicuously removed; with the sole condition, that the sale notice be served on the borrower 15 days prior to the public auction, having alone been retained. The Bank therefore, legitimately maintains that a sale conducted in compliance of this condition would be valid in law and can be challenged by the borrower only by invoking their alternative statutory remedies, rather than filing a writ petition before this Court. 15. In contrario sensu, Sri. Titus Mani Vettom vehemently contends that the proviso to Rule 9(1) of the Rules cannot be read in isolation but has to read along with it, making it inevitable that the said proviso deals only with the notice to be issued to the borrower and not with the public notice. What he means is that since the proviso is silent as to the public notice but speaks only of the notice to the borrower, in the case of subsequent sale of the secured asset, the stipulation in Rule 9(1) continues to be applicable to such sale also. He thus reiteratingly predicates that the sale in this case has been rendered without legal force. 16. When I assay the syllogistical contentions of the parties as afore, I must first keep in mind that the provisions of Rule 8(6) of the Rules makes it mandatory that the Authorized Officer shall serve the borrower a notice of 30 days for sale of immovable property but when it comes to the proviso to Rule 9(1), this has been attenuated to a 15 day period in the case of a subsequent sale. 17. Obviously, therefore, what is intended by the Rule makers is that in case of a subsequent sale, the stipulation in Rule 8(6), of serving a notice of 30 days on the borrower is relaxed. 17. Obviously, therefore, what is intended by the Rule makers is that in case of a subsequent sale, the stipulation in Rule 8(6), of serving a notice of 30 days on the borrower is relaxed. Whether this relaxation is valid in law and whether these Rules will stand the scrutiny of a competent Court are issues which are beyond my consideration in this writ petition because, they have not been raised before me and the petitioners have not sought to challenge any of these provisions. 18. In fact, the petitioners seem to be relying on these provisions to contend that, notwithstanding the proviso to Rule 9(1), the rigour of the said Rule must apply even to subsequent sale. I am afraid, going by an ex facie reading of these provisions and applying the principles of litera legis, this Court can only read these provisions as it is written, since there is no ambiguity in its words. This is more so since, when viewed closely, Rule 8(6) certainly provides that there should be a notice of 30 days to the borrower but does not provide any stipulation as to the time limit for conduct of the sale, even at the first instance, after the publication of a public notice. This time constraint is brought into the Rules through Rule 9(1), which stipulates that the Bank must wait for 30 days after the publication of the public notice, when property is sold “at the first instance”. However, coming to its proviso, this restriction is taken away and the imperative requirement in Rule 8(6) is also concomitantly relaxed, bringing down the notice period therein to the borrower from 30 days to 15 days. 19. A sum total of all these provisions would therefore, make it irrefragable that while the Banks and Financial Institutions will have to follow Rule 9(1) in its letter and spirit for sale of a secured asset/s at the “the first instance”, when it comes to such sale on a subsequent instance, on account of the first attempt failing, then the provisions of Rule 8(6) read with the proviso to Rule 9(1) of the Rules would alone apply; and axiomatically, the requirement for the Bank in having to wait for 30 days after the publication of the public notice under Rule 8(6) is not attracted for such sale. 20. 20. Ineluctably, the contentions of the petitioners build upon these provisions, which I ingeminate, have not been challenged, have to fail; and consequently, I will not be justified, in any manner, interdicting or intervening with the sale now confirmed by the respondent – Bank in favour of the 3rd respondent – Travancore Devaswom Board. Thus, in conspectus, this writ petition fails but I make no order as to costs and leave the parties to suffer their respective costs.