OASIS DEALCOM PVT. LTD. Vs. KHAZANA DEALCOMM PVT.LTD. & ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 10676-10677 of 2016, Judgment Date: Nov 08, 2016
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.10676-10677 OF 2016
(@ SLP (C) No. 32638-32639 of 2011)
M/s Oasis Dealcom Pvt. Ltd. ….Appellant
VERSUS
Khazana Dealcomm Pvt. Ltd. & Ors. ...Respondents
J U D G M E N T
ANIL R. DAVE, J.
1. Leave granted.
2. The present appeals are directed against the judgment dated
24.08.2011 rendered by the High Court of Calcutta, whereby the High Court
has dismissed the revision petition filed by the appellant under Article
227 of the Constitution of India and affirmed the order of the Debt
Recovery Appellate Tribunal, Calcutta.
3. The facts of the case, in a nutshell, are as under :
Respondent nos. 2 and 3 are the principal shareholders, directors and
persons in charge of Respondent No.1 Company. Respondent No. 4 (ING Vysya
Bank) had granted financial assistance to Respondent nos.1 to 3 by way of
“Cash Credit facility”. In consideration of the aforesaid loan, Respondent
nos.1 to 3 had furnished security in terms of (a) Hypothecation of Book
Debts, (b) Equitable mortgage of residential flat bearing no. 1-C at 7/1,
Queens Park, Kolkata-700019 and (c) pledge of LIC Policy for an assured sum
of Rs.8 lakh in name of Respondent No.3.
4. Respondent nos. 1 to 3 defaulted in the repayment of the loan and
thus, the account was classified as “Non-performing Asset” with effect from
1.12.2008 in accordance with the directions of Reserve Bank of India. As on
31st December, 2008, a sum of Rs.37,01,758.49 (Rupees Thirty seven lakh one
thousand seven hundred fifty eight and forty nine paise), along with
applicable interest @ 15% per annum and penal interest was outstanding
against the said Respondents.
5. Accordingly, a notice dated 17th January, 2009 under Section 13 (2)
of The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the
Act”) read with Rule 9 of the Security Interest (Enforcement) Rules, 2002
(hereinafter referred to as “the Rules”) was served upon Respondent nos.1
to 3 calling upon them to pay the aforementioned sum along with future
interest within 60 days from the date of the said notice and they were also
instructed not to create any third party interest in the secured assets by
way of sale, lease or otherwise. The aforesaid notice was duly replied to
by Respondent No.1 Company vide letter dated 14th March, 2009 by disputing
the amount and requesting Respondent no. 4 bank to give certain credits.
Respondent no.4 gave a reply vide its letter dated 20th March, 2009 to
letter dated 14th March, 2009 by asserting that notice dated 17th January,
2009 had been correctly issued as per the provisions of Section 13 (2) of
the Act.
6. It is apposite to state that Respondent No. 4 bank vide possession
notice dated 10th August, 2009 took “symbolic possession” of the property
in question i.e. Residential Flat No. bearing 1C (1st Floor) situated at
premises no. 7/1, Queens Park, Kolkata-700019 (hereinafter referred to as
“the flat”) which was in the names of Respondent nos. 2 and 3.
7. Being aggrieved by said notice dated 10th August, 2009, Respondent
nos. 1 and 3 preferred application no.92/2009 under Section 17 of Act, 2002
on 15th September, 2009 against Respondent no.4 bank by stating that the
act of taking symbolic possession of the flat in question was illegal,
without jurisdiction and was in violation of the Act and Regulations made
thereunder, primarily for the reason that no advertisement was published in
the newspaper in terms of Rule 8 (2) of the Rules and no possession notice
under Rule 8 (1) was affixed on the said property and hence, prayed for
quashing of notice dated 17th January, 2009 and also for quashing all steps
taken under the Act.
8. Taking cognizance of the aforesaid application, the learned Presiding
Officer, DRT, Kolkata vide order dated 17th December, 2009 directed
Respondent nos.1 and 3 to pay a sum of Rs.15 lakh before 26th December,
2009 and directed the Respondent bank to maintain status-quo and in case
the borrowers fail to deposit the said sum before the stipulated date,
Respondent no. 4 bank would be at liberty to proceed in accordance with
law.
9. Being dissatisfied with the order dated 17th December, 2009 passed by
the DRT, Kolkata, Respondent nos.1 and 3 filed a Petition under Article 227
of the Constitution of India before the High Court and the High Court vide
order dated 24th December, 2009 modified the order passed by the DRT to the
extent that instead of paying a sum of Rs.15 lakh to the bank before 26th
December, 2009, bank guarantee for Rs.10 lakh be furnished before 2nd
January, 2010 and the hearing was adjourned to 4th January, 2010.
10. On 4th January, 2010, when the matter was taken up before the High
Court, an adjournment was sought for by the borrowers and it was submitted
on behalf of the Respondent bank that bank guarantee for Rs.10 lakh, as
ordered, had not been furnished by the borrowers.
11. In the light of the aforestated situation, Respondent no.4 bank
issued a notice dated 4th January, 2010 for auctioning the flat by
referring to an earlier auction notice dated 10th November, 2009, which had
been published in newspapers “The Statesman” (English) and “Aajkal”
(Bengali). The auction was to take place on 6th January, 2010 and the
reserve price of the flat was Rs.1,48,00,000/-(Rupees one crore forty eight
lakh only).
12. In terms of the aforestated notice dated 4th January, 2010, the
Appellant (M/s Oasis Dealcom Pvt. Ltd) submitted its bid to purchase the
flat, who was the sole bidder. Respondent no.4 bank, vide its letter dated
6th January, 2010 accepted the bid for a sum of Rs.1,48,00,000/- and on the
same day, confirmed the sale in terms of the provisions of the Act.
Respondent no.4 bank vide letter dated 9th January, 2010 also issued a sale
certificate in favour of the Appellant as per Rule 9 (6) of the Rules.
13. On 11th January, 2010, when the Petition came up for hearing before
the High Court, it was noticed that the bank guarantee had not been
furnished by the borrowers in terms of its order dated 24th December, 2009
and the Respondent bank had sold the property in question to the Appellant
company.
14. When the matter was placed before the Debt Recovery Tribunal on 7th
January, 2010, the Tribunal recorded the fact that the flat had been sold
and therefore, virtually the proceedings had become infructuous. However,
the matter was adjourned to 5th March, 2010, to enable the parties to
complete the pleadings. However, on 14th January, 2010, the Respondent
borrowers filed an application for depositing the amount payable but on the
same day, taking judicial notice of the subsequent developments, the
Tribunal dismissed the said application as it had become infructuous.
15. In the aforestated circumstances, the Respondent borrowers filed
another application under Section 17(1) of the Act challenging the validity
of the demand notice dated 17th January, 2009 and sale of property which
had taken place in January 2010 in pursuance of the aforestated notice.
The Tribunal ordered to maintain status-quo as on 28th January, 2010.
16. Being aggrieved by the order of the Tribunal, Writ Petition No.169 of
2010 was filed by the present Appellant i.e. the auction purchaser, but the
High Court disposed of the Petition as the matter was pending before the
Tribunal. Ultimately, the Tribunal passed an order dated 10th June, 2010
in O.A. No.4 of 2010 setting aside the sale certificate. However, it
permitted the borrowers to make payment within three weeks and if the
amount was paid within three weeks, the bank was directed to refund the
purchase money to the Appellant with 8% interest thereon.
17. Being aggrieved by the said order, the Appellant filed Writ Petition
No.7087 of 2010 challenging the validity of the order dated 10th June, 2010
passed by the Tribunal and the said petition was disposed of with a liberty
to the Appellant to approach the Debt Recovery Appellate Tribunal.
18. By an order dated 18th February, 2011, the Debt Recovery Appellate
Tribunal confirmed the order passed by the Tribunal observing that material
irregularities had been committed in conducting the auction sale and in the
circumstances, the auction purchaser as well as the respondent bank
separately challenged the validity of the said order dated 18th February,
2011 before the High Court and the High Court confirmed the order passed by
the Debt Recovery Appellate Tribunal by an order dated 24th August, 2011.
19. Being aggrieved by the said judgment and order dated 24th August,
2011, the present appeals have been filed by the auction purchaser .
20. The Appellant was represented by one of its Directors, Shri Agarwal,
who appeared in person. He submitted that the amount of purchase price had
already been paid and as the entire proceedings had been conducted in
accordance with the provisions of the Act as well as the Rules, the High
Court committed an error by setting aside the auction sale. He further
submitted that there was neither any fraud nor any illegality in conducting
the auction of the flat. He also submitted that necessary notice under
Section 13 had already been issued to the Respondent borrowers and as the
borrowers had failed to make payment after publication of notice in
newspapers as per the provisions of the Act as well as the Rules, the
property in question had been sold by holding an auction. He further
submitted that the price offered by the Appellant was just and fair, though
nobody else had participated in the bid. According to him, wide publicity
had also been given to the auction. In view of the fact that the entire
amount had been paid, according to him, the sale ought not to have been set
aside. He further submitted that sufficient opportunity had been given to
the borrowers to make the payment at an earlier point of time, but they had
failed to make payment of their dues to the creditor bank. Moreover,
according to him, the borrowers had also failed to furnish bank guarantee,
as directed earlier and the said fact had been duly considered by the
Tribunal at an earlier point of time and as the borrowers had failed to
furnish the bank guarantee, the creditor bank had rightly confirmed the
sale in favour of the Appellant company.
21. On the other hand, the learned counsel for the Respondent borrowers
had submitted that several serious irregularities had been committed by the
bank in conducting the auction. Requisite notice, as required as per the
Rules, had not been given and he had supported the judgment delivered by
the High Court. According to him, if for any reason the auction sale is
postponed, the entire process for holding the auction should be started
afresh and as no fresh notice was given before conducting the auction, the
sale effected by the bank was absolutely improper as held by the High
Court. He had thus supported the reasons assigned by the High Court for
setting aside the auction sale.
22. On behalf of the Respondent bank, the learned counsel submitted that
the bank was prepared to accept the amount due and payable by the
respondent borrower and in that event it would return the amount received
from the Appellant along with interest thereon, as directed by the High
Court.
23. Upon hearing the learned counsel and going through the concurrent
findings of fact arrived at by the Debt Recovery Appellate Tribunal as well
as the High Court, we have no doubt about the fact that undue haste was
made by the creditor bank in holding the auction. The creditor bank could
have waited for some time when the proceedings were pending before the
Tribunal as well as the High Court before conducting the auction and
confirming the sale. We do not find any reason to disturb the concurrent
findings arrived at by the Debt Recovery Appellate Tribunal as well as the
High Court about the irregularities committed in holding the auction.
24. A submission had been made on behalf of the Appellant that the second
application filed under Section 17 of the Act was not maintainable and
therefore, it ought not to have been entertained by the Tribunal. We are
not in agreement with the said submission for the reason that when another
application was filed under Section 17(1) of the Act, the cause of action
was different. At an earlier point of time, the issuance of notice as well
as notice for sale of the flat had been challenged, whereas the subsequent
application had been filed after the auction had been held. The cause of
action in respect of both the applications was not same and therefore, in
our opinion, the second application for a different cause of action was
maintainable.
25. In the circumstances, we do not intend to disturb the judgment
delivered by the High Court. However, looking at the nature of litigation
faced by the auction purchaser, we modify the order and direct that the
amount already paid by the auction purchaser shall be returned to the
auction purchaser with simple interest at the rate of 10% till the said
amount is paid.
26. In exercise of our powers under Article 142 of the Constitution of
India, we further direct that before 30th November, 2016, the creditor bank
shall give intimation of the total amount payable by the borrowers ( i.e.
principal amount and interest, including penal interest, if any) as on 1st
December, 2016 and if the said amount is not paid by the borrowers before
10th day of December, 2016, it would be open to the creditor bank to sell
the flat by holding an auction, without giving any further notice to the
borrowers but after giving a 30 days’ public notice for the sale of the
flat in one English leading newspaper and in one local newspaper, so as to
recover its dues.
27. The appeals are disposed of in terms of the aforestated modification
with no order as to costs.
……………………………..J
(ANIL R. DAVE)
……………………………..J
New Delhi. (UDAY UMESH LALIT)
NOVEMBER 8, 2016.