REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.    2928-2930          OF 2018 [Arising out of SLP (C) Nos. 10215-10217/2016]

ITC LIMITED                                                          …. APPELLANT

VERSUS

BLUE COAST HOTELS LTD. & ORS.                           ….RESPONDENTS

WITH

CIVIL APPEAL Nos.   2931-2933        OF 2018 [Arising out of SLP (C) Nos. 10196-10198/2016]

J U D G M E N T  

S. A. BOBDE, J.  

1. Leave granted.

2. The auction purchaser ITC Ltd. is before us in the appeals arising

out of SLP (C) Nos.10215-10217/2016. The sale of a five star luxury

hotel property purchased in a public auction was set aside by an order1

of  the  Bombay  High  Court  in  favour  of  the  debtor  Blue  Coast   

Hotels Ltd.   

1 Dated 23.03.2016 1

3. The circumstances under which the auction purchaser purchased

the hotel property are as follows:-

Industrial  Financial  Corporation  of  India  (IFCI),  [filed  appeals

arising  out  of  SLP  (C)  Nos.10196-10198/2016  in  this  Court],  the

secured  creditor  (hereinafter  referred  to  as  ‘the  creditor’),  in  the

capacity  of  a  financial  institution  entered  into  a  corporate  loan

agreement2 with  Blue  Coast  Hotels  (hereinafter  referred  to  as  ‘the

debtor’)  for  a  sum  of  Rs.150  crores.  The  agreement  included  a

creation  of  a  special  mortgage  to  secure  the  corporate  loan.  The

mortgaged  property  comprised  of  the  whole  of  the  debtor’s  hotel

property- including the agricultural land on which the debtor was to

develop villas. The debtor defaulted in repayment of the loan and the

debtor’s account became a Non- Performing Asset (NPA)3.  

4.  Several  notices  intimating  default  in  payment  of  the  total

outstanding amount of Rs.133.18 crores were sent by the creditor to

the  debtor. Upon  failure  to  remit  the  overdue  amount  despite  the

notices,  a  notice4 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”) was sent by

the creditor calling upon the debtor to pay the amount overdue within

a period of 60 days.

2 Dated 26.02.2010 3 w.e.f. 30.09.2012 4 Dated 26.03.2013

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5. In  reply  to  the  said  notice,  the  debtor  sent  the  creditor  a

proposal5 for  extension of time for the payment of the outstanding

dues. The High Court held that the creditor’s failure to deal with this

representation constituted a violation of Section 13 (3A) of the Act.

Further, the High Court held that the notice issued under Section 13

(2) by the creditor comprising of agricultural property despite the bar

under Section 31 (i) of the Act is contrary to the law since the land

was not converted into non-agricultural land. The High Court also held

that the auction/sale of the property based upon symbolic possession

of the property is contrary to the scheme of the Act and the Rules.  

6. On  18.06.2013,  a  notice  was  issued  under  Section  13  (4)

whereby symbolic possession of the hotel property was taken over by

the creditor. The debtor filed a securitization application6 before the

Debts Recovery Tribunal (hereinafter referred to as ‘the DRT’) against

the  taking  over  of  the  symbolic  possession  by  the  creditor. In  the

meanwhile, the creditor published the first auction sale notice7 with a

reserve price of Rs. 403 crores which came to be postponed in view of

the negotiations between the parties for the repayment of the dues.

Upon default in the repayment of the outstanding amount, a second

sale notice was published on 09.01.2014 with the same reserve price.

5 Dated 27.05.2013 6 Dated 31.07.2013 7 On 04.09.2013

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The DRT passed an interim order,8 directing the creditor to defer the

acceptance of bids and not to take any further steps for sale of the

property for the next 60 days. Subsequently, no bids were received

and the auction failed.

7. The creditor  challenged the interim order  passed  by the  DRT

order before Debts Recovery Appellate Tribunal (hereinafter referred to

as ‘the DRAT’). In the challenge, the Appellate Tribunal directed for the

second appeal to be disposed off within a month by the DRT.

8. The DRT disposed off the second appeal and set aside the notice

under Section 13(2)9 on the ground of non compliance with Section

13(3A)  and  for  issuance  of  the  demand  notice  jointly  for  the

mortgaged land comprising of agricultural land to which the provisions

of the Act did not apply as per Section 31(i) of the Act.

9. The creditor filed an appeal to the order of the DRT10 in the DRAT

which came to be allowed11 and the validity of the notice issued under

Section 13(2) was upheld. Against the order of the DRAT setting aside

the order of the DRT, the debtor filed the Writ Petitions leading up to

the present SLP, in the High Court.

8  Vide order dated 6.02.2014  9  Vide order dated 26. 03.2013 10 Vide order dated 31.03.2014 11 Vide order dated 10.09.2014

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The Auction Sale

10. On 04.09.2013, the creditor published a Notice of Sale by Public

Auction in the newspaper fixing the date of auction as 09.10.2013 at a

reserve price  of  Rs  403 crores.  In  view of  this,  the  debtor  sent  a

letter12 to  the  creditor  undertaking  that  it  will  pay  all  outstanding

installments by 31.12.2013 and that the sale of assets be deferred

upto the aforesaid date. The debtor further stated that they shall not

proceed in respect of their Securitization Application13 before the DRT.

In pursuance of it, the creditor deferred the sale by issuing a public

notice  on  08.10.2013  and  granted  the  debtor  an  opportunity   

to  clear  the  loan,  however, the  creditor  extended  repayment  only   

by 15-20 days.  

11. Thereafter,  on  25.11.2013,  the  debtor  gave  a  letter  of

undertaking  accepting  the  schedule  given  by  the  creditor  and  also

acknowledging the right of the creditor to sell the assets in case of

default as per the schedule.   

12. On 30.12.2013, the debtor sought further time to repay the loan

to which the creditor issued a notice taking over symbolic possession.

13. On 09.01.2014, the creditor published a second notice of sale at

the  same reserved  price  of  Rs.  403  crores.   The DRT14 passed  an

12 Dated 19.09.2013 13 Dated 31.07.2013 14 Vide order dated 06.02.2014

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interim order directing the creditor to defer the acceptance of the bids

and not take any further steps with regard to the sale of the property

for 60 days.  

14. On  08.10.2014  the  creditor  issued  a  third  Notice  of  Sale  by

public auction fixing the auction on 12.11.2014 at a reserve price of  

Rs. 542.57 crores. Pursuant to the writ petitions filed by the debtor,

the High Court15 allowed the bids to be received for the sale of the Goa

Hotel to be held in a sealed cover till the next date of hearing which

was  fixed  to  be  on  19.11.2014.  However,  no  bids  were  received

pursuant to the 3rd Public Auction Notice.  

15. In the meanwhile, the debtor wrote to the creditor stating that

the corporate loan will be taken over by Hyatt who were the operating

service  provider  for  the  hotel.  Hyatt  in  turn  wrote  to  the  creditor

stating that they will not be responsible for the repayment of the loan.

On 31.12.2014, a fourth and fresh notice for conducting the auction

sale of the Goa Hotel was issued by the creditor setting the reserve

price at Rs. 515.44 crores. This notice led to the sale of the Goa Hotel

to ITC Ltd. (hereinafter referred to as ‘the auction purchaser’).

Findings of the High Court

15 Vide order dated 11.11.2014 6

16. The  parties  eventually  moved  the  High  Court  by  way of  writ

petitions  in  its  jurisdiction  under  Article  226  of  the  Constitution  of

India.  Three writ petitions were filed:- (i) Writ  Petition  No.  2698  of  2014  (renumbered  as  222  of

2015) was filed on 04.10.2014 by the debtor challenging

the order of the DRAT.16

(ii) Writ Petition No. 1150 of 2015 was filed on 02.03.2015 by

the debtor against the order of handing over possession

passed by the District Magistrate. 17

(iii) Writ Petition No. 2486 of 2015 was filed on 19.03.2015 by

the debtor challenging the sale of the secured assets in an

auction on 25.02.2015.

The writ petitions were filed before the Panaji Bench of the High

Court at Goa, though eventually they were heard by the Bombay High

Court.  The High Court set aside the judgment of the DRT and held the

entire proceedings for recovery and sale of the Goa Hotel to be illegal

being in violation of the Act.

17. In brief the High Court held that:- (i) The recovery proceedings were a breach of Section 13 (3A)

for failure of the creditor to reply to the representation of

the debtor and reject the same by a reasoned order.   (ii) That  a  portion  of  the  land mortgaged by the debtor  as

security interest consisted of agricultural land to which the

16 Order dated 10.09.2014 17 Order dated 26.02.2015

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provisions of the Act do not apply.  The land, therefore,

could not have been recovered.   (iii) The proceedings under  Section 14 were  initiated by the

creditor who was not a secured creditor after having sold

the property in auction to the auction purchaser.   (iv) It  was  incumbent  of  the  creditor  to  take  physical

possession of the property before putting it to sale in an

auction.  

(v) Lastly,  having  regard  to  the  manner  in  which  the

proceedings  of  the  auction  sale  were  conducted,  it  was

held that they were vitiated by fraud and collusion.  

Section 13 (3A) and its True Construction

18. One of the main contentions on behalf of the debtor which found

favour with the High Court was that after the creditor issued the notice

under Section 13(2), the debtor made a representation asking for a

reschedulement  of  the  loan  which  the  creditor  neither  considered

(constituting a breach of sub-section (3A) which is mandatory), nor

communicated  the  reasons  for  non-acceptance  thereof.  Thus,  the

subsequent  action  of  the  creditor  in  resorting  to  a  measure  under

Section 13(4) is liable to be annulled.  

19. The statutory scheme in this regard has been enumerated under

Section 13 of the Act18.  

18 13. Enforcement of security interest 8

20. The  Security  Interest  (Enforcement)  Rules,  2002  (hereinafter

referred to as ‘the Rules’)  framed under the Act19 elaborate on the

manner in which the representation of the borrower is required to be

dealt with. Section 13 (4) enables any creditor to enforce any security

interest without the intervention of a court or tribunal. The procedure

prescribed is that after classifying the debt as a non-performing asset,

(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of this Act.  (2)  Where  any  borrower, who  is  under  a  liability  to  a  secured  creditor  under  a  security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).  (3)……………. (3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable  or  tenable,  he  shall  communicate  within  fifteen  days  of  receipt  of  such representation or objection the reasons for non-acceptance of the representation or objection to the borrower:  PROVIDED that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal  under section 17 or the Court of District  Judge under section 17A.  (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section  (2),  the  secured  creditor  may take  recourse  to  one  or  more  of  the  following measures to recover his secured debt, namely:--  (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;  (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: PROVIDED that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:  PROVIDED FURTHER that where the management of whole of the business or part of  the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt.  (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;  

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the creditor may, by a notice in writing require the debtor/borrower to

discharge his  liabilities  within  60 days.  On receipt  of  a  notice,  the

borrower  may  make  a  representation  or  raise  any  objection.  The

creditor is then bound to consider the representation or objection.  If

the creditor  comes to the conclusion that the representation is  not

acceptable  or  tenable,  the  creditor  is  required  to  communicate  the

reasons for the non-acceptance of the representation/ objection within

fifteen days.  Where the borrower fails to discharge his liability in full,

the creditor may take any of the actions under sub- section (4) which

include the taking over of possession of the secured assets et cetera.  

(d) require at any time by notice in writing, any person who has acquired any of the secured assets  from the borrower  and from whom any money is  due or may become due to  the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.  (5)……………… (6)……………… (7)……………… (8)……………… (9)……………… (10)……………. (11)…………… (12)……………. (13)……………. 19 3-A. Reply to Representation of the borrower.-  (a) After issue of demand notice under sub-section (2) of section 13, if the borrower makes any representation or raises any objection to the notice, the Authorised Officer shall consider such representation or objection and examine whether the same is acceptable or tenable.  (b) If on examining the representation made or objection raised by the borrower, the secured creditor is satisfied that there is a need to make any changes or modifications in the demand notice, he shall modify the notice accordingly and serve a revised notice or pass such other suitable  orders  as  deemed necessary, within  fifteen  days  from the  date  of  receipt  of  the representation or objection.  (c) If on examining the representation made or objection raised, the Authorized Officer comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within fifteen days of receipt of such representation or objection, the reasons for non-acceptance of the representation or objection, to the borrower.   

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21. Rule 3A of the Rules requires the authorized officer who is an

officer specified by the Board of Directors of the secured creditor to

consider  the  representation  and  modify  the  notice  of  demand  if

satisfied of the need to do so in that regard. If the authorized officer

comes to the conclusion that such representation or objection is not

tenable  or  acceptable,  he  must  communicate  the  reasons  for

non-acceptance of the representation or objection within fifteen days.  

22. The Act and the Rules thus provide for a locus poenitentiae.  The

borrower  may  raise  an  objection  or  make  a  representation  of  any

nature that the creditor must consider, and if found not acceptable,

may  reject  the  same  before  proceeding  to  resort  to  any  of  the

measures provided by Section 13(4) of  the Act.  The borrower may

thus  raise  an  objection  against  the  proposed  measures  or  make a

representation  explaining  the  circumstances  in  which  he  cannot

discharge his liabilities and propose reschedulement. This may result in

reconsideration by the creditor of whether or not it would be prudent

to  carry  out  the  proposed  measures  and  may  even  result  in  a

renovation of the contract.

23. Sub-section (3A) of Section 13  was introduced in the Act by the

Parliament in pursuance of the following observations of this Court in

Mardia20 Chemicals:

20 (2004) 4 SCC 311 11

“45.  …The  purpose  of  serving  a  notice  upon  the borrower under sub-section (2) of Section 13 of the Act  is,  that  a  reply  may  be  submitted  by  the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) of Section  13  in  case  of  non-compliance  with  notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic  measures under sub-section (4) of Section 13 of the Act. Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in reply  to  the  notice  served  upon  them  before proceeding to take measures under sub-section (4) of  Section  13.  Such  reasons,  overruling  the objections  of  the  borrower,  must  also  be communicated  to  the  borrower  by  the  secured creditor. It will only be in fulfillment of a requirement of  reasonableness  and  fairness  in  the  dealings  of institutional financing which is so important from the point  of  view of  the  economy of  the  country  and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and  being  made  liable  for  the  unsavoury  steps contained under  sub-section (4)  of  Section 13.  At the same time, more importantly, we must make it clear  unequivocally  that  communication  of  the reasons  for  not  accepting  the  objections  taken  by the  secured  borrower  may  not  be  taken  to  give occasion to resort to such proceedings which are not permissible  under  the  provisions  of  the  Act.  But communication  of  reasons  not  to  accept  the objections of the borrower, would certainly be for the purpose  of  his  knowledge  which  would  be  a  step forward  towards  his  right  to  know as  to  why  his objections have not been accepted by the secured

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creditor  who  intends  to  resort  to  harsh  steps  of taking  over  the  management/business  of  viz. secured  assets  without  intervention  of  the  court. Such  a  person  in  respect  of  whom  steps  under Section 13(4) of the Act are likely to be taken cannot be  denied  the  right  to  know  the  reason  of non-acceptance and of his objections. It is true, as per  the  provisions  under  the  Act,  he  may  not  be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of  time  unless  his  right  to  approach  the  Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act.”

 (emphasis supplied)

24. The Parliament transformed the observations of this Court into a

provision in the Act with a plain intention to introduce a pause for the

creditor to rethink and reconsider the action proposed by the debtor.

It  is  a  departure  from the usual  steps  that  an ordinary creditor  is

bound to take for recovering the loan i.e. through the intervention of

the Court.  

25. The question that arises for consideration before us is whether

the Parliament intended for a total invalidity to result from the failure

to reply and give reasons for the non-acceptance of the borrower’s

representation. In other words, whether sub-section (3A) of Section 13

is mandatory or directory in nature.   

26. There is no doubt that if a reply with reasons is an integral and

indispensable  part  of  the  statutory  scheme,  the  Courts  would  not

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excuse a departure from it.  But, on the other hand, if the reply is

merely  a  direction  and  not  of  substance  to  the  scheme,  the

non-compliance may be excused.   

27. This  question  must  be  answered  upon  a  construction  of  the

statute according to its true intent by taking into account the language

in which the intent is clothed. In a passage from Crawford’s Statutory

Construction, it is stated -

“The question as to whether a statute is mandatory or  directory  depends  upon  the  intent  of  the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature  must  govern,  and  these  are  to  be ascertained  not  only  from the  phraseology  of  the provision,  but  also  by  considering  its  nature,  its design,  and  the  consequences  which  would  follow from construing it the one way or the other.”21

This  has  been  followed  in  several  decisions  of  the  Supreme

Court22. Subbarao, J. in  State of U.P. v. Babu Ram Upadhya23 points

out,  "For ascertaining the real intention of the Legislature, the court

may consider inter alia, the nature and design of the statute, and the

consequences which would follow from construing it the one way or 21 Passage from CRAWFORD: Statutory Construction, p. 516  22 State of U.P.v. Manbodhan Lal Shrivastava, AIR 1957 SC 912, p. 918: 1958 SCR 533; State of U.P. v. Baburam, Upadhya,  AIR 1961 SC 751, p. 765 : (1961) 2 SCR 679;  Article 143 of the Constitution of India, In the matter of, supra, p. 769; State of Mysore v. V.K. Kangan, AIR 1975 SC 2190, p. 2192: (1976) 2 SCC 895; Govindlal Chhagan-lal Patel v. Agriculture Produce Market Committee, AIR 1976 SC 263, p. 267 : (1976) 1 SCC 369; Ganesh Prasad Sah Kesari v. Lakshmi Narayan,  (1985) 3 SCC 53, pp. 59, 60 : AIR 1985 SC 964; B.P. Khemka Pvt. Ltd. v. Birendra Kumar Bhowmik, (1987) 2 SCC 407, p. 415 : AIR 1987 SC 1010; Owners and Parties interested in M.V. "Vali Pero" v. Fernandes Lopez, AIR 1989 SC 2206, p. 2213 : (1989) 4 SCC 671; State of M.P.  v.  Pradeep  Kumar,  (2000)  7  SCC  372,  p.  377  :  (2000)  10  JT  349;  Sarla  Goel  v. Krishanchand, (2009) 7 SCC 658 pp. 668, 669 para 30 : (2009) 9 JT 21. 23 AIR 1961 SC 751

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the other;  the impact of other provisions whereby the necessity of

complying  with  the  provisions  in  question is  avoided;  the  cir-

cumstances, namely, that the statute provides for a contingency of the

noncompliance with the provisions; the fact that the non-compliance

with the provisions is or is not visited by some penalty; the serious or

the trivial consequences, that flow therefrom; and above all, whether

the object of the legislation will be defeated or furthered".

28. We find the language of sub-section (3A) to be clearly impulsive.

It states that the secured creditor “shall consider such representation

or  objection  and  further, if  such  representation  or  objection  is  not

acceptable  or  tenable,  he  shall  communicate  the  reasons  for

non-acceptance” thereof. We see no reason to marginalize or dilute the

impact of the use of the imperative ‘shall’ by reading it as ‘may’. The

word  ‘shall’  invariably  raises  a  presumption  that  the  particular

provision is imperative24.

29. There is  nothing in the legislative scheme of  Section 13 (3A)

which requires the Court to consider whether or not, the word ‘shall’ is

to  be  treated  as  directory  in  the  provision.   As  the  Section  stood

originally, there was no provision for the above mentioned requirement

of a debtor to make a representation or raise any objection to the

notice  issued  by  the  creditor  under  Section  13(2).   As  it  was

24 State of U.P. v. Manbodhan Lal Shrivastava, AIR 1957 SC 912, p. 917 15

introduced via sub-section (3A), it could not be the intention of the

Parliament for the provision to be futile and for the discretion to ignore

the objection/representation  and proceed to  take measures,  be left

with the creditor.  There is a clear intendment to provide for a  locus

poenitentiae which requires an active consideration by the creditor and

a reasoned order as to why the debtor’s representation has not been

accepted.  

30. Moreover,  this  provision provides  for  communication  of  the

reasons  for  not  accepting  the  representation/objection  and  the

requirement  to  furnish  reasons  for  the  same.   A  provision  which

requires reasons to be furnished must be considered as mandatory.

Such  a  provision  is  an  integral  part  of  the  duty  to  act  fairly  and

reasonably  and  not  fancifully.   We  are  not  prepared  in  such

circumstances  to  interpret  the  silence  of  the  Parliament  in  not

providing  for  any  consequence  for  non-compliance  with  a  duty  to

furnish  reasons.  The  provision  must  nonetheless  be  treated  as

‘mandatory’.  

We agree with the view of this Court in this regard in  Mardia

Chemicals Ltd. v. Union of India25, Transcore v. Union of India26 and

Keshavlal Khemchand & Sons (P) Ltd. v. Union of India27.

25 (2004) 4 SCC 311 (para 45, 47, 77 and 80) 26 (2008) 1 SCC 125 (para 24 and 25) 27 (2015) 4 SCC 770 (para 19 and 61)

16

We also  approve  of  the  view  of  several  High  Courts  in  this

regard28.

31. It was submitted on behalf of the creditor that the conduct of the

debtor does not warrant an interference in this case. However, we are

of the view that the construction of the Act should not be affected by

the facts of a particular case.  For, indeed, where the remedy invoked

is  a  discretionary  remedy,  the  Court  may  deny  relief  if  the

circumstances so warrant.    

32. In the present case, it is a fact that the creditor has not replied

to the debtor’s representation29, and thus appears to be in breach of

Section  13  (3A),  but  the  following  attendant  circumstances  are

important:

(i) On 26.03.2013, the creditor issued a notice under Section

13(2) to the debtor to discharge his liabilities within 60

days.  On 27.05.2013 the debtor made a representation to

the  creditor  containing  a  proposal  for  reschedulement

28 Kiran Devi Bansal v. DGM SIDBI, AIR 2009 Guj 100 (DB)(para 9 and 10); Clarity Gold Pvt. Ltd. v. State Bank of India, AIR 2011 Bom. 42 (DB)(para 11, 12 and 13); Vinay Container Services Pvt. Ltd. v. Axis Bank, 2011 (1) Mh. L.J. 882 (para 6); Krushna Chandra Sahoo v. Bank of India, AIR 2009 Orissa 35 (para 6 and 7); Tensile Steel Ltd. & Anr. v. Punjab and Sind Bank & Ors., AIR 2007 Guj 126 (para 21); M/s Jayant Agencies v. Canara Bank & Ors., Jharkhand HC in WP (C) No. 4048 of 2010 (para 27, 28, 29, 32 and 33); M/s Tetulia Coke Plant Pvt. Ltd. v. Bank of India, AIR 2013 Jhar 12 (para 5, 9, 20, 22, 23 and 24); Mrs. Sunanda Kumari v. Standard Chartered Bank, (2007) 135 Comp Cases 604 (Kar) (para 5); Palash Mukherjee v. U.O.I, W.P. 9876 (W) of 2014 Calcutta High Court (para 1, 2 and 67); Jaideep Singh and Ors. v. Union of India and Anr., 2008 2 GLT (91) (para 25 and 28); Malabar Sand and Stones (Pvt.) Ltd. v. Catholic Syrian Bank Ltd. & Ors., AIR 2013 Ker 25 (para 7, 8, 9 and 10). 29 Dated 27.05.2013

17

(which was the same as the one made as far back as on

22.08.2012) and reserving the right to file a reply. (ii) On  07.06.2013,  the  debtor  again  sent  a  proposal  for

extension  of  time for  repayment,  repeating  its  proposal

dated 27.05.2013. (iii) On  20.06.2013,  the  creditor  issued  the  notice  of

possession  under  Section  13(4).   The  taking  over  of

possession was purely symbolic.  We are informed that the

debtor is in possession of the hotel till date and is running

its business without any noteworthy repayment.     (iv) On the next day 21.06.2013, the debtor wrote a letter to

the creditor  seeking extension  of  time and enclosed  six

cheques for upfront payment of Rs.33.16 crores without

making  any  reference  to  the  notice  of  taking  over  of

possession. The cheques were dishonoured. (v) On 04.09.2013, the creditor published a Notice of Sale by

Public Auction in the newspaper fixing the date of auction

as 09.10.2013 at a reserve price of Rs. 403 crores. (vi) Following this the debtor sent a letter to the creditor on

19.09.2013 undertaking that it will  repay all outstanding

installments by 31.12.2013 and that the sale of assets be

deferred up to the said date.  The debtor further stated

that  it  shall  not  proceed  further  in  respect  of  their

Securitization Application before the DRT.  (vii) On 08.10.2013, the creditor deferred the sale by issuing a

public notice while considering the debtor’s proposal.

18

(viii) On 29.10.2013, the creditor granted an opportunity to the

debtor to clear the debt as stated in the debtor’s letter

dated 03.10.2013 wherein it sent forth another proposal

for  extension  of  time  for  repayment  stating  that  it  will

repay  a  principal  installment  of  the  corporate  loan  of  a

total of Rs. 89 crores by 31.12.2013. However, the creditor

only extended the time for repayment by 15-20 days. (ix) On 25.11.2013, “A Letter of Undertaking” was given by the

debtor  accepting  the  schedule  given  by  the  creditor  on

29.10.2013  and  also  acknowledging  the  right  of  the

creditor  to sell  the assets  in  case of  default  as  per  the

above mentioned schedule.  

(x) The creditor wrote to the debtor on 08.01.2014 informing

the  debtor  that  due  to  the  default  in  repayment,  the

creditor is proceeding with steps to recover the dues and

accordingly  rejected  the  debtor’s  request  letter  dated

30.12.2013 seeking further time to repay the outstanding

dues.  

33. From the above, it is clear that the creditor was induced by the

debtor  not  to  take  action  against  them  through  assurances  and

promises.  The creditor appeared to have entered into negotiations for

the settlement of the dues and even accepted cheques in repayment

19

much after  the notice30 under  Section 13(2) and after  the debtor’s

letter  of  representation31.   Many opportunities  were  granted by the

creditor  to  the  debtor  to  repay  the  debt  which  were  all  met  by

proposals for extension of time.  Eventually, the debtor even executed

“A Letter of Undertaking32” acknowledging the right of IFCI to sell the

assets in the case of default.

34. In  these circumstances,  we have no doubt that the failure to

furnish a reply to the representation is not of much significance since

we  are  satisfied  that  the  creditor  has  undoubtedly  considered  the

representation and the proposal for repayment made therein and has

in fact granted sufficient opportunity and time to the debtor to repay

the debt without any avail. Therefore, in the fact and circumstances of

this case, we are of the view that the debtor is not entitled to the

discretionary  relief  under  Article  226  of  the  Constitution  which  is

indeed an equitable relief.

Letter of Undertaking “Without Prejudice”

35. Much was sought to be made of the words “without prejudice” in

the letter33 containing the undertaking that if the debt was not paid,

the creditor could take over the secured assets. The submission on

behalf of the debtor that the letter of undertaking was given in the

30 Dated 26.03.2013 31 Dated 27.05.2013 32 On 25.11.2013 33 Dated 25.11.2013

20

course of negotiations and cannot be held to be an evidence of the

acknowledgement of liability of the debtor, apart from being untenable

in law, reiterates the attempt to evade liability and must be rejected.

The submission that the letter  was written without prejudice to the

legal rights and remedies available under any law and therefore the

acknowledgement or the undertaking has no legal effect must likewise

be  rejected.   This  letter  is  reminiscent  of  a  letter  that  fell  for

consideration in Spencer’s34 case as pointed out by Mr. Harish Salve,

“as a rule the debtor who writes such letters has no intention to bind

himself further than is bound already, no intention of paying so long

as he can avoid payment, and nothing before his mind but a desire,

somehow or other, to gain time and avert pressure.”

It was argued in a subsequent case35 that an acknowledgment

made “without prejudice” in the case of negotiations cannot be used as

evidence of anything expressly or impliedly admitted.  The House of

Lords observed as follows:

“But when a statement is used as acknowledgement for the purpose of s. 29 (5), it is not being used as evidence  of  anything.  The  statement  is  not  an evidence  of  an  acknowledgement.  It  is  the acknowledgement.”

Therefore, the without prejudice rule could have no application.

It said:

34 Spencer v. Hemmerde [1922] 2 AC 507, HL at 526 35 Bradford and Bingley vs. Rashid [2006]

21

“Here, the respondent, Mr. Rashid was not offering any concession. On the contrary, he was seeking one in respect of an undisputed debt. Neither an offer of payment nor actual payment.”  

We, thus, find that the mere introduction of the words “without

prejudice” have no significance and the debtor clearly acknowledged

the debt even after action was initiated under the  Act and even after

payment of a smaller  sum, the debtor has consistently  refused to   

pay up.  

36. All in all, as the matter stands, the debtor did not repay the loan.

The  debtor  managed  to  submit  a  letter  purporting  to  be  a

representation, containing a proposal for reschedulement made much

earlier  to  the  creditor’s  notice  and reserved  a  right  to  file  a  reply.

Apparently, the debtor induced the creditor to enter into negotiations

to ward off the reply and avoid the taking over of possession.  The

debtor ignored the symbolic possession taken over by the creditor and

continued  to  negotiate  and  even  gave  six  cheques  which  were

dishonoured.  The  debtor  then  gave  a  final  letter  of  undertaking

agreeing that the creditor could take over possession of the assets if

the debt was not repaid. All along, the debtor’s response has been that

of seeking extension of time to pay, with the usual unfulfilled promise

of repayment. We see no reason why the debtor should not be stopped

from  questioning  the  taking  over  of  possession,  particularly  since,

22

neither the debt nor the liability is in dispute. The debt has not been

repaid in fact, and the objection raised is merely on the ground that

the taking of assets is illegal because the creditor failed to reply to the

representation.

Inclusion of Agricultural Land as Security Interest in the Notice

of Recovery

37. One of the contentions raised on behalf of the debtor questioned

the correctness of the finding of the High Court on the ground that the

inclusion of agricultural land as security interest could not have been

validly included in the notice for recovery of the secured loan.  The

correctness of the finding of the High Court depends on the effect of

Section 31 (i) of the Act, which reads as follows:-

”31.  Provisions  of  this  Act  not  to  apply  in  certain cases-The provision of this Act shall not apply to-

(a)….

(b)….

(c)….

(e)….

(f)….

(g)….

(h)….

(i) any security interest created in agricultural land;

(j)….”

38. The purpose of enacting Section 31(i) and the meaning of the

term “agricultural land” assume significance.  This provision, like many 23

others  is  intended  to  protect  agricultural  land  held  for  agricultural

purposes  by  agriculturists  from the  extraordinary  provisions  of  this

Act,  which  provides  for  enforcement  of  security  interest  without

intervention of  the Court.  The plain intention of  the provision is  to

exempt  agricultural  land  from the  provisions  of  the  Act.   In  other

words, the creditor cannot enforce any security interest created in his

favour without intervention of the Court or Tribunal, if such security

interest is in respect of agricultural land.  The exemption thus protects

agriculturists from losing their source of livelihood and income i.e. the

agricultural  land,  under  the  drastic  provision  of  the  Act.  It  is  also

intended to deter the creation of security interest over agricultural land

as defined in Section 2 (zf)36. Thus, security interest cannot be created

in respect of property specified in Section 31.

39. In the present case, security interest was created in respect of

several parcels of land, which were meant to be a part of single unit

i.e. the five star hotel in Goa.  Some parcels of land now claimed as

agricultural  land  were  apparently  purchased  by  the  debtor  from

36 (zf) “security  interest”  means  right,  title  or  interest  of  any  kind,  other  than  those specified  in  section  31,  upon  property  created  in  favour  of  any  secured  creditor  and includes- (i) any mortgage, charge, hypothecation, assignment or any right, title or interest of any kind, on tangible asset, retained by the secured creditor as an owner of the property, given on hire or financial lease or conditional sale or under any other contract which secures the obligation to pay any unpaid portion of the purchase price of the asset or an obligation incurred or credit provided to enable the borrower to acquire the tangible asset; or (ii) such right, title or interest in any intangible asset or assignment or licence of such intangible asset which secures the obligation to pay any unpaid portion of the purchase price of the intangible asset or the obligation incurred or any credit provided to enable the borrower to acquire the intangible asset or licence of intangible asset;

24

agriculturists  and  are  entered  as  agricultural  lands  in  the  revenue

records.  The  debtor  applied  to  the  revenue  authorities  for  the

conversion of these lands to non-agricultural lands which is pending till

date due to policy decision.   

40. It is undisputed that these lands were mortgaged in favour of

the  creditor  under  a  deed  dated  26.02.2010.   Obviously, since  no

security interest can be created in respect of agricultural lands and yet

it was so created, goes to show that the parties did not treat the land

as agricultural land and that the debtor offered the land as security on

this basis. The undisputed position is that the total land on which the

Goa Hotel was located admeasures 182225 sq. mtrs.  Of these, 2335

sq. mtrs. are used for growing vegetables, fruits, shrubs and trees for

captive consumption of the hotel.   There is no substantial evidence

about the growing of vegetables but what seems to be on the land are

some trees bearing curry leaves and coconut.  This amounts to about

12.8 % of the total area.  

41. The Corporate Loan Agreement37 that deals with the mortgage in

question in the relevant clause38 reads as follows:-

“The Borrower shall create mortgage on Exclusive basis on the ‘Park Hyatt Goa Resort and Spa” Hotel Property admeasuring 1, 82, 225 Sq Mtrs with a built up  area  of  25182  Sq.  Mtrs  situated  at  263  C, Arossim, Canasaulim Goa.”

37 Dated 26.02.2010 38 Clause 2.1, part b

25

The mortgage is thus intended to cover the entire property of

the  Goa  Hotel.   Prima  facie, apart  from  the  fact  that  the  parties

themselves understood that the lands in question are not agricultural,

it also appears that having regard to the use to which they are put and

the purpose of such use, they are indeed not agricultural.   

42. At the outset, it was argued on behalf of the debtor that Section

31(i) is beyond the legislative competence of the Parliament since it is

only  the  State  Legislature  which  is  competent  to  legislate  on  land

under Entry 18 of List II.  This contention appears to be completely

untenable.  Though Section 31(i)  exempts agricultural  land from the

operation of the Act it is not possible to construe such a provision as a

legislation  on  agricultural  land.  In  fact,  it  is  quite  the  contrary.

Moreover, Section 31 (i) is one of the provisions in the Act which has

been held by this Court as referable to Entry 45 of List I, in Union of

India and Another v. Delhi High Court Bar Association and Ors.39.  The

Court held that:-

“14…….  Entry  45  of  List  I  relates  to  “banking”. Banking operations would inter alia, include accepting of loans and deposits, granting of loans and recovery of the debts due to the bank.  There can be little doubt that  under  Entry  45 of  List  I,  it  is  Parliament alone which can enact a law with regard to the conduct of business  by  the  banks.   Recovery  of  dues  is  an essential  function  of  any  banking  institution.   In exercise  of  its  legislative  power  relating  to  banking, Parliament  can  provide  the  mechanism  by  which

39 (2002) 4 SCC 275 26

monies due to the banks and financial institutions can be recovered.”

In  State  Bank  of  India  v.  Santosh  Gupta  and  Ors.40  

this Court concluded that the Act is referable to Entries 45 and 95 of  

List I.  It observed that:-

“43……. the entire Act, including Sections 17-A and 18-B, would in pith and substance be referable to Entries 45 and 95 of List I,….”

43. The validity of Section 31(i) which in any case deals with security

interest created over agricultural land and not agricultural land itself, is

an integral part of the Act and cannot be questioned on the ground of

legislative competence.

In A.S. Krishna and Ors. v. State of Madras41 this Court observed

as follows:-

“It  would  be  quite  an  erroneous  approach  to  the question to view such a statute not as an organic whole,  but  as  a  mere  collection  of  sections,  then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that  process  determine  what  portions  thereof  are intra vires, and what are not.”

Thus, this contention on behalf of the debtor must be rejected.

40 AIR 2017 SC 25 41 AIR 1957 SC 297

27

44. In  ‘Commissioner  of  Wealth  Tax,  Andhra  Pradesh  v.

Officer-in-Charge (Court of Wards) Paigah42,  this Court interpreted the

definition of the term ‘Agricultural Land’  with respect to Section 2(e)

of  the Wealth  Tax Act,  1957 that excluded the said term from the

definition of assets. This Court observed:-

“We  agree  that  the  determination  of  the character of land, according to the purpose for which it is meant or set apart and can be used, is  a  matter  which ought  to  be determined on the facts  of  each  particular  case.  What  is  really required to be shown is the connection with an agricultural purpose and user and not the mere possibility  of  user  of  land,  by  some  possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of "assets",  but its actual condition and intended user which has to  be  seen  for  purposes  of  exemption  from wealth-tax.  One of  the objects  of  the  exemption seemed to be to encourage cultivation or actual utilisation of land for agricultural purposes. If there  is  neither  anything  in  its  condition,  nor anything in evidence to indicate the intention of its owners or possessors,  so as to connect it  with an agricultural  purpose,  the  land  could  not  be "agricultural  land"  for  the  purposes  of  earning  an exemption under the Act. Entries in revenue records are, however, good prima facie evidence.”  

                (emphasis supplied)

Similarly, in the case of  Kunjukutty Saheb v. State of Kerala43,

this Court held as follows:

“We suppose that something or other can be, and often is, grown on any vacant land, but that would not  necessarily  make  it  agricultural  land  for  our

42 (1976) 3 SCC 864 43 (1972) 2 SCC 364

28

purposes.  To  give  an  example  the  possibility  of cultivating, or even the actual cultivation of, what is essentially  a  building  site  in  the  heart  of  a  town would not make it agricultural land. It is the purpose for which it is held that determines its character and the existence of a few coconut trees or a vegetable patch on the land cannot alter the fact that it is held for  purposes  of  building  and  not  for  purposes  of agriculture.”

In any event, having regard to the character of the land and the

purpose for which it is set apart, we are of the view that the land in

question is not an agricultural land.  The High Court mis-directed itself

in holding that the land was an agricultural  land merely because it

stood  as  such  in  the  revenue  entries,  even  though the  application

made for such conversation lies pending till date.

Transfer of Security Interest by IFCI to ITC

45. As noticed earlier, the creditor took over symbolic possession of

the property on 20.06.2013. Thereupon, it transferred the property to

the sole bidder ITC and issued a sale certificate for Rs.515,44,01,000/-

on 25.02.2015. On the same day, i.e., 25.02.2015, the creditor applied

for taking physical possession of the secured assets under Section 14

of the Act.  

46. According  to  the  debtor,  since  Section  14  provides  that  an

application for taking possession may be made by a secured creditor,

and  the  creditor  having  ceased  to  be  a  secured  creditor  after  the

29

confirmation  of  sale  in  favour  of  the  auction  purchaser,  was  not

entitled to maintain the application. Consequently, therefore, the order

of  the  District  Magistrate  directing  delivery  of  possession  is  a  void

order. This submission found favour with the High Court that held that

the  creditor  having  transferred  the  secured  assets  to  the  auction

purchaser  ceased to  be a secured creditor  and could  not  apply  for

possession. The High Court held that the Act does not contemplate

taking over of symbolic possession and therefore the creditor could not

have transferred the secured assets to the auction purchaser. In any

case, since ITC Ltd. was the purchaser of such property, it could only

take recourse to the ordinary law for recovering physical possession.  

47. We find nothing in the provisions of the Act that renders taking

over of symbolic possession illegal. This is a well- known device in law.

In  fact,  this  court  has,  although  in  a  different  context,  held  in

M.V.S.Manikayala  Rao  v.  M.Narasimhaswami44 that  the  delivery  of

symbolic  possession  amounted  to  an  interruption  of  adverse

possession of a party and the period of limitation for the application of

Article 144 of the Limitation Act would start  from such date of the

delivery.

48. The question, however, whether the creditor could maintain an

application of possession under Section 14 of the Act; even though it

44 AIR 1966 SC 470 30

had  taken  over  only  symbolic  possession  before  the  sale  of  the

property to the auction purchaser, depends on whether it remained a

secured creditor after having done so.   

Section 2(d)  of  the  Act  defines  `secured creditor’  to  mean a

"banking company" having the meaning assigned to it in clause (c) of

section 5 of the Banking Regulation Act, 1949;  

Clause  2(L)45 includes  debts  or  receivables  and  any  right  or

interest in the security whether full or part underlying such debt or

receivables or any beneficial interest in property vide (L)(i)(iv) & (v)46.

Sub-section (6) of Section 1347 posits that the transfer of the

secured asset by the secured creditor shall vest in the transferee all

the  rights  as  if  the  transfer  had  been  made  by  the  owner  of  the

secured asset.   

49. In Mulla’s the Transfer of Property Act48:-

45 2(L) SARFAESI Act 46  2 (l) "financial asset" means debt or receivables and includes—

(i) a claim to any debt or receivables or part thereof,  whether secured or unsecured; or (iv)  any right  or  interest  in  the security, whether  fall  or  part  underlying such debt  or receivables; or (v) any beneficial interest in property, whether movable or immovable, or in such debt, receivables, whether such interest is existing, future, accruing, conditional or contingent; or (vi)x x x  

47 13 (6) Any transfer  of  secured asset  after  taking possession thereof  or  take over  of management under sub-section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. 48 Page 104, 105

31

“The section (s.8) does not apply to court sales, for such sales effect a transfer by the operation of law.  The  principle  of  the  section  was,  however, applied  in  a  case  decided  by  Madras  High  Court where a debt for unpaid purchase money on a sale of  land  was  attached  and  sold,  and  the  auction purchaser was held entitled to the charge which the vendor had under s 55(4) (b) on the property in the hands of the buyer.  The court, after observing that the  present  section  did  not  apply  to  court  sales, said: The effect of applying s 8 is to strengthen the sale certificate by transferring the lien along with it.”

This Court observed in Abdul Aziz49 that a sale through court is

different from a sale inter parties:-  

“What is sold at a court sale is the right, title and interest of the judgment debtor, and the extent of that interest is a mixed question of fact and law to be decided according to the circumstances of each particular  case,  and depends upon what  the court intended to sell, and the purchaser intended to buy.”

We note that even though the entire right, title and interest were

purported to have been transferred, all the rights, transfer and interest

could not be said to have been transferred since the possession of the

property was not transferred to creditor. The possession was retained

by the debtor who continued to do business and receive rent from the

rooms  on  the  property  and  has  in  fact  continued  to  do  so   

till date.  There is no doubt that after taking over the property from

debtor, the creditor also acquired the right to receive the usufruct of

the property i.e. the rent in this case. However, this was an interest in 49  Abdul Aziz v. Appayasami (1904) ILR 27 Mad 131, 31 IA 1.

32

the property which was not at any point of time transferred to the

auction purchaser.

50. In this case, the creditor did not have actual possession of the

secured  asset  but  only  a  constructive  or  symbolic  possession.  The

transfer  of  the  secured  asset  by  the  creditor  therefore  cannot  be

construed to be a complete transfer as contemplated by Section 8 of

the Transfer of Property Act. The creditor nevertheless had a right to

take actual possession of the secured assets and must therefore be

held to be a secured creditor even after  the limited transfer to the

auction purchaser under the agreement50. Thus, the entire interest in

the property not having been passed on to the creditor in the first

place, the creditor in turn could not pass on the entire interest to the

auction purchaser and thus remained a secured creditor in the Act.

Findings of Fraud and Collusion by the High Court

51. Finally, the High Court  in its  judgment renders  a finding that

there  was in fact  fraud and collusion between the creditor  and the

auction purchaser.  According to the High Court, since the measures

were taken in breach of all laws, the inference of manipulation and

collusion cannot be ruled out.   

52. We fail to see how such a finding of manipulation and collusion is

sustainable on account of breach of law in the present case.  A risk of

50 Dated 25.02.2015 33

this  kind  taken  up  by  an  intending  purchaser  cannot  lead  to  an

inference of collusion.  Mainly, the finding is based on the fact that the

sale is a collusion because the auction purchaser was aware that a

dispute between the parties  was pending and still  went  ahead and

made a bid for the property.  It is not unusual in the sale of immovable

properties to come across difficulties in finding suitable buyers for the

property. We find that the property was eventually sold on the fourth

auction, and all the auctions were duly advertised.   

53. Another fact on the basis of which the High Court has observed

an inference of collusion is that the property was sold and the sale was

confirmed in favour of ITC Ltd. though a statement was made in the

morning of  23.02.2015 before  the DRT that  the sale  would  not  be

confirmed till the order is passed.  This seems to be recorded in the

order of the DRT.  However, what is overlooked is the fact that in the

statement on behalf of the creditor, the creditor only agreed to not

confirm the sale till 3 pm. In the absence of any finding as to what

actually transpired, it is not possible for us to infer manipulation and

collusion on this account.  There is no dispute that the property was

actually purchased by ITC Ltd. in pursuance of a public auction and

that the entire amount of sale consideration has been deposited by it.

54. We have anxiously considered the entire matter and find that the

undisputed facts of the case are that a loan was taken by the debtor

34

which was not paid, the debtor did not respond to a notice of demand

and made a representation which was not replied to in writing by the

creditor.   The  creditor,  however,  considered  the  proposals  for

repayment of the loan as contained in the representation in the course

of  negotiations which continued for  a considerable amount of  time.

Several  opportunities  were  in  fact  availed  of  by the debtor  for  the

repayment  of  the  loan  after  the  proceedings  were  initiated  by  the

secured  creditor.  The  debtor  failed  to  discharge  its  liabilities  and

eventually undertook that if the debtor fails to discharge the debt, the

creditor would be entitled to take realize the secured assets.  

55. As held, we are of the view that non-compliance of sub-section

(3A) of Section 13 cannot be of any avail to the debtor whose conduct

has been merely to seek time and not repay the loan as promised on

several occasions.

56. This Court  in the case of  State of Maharashtra v.  Digambar51

observed as follows:-   

“19. Power of the High Court to be exercised under Article 226 of the Constitution, if is discretionary, its exercise must be judicious and reasonable, admits of no  controversy.  It  is  for  that  reason,  a  person’s entitlement for relief from a High Court under Article 226 of the Constitution, be it against the State or anybody else, even if is founded on the allegation of infringement  of  his  legal  right,  has  to  necessarily depend upon unblameworthy conduct of the person seeking  relief,  and  the  court  refuses  to  grant  the

51  (1995) 4 SCC 683 35

discretionary relief to such person in exercise of such power, when he approaches it with unclean hands or blameworthy conduct.”

It  relied  on  the  judgment  of  the  Privy  Council  in  Lindsay

Petroleum Co. v. Hurd52, where the Privy Council observed:-  

“…….Two  circumstances,  always  important  in  such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either  party  and  cause  a  balance  of  justice  or injustice in taking the one course or the other, so far as it relates to the remedy.”

57. Therefore,  the  debtor  is  not  entitled  for  the  discretionary

equitable relief under Articles 226 and 136 of the Constitution of India

in the present case.

58. We accordingly, set aside the impugned judgment of the High

Court and direct the debtor and its agents to handover possession   

of  the  mortgaged  properties  to  the  auction  purchaser  within  a   

period of six months from the date of this judgment along with the

relevant accounts.

59. Appeals are allowed accordingly.   

….………………………………..J. [S.A. BOBDE]

….………………………………..J.  [L. NAGESWARA RAO]

NEW DELHI  MARCH 19, 2018

52 (1874) 5 PC 221 36