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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.

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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.

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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.