G.Anil Chand vs Authorized Officer,

All the above three writ petitions were heard together and are being disposed of by this common judgment and order.

2 We have heard Sri R.Sushanth Reddy, learned counsel and Sri Vivek Jain, learned counsel for the petitioners in W.P.No.23804 of 2018 and

W.P.No.23805 of 2018; Sri Ashwin Kumar Jaiswal, learned counsel for the petitioners in W.P.No.25432 of 2018; and Sri Sharad Sanghi,

learned counsel for the respondents in all the writ petitions.

W.P.No.23804 of 2018:

3 This writ petition has been filed by G.Anil Chand and G.Ramesh Kumar assailing the legality and validity of the order dated 02.05.2018 passed

by the Debts Recovery Appellate Tribunal, Kolkata, in Appeal No.207/2017/532-534, confirming the order dated 23.05.2017 passed by the

Debts Recovery Tribunal-II at Hyderabad (Tribunal) in S.A.No.651 of 2017.

4 Petitioners are the auction purchasers who had purchased the schedule property through auction sale. They are aggrieved by the order of the

Tribunal setting aside the auction sale which order has been affirmed by the Debts Recovery Appellate Tribunal, Kolkata (Appellate Tribunal) in

appeal filed by the petitioners.

5 Facts leading to filing of the present writ petition are, briefly, narrated hereunder.

6 Petitioners had purchased the schedule property bearing open plot No.66 in Sy.Nos.56, 63, 64 and 66, admeasuring 240 Sq.Yards situated at

Ward No.4, Miyapur village, Boduppal Gram Panchayat under Ghatkesar Mandal in auction proceedings dated 13.11.2014. The auction

proceedings were conducted to realize the loan amounts in respect of the loan account of respondent Nos.2 and 3 i.e. Y.Kiran Kumar and Smt.

Aarthi Devi Mukhya, who had defaulted in repayment of the loan availed of from respondent No.4 â€" Manipal Housing Finance Syndicate

Limited for which the loan account was classified as Non-Performing Asset (NPA) by respondent No.4. In the auction which was held on

13.11.2014 petitioners were the successful bidders. They had earlier paid an amount of Rs.2,16,000-00 equivalent to 10% of the reserve price on

24.09.2014 to respondent No.4 and paid a further amount of Rs.3,25,000-00 on 13.11.2014; thus paying an amount equivalent to 25% of the

auction sale amount as on the date of the auction.

7 By letter dated 25.11.2014 petitioners sought additional time from respondent No.4 for payment of the balance sale consideration on the ground

that they were processing a housing loan from Canara Bank. This was accepted by respondent No.4, whereafter authorized officer of respondent

No.4 i.e. respondent No.1 informed the petitioners vide letter dated 26.11.2014 that additional time was granted for availing loan from Canara

Bank to pay the balance 75%.

8 On 10.12.2014 petitioners paid the balance 75% of the sale consideration to respondent No.4 by way of a cheque which was directly issued by

Canara Bank in favour of respondent No.4. On such payment, a sale certificate was issued by respondent No.4 in favour of the petitioners on the

same day i.e. on 10.12.2014.

9 Petitioners have stated that after purchasing the aforesaid property which was an empty land, they had obtained building permission from the

competent authority and constructed a house thereon. The construction was completed in the year 2015.

10 Respondent Nos.2 and 3 i.e. the borrowers challenged the auction proceedings before the Tribunal belatedly contending that the auction

proceedings came to their knowledge only on 05.01.2015 whey they found some unknown persons on the schedule property. On various

grounds, the auction sale was challenged by respondent Nos.2 and 3 before the Tribunal by filing securitization application under Section 17 of the

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’

hereinafter). The same was registered as S.A.No.485 of 2015 before the Debts Recovery Tribunal-I, Hyderabad which was subsequently

renumbered before the Tribunal as S.A.No.651 of 2017. Respondent No.4 contested the said securitization application by filing reply statement.

Likewise, petitioners who were arrayed as respondent Nos.2 and 3 before the Tribunal also filed reply statement opposing the securitization

application. After hearing the parties and on due consideration, Tribunal held that respondent No.4 had violated Rule 8 (1) of the Security Interest

(Enforcement) Rules, 2002 (referred to hereinafter as ‘the SARFAESI Rules’). Tribunal further held that there was violation of Rule 9 (4) of

the SARFAESI Rules in carrying out the auction sale. Resultantly, the securitization application was allowed by quashing the possession notice,

auction sale held on 13.11.2014 and the consequential sale certificate. Respondent No.4 was directed to restore possession of respondent Nos.2

and 3 over the schedule property as well as to refund the amount deposited by the petitioners with simple interest at the rate of 6% p.a. from the

date of deposit till the date of payment.

11 Petitioners challenged the aforesaid order of the Tribunal dated 23.05.2017 before the Appellate Tribunal by filing appeal under Section 18 of

the SARFAESI Rules, which was registered as Appeal No.208/2017/532-534. Respondent No.4 also preferred appeal before the Appellate

Tribunal against the said order of the Tribunal which was registered as Appeal No.207/2017/532-534. By the order dated 02.05.2018, Appellate

Tribunal took the view that there was no error in the impugned order of the Tribunal. Therefore, the appeal preferred by the petitioners was

dismissed. By separate order passed on the same day, Appellate Tribunal also dismissed the appeal of respondent No.4. Aggrieved, the present

writ petition has been filed.

12 Respondent Nos.2 and 3 (borrowers) have filed counter affidavit. It is submitted that writ petition is not maintainable as the order dated

02.05.2018 is a consent order. Respondents Nos.2 and 3 have denied the submissions made by the petitioners. Therefore, they seek dismissal of

the writ petition.

W.P.No.23805 of 2018:

13 Petitioners of W.P.No.23804 of 2018 have filed the present writ petition seeking the same reliefs as in W.P.No.23804 of 2018. It is not

understood as to why the petitioners have filed the present (second) writ petition seeking the same reliefs as in W.P.No.23804 of 2018 when the

said writ petition was pending. In fact, there is no mention about why filing of the second writ petition was necessitated. It may, therefore, be not

necessary for us to refer to the pleadings in W.P.No.23805 of 2018. Be it stated that respondent No.2 i.e. Y.Kiran Kumar has filed counter

affidavit, which is identical to the one filed in W.P.No.23804 of 2018.

W.P.No.25432 of 2018:

14 This writ petition has been filed by Manipal Housing Finance Syndicate Limited as the petitioner challenging the appellate order dated

02.05.2018 dismissing its appeal. In this writ petition the borrowers i.e. Y. Kiran Kumar and Smt. Aarthi Devi Mukhya have been arrayed as

respondent Nos.1 and 2, whereas the auction purchasers who are the petitioners in W.P.No.23804 of 2018 and W.P.No.23805 of 2018 have

been arrayed as respondent Nos.3 and 4.

15 Facts narrated by the petitioner Manipal Housing Finance Syndicate Limited (for short, ‘Manipal Housing’ hereinafter) may be briefly

adverted to.

16 It is stated that Manipal Housing is a financial institution within the meaning of Section 2 (zb) of the SARFAESI Act. Ministry of Finance,

Government of India, vide notification dated 10.11.2003 has recognized the petitioner Manipal Housing as a financial institution authorized to take

action under the SARFAESI Act.

17 Respondent Nos.1 and 2 (borrowers) had applied for housing loan form Manipal Housing which was sanctioned on 31.05.2010 for an amount

of Rs.18.00 lakhs. For the purpose of the housing loan, respondent Nos.1 and 2 deposited the original title deeds of the schedule property in

favour of Manipal Housing on 03.06.2010 as primary security for the housing loan sanctioned to them.

18 Respondents Nos.1 and 2 defaulted in repayment of the loan. Consequently their loan account became irregular from 30.11.2011. Following

the laid down norms, the loan account of respondent Nos.1 and 2 was declared as Non Performing Asset (NPA) on 30.07.2012.

19 Notice under Section 13 (2) of the SARFAESI Act was issued by Manipal Housing to respondent Nos.1 and 2 on their last known address on

31.07.2012. However, the said notice was returned unserved with the postal remark that there was no such person. It is stated that the address of

respondent Nos.1 and 2 mentioned in the Section 13 (2) notice is the same as the one furnished by the said respondents themselves in their

securitization application filed before the Tribunal under Section 17 of the SARFAESI Act.

20 Be that as it may, since the said notice was returned unserved, the same was published in the newspapers â€" Financial Express in English and

Andhra Prabha in Telugu language. There was no response to such notice as published in the newspapers.

21 Manipal Housing issued further notice dated 15.03.2013 under Section 13 (4) (ia) of the SARFAESI Act to the borrowers, which was also

published in the newspapers â€" Financial Express in English and Andhra Prabha in Telugu language on 20.03.2013. The said notice was affixed at

the boundary wall of the said property as well. Thus it is stated that there was full compliance to the requirements of Rules 8 (1) and 8 (2) of the

SARFAESI Rules.

22 Thereafter, notice for sale under Rule 8 (6) of the SARFAESI Rules was issued on 25.09.2014. The same was dispatched to respondent

Nos.1 and 2 in their last known address by registered post with acknowledgement due, which was the same as the address disclosed by

respondent Nos.1 and 2 themselves in their securitization application. The said notice for sale was also published in Financial Express and Andhra

Prabha on 10.12.2014 (sic, 10.10.2014), besides being affixed at the boundary wall of the said plot of land.

23 In terms of the sale notice, auction was conducted on 13.11.2014. Following the auction, respondent Nos.3 and4 (petitioners in writ petition

Nos.23804 of 2018 and 23805 of 2018) were declared as the successful bidders. 25% of the bid amount was deposited by them in favour of

Manipal Housing on 13.11.2014 itself. Auction purchasers had applied for enhancement of credit limits from their banker i.e. Canara Bank to

finance their purchase, which was allowed. Thereafter, 75% of the sale consideration was paid by the auction purchasers to Manipal Housing on

10.12.2014, which was accepted beyond 15 days from the date of payment of the initial deposit. On such payment, sale certificate was issued by

Manipal Housing to the auction purchasers on 10.12.2014.

24 On 12.01.2015 respondent Nos.1 and2 challenged the auction sale by filing securitization application under Section 17 of the SARFAESI Act.

The same was contested by Manipal Housing as well as by the auction purchasers. However, by the order dated 23.05.2017, the said

securitization application was allowed by the Tribunal by setting aside the auction sale dated 13.11.2014 as well as the consequential sale

certificate dated 10.12.2014. Further Manipal Housing was directed to refund the sale price to the auction purchasers with simple interest at the

rate of 6% p.a. from the date of deposit till the date of payment besides restoring possession of the schedule property to the borrowers i.e.

respondent Nos.1 and 2.

25 Against the aforesaid order dated 23.05.2017 passed in S.A.No.651of 2017, Manipal Housing preferred appeal before the Appellate Tribunal

which was registered as Appeal No.207/2017. However, by the order dated 02.05.2018, the appeal was dismissed.

26 Aggrieved, the present writ petition has been filed.

27 This Court by order dated 01.08.2018 had issued notice before admission and directed maintenance of status-quo in all respects relating to the

property which was the subject matter of S.A.No.651 of 2017 before the Tribunal.

28 Both learned counsel for the petitioners have assailed the order of the Tribunal dated 23.05.2017 as unsustainable in law as well as on facts. It

is submitted that possession notice was issued by Manipal Housing under Section 13 (4) of the SARFAESI Act on 15.03.2013. This was

followed by notice for sale issued on 25.09.2014 whereafter the auction was conducted on 13.11.2014. However, the borrowers had filed

securitization application under Section 17 of the SARFAESI Act only on 12.01.2015, which was much beyond the limitation period of 45 days

from the date of issuance of possession notice. This fact was overlooked by the Tribunal as well as by the Appellate Tribunal.

29 Tribunal had held that possession notice was not affixed at a conspicuous place of the secured asset; no proof of affixation was placed on

record. Thus it was held that the secured creditor had violated Rule 8(1) of the SARFAESI Rules. Submission is that possession notice was

affixed at the boundary pillar of the secured asset. However, the photographs to this effect were misplaced. Tribunal did not provide any

opportunity to the secured creditor to produce proof of affixation of the possession notice on the secured asset. Photographs were placed before

the Appellate Tribunal which unfairly declined to consider the same. Therefore, it is asserted that there was full compliance to the requirements of

Rules 8 (1) and 8 (2) of the SARFAESI Rules.

30 On the finding of the Tribunal that Rule 9 (4) of the SARFAESI Rules was violated, it is submitted that the auction purchasers had sought for

extension of time of 15 days which was granted so as to enable the auction purchasers to avail a loan from the Canara bank. It is submitted that

Tribunal had failed to appreciate that Rule 9 (4) of the SARFAESI Rules was amended in the interregnum which took effect from 04.11.2016. As

per the amendment, the words “between the parties†were substituted by the words “between the secured creditor and the auction

purchaserâ€. This amendment being clarificatory would be applicable in the instant case. In any case, Rule 9 (4) comes into play at a stage

pursuant to the auction. That apart, the said provision is for the benefit of the secured creditor and not for the benefit of the borrower. At that stage

role of the borrower is minimal when he had already exhausted his right of redemption. Secured creditor is free to deal with the property in the

manner in which he chooses.

31 Tribunal had also failed to take into consideration the fact that the auction purchasers after purchase of the property had constructed a house on

the schedule property by availing loan from Canara bank, which is being regularly repaid by the auction purchasers.

32 In any view of the matter, the direction of the Tribunal to handover the secured asset back to the borrowers without any redemption is totally

unjustified.

33 Appellate Tribunal completely overlooked the above aspects, thereby leading to miscarriage of justice.

34 Learned counsel for the petitioners has placed reliance on the following decisions:

i. Commissioner of Income Tax Vs. Gold Coin Health Food Private Limited (2008) 9 SCC 622;

ii. Central Bank of India Vs. C.L.Vimla (2015) 7 SCC 337

35 On the other hand, learned counsel for the borrowers i.e. respondent Nos.2 and 3 in W.P.No.23804 of 2018 has supported the order of the

Tribunal as affirmed by the Appellate Tribunal. He has referred to Rules 57 and 58 of Schedule II to the Income Tax Act, 1962 and submits that

the said provisions are mandatory. Authorised Officer had no jurisdiction to extend the time for payment of the sale price. Further, reference has

been made to Rule 9 (4) of the SARFAESI Rules and submits that there can be no waiver of the mandatory conditions. Failure of the auction

purchasers to pay the balance amount of 75% within 15 days of the sale has vitiated the sale for which the same was rightly set aside by the

Tribunal and affirmed by the Appellate Tribunal.

36 Insofar amendment to Rule 9 (4) of the SARFAESI Rules is concerned, it is submitted that the said amendment is prospective in nature and

could not have been applied in the present case.

37 Learned counsel for respondent Nos.2 and 3 has submitted a compilation of judgments in support of his contentions and submits that no case

for interference is made out. Therefore, all the writ petitions should be dismissed.

38 Submissions made by learned counsel for the parties have received the due consideration of the Court.

39 As noticed above, the borrowers i.e. Y. Kiran Kumar and his wife Smt. Aarthi Devi Mukhya, had filed the securitization application before the

Tribunal on 12.01.2015 to declare the measures taken by Manipal Housing under Section 13 (4) of the SARFAESI Act as illegal, arbitrary and

null and void; to declare the sale certificate dated 10.12.2014 as null and void; to deliver vacant physical possession of the schedule property

(secured asset) to them by making demolition of the structures raised thereon etc. In the securitization application the borrowers admitted that they

had availed a housing loan of Rs.18.00 lakhs form Manipal Housing which was required to be repaid in 180 equated monthly installments at the

rate of Rs.20,016-00 with interest at the rate of Rs.10.25% p.a. The borrowers admitted that they had defaulted in payment of some of the

installments towards later part of the year 2014 for various reasons. It is stated that when they had visited the schedule property on 01.01.2015,

they came to know that the schedule property was sold by Manipal Housing whereafter sale certificate was issued. Amongst various grounds

taken in the securitization application, the borrowers contended that Manipal Housing had not affixed the sale notice as required under Rule 8 (1)

of the SARFAESI Rules on any conspicuous place of the schedule property. Further ground taken was that the balance 75% of the sale price was

not paid by the auction purchasers within 15 days from the date of sale. It was stated that as per the sale certificate the details of payment were as

under:-

24.09.2014 Â Â Â Â Earnest money of Rs.2,16,000-00 paid

13.11.2014 Â Â Â Â Rs.3,25,000-00 paid

10.12.2014 Â Â Â Â Rs.16,24,000-00 paid

40 Thus it was contended that there was violation of Rules 57 and 58 of the Income Tax Rules, 1962.

41 Be it stated that in the said securitization application, the borrowers disclosed their address as follows:-

“R/o 8-3-228/1280/450&455,

Jawahar Nagar, Yusufguda, Hyderabad.â€​

42 That apart, the borrowers paid court fee valuing the securitization application at Rs.22,57,911-46 which was alleged to be the outstanding dues

as on 30.11.2014.

43 Manipal Housing in the reply statement, amongst others, stated that despite issuance of demand notice dated 31.07.2012 under Section 13 (2)

of the SARFAESI Act, the borrowers failed to repay the loan amount. Thereafter Manipal Housing took over symbolic possession of the schedule

property vide possession notice dated 15.03.2013 issued under Section 13 (4) of the SARFAESI Act, which was also published on 20.03.2013

in Financial Express, a daily newspaper in English and in Andhra Prabha, a daily newspaper in Telugu language. It was stated that since the

schedule property was an open plot, the notice was affixed at a conspicuous place surrounded by the property. It was further stated that the sale

notice dated 25.09.2014 fixing auction sale on 13.11.2014 was sent to the borrowers by registered post with acknowledgement due in the last

known address of the borrowers. But it was returned unserved with the endorsement “addressee leftâ€. The said notice was thereafter

published in the newspapers Financial Express in English and Andhra Prabha in Telugu language. It was stated that the notices were sent in the

same address as given by the borrowers in the securitization application. Thus, it was contended that Manipal Housing had followed the due

procedure laid down under the SARFAESI Act and the SARFAESI Rules. Open auction was conducted on 13.11.2014 in which the auction

purchasers became the successful bidders. Auction purchasers had paid earnest money of Rs.2,16,000-00 earlier i.e., on 24.09.2014 to enable

them to participate in the auction in terms of the sale notice. In the auction held on 13.11.2014 they became the successful bidders and paid

Rs.3,25,000-00 on the same date. Both the amounts together made 25% of the sale price, whereafter Manipal Housing confirmed the sale in

favour of the auction purchasers while directing them to pay the balance 75% of the sale consideration within 15 days. In the meanwhile, the

auction purchasers submitted a letter dated 25.11.2014 requesting some more time for payment of the balance amount; it was mentioned that they

were in the process of availing loan from Canara bank. On due consideration, Manipal Housing granted time to the auction purchasers for payment

of the balance sale consideration. This was communicated by letter dated 26.11.2014. Canara bank sanctioned the loan to the auction purchasers

whereafter issued demand draft on 10.12.2014 for the balance sale consideration amount of Rs.16,24,000-00 directly in favour of Manipal

Housing. On receipt of such amount, Manipal Housing executed sale certificate in respect of the schedule property in favour of auction purchasers.

It was further contended that as against the market value of the schedule property of Rs.18,00,000-00, secured asset was sold for an amount of

Rs.21,65,000-00. That being the position, Manipal Housing sought for dismissal of the securitization application.

44 Auction purchasers had also filed reply statement, which was more or less similar to the one filed by Manipal Housing. Additionally, it was

stated that after having purchased the schedule property through auction sale by availing loan from Canara bank they were in peaceful possession

of the schedule property.

45 Tribunal, by the order dated 23.05.2017 recorded the fact that as on 30.11.2014 the outstanding dues of the borrowers stood at

Rs.22,57,911-46. After referring to the rival pleadings and submissions, Tribunal framed the following issue for consideration:-

“Whether the applicants (borrowers) had made out any valid ground to declare the measures taken by Manipal Housing in respect of the

schedule property under Section 13 (4) of the SARFAESI Act as illegal, arbitrary and null and void.â€​

46 While adjudicating the said issue, Tribunal recorded the fact that the applicants (borrowers) did not dispute availing of loan of Rs.18.00 lakhs

from Manipal Housing by mortgaging the schedule property as security for the said loan. Tribunal further referred to the demand notice issued

under Section 13 (2) of the SARFAESI Act on 31.07.2012 and found that the said notice was issued to the applicants in the same address as

mentioned in the securitization application by the applicants themselves. It was held that it was not the case of the applicants that the demand notice

was issued to wrong address. That apart, the said demand notice was issued by way of newspaper publication as well. Therefore, it was held that

there was no flaw in the demand notice issued under Section 13 (2) of the SARFAESI Act.

47 Regarding possession notice dated 15.03.2013 issued under Section 13 (4) of the SARFAESI Act, Tribunal noted that the same was

published in the daily newspapers Financial Express and Andhra Prabha on 20.03.2013. Insofar affixation of the said notice at a conspicuous

place of the secured asset was concerned, according to the Tribunal, the applicants had taken a specific plea that Manipal Housing had not

complied with Rule 8 (1), qua, affixture of the possession notice at a conspicuous place of the schedule property. It was mentioned that though

Manipal Housing had pleaded in the reply statement that the possession notice was affixed at a conspicuous place of the schedule property, no

proof was placed on record. Therefore, Tribunal took the view that Manipal Housing had violated Rule 8(1) of the SARFAESI Rules.

48 On the plea of the borrowers that auction purchasers had not paid the balance 75% of the sale price within 15 days of confirmation of sale for

which the sale and the consequential sale certificate were liable to be set aside, Tribunal referred to the provisions of Rule 9 (4) of the SARFAESI

Rules as it existed on the date of auction i.e. on 13.11.2014 since the said provision was amended with effect from 03.11.2016. As per the

unamended provision, the balance amount of purchase price should be paid by the purchaser on or before the 15th day of confirmation of sale of

the immovable property or within such extended period as may be agreed upon in writing between the parties. Referring to the decision of the

Supreme Court in Sri Siddeshwara Co-operative Bank Ltd. Vs. Ikbal (2013) 10 SCC 83 wherein it was held that the expression “between the

parties†would mean between the secured creditor, borrower and auction purchaser, Tribunal held that Manipal Housing had not consulted the

applicants (borrowers) while extending the time to the auction purchasers for depositing the balance 75% of the sale price. On that basis it was

held that extension of time to deposit the balance 75% of the sale price by Manipal Housing to the auction purchasers was not in accordance with

Rule 9 (4) of the SARFAESI Rules and, therefore, the sale was not valid. Consequently it was held that the sale certificate issued by Manipal

Housing to the auction purchasers was liable to be set aside.

49 In view of above, Tribunal set aside the possession notice dated 15.03.2013 as well as the auction sale of the schedule property conducted on

13.11.2014 and the consequential sale notice. Further, Manipal Housing was directed to restore possession of the schedule property to the

applicants (borrowers) after expiry of the appeal period with a further direction to refund the amount deposited by the auction purchasers towards

sale consideration with simple interest @ 6% p.a. from the date of deposit till the date of payment.

50 Against the aforesaid order of the Tribunal dated 23.05.2017, Manipal Housing filed appeal before the Appellate Tribunal being Appeal

No.207/2017. Likewise, the auction purchasers had also filed appeal being Appeal No.208/2017. Both the appeals were dismissed by separate

orders on 02.05.2018 by the Appellate Tribunal. In the appeal filed by Manipal Housing, it is seen that learned counsel for the appellant Manipal

Housing had submitted before the Appellate Tribunal that insofar setting aside of the sale held on 13.11.2014 due to non-compliance of Rule 9(4)

of the SARFAESI Rules is concerned, the appellant i.e. Manipal Housing had no case. Therefore, learned counsel representing the appellant

Manipal Housing confined her arguments to setting aside of the possession notice for non-compliance of Rule 8 (1) of the SARFAESI Rules.

Referring to the memorandum of appeal, it was submitted that the sale notice was affixed at the boundary pillar of the schedule property as would

appear from the annexed photographs. However, taking the view that at a belated stage, appellant Manipal Housing contended that the possession

notice was affixed at a conspicuous place of the schedule property, Appellate Tribunal held that such photograph(s) could not be looked into.

Further, the Appellate Tribunal held that there was no valid reason as to why the photograph(s) filed before the Appellate Tribunal could not be

filed before the Tribunal. That apart, the veracity of the photograph(s) was also doubted. Therefore, Appellate Tribunal did not interfere with the

finding recorded by the Tribunal and consequently dismissed the appeal.

51 Insofar the appeal filed by the auction purchasers is concerned, we find that learned counsel appearing for the appellants (auction purchasers)

submitted that in view of the law laid down by the Supreme Court in Sri Siddeshwara Co-operative Bank Ltd (supra), he might not be able to

assail the view taken by the Tribunal while setting aside the sale held on 13.11.2014. Therefore, following the decision rendered in the appeal filed

by Manipal Housing, Appellate Tribunal dismissed the appeal of the auction purchasers holding that the appeal had no substance.

52 From a reading of the two appellate orders, it is seen that there was concession on the part of learned counsel appearing for both the appellants

as to setting aside of the sale by the Tribunal for non-compliance of Rule 9(4) of the SARFAESI Rules in view of the decision of the Supreme

Court in Sri Siddeshwara Co-operative Bank Ltd (supra). If that be the position, it would not be open to the petitioners to assail the findings of the

Tribunal as affirmed by the Appellate Tribunal, vis-Ã -vis non-compliance to the provisions of the Rule 9 (4) of the SARFAESI Rules. Therefore,

the only question which would arise for consideration is the alleged non-compliance of Rule 8(1) of the SARFAESI Rules.

53 Rule 8 of the SARFAESI Rules deals with sale of immovable secured asset. Sub-Rule (1) says that where the secured asset is an immovable

property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in

Appendix IV to the SARFAESI Rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the

property. As per Sub-Rule (2), the possession notice as referred to in Sub-Rule (1), shall also be published in two leading newspapers.

54 As we have already noticed, Tribunal did not find any flaw in the demand notice issued by Manipal Housing to the borrowers under Section 13

(2) of the SARFAESI Act. Tribunal further recorded that Manipal Housing had issued possession notice under Section 13 (4) of the SARFAESI

Act to the borrowers on 15.03.2013 and also published the same in Financial Express and Andhra Prabha daily newspapers on 20.03.2013.

However, Tribunal found fault with the affixture of possession notice under Rule 8 (1) of the SARFAESI Rules. Tribunal noted that the applicants

(borrowers) had taken a specific plea that Manipal Housing had not complied with Rule 8 (1) insofar affixture of possession notice at a

conspicuous place of the schedule property was concerned. Tribunal further noted that though Manipal Housing had pleaded in its reply statement

that possession notice was affixed at a conspicuous place of the schedule property, no proof was placed on record to substantiate such claim.

Therefore, Tribunal took the view that Manipal Housing had violated Rule 8 (1) of the SARFAESI Rules.

55 This brings us to the findings of the Appellate Tribunal on this issue. Before the Appellate Tribunal Manipal Housing urged a ground that

possession notice was affixed at the boundary pillar of the schedule property and in support of such ground photograph was annexed to the

memorandum of appeal.

Further, it was argued before the Appellate Tribunal that the Tribunal at no point of time had called upon Manipal Housing to produce proof of

affixation of possession notice at a conspicuous place on the secured asset. Learned Appellate Tribunal however held as follows:

“In the S.A. it has been specifically averred that possession notice has not been affixed at a conspicuous place. The said averment has been

replied in paragraph 7 (iii) of the Reply Statement wherein it is stated that the schedule property is an open plot, the said Notice was affixed at the

conspicuous places surrounded by the property. No evidence or photograph which has been annexed along with the Memorandum of Appeal, has

been annexed. In the reply the borrower in paragraph 12 has categorically denied the averment and further submitted that the appellants are put to

strict proof of the same.

Despite such averment in the reply the appellant failed to file photographs. There appears to be no valid reason that why photographs, which have

been filed here, could not be filed before the DRT. If it is the case of the appellant that affixation was made at a conspicuous place burden lies

upon the Financial Institution to prove. Further it is doubtful whether the photograph is of the relevant date, there is nothing to show that it is of

relevant date. The Tribunal recorded categorical finding that no evidence in this regard has been filed by the appellant.â€​

56 From a perusal of the above, we are of the view that Appellate Tribunal ought to have given an opportunity to Manipal Housing to prove the

genuineness and veracity of the photograph as proof of affixture of possession notice at a conspicuous place on the secured asset. In view of the

assertion of the appellant, the said photograph certainly was a relevant document, having relevancy to the issue in hand. If the Appellate Tribunal

felt that it was not proper at the appellate stage to allow additional evidence, it ought to have remanded the matter back to the Tribunal for a fresh

consideration on this aspect. After all, this photograph had a clear bearing on the issue as to whether there was compliance to Rule 8(1) of the

SARFAESI Rules by Manipal Housing vis-Ã -vis affixture of notice at a conspicuous place on the secured asset. Both the Tribunal and Appellate

Tribunal failed to appreciate that the SARFAESI Act is primarily meant to protect the interest of the secured creditor. Therefore, due opportunity

should have been granted to the secured creditor to prove its claim of compliance to the procedural requirements. That being the position, we are

of the view that it would be in the interest of justice if the matter is remanded back to the Tribunal for a fresh consideration.

57 Since we are of the view that the matter should be remanded back to the Tribunal, we are of the further view that all issues and contentions

should be kept open for adjudication on remand including on the point of limitation as well as the issue relating to Rule 9(4) of the SARFAESI

Rules.

58 First we take up the issue relating to Rule 9 (4) of the SARFAESI Rules. Learned counsel for the appellants before the Appellate Tribunal did

not press this issue; rather conceded on this issue. Therefore we have held that the said issue cannot be agitated at the instance of the petitioners

(appellants). Nonetheless, the same having been brought to our notice, we are constrained to make the following observations.

59 Rule 9 of SARFAESI Rules deals with time of sale, issue of sale certificate and delivery of possession. Sub-Rule (1) says that no sale of

immovable property shall take place before the expiry of 30 days from the date of the sale notice. As per the proviso, in case of subsequent sale,

the period of 30 days is reduced to 15 days. Sub-Rule (2) mandates that the sale shall be confirmed in favour of the purchaser offering the highest

sale price. As per Sub-Rule (3), the purchaser shall immediately on sale pay a deposit of 25% of the sale price, which is inclusive of the earnest

money deposited to the authorized officer conducting the sale. This brings us to Sub-Rule (4), which is relevant. Therefore, we shall deal with the

same a little more in detail. A part of Sub-Rule (4) was amended with effect from 04.11.2016. Prior to its amendment, it read as follows:

“The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of

confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties.â€​

60 Thus as per the unamended Sub-Rule (4), the balance amount of 75% of the sale price should be paid by the purchaser to the authorized

officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing

between the parties. After the amendment, Sub-Rule (4) now says that the balance amount of purchase price shall be paid by the purchaser to the

authorized officer on or before the fifteenth day of confirmation of sale or such extended period as may be agreed upon in writing between the

purchaser and the secured creditor, in any case not exceeding three months. Sub-Rule (4) of Rule 9 as it stands now is as under:

“(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of

confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the purchaser and the secured

creditor, in any case not exceeding three months.â€​

61 The unamended provision of Sub-Rule (4) of Rule 9 came up for consideration before the Supreme Court in Sri Siddeshwara Co-operative

Bank Ltd (supra). It was held as follows:

A reading of sub-rule (1) of Rule 9 makes it manifest that the provision is mandatory. The plain language of Rule 9(1) suggests this. Similarly,

Rule 9(3) which provides that the purchaser shall pay a deposit of 25% of the amount of the sale price on the sale of immovable property also

indicates that the said provision is mandatory in nature. As regards balance amount of purchase price, sub-rule (4) provides that the said amount

shall be paid by the purchaser on or before the fifteenth day of confirmation of sale of immovable property or such extended period as may be

agreed upon in writing between the parties.

The period of fifteen days in Rule 9(4) is not that sacrosanct and it is extendable if there is a written agreement between the parties for such

extension. What is the meaning of the expression “written agreement between the parties†in Rule 9(4)? The 2002 Rules do not prescribe any

particular form for such agreement except that it must be in writing. The use of the term “written agreement†means a mutual understanding or

an arrangement about relative rights and duties by the parties. For the purposes of Rule 9(4), the expression “written agreement†means

nothing more than a manifestation of mutual assent in writing. The word “parties†for the purposes of Rule 9(4) we think must mean the

secured creditor, borrower and auction-purchaser.

62 Thus, Supreme Court had held that the period of 15 days in Rule 9 (4) is not sacrosanct. It could be extended provided there is a written

agreement between the parties. According to the Supreme Court, the word “parties†in the context of Rule 9(4) would mean the secured

creditor, borrower and auction purchaser. On that basis, Tribunal held that Manipal Housing had not consulted the applicants (borrowers) in

extending the time to the auction purchasers for depositing the balance 75% of the sale price. Therefore, it was held that extension of time granted

by Manipal Housing to the auction purchasers to deposit balance 75% of the sale price was not in accordance with Rule 9 (4) of the SARFAESI

Rules. Prima facie, the conclusion reached by the Tribunal does not appear to be sound. It could not have been the intention of the Supreme Court

to mandate that before the secured creditor could grant extension of time to the auction purchaser there should be written agreement with the

borrower as well. This is because post auction purchase the right of the borrower is minimal and extension of time for payment of the balance 75%

amount is primarily a matter between the secured creditor and the auction purchaser being a post auction consideration with discretion vested on

the secured creditor. This position has been made clear by the amendment brought to Rule 9 (4) with effect from 04.11.2016, which makes it

specifically clear that such extension of time would be dependent upon written agreement between purchaser and the secured creditor. But such

extended period should not in any case exceed three months.

63 Since the matter is being sent back on remand, we are, therefore, of the view that this aspect should also be looked into afresh by the Tribunal.

There is one more reason why we have taken such a view. The borrowers had not made any statement either before the Tribunal or before the

Appellate Tribunal or before this Court that they are willing and ready to pay the outstanding dues. Though they may have disputed the quantum of

the outstanding dues, they have still not stated that whatever be the outstanding dues as per their calculation that would be paid by them to the

secured creditor. In such a scenario, when the defaulter does not come forward to pay the outstanding amount, it would be against all cannons of

justice and equity to direct the secured creditor to handover possession of the secured asset to such defaulter when the auction purchaser had paid

the entire sale consideration and has made constructions thereon. In this connection, it would be apt to refer to the decision of the Supreme Court

in Central Bank of India Vs. C.L.Vimla (supra), relevant portion of which is extracted hereunder:

It appears to us that the High Court did not consider the said facts and further it has escaped from the mind of the High Court that the auction-

purchaser has purchased the auctioned property for sale consideration of Rs 3.27 crores and 25% of the sale consideration was duly paid on 5-

10-2006 and furthermore on 19-10-2006, the balance amount of sale consideration was duly paid by the auction-purchaser. We have further

noted that the sale was confirmed on 15-11-2006. The sale certificate was also issued in favour of the auction-purchaser after paying the requisite

stamp duty and registration fees which, as pointed out to us on behalf of the auction-purchaser, is to the tune of Rs 30,73,800. It is also not in

dispute that the auction-purchaser was put in possession of the property and is still in possession of the property since the sale certificate was

issued and registration was made in his favour. It is submitted on behalf of the auction-purchaser that he has purchased the property by availing

private borrowing for the said property and he is paying nearly Rs 5 lakhs per month as interest. Therefore, in our opinion, equity and good

conscience also have to play a role in the matter in question on the given facts and after considering the conduct of the respondents (C.L. Vimla

and others) in the matter.

In these circumstances, we feel that it would not be proper for us at this stage to set aside the sale, as has been done by the High Court without

taking into consideration all these facts. Further, the High Court has failed to appreciate these facts and wrongly held that the auction-purchaser is a

party to the negligence of the Recovery Officer and, accordingly, the sale was set aside. In our opinion, the auction-purchaser had nothing to do in

holding the auction. Rather he deposited the money after bona fide participating in the auction and, in fact, suffered for a long time to pay a price by

participating in the auction proceedings.

In these circumstances, we further noticed that the principal debtors were not prepared to pay back the amount to the Bank and did not

choose to defend themselves properly. The conduct of the principal debtors also cannot be overlooked by us.

Accordingly, we set aside the order passed by the High Court and hold that since the auction-purchaser has already paid the full amount of

sale consideration and is in possession of the property in question for more than about 8 years, for equity and good conscience, we do not intend

to interfere with his possession and we, therefore, set aside the order passed by the High Court, and allow these appeals.

64 Before parting with the record we may refer to Section 17 (1) of the SARFAESI Act which says that any person including a borrower who is

aggrieved by any of the measures referred to in Sub-Section (4) of Section 13 taken by the secured creditor or by the authorized officer may make

an application to the jurisdictional Debts Recovery Tribunal within 45 days from the date on which such measure had been taken. Insofar the

securitization application of the borrowers is concerned, the same was filed on 12.01.2015. The prayer made was to declare the measures taken

under Section 13 (4) of the SARFAESI Act as illegal, arbitrary and null and void. The possession notice under Section 13 (4) of the SARFAESI

Act was issued by Manipal Housing on 15.03.2013. It was sent to the same address of the borrowers which they had furnished in their

securitization application. The said notice was also published in two newspapers, Financial Express in English and Andhra Prabha in Telugu on

20.03.2013. This part of the action of the secured creditor i.e. Manipal Housing was not faulted by the Tribunal. What was faulted was regarding

affixture of the possession notice at a conspicuous place of the schedule property as is the requirement of Rule 8 (1) of the SARFAESI Rules. If

that be the position, prima facie, the securitization application was not filed by the borrowers within the stipulated period of 45 days as is required

under Section 17 (1) of the SARFAESI Act.

65 From the order of the Tribunal it is not discernible as to whether any application for condonation of delay was filed or how the Tribunal dealt

with the belated approach of the borrowers. This is also an aspect which is required to be examined by the Tribunal on remand.

66 Thus, on a thorough consideration of all aspects of the matter, we are of the view that the impugned orders are required to be set aside and the

matter is required to be remanded back to the Tribunal for a fresh decision.

67 Consequently, we set aside the order of the Tribunal dated 23.05.2017 and that of the Appellate Tribunal dated 02.05.2018. Matter is

remanded back to the Tribunal for a fresh decision in accordance with law. As we have already stated, all contentions are kept open. It would be

open to the parties to adduce additional evidence with right of cross-examination to the other side.

68 In the interregnum, the auction purchasers who had purchased the schedule property shall continue to enjoy the fruits of their purchase by

maintaining their possession over the schedule property and structures constructed thereon. However, the same shall be subject to outcome of

S.A.No.651 of 2017, which now stands revived by virtue of the present judgment and order.

69 Writ petitions are accordingly allowed (though there was no necessity for filing writ petition No.23805 of 2018) in the manner indicated above.

No order as to costs.

70 Miscellaneous petitions, if any, pending in these writ petitions, shall stand closed.