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Judgment
By this writ petition under Article 227 of the Constitution of India, 1950, the petitioners are challenging order dated 08.03.2018 (Annexure P/1) passed
by the Debts Recovery Appellate Tribunal, Allahabad in Appeal No.77/2016 by which the learned Appellate Tribunal set aside order dated 10.03.2016
(Annexure P/2) passed by the Presiding Officer, Debts Recovery Tribunal, Jabalpur, whereby Securitization Application No.87/2013 was allowed, by
allowing the appeal of the respondent â€" State Bank of India filed under Section 18 of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (herein after referred to as the SARFAESI Act, 2002).Â
The petitioners are guarantors of various loan and credit facilities sanctioned by the respondent â€" Bank. The respondent â€" Bank had
sanctioned various credit facilities to M/s. Utkarsh Industries Private Limited Company registered under the provisions of Indian Companies Act,
1956. In order to secure the said loans, equitable mortgage was created over immovable properties belonging to the petitioners. Since the
repayment of loan was not made in terms of the loan agreement, the account of the petitioner (s) was classified as Non Performing Asset (NPA) in
terms of Reserve Bank of India’s directives and the proceedings under the SARFAESI Act, 2002 were initiated. The demand notice under
Section 13 (2) of the SARFAESI Act, 2002 was issued on 17.12.2012 demanding a sum of Rs.30,46,29,280/- outstanding as on 30.11.2012. The
borrowers did not pay the loan in pursuance of the demand notice and their request for rescheduling the loan did not find favour of the respondent â€
Bank. As they did not comply with the said demand notices, after taking symbolic possession of the respective assets / properties, physical
possession of some of the properties under order dated 12.06.2013 passed by the District Magistrate, Sehore and under order dated 23.07.2014 passed
by the District Magistrate, Indore under Section 14 of the SARFAESI Act, 2002 was also taken.Â
In notice dated 17.12.2012 (Annexure P/6), details of the mortgaged properties (Serial No.i to xi) have been categorically given. The petitioners
have received notice under Section 13 (2) of the SARFAESI Act, 2002.
A corrigendum dated 22.02.2013 (Annexure P/16) to notice dated 17.12.2012 was restricted only to Plot No.27, 28, 30, 78, 79, 159 of Gokul Nagar,
Indore owned by Smt. Jaishree Rathi w/o Dwarka Das Rathi, Satyanarayan Rathi s/o Late Ratanlal Rathi, Saurabh Somani s/o Radheshyam Somani,
Sarveshwar Rathi s/o Ratanlal Rathi, Dwarkadas Rathi s/o Ratanlal Rathi, Smt. Surajkanta Rathi w/o Sarveshwar Rathi respectively which were
mortgaged with the respondent â€" Bank as collateral security for the loan granted in favour of M/s. Utkarsh Industries Private Limited. Due to
change in the size and re-location of the properties situated at Gokul Nagar, Indore, corrigendum was issued on 22.02.2013.Â
According to the respondent â€" Bank, the petitioners were well aware of the reduction in size of their plots, relocation of their plots vis-à -vis
payment of compensation to them by the State in lieu thereof, but at no point in time, they informed this factual aspect to the Bank and as such, in
good faith and without negligence, initial notice under Section 13 (2) of the SARFAESI Act, 2002 was issued to clarify the ownership of various
petitioners on plots mortgaged to the Bank. The corrigendum was limited to only six plots situated at Gokul Nagar, Indore, which was published in
the newspaper on 19.03.2013. Possession under Section 13 (4) of the SARFAESI Act, 2002 was issued on 26.02.2013 for the remaining seven
properties. Physical possession of the properties belonging to the company was taken on 29.06.2013 with the assistance of District Magistrate.
Notice for sale of secured assets and immovable properties was published on 05.04.2013 fixing auction of the same for 08.05.2013. The Bank had
also published photographs of the petitioners in the newspaper on 07.01.2013 (Annexure P/8).Â
The petitioners challenged the proceedings of the Bank before the Debts Recovery Tribunal, Jabalpur, stating inter alia that the publication of the
photographs was uncalled for and no notice to the corrigendum was served upon them along with other objections. The Debts Recovery Tribunal,
Jabalpur vide order dated 10.03.2016 (Annexure P/2) set aside the action initiated by the respondent â€" Bank and also awarded compensation by
directing the Bank not to charge interest and other costs from the borrowers with effect from the date of demand notice i.e. 17.12.2012 and to return
the possession of the secured assets to the borrowers. Paragraphs No.11 to 15 of order dated 10.03.2016 (Annexure P/2) passed by the Debts
Recovery Tribunal, Jabalpur read, as under: -
“11. The demand notice under Section 13 (2) has been assailed on the ground that a Corrigendum was issued subsequent to issuance of demand
notice dated 17.12.2012 and there is no provision for making such corrigendum. It is seen that the demand notice dated 17.12.2012 was issued by
the respondent bank, the service of which has not been disputed by the applicants. The respondent bank thereafter issued a corrigendum dated
22.02.2013 which was actually published in the newspaper on 19.03.2013. The respondent bank in the meantime took the symbolic possession by
issuance of notice dated 26.02.2013 which was subsequently published in the newspaper on 02.03.2013 under Section 13 (4) of the SARFAESI
Act. The receipt of possession notice is not being disputed by the applicant. However, his submission is with regard to the fact that the
corrigendum which was published in the newspaper on 19.03.2013 could not have been issued there being no provision for issuance of such
corrigendum and also that even in case it is assumed that the respondent bank could have done so, the same should have been served upon all the
borrowers extending the time of 60 days. Counsel for the respondent has vehemently argued that the corrigendum virtually had no effect on the
status of the demand notice as the corrigendum was merely related to the subsequent development (after the mortgage was created) in the size and
location of the plots as the same were changed by the Developer and which fact came to the notice of the respondent bank when physical inspection
of the mortgaged properties was carried out and information in this regard was sought from the Developer / Society.
It has been consistently held by the superior courts that the provisions of SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002,
being stringent, are required to be strictly followed and wide powers of the secured creditor cannot exercised arbitrarily and whimsically and
enforcement of security interest in secured asset by a secured creditor should strictly be in conformity with the provisions. Following these
principles leads us to the only irrefutable conclusion that action of the respondent Bank was illegal as the change in particulars of the mortgaged
property can, by no means, be said to be immaterial. Even if, for the sake of arguments, it is assumed so, the only option available with the bank
was to withdraw the demand notice and then to issue a fresh demand notice under Section 13 (2) there being no provision for issuance of a
corrigendum. Even if it is assumed that issuance of corrigendum was permissible, there is no escape from the conclusion that after service of the
same upon the applicants, as provided under Section 3 of the Security Interest (Enforcement) Rules, 2002, a fresh period of 60 days should have been
tendered to the applicants in order to enable them to repay their dues which was not done. It is an admitted fact that the corrigendum was not even
delivered or transmitted to the applicants and instead was published in only one newspaper that too after the taking over of symbolic possession. It
is interesting to note that pursuant to demand notice dated 17.12.2012, the symbolic possession was taken prior to publication of corrigendum to the
said demand notice.
The overt act of the respondent bank by publication of the photographs of all the borrowers and guarantors in several newspapers even before
expiry of 60 days period, despite there being no rules or provisions to do the same, is extremely deplorable and smells of personal vengence. The
decision to public the photographs of the applicants can only be said to be an act of over enthusiasm and misadventure and by this act of theirs, the
respondent bank in fact, while attempting to recover their dues, diminished the chances of the same on their own by tarnishing the image and
reputation of the applicants, the importance of which factors, in the industry sector, cannot be undermined.
With regard to other issues relating to hypothecated stocks, it is seen that this Tribunal vide interim orders had directed the applicants to take over
the same after paying certain amount to the respondent bank. The issue, therefore, does not require any further deliberations.
As far as the issue of compensation to the applicants is concerned, though the applicants have sought to huge amount without elaborating the
same, I feel that the applicants would be adequately compensated if the bank is restrained from levying upon them the interest, other charges and
costs w.e.f. 17.12.2012, the date when demand notice under Section 13 (2) was issued to applicants.
 On a conspectus of all the materials placed before me, I feel it just and proper to direct as under: -
(a) The demand notice under Section 13 (2) dated 17.12.2012, the Possession notice dated 26.02.2013 and subsequent corrigendum published on
19.03.2013 being illegal improper and unsustainable are hereby quashed.
(b) All the subsequent proceedings and actions pursuant to demand notice dated 17.12.2012 and Possession Notice dated 26.02.2013 are also set
aside.
(c) The respondent bank shall return the possession of all the secured assets as mentioned in the demand notice dated 17.12.2012 to the applicants
forthwith.
(d) The prayer of the applicants seeking compensation from the respondent bank is allowed under Section 19 of the SARFAESI Act, 2002 only to the
extent that the respondent bank shall not charge the interest, other charges and costs etc. from the applicants w.e.f. 17.12.2012, the date when
demand notice under Section 13 (2) was issued to the applicants.
With the above observations, the present SA stands finally disposed off.â€
The respondent â€" Bank challenged order dated 10.03.2016 (Annexue P/2) passed by the Debts Recovery Tribunal, Jabalpur by filing an appeal
under Section 18 of the SARFAESI Act, 2002 on the ground that there were 13 properties which were described in the demand notice dated
17.12.2012, but while inspecting the site for six plots, it was found that the areas and the boundaries of those plots were changed by the Developer
Society. This fact was well within the knowledge of the petitioners, but they had not conveyed the same to the Bank. After getting confirmation
from the Developer Housing Society, a corrigendum was issued for those six plots and symbolic possession of other seven properties was taken on
26.02.2013, whereas the possession of those six plots was taken on 15.01.2015 after completion of the formalities. Thus, the Debts Recovery
Tribunal has erred in concluding that the possession was taken before publication of the corrigendum. It was also urged that there was no change in
the amount of the demand notice or in the details of the properties, but it was only a change in the size and boundaries of the properties, so there was
no need to issue fresh demand notice under the provisions of the SARFAESI Act, 2002 and the rules framed thereunder nor there is any violation of
the mandatory provisions of the statute and regulations.
The learned Appellate Tribunal, after appreciating the arguments of the learned counsel for the parties, allowed the appeal by giving following
findings in paragraphs No.8 to 18 of order dated 08.03.2018 (Annexure P/1), which read, as under: -
“8. Having heard the learned counsels for the parties and considering the material available on record, there is no dispute on the point that 13
properties were described in schedule-c of the demand notice dated 17.12.2012 and the corrigendum was issued on 22.02.2013 for six plots situated at
Gukul Nagar, Indore, which was published in the newspaper on 19.03.2013. The symbolic possession was taken on 26.02.2013 of the remaining
seven properties excluding these six plots, which is evident from the possession notice placed at Page No.316 of the paper book. The photographs
of the borrowers were also published in the Newspaper. Though, it was averred by the Bank that the corrigendum was sent to the borrowers through
Registered Post, but there appears to be no proof to this effect on the record.
In the above backdrop, the questions for consideration are as to-
(i) whether the Bank was justified in publishing the photographs of the borrowers in the newspaper?
(ii) whether the Bank could segregate the properties for taking possession from properties mentioned in the demand notice and also that there was any
requirement to issue fresh demand notice?
So far as the publication of photographs is concerned, the standard convenant agreed by the borrowers is placed on record at Page No.150 of the
paper book, which reads as under: -
“In case of default in repayment of the loan / advances or in the payment of the interest thereon or any of the agreed installments of the loan on
due dates by the borrower, the bank and / or the RBI will have an unqualified right to disclose or publish the borrower's name or the name of the
borrower's company and its directors / partners / members / promoters as defaulter in such manner and through such medium as the Bank or the RBI
in their absolute discretion may think fit.â€
Thus, in view of the above, the Bank had right to disseminate the information about defaulters to the public at large in the manner as it deems
proper. The demand notice for a sum of Rs.30,46,29,280/- was issued and the borrowers had not paid any heed to the request made by the Bank
for repayment of the same. Hence, in my opinion, the Bank was justified to publish the photographs of the willful defaulters. This view is fortified by
the principles laid down in the judgments of Ku. Archana Chouhan v. State (supra), Revati Cements Private Limited v. AllahabadBank (supra) and
Monal Dineshbhai Chokshiand  v. State Bank of India & (supra), wherein it has been held that the publication of photographs of the borrowers
cannot be said to be impermissible mode and the publication with the discretion of the Bank may in turn include with the photograph. Therefore, the
appellant â€" Bank was well within its right to publish the photographs and I find no illegality caused by the Bank on this aspect.
It is to be noted that the Tribunal below had held that the possession of the property was taken before publication of corrigendum, but the finding is
not factually correct. As the publication of corrigendum was with regard tot he six properties, the possession thereof was not taken on 26.02.2013,
but it was taken later on 15.01.2015. So, after publication of corrigendum on 19.03.2013, there was ample time with the borrowers to deposit their
dues with the Bank, if they so wished, but no step was taken except writing various letters to the Bank and admitting the liability, which is evident from
one of the letters dated 23.03.2013, placed at page no.231 of the paper book. Therefore, there is no irregularity in taking possession of seven
properties by the Bank.
The fact of publication of corrigendum was within the knowledge of the borrowers. Though there was no proof that the corrigendum dated
22.02.2012 was served upon the borrowers, but in my considered view, there was no necessity to serve the same on the borrowers. Actually, this
corrigendum was only with regard to the six properties qua the size and boundaries thereof. So, neither there was a change in the amount of the
demand notice nor it was a change in the description of the properties. Therefore, it cannot be termed as any amendment or modification in the
original demand notice. The corrigendum was issued for the public in general and not for the borrowers, as the borrowers were already aware
about the fact. It was their duty to convey the changed facts to the Bank. And if earlier, it was not conveyed, then they should have responded to
the demand notice stating the correct position of the size and boundaries of the plots, but they deliberately concealed this fact, so they cannot be
permitted to take the benefit of their own misdemeanor.
In the instant case, the issuance of corrigendum does not invoke the provisions and procedures laid down in Rules 3 (3) and 3 (A) (B) of the
Security Interest (Enforcement) Rules, 2002. Rule 3 (3) is applicable only when any other notice is issued by the secured creditor and Rule 3 (A)(b)
provides for issuance of notice if there is any amendment or modification made by the Bank on consideration of the representation submitted by the
borrowers. But here in this case, no representation to this effect was made by the borrowers before the Bank and it was not in the form of any
modification or amendment nor any other notice was issued, but only a corrigendum was issued to clarify the size and boundaries of some of the
properties mentioned in the demand notice. Thus, a period of sixty days cannot be counted from the date of corrigendum or from the date of
publication of the corrigendum, as it has no substantial change in the original demand notice. The notice dated 17.12.2012 under Section 13 (2) of
the SARFAESI Act, 2002 was property served upon the borrowers and after providing requisite period of more than 60 days, the possession of the
properties was taken on 26.02.2013. Therefore, the findings of the Tribunal below on both these issues are not sustainable.
The Tribunal below has not only set aside the proceedings initiated by the Bank, but also found it proper to award the compensation to the
borrowers by directing the Bank not to charge the interest from the date of demand notice. Though, the Tribunal may award the compensation in its
discretion provided under Section 19 of the SARFAESI Act, 2002, but the discretion is required to be exercised judiciously and there should be cogent
reasons for determination of the amount of compensation and / or cost, but in the present matter, no specific reasons were assigned to arrive at the
conclusion for not allowing the interest on this huge amount from the date of demand notice till indefinite period. So, the conclusion of the Tribunal
below on this aspect also cannot be said to be proper and logical.
In view of the above, the appeal is allowed and the impugned order dated 10.03.2016 passed by the Tribunal below is quashed and set aside. No
order as to costs.
A copy of this judgment be forwarded to the parties as well as to the DRT concerned.â€
Shri Ajay Bagadia, learned counsel for the petitioners has submitted that after receipt of the demand notice, a representation was made on
12.02.2013 (Annexure P/11) and as per Rule 2 (a) of the Security Interest (Enforcement) Rules, 2002 (herein after referred to as the Rules, 2002),
the same has to be decided by the Authorized Officer, as defined therein, but the same has been decided by the Relationship Manager (ME), SME
Branch, Indore of the respondent â€" Bank on 20.02.2013 (Annexure P/12).Â
He has also drawn our attention to the provisions contained in Section 13 (2) & 13 (4) of the SARFAESI Act, 2002 and Rule 3A (b) of the Rules,
2002; and submitted that 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 seven days from the date of receipt of the representation or objection.    Â
He submitted that there is no compliance of mandatory provisions of the SARFAESI Act, 2002 and the Rules of 2002, and this aspect of the
matter has not been considered by the learned Appellate Tribunal while considering order dated 10.03.2016 (Annexure P/2) passed by the Debts
Recovery Tribunal, Jabalpur.
His contention is that demand notice dated 17.12.2012 (Annexure P/6) was amended on 19.03.2013 (Annexure P/16), but the same was never
communicated and amended notice i.e. corrigendum was published in the newspaper, with an object to deceive the petitioners. His submission is that
amended notice has been ante dated 22.02.2013, but actually the same was published in the newspaper on 19.03.2013.Â
According to Rules, 2002, if demand notice is amended, then fresh opportunity on dues is required to be given by submitting representation. As
no service of any corrigendum was made to the petitioners, the action is illegal; and prayed that the impugned order be setting aside by allowing the
writ petition filed by the petitioners under Article 227 of the Constitution of India.
Shri Amit S. Agrawal, learned Senior Counsel for the respondent â€" Bank has drawn our attention to demand notice dated 17.12.2012 (Annexure
P/6), which was issued under Section 13 (2) of the SARFAESI Act, 2002 and corrigendum dated 19.03.2013 (Annexure P/16), so also representation
/ objection of the petitioners dated 12.02.2013 (Annexure P/11) and submitted that the same is nothing but a request for further loan and re-habitation /
reconstruction of the company. He submitted that proposal / representation, which was made by the petitioners, has been rejected on 20.02.2013
(Annexure P/12) by the Relationship Manager on the ground that the account has already turned NPA on 16.12.2012.Â
To appreciate the arguments, we quote the proposal made in the representation, which reads, as under: -
“PROPOSAL OF THE COMPANY:
In view of the above facts and circumstances and past Four Decade sound financial track records of the Promoter / Company, coupled with the fact
that even as on the date, the Bank is having security worth more than Rs.30,00 Crores detailed as above, it is humbly submitted and prayed that, Bank
being our debt partner, who has always stood with Company, may immediately sanction and disburse enhanced working capital of Rs.10.00 Crores as
well as disburse, balance amount of Rs.201.70 crores out of sanctioned Term Loan, out of which Rs.5.00 Crores may be directly re-deposited to
square of Ad-hoc facility of Rs.5.00 Crores and balance will help us to revive the working which will take care of regular interest payments and
installment towards loan repayment.  Â
Our Company is submitting herewith the proposal for rehabilitation of the Working Capital and Term Loan which will help the Company to regularize
the Account. The detailed proposal is enclosed herewith.â€
By order dated 20.02.2013 (Annexure P/12), the representation of the petitioners has been rejected, which reads, as under: -
“Wherein receipt of your letter dated 12.02.2013 (received by us on 14.02.2013). In this connection we have to advise as under: -
Your request for sanction of enhanced working capital of Rs.10.00 crs. and further disbursal of Rs.2.01 Cr. of Term Loan (Phase-II) cannot be
considered by us due to the reason that despite our repeated reminders you have not regularize the CC and Term Loan Accounts and the subsequent
actions taken by us under Section 13 (2) of SARFAESI Act, 2002 as the account has already turned NPA on 16.12.2012.â€
He has also drawn our attention to sub-section (3) of Section 13 of the SARFAESI Act, 2002 and submitted that in the demand notice, the Bank
has to give details of the amount payable by the borrower and the secured assets. The contention of the learned Senior Counsel for the respondent
â€" Bank is that there is no change in the amount which was lying outstanding as mentioned in the demand notice dated 17.12.2012. After issuance
of the demand notice, the description of the property i.e. size of the property has been changed and just to avoid further complications in the auction of
the properties, corrigendum was issued, so that at the time of auction, prospective buyers must know the exact details and size of the properties / plots,
which have been mortgaged with the Bank. He submitted that all these details, which have been mentioned in the corrigendum, have to be informed
by the petitioners as they failed to inform the aforesaid details, and therefore, corrigendum was issued. He further submitted that at present the
outstanding dues is around ninety crores and not a single penny has been paid by the petitioners after 17.12.2012. There is no violation of any of the
provisions of SARFAESI Act, 2002 and Rules, 2002 made thereunder.
In respect of publication of photographs of the petitioners in newspaper is concerned, he submitted that as per standard covenant agreed by the
petitioners and the Bank, the Bank and / or RBI will have an unqualified right to disclose or publish the borrower’s name or the borrower’s
company and its Director / Partners / Members / Promoters as defaulter in such manner and through such medium as the Bank or the RBI in their
absolute discretion they may think fit. Thus, there is no legal issue in the matter; and prayed for dismissal of the writ petition.
We have heard the learned counsel for the parties and perused the record.
In the demand notice, 13 properties were mentioned and the possession of 7 properties was taken on 26.02.2013. Publication of the corrigendum
was with regard to 6 properties, possession thereof was not taken on 26.02.2013, but it was later taken on 15.01.2015, i.e. much after publication of
the corrigendum on 19.03.2013. In between there was ample time with the borrowers to deposit their dues with the Bank, if they so wished, but no
step was taken except writing various letters to the Bank and admitting the liability, which is evident from one of the letters dated 23.03.2013. Thus,
there is no irregularity in taking possession of 7 properties by the Bank.
It is not in dispute that out of 13 properties, size and boundaries of 6 properties have been changed later on and this was never informed by the
borrower. There was no change in the amount of the demand notice nor it was a change in the description of the properties. Therefore, the learned
Appellate Tribunal has rightly held that it cannot be terms as any amendment or modification in the original demand notice. The corrigendum was
issued for the public in general and not for the borrowers, as the borrowers were already aware about the fact. It was their duty to convey the
changed facts to the Bank. If we go through the provisions and procedures laid down in Rule 3 (3) and 3 (A) (b) of the Rules, 2002, it is very clear
that Rule 3 (3) is applicable only when any other notice is issued by the secured creditor and Rule 3 (A) (b) provides for issuance of notice if there is
any amendment or modification made by the Bank on consideration of the representation submitted by the borrowers. In the present case, no
representation to this effect was made by the borrower before the Bank and it was not in the form of any modification or amendment nor any other
notice was issued, but only a corrigendum was issued to clarify the size and boundaries of some of the properties mentioned in the demand notice.Â
Thus, there is no substantial change in the original demand notice. Corrigendum dated 19.03.2013 is in the nature of correction, and therefore, it
does take to the demand notice correct, and therefore, the same was issued.Â
The purpose of serving the notice upon the borrower under sub-section (2) of Section 13 of the SARFAESI Act, 2002 is that reply may be
submitted by the borrower explaining the reasons as to why measure may not be taken under sub-section (4) of Section 13 of SARFAESI Act,
2002. In case of non-compliance of notice within sixty days under sub-section (2) of Section 13 of the SARFAESI Act, 2002, it is incumbent upon
the secured creditor to serve sixty days notice before proceeding to take any of the measures, as provided under subsection (4) of Section 13 of the
SARFAESI Act, 2002. After service of notice, if borrower raises any objection or states facts for consideration of the secured creditors, such reply
to the notice must be considered with the application of mind and the reasons for not accepting the objection, however, must be communicated to the
borrower.
Learned Senior Counsel for the respondent â€" Bank has drawn our attention to paragraphs No.10 to 15 of Division Bench decision dated
05.02.2010 of Delhi High Court in the case of State Bank of India v. Hon'ble Debts Recovery Appellate Tribunal &others, Writ Petition (C)
No.9090/2009, which read, as under: -Â
“10. The second limb, however, is the consequence of non-specification of this amount. In this behalf, learned counsel for the petitioners
emphasized that a bare reading of the proforma would show that the specification set out are for the benefit of the auction purchaser. This is clear
from clause (f), which requires any other material to be stated in the auction notice, which is material for a purchaser to know in order to judge the
nature and value of the property. In the present case, it is, thus, pleaded that the auction purchaser is not making any grievance and the mortgagor
should not be permitted to make a grievance in this behalf.
Learned counsel for the petitioners seeks to draw strength from the observations of the Supreme Court in Saheb Khan v. Mohd.Yousufuddin &
Ors., (2006) 4 SCC 476, where in the Apex Court while dealing with an auction under the Civil Procedure Code, 1908 (for short, â€the Code‟)
observed as under :-
“12. We are unable to sustain the reasoning of the High Court. Order 21 Rule 90 of the Code of Civil Procedure allows, inter alia, any person
whose interests are affected by the sale to apply to the court to set aside a sale of immovable property sold in execution of a decree on the ground of
“a material irregularity or fraud in publishing or conducting†the sale. Sub-rule (2) of Order 21 Rule 90 however places a further condition on the
setting aside of a court sale in the following language:
“90.(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the court is
satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.â€
Therefore, before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and
establish to the satisfaction of the court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the
applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been
occasioned by a material irregularity or fraud in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (1964) 6 SCR
1001 : AIR 1964 SC 1300; Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala, 1991 Supp (2) SCC 691 and Kadiyala Rama Rao v.
Gutala Kahna Rao, (2000) 3 SCC 87).
A charge of fraud or material irregularity under Order 21 Rule 90 must be specifically made with sufficient particulars. Bald allegations would not
do. The facts must be established which could reasonably sustain such a charge. In the case before us, no such particulars have been given by the
respondent of the alleged collusion between the other respondents and the auction-purchaser. There is also no material irregularity in publishing or
conducting the sale. There was sufficient compliance with Order 21 Rule 67(1) read with Order 21 Rule 54(2). No doubt, the trial court has said that
the sale should be given wide publicity but that does not necessarily mean by publication in the newspapers. The provisions of Order 21 Rule 67
clearly provide if the sale is to be advertised in the local newspaper, there must be specific direction of the court to that effect. In the absence of such
direction, the proclamation of sale has to be made under Order 21 Rule 67(1) “as nearly as may be, in the manner prescribed by Rule 54 sub-rule
(2)â€. Rule 54 sub-rule (2) provides for the method of publication of notice and reads as follows :-
“54.(2) The order shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the
order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the courthouse, and also, where the property is land
paying revenue to the Government, in the office of the Collector of the district in which the land is situate and, where the property is land situate in a
village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village.â€
The submission, thus, is that a mere irregularity should not be permitted to nullify and defeat the rights of the auction purchaser for whose benefits
the proforma enlists certain requirements. Not only that, there is no injury, which has occurred to the mortgagor nor is it pleaded.
Learned counsel for the mortgagor, on the other hand, contends that the mandatory requirement has not been complied with, which must nullify the
auction notice. Learned counsel referred to the judgment of the Division Bench of the Madras High Court passed in W.P. No. 9729 of 2009 titled
“K. Raamaselvam & Ors. V. Indian OverseasBank & Ors.‟ on 29.07.2009 to contend that it is not open for the secured creditor to plead that a
violation is technical and, thus, need not be complied with. This is, of course, apart from relying on the judgment in Manoj D. Kapasi & Anr.'s case
(supra).
We have perused the judgment in Manoj D.Kapasi & Anr.'s case (supra) wherein the matter dealt with the right of redemption available to a
mortgagor, which is so available till sale or transfer takes place. The emphasis was on Section 13(8) of the said Act, which reads as under :-
“13. Enforcement of security interest. â€"â€" … … … … … … … …
(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time
before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken
by him for transfer or sale of that secured asset.â€
It was pleaded that the mortgagor has a right of redemption. The plea advanced was that no notice as required under Rule 8(6) of the said Rules was
given to the petitioners therein and the notice of sale published was defective being in breach of Rule 9(1) of the said Rules because it gave only five
days for the bid to be received. Thus, if rights of the borrowers are to be protected, it must be interpreted and enforced in a manner to facilitate the
party concerned to redeem the property. Thirty days had not been provided as per Rule 8(6) of the said Rules. It was in that context observed that
Rule 8(6) and also Rule 9(1) of the said Rules are mandatory and are clearly to be followed by the Bank.
On due consideration of the aforesaid, so also the findings recorded by the learned Appellate Tribunal, we are of the view that the corrigendum is
nothing but a correction of the demand notice, but size, boundaries and description of 6 properties which has necessitated because after mortgage of
the aforesaid properties, a part of the same was acquired and this fact was never communicated by the petitioners, and therefore, the same was
issued just to intimate the correct facts of the properties to the prospective buyers to cut short the litigation.
The demand notice was issued on 17.12.2012, but till today, no amount has been paid nor during the course of arguments any offer for settlement
of payment of the amount has been made, as per version of the learned Senior Counsel for the respondent â€" Bank, at present, the dues is around
ninety crores.
 25. For these reasons, Writ Petition No.12021/2018 filed by the petitioners under Article 227 of the Article has no merit and is
accordingly, dismissed without any order as to costs.