Souvik Pal & Anr. vs Dewan Housing Finance Corporation Limited & Ors.

The petitioner seeks issuance of a sale certificate and a letter of confirmation of sale in respect of an immovable property purchased by the petitioner in an auction undertaken by the respondent no.1 under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI).

The learned advocate for the petitioner submits that the petitioner has paid the entire consideration price of the property but not within the time. He submits that the respondent no.1 has issued a notice purported to forfeit the entire sale consideration. He submits the respondent no.1 is not entitled to do so.

The learned advocate for the respondents submits that the sale in favour of the petitioner was confirmed on December 21, 2016 in terms of Rule 9 (4) to (6) of the Security Interest (Enforcement) Rules, 2002. The respondent no.1 is entitled to forfeit the part sale consideration immediately on the expiry of the 15 days from date of confirmation of the sale. In the present case, the date of confirmation of the sale being the December 21, 2016, the respondent no.1 became entitled to forfeit the entire sale consideration on January 5, 2017. The respondent no.1, however, had granted some time to the petitioner to pay the balance consideration. It had invoked Rule 9 (4) of the Rules, 2002 for such purpose. The petitioner not having paid the entire sale consideration, the respondent no.1 was constrained to terminate the sale by a writing dated February 17, 2017. On the date of termination, the entire sale consideration was not paid. He submits that the petitioner had put in the balance consideration even after February 17,2017 through NEFT and RTGS payments. The respondent no.1 did not authorize the petitioner to make such payments.

I have considered the rival contentions of the parties and the materials made available on record.

The respondent no.1 had undertaken the sale of an immovable property under the provisions of the SARFAESI Act, 2002. Such sale is governed by the Security Interest (Enforcement) Rules 2002. For the purpose of consideration of the present proceedings, the Rules 9(3) to (6) of the Rules 2002 are as follows:- "(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. Of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again.

(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.]

(5) In default of payment within the period mentioned in suchrule (4), the deposit shall be forfeited[to the secured creditor] and the property shall be resold and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may be subsequently sold.

(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorized officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the form given in Appendix-V to these rules."

Sub-rule (3) requires the purchaser to deposit 25% of the amount of sale price on the date of the sale. The first petitioner has done so. There is no dispute with regard thereto. Sub-rule (4) requires that, the balance amount of purchase price be paid by the purchaser on or before the fifteenth day of the confirmation of the 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.

In the present case, the confirmation of sale happening on December 21, 2016, the fifteenth day expired on January 5, 2017. Subsequent to January 5, 2017, the bank had received paymens from the petitioner. The bank has proceeded to terminate the contract only on February 17, 2017. No material has been placed before the Court to suggest that the petitioner had applied for extension of time and that the authorized officer had granted the same.

The authorised officer had acted unilaterally in extending the time for payment without corresponding request being made by the petitioner. This course of conduct by the authorised officer violates Sub-rule (4). Therefore, the respondents were not in a position to contend that the action of the petitioner is bad when the petitioner has deposited the entire sale price beyond 15 days but within the period of three months as in Sub-rule (4).

The Court is informed that the respondent no.1 has put up the property for re-auction today. In view of the fact that the petitioner has put in the entire sale price within the time contemplated under the sub rule (4), it would be appropriate to direct the respondents to issue a sale confirmation in favour of the petitioner and execute the sale certificate in favour of the petitioner in respect of the concerned immovable property forthwith. In view of such direction, the respondents will not continue with the re-auction in any manner whatsoever.

At this stage, the learned advocate for th respondents on instructions, with a representative of the respondents being present in Court, submits that, the respondent no.1 is agreeable to refund the entire sale consideration but without any interest.

In such circumstances, it would be appropriate to direct the respondent no.1 to refund the entire sale consideration to the petitioner forthwith and preferably within seven days from the date by pay order being made in the name of the first petitioner.

So far as the interest is concerned, the transactions between the petition and the respondent no.1 being commercial in nature, the petitioner is legitimately entitled to interest. In such circumstances, the respondent no.1 will refund the amount together with interest calculated @ 18% per annum from the date of deposit of the money till the date of refund. Such rate of interest is granted in view of the transactions being commercial in nature and in view of the fact that nationalized banks charge interest at rates not less than such rate of interest in respect of commercial transactions.

W.P. 6942 (w) of 2017 is disposed of without any order as to costs. Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.