BANK OF BARODA versus M/S KARWA TRADING COMPANY & ANR.

Citation: [2022] 1 S.C.R. 1100 · Decided: 10-02-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A
B
C
D
E
F
G
H
1100
SUPREME COURT REPORTS
[2022] 1 S.C.R.
[2022] 1 S.C.R. 1100
1100
BANK OF BARODA
v.
M/S KARWA TRADING COMPANY & ANR.
(Civil Appeal No. 363 of 2022)
FEBRUARY 10, 2022
[M. R. SHAH AND SANJIV KHANNA, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – ss.13(2), 13(4), 14
and 17 – Security Interest (Enforcement) Rules, 2002 – r.8 r/w r.9 –
Appellant (bank) granted term loan of Rs.100 lakhs and cash credit
limit of Rs.95 lakhs to respondent (borrower) against security of
two mortgaged properties – Borrower failed to repay the loan as
per terms & conditions of the agreement – The account of the
borrower became NPA on 31.10.2012 – Notice u/s.13(2) of
SARFAESI Act served upon the borrower on 07.01.2013 demanding
sum of Rs.1,85,37,218.80/- – Bank took symbolic possession of the
immovable property / residential house and issued notice u/s. 13(4)
of SARFAESI Act on 22.08.2013 – The bank issued sale notice by
public auction of the residential property on 16.12.2013 – Reserve
price fixed was Rs.48.65 lakhs – Date of auction notified was
20.01.2014 – Borrower challenged the auction by filing application
u/s 17 of the SARFAESI Act before DRT – DRT passed interim order
directing release / handover of possession of the mortgaged property
to the borrower on deposit of Rs.48.65 lakhs – Bank filed appeal
before DRAT which was dismissed – Single Judge of High Court set
aside the orders passed by DRT & DRAT on ground that the orders
were in contravention of s.13(8) of SARFAESI Act – Division Bench
set aside the order of Single Judge and directed the bank to release
the secured property (residential house) on the borrower depositing
a further sum of Rs.17 lakhs to the bank and handover possession
along with title deeds to the borrower – Propriety – Held: Not proper
–The bank/secured creditor could be restrained from selling the
mortgaged property/secured property if the borrower deposited
entire dues that was Rs.1,85,37,218.80/- as on 07.01.2013 with the
secured creditor – DRT in its order which as such was an interim
relief order pending appeal u/s.17 of the SARFAESI Act was not
justified in directing to release the mortgaged property and
A
B
C
D
E
F
G
H
1101
handover the possession along with the original title deeds to the
borrower on payment of Rs.48.65 lakhs only which was the base
price/ reserve price, which the Division Bench of the High Court
increased to Rs.65.65 lakhs on the ground that the highest bid
received was Rs.71 lakhs – Unless and until the borrower was ready
to deposit /pay the entire amount payable together with all costs
and expenses with the secured creditor, the borrower could not be
discharged from the entire liability outstanding – It will be open for
the appellant to proceed with the auction proceedings of the
mortgaged properties – At the same time, DRT to decide and dispose
of the application filed by the borrower u/s 17 of the SARFAESI Act
in accordance with law.
Allowing the appeal, the Court
HELD:1. The bank had already initiated the proceedings
under Section 13 of the SARFAESI Act and even the possession
of the mortgaged property was taken over by the bank under
Section 14 of the SARFAESI Act and thereafter the mortgaged
property was put to sale by a public auction and at that stage the
borrower wanted to stall the auction proceedings and restrain
the secured creditor/ bank from selling the property. In such a
situation the bank/secured creditor can be restrained from selling
the mortgaged property/secured property where the borrower
deposits entire dues that was Rs.1,85,37,218.80/- as on 18
07.01.2013 with the secured creditor. Therefore, the DRT in its
order dated 17.01.2014 which as such was an interim relief order
pending the appeal under Section 17 of the SARFAESI Act was
not justified in directing to release the mortgaged property and
handover the possession along with the original title deeds to
the borrower on payment of Rs.48.65 lakhs only which was the
base price/ reserve price, which the Division Bench of the High
Court has increased to Rs.65.65 lakhs on the ground that the
highest bid received was Rs.71 lakhs (which was not materialized
as the highest bidder did not come forward). Unless and until the
borrower was ready to deposit/pay the entire amount payable
together with all costs and expenses with the secured creditor,
the borrower cannot be discharged from the entire liability
outstanding. Therefore, as such no order
Excerpt shown. Read the full judgment & AI analysis in Lexace.