S. KARTHIK & ORS. versus N. SUBHASH CHAND JAIN & ORS.

Citation: [2021] 13 S.C.R. 1096 · Decided: 23-09-2021 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 13 S.C.R.
S. KARTHIK & ORS.
v.
N. SUBHASH CHAND JAIN & ORS.
(Civil Appeal Nos. 5920-5923/2021)
SEPTEMBER 23, 2021
[L. NAGESWARA RAO, B. R. GAVAI AND
B. V. NAGARATHNA, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – Section 13 –
Enforcement of Security Interest – Notice to Sale – Rule 9 of the
SARFAESI Rules – 30 days’ notice – The present appeal challenges
the common judgment of the High Court disposing of four writ
petitions – Loan transaction of Rs. 21,14,00,000/- between AC Pvt.
Ltd. (borrower) and Bank (Respondent No. 5) – 4 properties were
mortgaged as security – Borrower was categorised as Non-
Performing Asset – First Sale Notice was issued on 21.01.2012 in
respect of all the 4 properties scheduling the date for sale on
27.02.2012 – On application of Appellants and Respondent No. 2
to 4, DRT vide order dated 27.02. 2012 granted interim stay for 30
days on the sale subject to the deposit of the 50% of outstanding
amount – On 28.03.2012 one of the mortgaged properties was sold
by the Bank through a private treaty for Rs. 12.25 Crores – Second
sale notice was issued in regards to the outstanding amount of Rs.
11,99,53,926/- on 9.07.2012 scheduling the sale on date
20.07.2012 on which the two of the mortgage properties were sold
to auction purchaser (Respondent No.1) for consideration of
Rs. 4,86,21,000/- – Sale certificate in favour of auction purchaser
issued on 13.09.2012 – Third sale notice dated 27.09.2012 was
issued for the sum of Rs. 6,76,07,054/- and the date of sale was
scheduled on 30.10.2012, however, the High Court in vide an interim
order restrained the respondent-bank and the auction purchaser
from taking physical possession of the properties – A sum of Rs. 12
crore was paid to the respondent bank against the sale of the
remaining of the mortgage property which owned by the Respondent
No. 3, after the sale, the respondent bank had excess amount of
4.48 Crores for which Respondent No. 3 was entitled – DRT set
aside the Second Sale Notice and the consequent sale of mortgaged
[2021] 13 S.C.R.1096
1096
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properties – Directed Respondent-Bank to refund the amount paid
by auction purchaser along with 10% Interest and refund of surplus
sum of Rs. 4.48 Crores to the Respondent No. 3 along with 10%
Interest – On appeal, DRAT, set aside the order of DRT, except in
respect of payment of excess amount to third respondent – High
Court upheld the order of the DRAT – Held: Sale scheduled on
27.02.2012 in pursuance of First Sale Notice could not take place
on account of the interim orders Passed by the DRT on the
representation of the guarantors – One of the properties was sold
for Rs. 12.25 Crores through a private treaty, but this could not
fulfil the entire claim – Hence, Second Sale Notice was issued which
was in the continuation of the proceedings of the First Sale Notice,
therefore providing of 30 days’ clear notice is not necessary – Order
of the DRT was not sustainable insofar as setting aside the sale –
DRAT has rightly reversed the same which was upheld by the High
Court – Auction purchaser was the successful bidder and the sale
was register in his favour – But for the 9 years, he could not enjoy
the fruit of the said sale, therefore, the appellants are directed to
handover the vacant and peaceful possession of the properties to
the Auction purchaser along with the rent received by the appellants.
Litigation – Series of – Recourse to series of proceedings to
block the enforcement of a security interest – Dilatory tactics –
Held: Every attempt has been made to frustrate the purpose of the
SARFAESI Act – Three rounds of litigation – It appears that the
appellants were only interested in protracting the litigation as, they
had more than one opportunity for redemption of mortgage however,
they did not avail the opportunity – Sale in pursuance of First Sale
Notice could not take place on their incorrect misrepresentation.
Dimissing the appeals, the Court
HELD:
1. It will be relevant to note that this Court in the case of
Mathew Varghese itself has held that in the event of any such sale
properly notified after giving a 30 days’ clear notice to the
borrower does not take place as scheduled for the reasons, which
are not solely attributable to the borrower, then the secured
creditor cannot effect the sale and he will have to initiate the
procedure de novo. [Para 56][1136-F-H]
S. KARTHIK

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