SHAKEENA & ANR. versus BANK OF INDIA & ORS.

Citation: [2019] 11 S.C.R. 341 · Decided: 20-08-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Dismissed

Cited by 1 judgment(s) · cites 9 · see the full citation network in Lexace

Judgment (excerpt)

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SHAKEENA & ANR.
v.
BANK OF INDIA & ORS.
(Civil Appeal Nos. 8097-8098 of 2009)
AUGUST 20, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002: ss. 13(2), 13(4) – Right
of redemption – Loan taken by appellants from respondent Bank –
In view of default in discharging the loan by appellants, respondent
Bank exercised its power under s.13(4) and took over constructive
possession of mortgaged property – Appellant filed applications
before DRT which, however, were dismissed for non-prosecution –
Thereafter, respondent bank brought secured property for sale –
Respondent no. 3 was the highest bidder and he deposited 25% of
sale consideration – On 2.1.2006, appellant deposited Rs.25 lacs
in the account of his father followed by deposit of three cheques of
Rs.25 lacs which were returned by respondent bank on the ground
that same was not a valid tender – Meanwhile, respondent no. 3
complied with all terms and conditions of sale, as a result of which
sale was confirmed in his favour – Respondent bank credited a sum
in the loan accounts of appellants and closed both the loan accounts
– On 6.1.2006, respondent bank issued a sale certificate in favour
of respondent no.3 – Appellant filed applications for restoration of
the main proceedings before DRT which was dismissed  – Appellants
thereafter forwarded demand drafts in the name of Authorised
Officer of the bank which was also not accepted – Appellant filed
writ petition before High Court for quashing of the auction of subject
property – Whether the appellants had a subsisting right of
redemption until the sale certificate was duly registered entailing in
transfer of subject property – Held: There was substance in the
stand taken by respondent bank that no valid tender was made by
the appellants so as to discharge them from their obligation – The
amount allegedly deposited in the account of father of appellant
No.2 and not in their loan accounts was not be a valid tender –
Similarly, appellants attempted to pay in the form of cheques on
   [2019] 11 S.C.R. 341
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SUPREME COURT REPORTS
[2019] 11 S.C.R.
2.1.2006 – However, as per the terms and conditions, payment by
cheques was not permissible – Thus, the respondent bank was not
obliged to accept the amount in the form of cheques – Even the
third attempt made by appellants was to offer demand drafts drawn
in favour of or in the name of the Authorised Officer of the
respondent bank and not in the name of the bank or authorising
the bank to appropriate it towards the subject loan accounts –
Therefore, these demand drafts were rightly not accepted as a valid
tender – Thus, appellants failed to exercise their right of redemption
before the issue of sale certificate much less the registration thereof.
Dismissing the appeals, the Court\
HELD: 1.  Indisputably, after the disposal of the writ appeals
by the Division Bench of the High Court, the auction purchaser
(respondent No.3) got the sale certificate registered on 18th
September, 2007 and then transferred the property by a
registered sale deed on 5th October, 2007 to third party.  It was
not the case of the appellants that some interim injunction
prohibiting respondent No.3 from registering the sale certificate
or transferring the suit property, was operating against him after
the decision of the Division Bench of High Court. In fact, the
impugned judgment was not even carried in appeal before this
Court by the appellants until then. The special leave petitions
came to be filed only on 13th October, 2007 and order of status
quo was passed by this Court on 23rd November, 2007. In other
words, there has been a paradigm shift in the rights of the parties
upon registration of the sale certificate on 18th September, 2007
and also because of the registered sale deed in favour of third
party on 5th October, 2007. [Para 25] [359-A-D]
2. The appellants had allowed the action taken by the
respondent bank under Section 13(4) of the 2002 Act, to become
final consequent to the order of the DRT rejecting challenge
thereto due to non-compliance of the conditional order. Even the
subsequent application for restoration of the DRT proceedings
came to be rejected. The appellants then filed the subject writ
petition on 19th January, 2006, by which date the auction had
already concluded including the sale certificate was issued in
favour of the highest bidder on 6th January,

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