VASU P. SHETTY versus M/S HOTEL VANDANA PALACE & ORS.

Citation: [2014] 9 S.C.R. 38 · Decided: 22-04-2014 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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(2014] 9 S.C.R. 38 
VASU P. SHETTY 
V. 
M/S HOTEL VANDANA PALACE & ORS. 
(Civil Appeal No. 4679 of 2014) 
' 
APRIL 22, 2014 
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.) 
Security Interest (Enforcement) Rules, 2002 - rr.8 & 9 -
Default in rep~yment of loan by borrower - Auction sale of 
mortgaged property set aside by High Court on ground that 
public notice issued for the sale was defective as 30 days time 
mandatorily required under rr. 8 and 9 was not given - Plea 
of auction purchaser as well as the Bank that the borrower by 
its conduct had waived said mandatory requirement of ttie 
Rules - Held: Not tenable - No case of waiver made out in 
the instant case - Two earlier failed auctions and one failed 
One time Settlement (OTS) proposal of the borrower does not 
lead to the conclusion that the Bank was relieved from its 
obligation not to follow the mandatory procedure contained 
in the Rules, while taking fresh steps for disposal of the 
property - Even if delaying tactics were adopted by borrower 
in respect of the first two auctions, the conduct of borrower 
cannot be taken as waiver of the mandatory condition of 30 
days notice for auction as well as other requirements - There 
was not even slightest move on the part of borrower 
amounting to waiver either express or implied - In view of 
breach of mandatory requirements, auction sale in question 
to be treated as null and void - Two months time granted to 
borrower to discharge the entire liability of the Bank - If 
borrower pays the amount due, the property shall revert back 
G 
to it - Otherwise, the Bank shall be at liberty to proceed with 
the sale of the property - Purchaser refunded entire amount 
spent by it - No interest granted to purchaser on the amount 
refunded, as he, in the meantime, utilized the property in 
H 
38 
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VASU P. SHETTY v. MIS HOTEL VANDANA PALACE 
39 
question - Securitisation and Reconstruction of Financial A 
Assets and Enforcement of Security Interest Act, 2002 - ss. 
13 and 18 - Doctrines - Doctrine of waiver. 
Respondent no.1 took loan from Bank but defaulted 
in making re-payment. Taking action under provisions of 
8 
the Securitisation and Reconstruction of Financial Assets 
and Enforcement of Security Interest Act, 2000, the Bank 
took formal possession of the mortgaged property given 
as surety for due discharge of the loan. The property was 
put to auction sale. The appellant was highest bidder and 
C 
therefore a sale certificate was issued in his favour. 
Respondent chaJlenged the sale by filing application 
before Debt Recovery Tribunal which was dismissed. 
Respondent then filed petition before the High Court 
which was dismissed by a Single Judge. On appeal, the 
Division Bench set aside sale of property in favour of the 
D 
appellant on the ground that the public notice issued for 
the said sale was defective as 30 days time mandatorily 
required under Rules 8 and 9 of the Security Interest 
(Enforcement) Rules, 2002 was not given. 
E 
Notwithstanding the fact that insufficient notice was 
given and the mandatory nature of Rules 8 & 9, the 
appellants viz auction purchaser as well as the Bank 
maintained before this Court that the sale was valid 
because respondent-borrower by its conduct had 
F 
waived the said mandatory requirement of the Rules. 
In this backdrop, the question that arose for 
consideration before this Court was as to whether there 
could be a waiver of the aforesaid mandatory condition; 
and if so, whether this waiver could be discerned in the 
G 
present case. 
Dismissing the appeals, the Court 
HELD:1.1. In the instant case, no case of waiver is .H 
40 
SUPREME COURT REPORTS 
[2014] 9 S.C.R. 
A made out. From what is argued by the appellants, at best 
it can be inferred that the borrower tried to thwart the 
earlier attempts of the Bank in selling the property. When 
the first notice was issued, the borrower filed the writ 
petition. However, in the said Writ Petition no interim 
B order was passed staking the auction on the stipulated 
date. The only stay granted was against confirmation of 
sale. That did not preclude anybody from participating in 
the auction. Many times pendency of such a Writ Petition 
challenging the auction notice and the kind of stay 
c granted, even partial in nature, deter the intending buyers 
to come forward and participate in the auction. Be as it 
may, even in the second attempt when the reserve price 
was reduced to Rs. 2.39 crores, the highes

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