advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Saturday, March 15, 2014

Sec.13 SARFAESI Act,Rules 8 and 9 of the Rules, 2002 - Sale against the rules are null and void - agreed to sale property under private treaty - Bank sold the property with it's agent with out the knowledge of debtor to the third party Appellant for lower price - just more than Rs.10,000/- on the reserve price - High court and D.B. rightly held that is void as it was done against rule 8 and 9 of Rules 2002 - Since the third party appellant is a bonafide purchaser who paid entire amount and took delivery of possession - Apex court modified the judgement and directed (i) The State Bank of India – Respondent No.3 directed to refund the entire proceeds of the FDR in which the sale consideration was deposited together with accrued interest forthwith.(ii) The Respondent Nos. 1 and 2 will ensure that the entire amount due to the appellants is paid on or before 15th June, 2014.(iii) Upon receipt of the entire amount, the possession shall be delivered to Respondent Nos. 1 and 2.= J.Rajiv Subramaniyan & Anr. …Appellants VERSUS M/s. Pandiyas & Ors. ...Respondents= 2014 (March. Part ) judis.nic.in/supremecourt/filename=41326

  Sec.13  SARFAESI   Act,Rules 8 and  9  of  the Rules, 2002 - Sale against the rules are null and void -  agreed to sale property under private treaty - Bank sold the property with it's agent with out the knowledge of debtor to the third party Appellant  for lower price - just more than Rs.10,000/- on the reserve price - High court and D.B. rightly held that is void as it was done against rule 8 and 9 of Rules 2002 - Since the third party appellant is a bonafide purchaser who paid entire amount and took delivery of possession - Apex court modified the judgement and directed (i)   The State Bank of India – Respondent No.3 directed to refund the entire proceeds of the FDR in which the sale  consideration  was deposited together with accrued interest forthwith.(ii)  The Respondent Nos. 1 and 2 will ensure that the  entire  amount due to the appellants is paid on or before 15th June, 2014.(iii) Upon receipt of the  entire  amount,  the  possession  shall  be delivered to Respondent Nos. 1 and 2.=

 It is not disputed before us that there were no terms  settled  in
      writing between the parties that the sale can be affected  by  Private
      Treaty.  In fact, the borrowers – respondent Nos. 1  and  2  were  not
      even called to the joint meeting between the Bank  –  Respondent  No.3
      and         Ge-Winn held on 8th December, 2006.  Therefore, there  was
      a clear violation of the aforesaid Rules rendering the sale illegal.
   
“27. Therefore, by virtue of the  stipulations  contained  under
           the   provisions   of   the   SARFAESI   Act,   in   particular,
           Section 13(8), any sale or transfer of a SECURED  ASSET,  cannot
           take place without duly informing the borrower of the  time  and
           date of such sale or transfer in order to enable the borrower to
           tender the dues of the SECURED CREDITOR with all costs,  charges
           and expenses and any such  sale  or  transfer  effected  without
           complying  with  the  said  statutory  requirement  would  be  a
           constitutional violation and nullify the ultimate sale.”


      14. As noticed above, this Court also examined Rules 8 and  9  of  the
      Rules, 2002.  On a detailed analysis of  Rules 8 and 9(1), it has been
      held that any sale effected without complying with the same  would  be
      unconstitutional and, therefore, null and void.
      15. In the present case, there is an additional reason  for  declaring
      that sale in favour of the appellant was a nullity.  Rule 8(8) of  the
      aforesaid Rules is as under:-
           “Sale by any method other than public auction or public  tender,
           shall be on such terms as may be settled between the parties  in
           writing.”


    17. It  must  be  emphasized  that  generally  proceedings  under  the
      SARFAESI Act, 2002 against the borrowers are initiated only  when  the
      borrower is in dire-straits.  The provisions of the SARFAESI Act, 2002
      and the Rules, 2002 have been enacted to ensure that the secured asset
      is not sold for a song.   It  is  expected  that  all  the  banks  and
      financial institutions which resort to the extreme measures under  the
      SARFAESI Act, 2002 for sale of the secured assets to ensure, that such
      sale of the asset provides maximum benefit to the borrower by the sale
      of such asset. Therefore, the secured creditors are expected  to  take
      bonafide measures to ensure that there  is  maximum  yield  from  such
      secured assets for the borrowers.  In  the  present  case,  Mr.  Dhruv
      Mehta has pointed out that sale consideration is only Rs.10,000/- over
      the reserve price whereas the property was worth much more.  It is not
      necessary for us to go into this question as, in our opinion, the sale
      is null and void being in violation of the provision of Section 13  of
      the SARFAESI Act, 2002 and Rules 8 and 9 of the Rules, 2002.


      18. We, therefore, have no hesitation in upholding  the  judgments  of
      the learned Single Judge and the Division Bench of the High  Court  to
      the effect that the sale effected in favour of the appellants on  18th
      December, 2006 is liable to be set aside.

  In view of the aforesaid, we hold that the sale  in  favour  of
      the appellants dated 18th December, 2006 and the  subsequent  delivery
      of possession to the  appellants  is  null  and  void.   The  sale  is
      accordingly set aside. The appellants  are  directed  to  deliver  the
      possession of the property purchased by them under the Sale Deed dated
      20th December, 2006 to  Respondent  Nos.  1  and  2  immediately  upon
      receiving the entire amount as directed hereunder:-
      (i)   The State Bank of India – Respondent No.3 directed to refund the
           entire proceeds of the FDR in which the sale  consideration  was
           deposited together with accrued interest forthwith.
      (ii)  The Respondent Nos. 1 and 2 will ensure that the  entire  amount
           due to the appellants is paid on or before 15th June, 2014.
      (iii) Upon receipt of the  entire  amount,  the  possession  shall  be
           delivered to Respondent Nos. 1 and 2.
      29. With these observations, the appeals are disposed of with no order
      as to costs.


  2014 (March. Part ) judis.nic.in/supremecourt/filename=41326
SURINDER SINGH NIJJAR, A.K. SIKRI
                                               REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                       CIVIL APPEAL NO.  3865  OF 2014
                 (Arising out of S.L.P.(C) No.24915 of 2011)




      J.Rajiv Subramaniyan & Anr.                      …Appellants


      VERSUS
      M/s. Pandiyas & Ors.                         ...Respondents
                                 WITH
                CIVIL APPEAL NO.  3866  OF 2014
               (Arising out of S.L.P.(C) No.25448 of 2012)


                               J U D G M E N T


      SURINDER SINGH NIJJAR,J.
      1.  Leave granted.
      2. These special  leave  petitions  are  directed  against  the  final
      judgment and order dated 14th June, 2011 passed  by  the  Madras  High
      Court (Madurai Bench) in W.A.No.417 of 2011 dismissing  the  aforesaid
      Writ Appeal filed by the appellants.
      3. We have heard the learned counsel for the parties at length.
      4.   Mr. Ashok Desai learned senior counsel appearing on behalf of the
      appellants has submitted that although many issues have been raised in
      the SLP, he is not pressing the point that the  High  Court  erred  in
      entertaining the writ petition filed by respondent Nos.1  and  2.  The
      point with regard to the maintainability  of  the  writ  petition  was
      taken on the basis of a judgment of this Court in the case  of  United
      Bank of India vs. Satyawati Tondon & Ors.[1]. It was urged before  the
      High Court that an alternative remedy being  available  to  respondent
      Nos.1 and 2 under the Securitization and Reconstruction  of  Financial
      Assets and Enforcement of Security  Interest  Act,  2002  (hereinafter
      referred to as “SARFAESI Act, 2002), the writ petition  would  not  be
      maintainable. The second issue with regard to the maintainability  was
      based on the fact that earlier respondent Nos. 1 and 2 had filed  Writ
      Petition Nos.5027-28 of 2006 challenging the auction sale notice dated
      23rd May, 2006. However, these writ petitions were  withdrawn  on  3rd
      July, 2006. The High Court did not give any liberty to respondent Nos.
      1 and 2 to file fresh writ petition. Mr. Desai very  fairly  submitted
      that it is not necessary to examine the issues on  maintainability  of
      the writ petition, as the entire issue is before this Court on merits.




      5.     Mr. Ashok Desai has pointed out that respondent Nos.1 and 2 had
      taken  various  loans  from  respondent  No.3-Bank.  Upon  failure  of
      Respondent Nos. 1 and 2 to repay the loan, the  assets  of  respondent
      Nos.1 and 2 which had been mortgaged with  respondent  No.3-Bank  were
      classified as non-performing assets  (NPA).  Inspite  of  such  action
      having been taken by respondent  No.3-Bank,  respondent  Nos.1  and  2
      failed to regularize the bank account. Therefore, on 8th  June,  2005,
      the bank-respondent No.3 issued notice  under  Section  13(2)  of  the
      SARFAESI Act, 2002 followed by a possession notice  on  12th  January,
      2006 under Section 13(4) of the  said  Act.  Respondent  Nos.1  and  2
      challenged the aforesaid two notices  by  filing  Writ  Petition  Nos.
      4174/2006,  4175/2006,  5027/2006  and  5028/2006.  In  the  meantime,
      auction sale was fixed on 7th July, 2006. But no sale  took  place  as
      there were no bidders. On           28th August, 2006, respondent Nos.
      1  and  2  sought  cancellation  of  the  auction  notice  and  sought
      permission of respondent No.3-Bank  to  sell  the  secured  assets  by
      private Treaty. It was stated that as on  that  date  the  outstanding
      balance due to the bank was a sum of Rs.1.57  crores.  A  request  was
      made to break up the aforesaid amount as follows :
      (a) Machineries of M/s. Suruthi Fabrics            -  0.40 lacs
      (b) Land and building of M/s. Suruthi Fabrics  -  0.70 lacs
      (c) Pandias Garment Factory land and Building -  0.47 lacs
          And Suruthi Fabrics 5.51 acres Land


      6.     Permission was sought to sell the assets as stated above within
      six months. On 11th September, 2006, respondent Nos.1  and  2  made  a
      payment of Rs.42 lacs to respondent No.3-Bank,  by  selling  machinery
      with the permission of respondent No.3-Bank. A request was  also  made
      for an extension of two moths for paying the  remaining  amount  after
      selling the secured assets. On     8th December, 2006, respondent No.3-
      Bank gave approval for private sale of the immovable property  to  the
      appellants and for issue of sale certificate. On the very  same  date,
      the secured assets were  sold  in  favour  of  the  petitioner  for  a
      consideration of 123.10 lacs. It is not disputed by Mr.  Vikas  Singh,
      learned senior counsel appearing for Respondent No.3,  that  the  sale
      was affected through Ge-Winn Management  Company,  Resolution  Agents.
      This is also evident from the proceedings of the meeting held  between
      respondent No.3-Bank and        Ge-Winn on 8th December, 2006.


      7.     We may point out here that the reserve  price  of  the  secured
      assets was fixed at 123 lacs. Sale deed was executed in favour of  the
      appellants by respondent No.3 on 20th December, 2006,  as  the  entire
      considerations  have  been  paid  on  15th  December,  2006.  On  21st
      December, 2006, respondent Nos.1 and 2  were  informed  by  respondent
      No.3-Bank that the secured assets had been  sold  for  more  than  the
      amount offered by them in the letter dated 28th August, 2006. At  that
      stage, respondent Nos.1 and 2  filed  Writ  Petition  No.325  of  2007
      without disclosing that the  earlier  Writ  Petition  Nos.5027-28/2006
      challenging the auction notice dated              23rd May,  2006  had
      been withdrawn without the court giving liberty to respondent  Nos.  1
      and 2 to file a fresh writ petition.


      8.    Upon completion of the proceedings inspite  of  the  preliminary
      objections taken by the appellants, the learned Single  Judge  allowed
      the writ petitions. The sale in favour of the petitioner was  held  to
      be vitiated on the ground that respondent No.3-Bank failed  to  follow
      the mandatory provisions of Rules 8(5), 8(6) and 9(2) of the  Security
      Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘Rules,
      2002’). But a direction was issued to refund the amount  paid  by  the
      petitioner i.e. Rs.1crore 41 lacs with interest at 9% per  annum  from
      April, 2007.


      9.    Aggrieved by the aforesaid  order,  the  appellants  filed  Writ
      Appeal No.4127/2011 in the High Court, which has also been dismissed.


      10. Mr. Ashok Desai  submits  that  the  petitioner  is  a  bona  fide
      purchaser and has paid the full consideration. Sale deed has been duly
      executed. Possession of the property  is  with  the  appellants  since
      2006. Therefore, respondent Nos.1 and 2 should  not  be  permitted  at
      this stage to claim that the sale is vitiated on the  ground  that  it
      has been affected through an agent of respondent No.3-Bank, namely, Ge-
      Winn. Mr. Desai submitted  that  the  Single  Judge  as  well  as  the
      Division Bench have wrongly held that  there  has  been  violation  of
      Rules 8(5), 8(6), 8(8) and 9(2) of the Rules, 2002. Mr. Desai  further
      submitted that it would be equitable to permit the petitioner to  keep
      the plot  which  is  adjacent  to  the  property  of  the  petitioner.
      Respondent Nos.1 and 2 can be permitted to take the other plots.


      11. Mr. Dhruv Mehta, learned senior counsel appearing on behalf of the
      respondent Nos. 1 and 2 relying on  the  judgment  of  this  Court  in
      Mathew Varghese Vs. M.Amritha Kumar & Ors. in C.A.No.1927-1929 of 2014
      decided on 10th February,  2014  submits  that  the  Rules,  2002  are
      mandatory in nature. In the present case, the sale has  been  effected
      in violation of the aforesaid rules. Both the learned Single Judge  as
      well as the Division Bench  have  come  to  the  conclusion  that  the
      provisions of the aforesaid rules have not been followed.  It  is  not
      disputed by any of the parties that  there  is  no  agreement  between
      respondent Nos. 1 and 2  and  respondent  No.3-Bank,  in  writing,  to
      affect the sale by Private  Treaty.        Mr.  Vikas  Singh,  learned
      senior counsel appearing for respondent  No.3-Bank,  however,  pointed
      out that the respondent Nos.1 and 2 had filed  a  review  petition  in
      which it was averred that they may be permitted to  sell  the  secured
      assets by Private Treaty. Therefore, according  to  Mr.  Vikas  Singh,
      respondent Nos. 1 and 2 cannot now be heard to say that they  had  not
      given their consent to affect the  sale  by  Private  Treaty.  We  are
      unable to accept the submission made by Mr. Vikas Singh that there  is
      no violation of the Rules, 2002. In our opinion, the findings recorded
      by the learned Single Judge as well as the Division Bench of the  High
      Court that there has been a violation of  Rules,  2002  are  perfectly
      justified.


      12. This Court in the case of Mathew Varghese Vs.  M.Amritha  Kumar  &
      Ors.[2] examined the procedure required to be followed by the banks or
      other financial institutions when the secured assets of the  borrowers
      are  sought  to  be  sold  for  settlement  of   the   dues   of   the
      banks/financial  institutions.   The  Court  examined  in  detail  the
      provisions of the SARFAESI Act, 2002.  The  Court  also  examined  the
      detailed procedure to be followed by the  bank/financial  institutions
      under the Rules, 2002.  This  Court  took  notice  of  Rule  8,  which
      relates to Sale of immovable secured assets and Rule 9  which  relates
      to time of sale, issue of sale certificate and delivery of  possession
      etc.  With regard to Section 13(1), this Court observed  that  Section
      13(1) of SARFAESI Act, 2002 gives a free hand to the secured creditor,
      for  the  purpose  of  enforcing  the  secured  interest  without  the
      intervention of Court or Tribunal.  But  such  enforcement  should  be
      strictly in conformity with the provisions of the SARFAESI Act,  2002.
      Thereafter, it is observed as follows:-
           “A reading of Section13(1), therefore, is clear  to  the  effect
           that while on the one hand any SECURED CREDITOR may be  entitled
           to enforce the SECURED ASSET created in its favour  on  its  own
           without resorting to any court proceedings  or  approaching  the
           Tribunal, such enforcement should  be  in  conformity  with  the
           other provisions of the SARFAESI Act.”


      13.   This Court further observed  that  the  provision  contained  in
      Section 13(8) of the  SARFAESI  Act,  2002  is  specifically  for  the
      protection of the borrowers in as much as, ownership  of  the  secured
      assets is a constitutional right vested in the borrowers and protected
      under Article 300A of  the  Constitution  of  India.   Therefore,  the
      secured creditor as a trustee of the secured asset can not  deal  with
      the same in any manner it likes and such an asset can be  disposed  of
      only in the manner prescribed in the SARFAESI Act,  2002.   Therefore,
      the creditor should ensure that the borrower was clearly put on notice
      of the date and time by which either the  sale  or  transfer  will  be
      effected in order to provide the required opportunity to the  borrower
      to take all possible steps for retrieving his property.  Such a notice
      is also necessary to ensure that the process of sale will ensure  that
      the secured assets will be sold to  provide  maximum  benefit  to  the
      borrowers.  The notice is also necessary to ensure  that  the  secured
      creditor or any one on its  behalf  is  not  allowed  to  exploit  the
      situation by virtue of proceedings initiated under the  SARFAESI  Act,
      2002.  Thereafter, in Paragraph 27, this Court observed as follows:-


           “27. Therefore, by virtue of the  stipulations  contained  under
           the   provisions   of   the   SARFAESI   Act,   in   particular,
           Section 13(8), any sale or transfer of a SECURED  ASSET,  cannot
           take place without duly informing the borrower of the  time  and
           date of such sale or transfer in order to enable the borrower to
           tender the dues of the SECURED CREDITOR with all costs,  charges
           and expenses and any such  sale  or  transfer  effected  without
           complying  with  the  said  statutory  requirement  would  be  a
           constitutional violation and nullify the ultimate sale.”


      14. As noticed above, this Court also examined Rules 8 and  9  of  the
      Rules, 2002.  On a detailed analysis of  Rules 8 and 9(1), it has been
      held that any sale effected without complying with the same  would  be
      unconstitutional and, therefore, null and void.
      15. In the present case, there is an additional reason  for  declaring
      that sale in favour of the appellant was a nullity.  Rule 8(8) of  the
      aforesaid Rules is as under:-
           “Sale by any method other than public auction or public  tender,
           shall be on such terms as may be settled between the parties  in
           writing.”




      16. It is not disputed before us that there were no terms  settled  in
      writing between the parties that the sale can be affected  by  Private
      Treaty.  In fact, the borrowers – respondent Nos. 1  and  2  were  not
      even called to the joint meeting between the Bank  –  Respondent  No.3
      and         Ge-Winn held on 8th December, 2006.  Therefore, there  was
      a clear violation of the aforesaid Rules rendering the sale illegal.


      17. It  must  be  emphasized  that  generally  proceedings  under  the
      SARFAESI Act, 2002 against the borrowers are initiated only  when  the
      borrower is in dire-straits.  The provisions of the SARFAESI Act, 2002
      and the Rules, 2002 have been enacted to ensure that the secured asset
      is not sold for a song.   It  is  expected  that  all  the  banks  and
      financial institutions which resort to the extreme measures under  the
      SARFAESI Act, 2002 for sale of the secured assets to ensure, that such
      sale of the asset provides maximum benefit to the borrower by the sale
      of such asset. Therefore, the secured creditors are expected  to  take
      bonafide measures to ensure that there  is  maximum  yield  from  such
      secured assets for the borrowers.  In  the  present  case,  Mr.  Dhruv
      Mehta has pointed out that sale consideration is only Rs.10,000/- over
      the reserve price whereas the property was worth much more.  It is not
      necessary for us to go into this question as, in our opinion, the sale
      is null and void being in violation of the provision of Section 13  of
      the SARFAESI Act, 2002 and Rules 8 and 9 of the Rules, 2002.


      18. We, therefore, have no hesitation in upholding  the  judgments  of
      the learned Single Judge and the Division Bench of the High  Court  to
      the effect that the sale effected in favour of the appellants on  18th
      December, 2006 is liable to be set aside.


      19. This now brings us to moulding the relief in  the  peculiar  facts
      and circumstances of this case.


      20.  As noticed earlier, Mr. Ashok Desai had emphasized on  behalf  of
      the appellants that no blame at all can be attributed  to  them.   The
      bank had decided to sell the immovable properties  to  the  appellants
      for Rs.1,23,10,000/- against  the  reserve  price  of  Rs.1,23,00,000.
      This is evident from the joint meeting of the bank held  with  Ge-Winn
      on 10th December, 2006, wherein it is observed as follows:-
           “Referring to the above in the presence of  the  undersigned  it
           has been decided to effect the sale to  M/s.  Susee  Automobiles
           Pvt.  Ltd.,  Madurai  and  Smt.  Nirmala  Jeyablan,   W/o   Shri
           Jayabaaalan, No.4,  S.V.  Nagar,  S.S.  Colony,  Madurai  for  a
           consideration of Rs.123.10 lakhs (Rupees one crore twenty  three
           lakhs and ten  thousand  only)  against  the  reserve  price  of
           Rs.123.00 lakhs and  issue  Sale  Certificate  for  registration
           under private treaty.”


      21. Mr. Desai had also pointed out that the borrowers -Respondent No.1
      and 2 had evaluated the property at Rs.117 lakhs.  The evaluation  was
      acknowledged  by  Respondent  Nos.  1  and  2  in  the  letter   dated
           28th August, 2006.  Therefore, the reserve price was fixed  based
      upon the aforesaid figures.  The appellants bought  the  property  for
      more  than  the  reserve  price.   The  appellants  paid  the   entire
      consideration within three days of the sale, i.e., on  15th  December,
      2006.  The Sale Deed was executed in their favour  on  20th  December,
      2006.   Possession  was  admittedly  delivered   on               20th
      December, 2006 also.  The appellants have  also  incurred  substantial
      loss as they have been  unnecessarily  dragged  into  litigation.   He
      pointed out that the  appellants  have  in  fact  incurred  losses  of
      Rs.3 crores as they were deprived of using the property in view of the
      interim orders passed by the High Court and they were forced  to  take
      other property on monthly rent of Rs.3 lakhs from  January  2007.  He,
      therefore, submitted that the proposal  made  by  the  appellants  for
      being permitted to keep the plot  adjacent  to  the  property  already
      owned by them,  be  accepted.   In  the  alternative,  learned  senior
      counsel submitted that the High Court has  unnecessarily  reduced  the
      amount of interest on the amount deposited by the appellants with  the
      bank would bear only 4% interest.  He submitted  that  the  appellants
      are entitled to 18% compound interest since the date  the  amount  was
      deposited till refund.


      22.    On the other hand, Mr. Dhruv Mehta pointed out that property of
      Respondent No.1 has been sold for a ridiculously  low  price,  as  the
      bank is interested only in regularizing the account of  the  borrower.
      He has submitted  that  respondent  Nos.  1  and  2  are  prepared  to
      compensate the appellants, to a reasonable  extent,  but  not  to  the
      extent claimed by Mr. Desai.


      23.     On the other hand, Mr. Vikas Singh has submitted that in  case
      the sale is to be set aside and the properties have to be returned  to
      the borrowers, the dues of the bank also have to be secured, which are
      now in the region of Rs.4 crores.


      24. We have considered the submissions made by the learned counsel for
      the parties.


      25.  Initially  on  our  suggestion,  respondent  Nos.  1  and  2  had
      quantified the amount in accordance with the directions issued by  the
      learned Single Judge.  The learned Single Judge had ordered refund  of
      Rs.1,41,00,000/-, (Representing Rs.1,23,10,000/-  towards  Sale  Price
      and Rs.18,90,000/- towards Stamp Duty with interest @9% per annum from
      April 2007).  However, since we had accepted  the  second  alternative
      (partially) of Mr. Ashok Desai, the appellants  and  respondents  have
      jointly submitted the following chart:-
|Amount quantified by the    |Interest@ 18%    |Total             |
|Learned Single Judge        |from April 2007  |                  |
|                            |to 15.06.2014    |                  |
|Rs. 1,41,00,000/-           |Rs. 1,84,00,500/-|Rs. 3,25,00,500/- |
|Rs. 1,23,10,000/- Sale Price|                 |                  |
|Rs. 18,90,000/- (Stamp Duty)|                 |                  |


      26.  Mr. Dhruv Mehta has stated that  Respondent  Nos.  1  and  2  are
      prepared to refund the sale amount paid  by  the  appellants  as  Sale
      Price together with 18% simple interest from 1st July, 2007 till  15th
      June, 2014. The total  amount  spent  on  Stamp  Duty  shall  also  be
      refunded to the appellants. The total amount  shall  be  paid  to  the
      appellants by 15th June, 2014.  Mr. Desai had  pointed  out  that  the
      amount deposited with the bank, which is said to be  lying  in  a  FDR
      Bearing 8.25% per annum ought to  be  refunded  by  the  bank  to  the
      appellants.  Upon the entire amount being repaid  to  the  appellants,
      the possession of the property purchased by  the  appellants  will  be
      delivered to the Respondent Nos.1   and  2.
      27.   Insofar as the submission of  Mr.  Vikas  Singh  learned  senior
      counsel  is concerned we are unable to accept the same  in  the  facts
      and circumstances of this case  It would be relevant to point out that
      the learned Single Judge of the High Court after holding that the sale
      in question was invalid, directed making  of  payments  by  respondent
      Nos. 1 and 2 to respondent No.3 bank with clear direction that on such
      payment, insofar as  the  bank  is  concerned  its  dues  shall  stand
      settled.    Not only respondent Nos. 1  and  2  made  the  payment  as
      directed which was  accepted  by  respondent  No.3  bank,  insofar  as
      respondent No.3 bank is concerned it even accepted the  said  judgment
      and did not file any appeal thereagainst.  Only  the  appellant  filed
      the appeal.  Though the order of the learned Single  Judge  about  the
      validity of the sale had been affirmed, the Division Bench  interfered
      with the other direction of the learned Single Judge which should  not
      have been done as bank had not challenged the  order  of  the  learned
      Single Judge.  We are, therefore, of the opinion that in the facts  of
      this case, once the payment is made to  the  appellant  by  respondent
      Nos.1 and 2 in the manner stated hereinafter, the  possession  of  the
      property shall be delivered to the respondent  Nos.1  and  2  with  no
      further liability towards the bank
      28.    In view of the aforesaid, we hold that the sale  in  favour  of
      the appellants dated 18th December, 2006 and the  subsequent  delivery
      of possession to the  appellants  is  null  and  void.   The  sale  is
      accordingly set aside. The appellants  are  directed  to  deliver  the
      possession of the property purchased by them under the Sale Deed dated
      20th December, 2006 to  Respondent  Nos.  1  and  2  immediately  upon
      receiving the entire amount as directed hereunder:-
      (i)   The State Bank of India – Respondent No.3 directed to refund the
           entire proceeds of the FDR in which the sale  consideration  was
           deposited together with accrued interest forthwith.
      (ii)  The Respondent Nos. 1 and 2 will ensure that the  entire  amount
           due to the appellants is paid on or before 15th June, 2014.
      (iii) Upon receipt of the  entire  amount,  the  possession  shall  be
           delivered to Respondent Nos. 1 and 2.
      29. With these observations, the appeals are disposed of with no order
      as to costs.


                                                             ….………………………..J.
                                                     [Surinder Singh Nijjar]






                                                              …………………………..J.
                                                                 [A.K.Sikri]
      New Delhi;
      March 14, 2014.




























                                                     -----------------------
[1]    [2010 (8) SCC 110]
[2]    2014 (2) Scale 331

-----------------------
19


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.