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Wednesday, November 30, 2016

The High Court in the judgment under challenge has also taken the view that the impugned sale Notification dated 26.06.2012 is invalid for infraction of Rule 5 and Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, in as much as the bank did not obtain any valuation report of the property before resorting to the impugned auction sale. The Rules in question read as follows. “5. Valuation of movable secured assets.- After taking possession under sub-rule (1) of rule 4 and in any case before sale, the authorised officer shall obtain the estimated value of the movable secured assets and thereafter, if considered necessary, fix in consultation with the secured creditor, the reserve price of the assets to be sold in realisation of the dues of the secured creditor.” “8. Sale of immovable secured assets.- (5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods: 21. Our attention had been specifically drawn to the stand of the appellant-Bank before the High Court in the counter filed (paragraph 20). Taking into account the averments made in the said affidavit, we find that the sale proclamation had mentioned a reserve price of Rs. 275 lacs and the property had been actually sold by auction at Rs. 416 lacs. That apart, the valuation report dated 14.06.2012 of the approved valuer valuing the property at Rs. 341.15 lacs has also been placed before us by way of an additional document which we are inclined to take on record. The requirements under Rule 5 and Rule 8(5) have, therefore, been complied with and the sale proclamation and the sale effected pursuant thereto cannot be invalidated on the above ground. 22. For the aforesaid reasons, the impugned order passed by the High Court has to be set aside which we hereby do. The appeals are consequently allowed. There will, however, be no order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                       CIVIL APPEAL  NO. 11247 OF 2016
                (arising out of S.L.P. (C) No.36973 of 2012)


UCO BANK AND ANR.                                   APPELLANT(s)


                                   VERSUS

DIPAK DEBBARMA & ORS.                            RESPONDENT(s)

                                    WITH


                        CIVIL APPEAL NO.11250 OF 2016
                (arising out of S.L.P. (C) No.33671 of 2016)


                               J U D G M E N T



RANJAN GOGOI, J.

      Leave granted.

2.    The  writ  petition  out  of  which  these  appeals  have  arisen  was
instituted before the Agartala Bench of the Gauhati  High  Court.  The  writ
petitioners, who are  the  respondents  herein,  are  members  of  Scheduled
Tribe(s) of  the  State  of  Tripura.  They  had  contended  that  the  Sale
Notification dated  26.06.2012  issued  by  the  appellant  Bank  under  the
provisions of the Securitisation and Reconstruction of Financial Assets  and
Enforcement of Security Interest Act, 2002 (hereinafter referred to  as  the
“Act of 2002”) was in infraction of Section 187 of the Tripura Land  Revenue
and Land Reforms Act, 1960 (hereinafter referred to as the “Tripura  Act  of
1960”) as under the Tripura Act there is a legislative embargo on  the  sale
of mortgaged properties by the bank to any person who is not a member  of  a
scheduled tribe. The auction purchasers in the present case happened  to  be
the persons who are not members of any scheduled tribe.

3.    The High Court by the impugned order answered  the  writ  petition  in
favour of the respondents/writ petitioners on the ground  that  the  Tripura
Act of 1960 being included in the Ninth Schedule to  the  Constitution  and,
therefore, enjoying the protection of  Section  31-B  of  the  Constitution,
would  prevail  over  the  Act  of  2002  so  as  to  invalidate  the   sale
Notification dated 26.06.2012, the same being contrary to the provisions  of
Section 187 of the Tripura Act of 1960.

4.    It will not require much appreciation  or  scrutiny  to  come  to  the
conclusion that the High Court was wholly incorrect in  answering  the  writ
petition and striking down the sale Notification  dated  26.06.2012  on  the
above basis.     Article 31-B of the Constitution, on the very face  of  the
language   contained   therein,   is   self   explanatory    and    provides
protection/immunity to a legislation from challenge on the  ground  that  it
violates any of the provisions of Part III of  the  Constitution.  Inclusion
of the Tripura  Act  of  1960  in  the  Ninth  Schedule  by  itself,  would,
therefore,  not  confer  immunity  to  the  said  legislation   from   being
overridden by  the  provisions  of  a  Parliamentary  statute.   This  is  a
question, therefore, that this Court will have to deal with  notwithstanding
the fact that the proceedings before the High Court did not proceed  on  the
aforesaid basis. We had, therefore, permitted the learned counsels  of  both
sides to address us on the core question arising  in  the  present  appeals,
namely, whether the  Act  of  2002  insofar  as  it  provides  for  sale  of
immovable properties offered as security for a loan  advanced,  without  any
restriction  as  to  the  class  or  category  of  buyers,   would   prevail
notwithstanding the restrictive provision in this regard under  Section  187
of the Tripura Act of 1960.

5.    Shri Mukul Rohatgi, the learned Attorney General for  India  appearing
on behalf of the appellant-Bank and Shri V.  Giri,  learned  senior  counsel
representing the auction-purchasers in the connected appeal  have  contended
that  the  purpose  and  object  of  the  Act  of  2002   is   to   regulate
securitisation and reconstruction of financial  assets  and  enforcement  of
security interest and for matters connected therewith. On  the  other  hand,
the purpose of the Tripura Act of 1960 is to consolidate  the  law  relating
to land revenue and to provide  for  the  acquisition  of  estates  and  for
certain other measures of land reform. While the Act of 2002 enacted by  the
Union Parliament is referable to Entry 45 of List I, the Tripura Act can  be
traced to Entries 18 and 45 of the State List. Section 187  of  the  Tripura
Act puts an embargo on the sale of hypothecated/ mortgaged properties  by  a
bank to any person who is not a tribal. Therefore,  the  provisions  of  the
Tripura Act of 1960 deal with a crucial aspect of the  subject  of  banking.
Reference in this regard is made to the provision of Section 13 of  the  Act
of 2002 which permits the secured creditor to enforce the security  interest
without the intervention of the Court. The  sale  of  the  property  of  any
person, offered to a bank as security for any financial facility, so  as  to
recover the dues of the Bank is a part of the core banking activity  of  any
bank. The dominant legislation so  far  as  banking  is  concerned,  in  the
present case, is the Act of 2002 enacted by the  Union  Parliament  and  not
the State Act. On the said basis, it is contended that by virtue of  Article
246(1) of the Constitution, the Act of 2002, so far  as  sale  of  mortgaged
properties by the bank is concerned, would prevail over Section 187  of  the
Tripura Act of 1960.  The said provisions of the State Act must give way  to
the provisions of the Central Act, it is urged.

6.    Learned counsels for the respondents/writ petitioners, in reply,  have
contended that the provisions of both the  statutes  can  co-exist  and  run
parallelly without any conflict. It is urged that,  in  fact,  there  is  no
conflict between the two. Section 187 of the Tripura Act of  1960  does  not
prohibit or impose a complete embargo on the sale of  mortgaged  properties.
Only when the borrower is a tribal the sale by the Bank has also to be to  a
tribal.

7.    Repugnancy or inconsistency between  the  provisions  of  Central  and
State enactments can occur in two  situations.  The  first,  in  case  of  a
Central and a State Act on any field of entry mentioned in List III  of  the
Seventh Schedule (Concurrent List). To such a  situation  of  repugnancy  or
inconsistency, the provisions of  Article  254  of  the  Constitution  would
apply. If there is such an  inconsistency,  Article  254(1)  makes  it  very
clear that the central law will prevail subject, however, to the  provisions
of Article 254(2) and further subject to  proviso  to  Article  254(2).  The
above position would be clear from the opinion rendered by  a  three  Judges
Bench of this Court in  M/s  Hoechst  Pharmaceuticals  Ltd.  and  Ors.   vs.
State of Bihar and Ors.[1]  Para 67 of the aforesaid opinion  which  may  be
usefully noticed is in the following terms:

“67.  Article 254 of the Constitution makes  provision  first,  as  to  what
would happen in the case of conflict between a Central and  State  law  with
regard to the subjects enumerated in the Concurrent List, and secondly,  for
resolving such conflict. Article 254(1) enunciates the normal rule  that  in
the event of a conflict between a Union and a State law  in  the  concurrent
field, the former prevails over the latter. Clause (1) lays down that  if  a
State law relating to a concurrent subject is ‘repugnant’  to  a  Union  law
relating to that subject, then, whether the Union law is prior or  later  in
time, the Union law will prevail and the State law shall, to the  extent  of
such repugnancy, be void. To the general  rule  laid  down  in  clause  (1),
clause (2) engrafts an exception viz., that if the President  assents  to  a
State law which has been reserved for his  consideration,  it  will  prevail
notwithstanding its repugnancy to an earlier law of  the  Union,  both  laws
dealing with a concurrent subject. In such a case,  the  Central  Act,  will
give way to the State Act only to the extent of  inconsistency  between  the
two, and no more. In short, the  result  of  obtaining  the  assent  of  the
President to a State Act which is inconsistent with  a  previous  Union  law
relating to a concurrent subject would be that the State  Act  will  prevail
in that State and override the  provisions  of  the  Central  Act  in  their
applicability to that State only. The predominance  of  the  State  law  may
however be taken away if Parliament legislates under the proviso  to  clause
(2). The proviso to Article 254(2) empowers the Union Parliament  to  repeal
or amend a repugnant State law, either directly, or  by  itself  enacting  a
law repugnant to the State law with  respect  to  the  ‘same  matter’.  Even
though the subsequent law made by Parliament does  not  expressly  repeal  a
State law, even then, the  State  law  will  become  void  as  soon  as  the
subsequent law of Parliament creating repugnancy is made. A State law  would
be repugnant to the Union law when there is direct conflict between the  two
laws. Such repugnancy may also arise where both laws  operate  in  the  same
field and the two cannot possibly stand together: See Zaverbhai  Amaidas  v.
State of Bombay, (1955) 1 SCR 799; M. Karunanidhi v. Union of India,  (1979)
3 SCR 254 and T. Barai v. Henry Ah Hoe, (1983) 1 SCC 177.”


8.    The above view has been reiterated in  State  of  W.B.   vs.   Kesoram
Industries Ltd. and Ors.[2] There are several other pronouncements  of  this
Court on the aforesaid issue. The  same,  however,  would  not  require  any
mention as any such reference would be only a multiplication of  discussions
on what appears to be a settled issue. In the  present  case,  however,  the
question before this Court is not one of repugnancy between a Central and  a
State law relatable to an Entry in List III (Concurrent  List).  No  further
attention to the above aspect of the matter would, therefore, be required.

9.    The second situation of repugnancy or inconsistency as in the  present
case is between to a subsequent Central law (Act of 2002) covered  by  Entry
45 of List I and an earlier State law (Tripura Act  of  1960)  relatable  to
Entries 18 and 45 of List II.  How such a situation is to  be  resolved  and
answered and which legislation would have primacy is the moot question  that
arises for consideration in the present appeals.

10.   Article 246 of the Constitution of India is in the following terms.

“246. Subject-matter of laws made by Parliament and by the  Legislatures  of
States:-

(1) Notwithstanding  anything  in  clauses  (2)  and  (3),  Parliament   has
exclusive power to make laws with respect to any of the  matters  enumerated
in List I in the Seventh Schedule (in this Constitution referred to  as  the
‘Union List’)

 (2) Notwithstanding anything in clause  (3),  Parliament  and,  subject  to
clause (1), the Legislature of any State also, have power to make laws  with
respect to any of  the  matters  enumerated  in  List  III  in  the  Seventh
Schedule (in this Constitution referred to as the ‘Concurrent List’)

(3) Subject to clauses (1)  and  (2),  the  Legislature  of  any  State  has
exclusive power to make laws  for  such  State  or  any  part  thereof  with
respect to any of the matters enumerated in List II in the Seventh  Schedule
(in this Constitution referred to as the ‘State List’)

(4) Parliament has power to make laws with respect to  any  matter  for  any
part of the territory of India not included  (in  a  State)  notwithstanding
that such matter is a matter enumerated in the State List”



11.   In interpreting Article 246 regard must be had to  the  constitutional
scheme which visualises a federal structure  giving  full  autonomy  to  the
Union  Parliament  as  well  as  to  the   State   legislatures   in   their
respective/demarcated fields  of  legislation.  The  problem  may,  however,
become a little more complex than what  may  seemingly  appear  as  the  two
legislations  may  very  well  be  within  the  respective  domains  of  the
concerned legislatures and, yet, there may be  intrusion  into   areas  that
fall beyond the assigned fields of legislation. In such a situation it  will
be plain duty of the Constitutional Court to see  if  the  conflict  can  be
resolved by acknowledging the mutual existence of the two  legislations.  If
that is not possible, then by virtue of the provisions  of  Article  246(1),
the Parliamentary   legislation   would   prevail   and        the

State legislation will have to give way notwithstanding the  fact  that  the
State legislation is within the demarcated field  (List  II).  This  is  the
principle of  federal  supremacy  which  Article  246  of  the  Constitution
embodies. The said  principle  will,  however,  prevail  provided  the  pre-
condition exists, namely, the  Parliamentary  legislation  is  the  dominant
legislation and the State legislation, though within its own field, has  the
effect of encroaching on a vital sphere of the subject  or  entry  to  which
the dominant legislation  is  referable.  This  is  the  principle  that  is
discernible from the Constitution Bench judgment of this Court in  State  of
West Bengal and Ors.  vs.  Committee for Protection  of  Democratic  Rights,
West Bengal and Ors.[3]  Paragraphs 25, 26  and  27  which  illuminates  the
issue may be conveniently extracted below.

“25.    The  non  obstante  clause  in  Article  246(1)   contemplates   the
predominance or supremacy of  the  Union  Legislature.  This  power  is  not
encumbered by anything contained in clauses (2) and (3)  for  these  clauses
themselves are expressly limited  and  made  subject  to  the  non  obstante
clause in Article 246(1). The State Legislature has exclusive power to  make
laws for such State or any part thereof with respect to any of  the  matters
enumerated in List II in the Seventh Schedule and it also has the  power  to
make laws with respect to any matters enumerated  in  List  III  (Concurrent
List). The exclusive power  of  the  State  Legislature  to  legislate  with
respect to any of the matters enumerated in List  II  has  to  be  exercised
subject to clause (1) i.e. the exclusive power of  Parliament  to  legislate
with respect to matters enumerated in List I. As a consequence, if there  is
a conflict between an entry in List I and an entry in List II, which is  not
capable of  reconciliation,  the  power  of  Parliament  to  legislate  with
respect to a matter enumerated in List  II  must  supersede  pro  tanto  the
exercise of power of the State Legislature.

26. Both Parliament and the State  Legislature  have  concurrent  powers  of
legislation with respect to any of the matters enumerated in List  III.  The
words “notwithstanding  anything  contained  in  clauses  (2)  and  (3)”  in
Article 246(1) and the words “subject to clauses (1)  and  (2)”  in  Article
246(3) lay down the principle of federal supremacy  viz.  that  in  case  of
inevitable conflict between the Union and State powers, the Union  power  as
enumerated in List I shall prevail over the State  power  as  enumerated  in
Lists II and III and in case of an overlapping between  Lists  II  and  III,
the latter shall prevail.

27. Though, undoubtedly, the Constitution exhibits supremacy  of  Parliament
over the State Legislatures, yet the principle  of  federal  supremacy  laid
down in Article 246 of the Constitution cannot be resorted to  unless  there
is an irreconcilable direct conflict between the entries in  the  Union  and
the State Lists. Thus, there is no quarrel with the broad  proposition  that
under the Constitution there is a clear demarcation  of  legislative  powers
between the Union and the States and they have to confine themselves  within
the field entrusted to them. It may also be borne in mind that the  function
of the lists is not to confer powers; they merely demarcate the  legislative
field……………………”


12.   Equally illuminating is the view available  in  the  opinion  of  this
Court rendered  in  re.  Special  Reference  No.  1  of  2001[4],  which  is
reproduced below.

 “13. The Constitution of  India  delineates  the  contours  of  the  powers
enjoyed by the State  Legislature  and  Parliament  in  respect  of  various
subjects  enumerated  in  the  Seventh  Schedule.  The  rules  relating   to
distribution of powers are  to  be  gathered  from  the  various  provisions
contained in Part XI and the legislative heads mentioned in the three  lists
of the Schedule.  The  legislative  powers  of  both  the  Union  and  State
Legislatures  are  given  in  precise  terms.  Entries  in  the  lists   are
themselves not powers of legislation, but fields  of  legislation.  However,
an entry in one list cannot be so  interpreted  as  to  make  it  cancel  or
obliterate another entry or make  another  entry  meaningless.  In  case  of
apparent conflict, it is the duty of the court to iron out  the  crease  and
avoid conflict by reconciling the conflict. If any entry overlaps or  is  in
apparent conflict with  another  entry,  every  attempt  shall  be  made  to
harmonise the same.

14. When the question arose about reconciling Entry 45 of List I, duties  of
excise, and Entry 18 of List  II,  taxes  on  the  sale  of  goods,  of  the
Government of India Act, 1935, Sir Maurice Gwyer, C.J. in Central  Provinces
and Berar Act No. XIV of 1938, In re, (1939) FCR 18, at pp. 42-44  observed:


“A grant of the power in general terms, standing by itself, would  no  doubt
be construed in the wider sense, but it may be qualified  by  other  express
provisions in the same enactment, by the implications of  the  context,  and
even by considerations arising out of what appears to be the general  scheme
of the Act.”

It was further observed:

“An endeavour must be made to solve  it,  as  the  Judicial  Committee  have
said, by having recourse to the  context  and  scheme  of  the  Act,  and  a
reconciliation attempted between two  apparently  conflicting  jurisdictions
by reading  the  two  entries  together  and  by  interpreting,  and,  where
necessary modifying the language of the one by that of the other. If  indeed
such a reconciliation should prove impossible, then,  and  only  then,  will
the non obstante clause operate and the federal power prevail;”

15. Although Parliament cannot legislate on any of the entries in the  State
List, it may do so incidentally while essentially dealing with  the  subject
coming within the purview of the entry in the Union  List.  Conversely,  the
State Legislature also while  making  legislation  may  incidentally  trench
upon the subject covered in the Union List. Such incidental encroachment  in
either event need not make the legislation  ultra  vires  the  Constitution.
The doctrine of pith and substance is sometimes  invoked  to  find  out  the
nature  and  content  of  the  legislation.  However,  when  there   is   an
irreconcilable  conflict  between  the   two   legislations,   the   Central
legislation  shall  prevail.  However,  every  attempt  would  be  made   to
reconcile the conflict.”


13.   The federal structure under the constitutional scheme  can  also  work
to nullify an incidental encroachment made by the Parliamentary  legislation
on a subject of a State legislation where the dominant  legislation  is  the
State legislation. An attempt to keep the aforesaid  constitutional  balance
intact and give a limited operation to the  doctrine  of  federal  supremacy
can be discerned in the concurring judgment of Ruma  Pal,  J.  in  ITC  Ltd.
vs.  Agricultural  Produce  Market  Committee  and  Ors.[5],  wherein  after
quoting the observations of this Court in the case of S.R. Bomai  vs.  Union
of India [6] (para 276), the learned Judge has gone to  observe  as  follows
(para 94 of the report):

 “276. The fact that under the scheme of our Constitution, greater power  is
conferred upon the Centre vis-à-vis the States does  not  mean  that  States
are mere appendages of the Centre.  Within  the  sphere  allotted  to  them,
States are supreme.  The  Centre  cannot  tamper  with  their  powers.  More
particularly, the courts should not adopt an  approach,  an  interpretation,
which has the effect of or tends to have the effect of  whittling  down  the
powers reserved to the States.


94. Although Parliament cannot legislate on any of the entries in the  State
List, it may do so incidentally while  essentially  legislating  within  the
entries under  the  Union  List.  Conversely,  the  State  Legislatures  may
encroach on the Union List, when such an encroachment  is  merely  ancillary
to an exercise of power intrinsically under the  State  List.  The  fact  of
encroachment does not affect the vires of the law even as regards  the  area
of encroachment. [A.S. Krishna  vs.  State  of  Madras,  AIR  1957  SC  297;
Chaturbhai M. Patel  vs.  Union  of  India,  (1960)  2  SCR  362;  State  of
Rajasthan vs. G. Chawla, AIR 1959 SC 544; Ishwari  Khetan  Sugar  Mills  (P)
Ltd. vs. State of U.P., (1980) 4 SCC 136]. This principle commonly known  as
the doctrine of pith and substance, does not amount to an extension  of  the
legislative fields. Therefore, such incidental encroachment in either  event
does not deprive the State Legislature in the first case  or  Parliament  in
the second, of their exclusive powers under the entry  so  encroached  upon.
In  the  event  the  incidental  encroachment  conflicts  with   legislation
actually enacted by  the  dominant  power,  the  dominant  legislation  will
prevail.”


14. The aforesaid view in the concurring judgment of Ruma  Pal,  J.  in  ITC
Ltd.  vs.  Agricultural Produce Market Committee and Ors. (supra), seems  to
have been echoed in a recent  pronouncement  of  this  Court  in  Vishal  N.
Kalsaria  vs.  Bank of India & Ors.[7]  , wherein this Court had  held  that
the provisions of the Act of 2002 will not have an overriding effect on  the
provisions of the State Rent Control Acts.

15.   In the present case the conflict between the  Central  and  the  State
Act is on account of an apparent  overstepping  by  the  provisions  of  the
State Act dealing with land reform into an area of banking  covered  by  the
Central Act.  The test, therefore, would be to find out as to which  is  the
dominant legislation having regard the area of encroachment.

16.   The provisions of the Act of 2002 enable the bank to  take  possession
of any property where a security interest has been created  in  its  favour.
Specifically,  Section  13  of  the  2002  Act  enables  the  bank  to  take
possession of and sell such property to any person to realise its dues.  The
purchaser of such property acquires a clear  title  to  the  property  sold,
subject to compliance with the requirements prescribed.

17.   Section 187 of the Tripura Act of 1960, on the other  hand,  prohibits
the bank from transferring the  property  which  has  been  mortgaged  by  a
member of a scheduled  tribe  to  any  person  other  than  a  member  of  a
scheduled tribe. This is a clear restriction on what  is  permitted  by  the
Act of 2002 for the realisation of amounts due to the bank.

18.   The Act of 2002  is  relatable  to  the  Entry  of  banking  which  is
included in List I of the Seventh Schedule. Sale of mortgaged property by  a
bank is an inseparable and integral part of the  business  of  banking.  The
object of the State Act, as already noted, is an attempt to consolidate  the
land revenue law in the State and  also  to  provide  measures  of  agrarian
reforms. The field of encroachment made by the State legislature is  in  the
area of banking. So long there  did  not  exist  any  parallel  Central  Act
dealing with sale of secured assets and referable to Entry  45  of  List  I,
the State Act, including Section 187, operated validly. However, the  moment
Parliament stepped in by enacting such a  law  traceable  to  Entry  45  and
dealing exclusively with activities relating to sale of secured assets,  the
State law, to the extent that it is inconsistent with the Act of 2002,  must
give way. The dominant legislation being the Parliamentary legislation,  the
provisions of the Tripura Act of 1960, pro tanto,  (Section  187)  would  be
invalid. It is the provisions of the Act of 2002, which do not  contain  any
embargo on the category of persons to whom mortgaged property  can  be  sold
by the bank  for  realisation  of  its  dues  that  will  prevail  over  the
provisions contained in Section 187 of the Tripura Act of 1960.

19.   The decision of this Court in Central Bank of  India   vs.   State  of
Kerala and Ors.[8], holding that the provisions  of  the  Bombay  Sales  Tax
Act, 1959 and the Kerala General Sales Tax Act, 1963 providing for  a  first
charge on the property of the person liable to pay sales tax, in  favour  of
the State,  is  not  inconsistent  with  the  provisions  contained  in  the
Recovery of Debts Due to Banks and Financial  Institutions,  Act  1993  (for
short the “DRT Act”) and  also  the  Act  of  2002  must  be  understood  by
noticing the absence of any specific provision  in  either  of  the  Central
enactments containing a similar/parallel provision  of  a  first  charge  in
favour of the bank. The judgment of this Court holding the State  enactments
to be valid and the Central enactments not to have  any  overriding  effect,
proceeds on the said basis i.e. absence of any provision  creating  a  first
charge in favour of the bank in either of the Central enactments.



20.   The High Court in the judgment under  challenge  has  also  taken  the
view that the impugned sale Notification dated  26.06.2012  is  invalid  for
infraction of Rule 5 and Rule 8(5) of the  Security  Interest  (Enforcement)
Rules, 2002, in as much as the bank did not obtain any valuation  report  of
the property before resorting to the impugned auction sale.   The  Rules  in
question read as follows.



“5. Valuation of movable secured assets.-

After taking possession under sub-rule (1) of rule 4 and in any case  before
sale, the authorised  officer  shall  obtain  the  estimated  value  of  the
movable secured assets and  thereafter,  if  considered  necessary,  fix  in
consultation with the secured creditor, the reserve price of the  assets  to
be sold in realisation of the dues of the secured creditor.”

“8. Sale of immovable secured assets.-

(5) Before effecting sale of the immovable property referred to in  sub-rule
(1) of rule  9,  the  authorised  officer  shall  obtain  valuation  of  the
property from an approved  valuer  and  in  consultation  with  the  secured
creditor, fix the reserve price of the property and may sell  the  whole  or
any part of such immovable secured asset by any of the following methods:



21.   Our attention  had  been  specifically  drawn  to  the  stand  of  the
appellant-Bank before the High Court in the counter  filed  (paragraph  20).
Taking into account the averments made in the said affidavit, we  find  that
the sale proclamation had mentioned a reserve price of Rs. 275 lacs and  the
property had been actually sold by auction at Rs. 416 lacs. That apart,  the
valuation report  dated  14.06.2012  of  the  approved  valuer  valuing  the
property at Rs. 341.15 lacs has also been placed before  us  by  way  of  an
additional  document  which  we  are  inclined  to  take  on   record.   The
requirements under Rule 5 and Rule 8(5) have, therefore, been complied  with
and the sale proclamation and the sale effected pursuant thereto  cannot  be
invalidated on the above ground.

22.   For the aforesaid reasons, the  impugned  order  passed  by  the  High
Court has to be set aside which we hereby do. The appeals  are  consequently
allowed. There will, however, be no order as to costs.

                                              ……………….....................,J.
(RANJAN GOGOI)



                                              ……………….....................,J.
                                                       (ABHAY MANOHAR SAPRE)

NEW DELHI
NOVEMBER 25, 2016.

-----------------------
[1]    (1983) 4 SCC 45
[2]    (2004) 10 SCC 201
[3]    (2010) 3 SCC 571
[4]    (2004) 4 SCC 489
[5]    (2002) 9 SCC 232
[6]    (1994) 3 SCC 1
[7]    (2016) 3 SCC 762
[8]    (2009) 4 SCC 94


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