277.
(SC) 05-01-2023
A. Constitution of India, Article 226, 227 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(4), 17, 18 -- SARFAESI proceedings – Challenge to order of DRT – Alternative remedy of appeal -- Writ jurisdiction -- By entertaining the writ petition straightway under Article 226/227 of the Constitution of India challenging the order passed by the DRT-I, the High Court has allowed / permitted the borrower to circumvent the provision of appeal before the DRAT under the provisions of the SARFAESI Act – In view of alternative statutory remedy available by way of appeal before the DRAT, the High Court ought not to have entertained the writ petition.
(Para 6)
B. Constitution of India, Article 226, 227 -- Security Interest (Enforcement) Rules, 2002, Rule 8(1)(2) – Possession of secured assets -- Possession Notices were published in two leading newspapers having sufficient circulation in the locality -- Even the Possession Notices were served upon the borrowers also -- Therefore, the High Court has materially erred in holding that there was a breach of Rules 8(1) & (2) of the Rules, 2002 -- Impugned judgment and order passed by the High Court quashed and set aside.
(Para 6.2, 8)
C. Constitution of India, Article 226, 227 -- Security Interest (Enforcement) Rules, 2002, Rule 9(3)(4) -- Auction of secured assets -- Deposit of 25 % of auction price on next day – Deposit of 75% amount on 15th day from communication by Bank – Permissibility of – High Court observed and held that there was non-compliance of the Rule 9(3) inter alia on the ground that 25% of the amount of sale price and thereafter 75% of the balance sale price was not deposited within the time stipulated under Rule 9 – Held, findings are just contrary to Rules 9(3) and (4) of the Rules, 2002.
-- Purchaser was required to deposit 25% of the amount of the sale price on the same day of sale or not later than the next working day -- Auction was held on 17.02.2017 -- Entire 25% of the sale price came to be deposited by 18.02.2017.
-- By communication / letter dated 08.03.2017, the secured creditor/ Bank directed the auction purchaser to deposit the balance 75% of the bid amount within 15 days and the auction purchaser deposited the balance 75% of the sale price on 23.03.2017, i.e., on the 15th day from the date of communication by the secured creditor/ Bank -- As per Rule 9(4) of the Rules, 2002, the balance amount of purchase price payable shall be paid by the purchaser to the Authorized Officer on or before 15th day of confirmation of sale of the immovable property or such extended period, in any case not exceeding three months -- Therefore, the communication dated 08.03.2017 can be said to be the extended period by the secured creditor/ Bank.
Held, it can be said that the entire sale price was deposited within the time prescribed under Rules 9(3) and (4) of the Rules, 2002 -- Therefore, the High Court has committed an error in holding that there was a breach of Rules 9(3) & (4) of the Rules, 2002 -- Impugned judgment and order passed by the High Court quashed and set aside.
(Para 2.3, 6.3, 6.4, 8)
D. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(4), 31(i) -- Agricultural property – Exemption from the provisions of the SARFAESI Act -- Once the secured property is put as a security by way of mortgage etc. meaning thereby the same was not treated as agricultural land, such properties cannot be said to be exempted from the provisions of the SARFAESI Act under Section 31(i) -- No evidence was led at all on behalf of the borrowers that the secured properties in question were actually put to use as agricultural land and/or any agricultural activity was going on -- High Court has committed an error in applying Section 31(i) of the SARFAESI Act and quashing and setting aside the entire Possession Notice, Auction Notice as well as Sale etc. -- Impugned judgment and order passed by the High Court quashed and set aside.
(Para 7.2, 8)
E. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(4), 31(i) -- Agricultural property – Exemption from the provisions of the SARFAESI Act – Onus of proof -- When it was the case on behalf of the borrowers that in view of Section 31(i) of the SARFAESI Act, the properties were agricultural lands, the same were being exempted from the provisions of the SARFAESI Act, the burden was upon the borrower to prove that the secured properties were agricultural lands and actually being used as agricultural lands and/or agricultural activities were going on.
(Para 7.3)