G. VIKRAM KUMAR versus STATE BANK OF HYDERABAD & ORS. on 2 May 2023

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SUPREME COURT REPORTS

[2023] 5 S.C.R.

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G. VIKRAM KUMAR

v.

STATE BANK OF HYDERABAD & ORS.

(Civil Appeal Nos.3152–3153 of 2023)

BMAY 02, 2023

[M. R. SHAH AND C. T. RAVIKUMAR, JJ. ]

Securitization and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 : ss. 13, 17 –CEnforcement of security interest – Application against measuresto recover secured debts – On facts, initiation of proceedings u/s 13 by the Bank against the borrower and attachement of theproperties of the borrower – Tribunal allowed the Bank to goahead with the sale excluding seven flats identified by theborrower – However, Flat No.6401 was not amongst the saidDseven flats – Borrower entered into an agreement to sale of FlatNo.6401 with the respondent no. 1 without informing tribunaland the Bank – Thereafter, properties of borrower including Flatno. 6401 subjected to e-auction by Bank – Borrower sought stayon all proceedings of Bank, however, the tribunal rejected theEsame – E-auction conducted by the Bank – Appellant declaredsuccessful bidder with respect to Flat No.6401 and paid 25% ofthe bid amount – Writ petition by the respondent no. 1 challengingthe e-auction notice as regards flat No. 6401, after the auctionwas conducted – High Court stayed the auction qua Flat No.F6401 subject to respondent no. 1 paying the required amount tothe Bank – Appellant then sought setting aside of sale in favourof respondent no. 1, however, the High Court allowed the writpetition in favour of respondent no.1 – Review application thereagainst dismissed – On appeal, held: Against any steps taken byGthe Bank u/s.13(4), the aggrieved party has a remedy under theSARFAESI Act by way of appeal u/s. 17 to approach the DRT –In view of the availability of the alternative statutory remedyavailable by way of proceedings/appeal u/s. 17, the High Courterred in entertaining the writ petition u/Art. 226 in which the e-auction notice was under challenge – Moreover, the transactionH

in favour of the respondent no. 1 with respect to Flat no.6401was already held to be void by the DRT – If the respondent no. 1would have approached the DRT against the e–auction notice hewould have been non-suited in view of the earlier order passed bythe DRT – Therefore, calculatively the respondent no. 1 filed thewrit petition before the High Court challenging the e-auction noticeand that too after conducting of the e-auction and the sale in favourof the appellant was confirmed – Respondent no. 1 and/or his heirscannot be permitted to get the benefit of his own wrong and cannotbe permitted to get the benefit of a void transaction – Thus, theimpugned judgment and order passed by the High Court isunsustainable – Constitution of India – Art. 226.

Allowing the appeals, the Court

HELD: 1.1 What was challenged before the High Court byrespondent no.1 in a writ petition under Article 226 of theConstitution of India was the e–auction notice which was pursuantto the action initiated by the Bank in exercise of powers underSection 13(4) of the SARFAESI Act. Against any steps taken bythe Bank under Section 13(4) of the SARFAESI Act the aggrievedparty has a remedy under the SARFAESI Act by way of appealunder Section 17 of the SARFAESI Act to approach the DRT.Therefore, in view of the availability of the alternative statutoryremedy available by way of proceedings/appeal under Section 17of the SARFAESI Act, the High Court ought not to haveentertained the writ petition under Article 226 of the Constitutionof India in which the e-auction notice was under challenge.Therefore, the High Court has committed a very serious error inentertaining the writ petition under Article 226 of the Constitutionof India challenging the e-auction notice issued by the Bank inexercise of power under Section 13(4) of the SARFAESI Act.[Para 8][635-B, C-E]

1.2. The flat in question namely Flat No.6401 was not theseven flats identified by the borrower to be kept out of theauction proceedings. At the relevant time the flat in questionwas not sold amongst the seven flats mentioned before thetribunal. That thereafter during the pendency of the S.A.

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ANo.253 of 2012 and without obtaining prior approval and/orintimation to the DRT and even the bank, the borrower enteredinto the sale agreement with the respondent no.1 on 16.06.2016.In the MoU dated 10.04.2016 between the borrower and therespondent no.1 in Clause No.4 it was specifically providedthat first the party should obtain clearance of sale from DRT/BSBH so that they can process with further agreement to sale.Thus, as such respondent no.1 at the relevant time was awareabout the pending DRT proceedings. Still the respondent no.1entered into the agreement to sale with the borrower on16.06.2016. At this stage, it is pertinent to note that thereafterCwhen the Bank issued a public notice on 28.07.2016 forauctioning the properties of the borrower. Before the date ofauction, on 24.08.2016 the borrower filed an application beforethe DRT praying for stay of all proceedings of the Bankpursuant to the auction notice dated 28.07.2016. The DRT was pleased to reject the said application for stay vide the orderDdated 24.08.2016 by observing that the sale of the flat inquestion without the permission of the Bank or the tribunal isvoid. Thus, as such the transaction in favour of the respondentno.1 with respect to Flat no.6401 was already held to be voidby the DRT. That, thereafter, after the borrower having failedEto obtain any order, the respondent no.1 had straightway filedthe writ petition challenging the e– auction notice which theborrower failed to get any relief before the DRT. If therespondent no.1 would have approached the DRT against thee-auction notice he would have been non–suited in view of theearlier order passed by the DRT dated 24.08.2016. Therefore,Fcalculatively the respondent no.1 filed the writ petition beforethe High Court challenging the e-auction notice and that tooafter conducting of the e– auction on 31.08.2016 and the salein favour of the appellant was confirmed. The said facts werepointed out before the High Court and despite the same theGHigh Court has allowed the writ petition which is notsustainable at all. By the impugned order the respondent no.1has got the relief which as such the borrower failed to get fromthe DRT. On the said grounds the impugned judgment andorder passed by the High Court is unsustainable. [Para8.2][636-B-H; 637-A]H

1.3 In the present case the borrower failed to get anyrelief from the DRT. The borrower did not apply and/or invokeSection 13(8) and did not agree to clear the entire dues.Therefore, also the High Court has materially erred in allowingthe writ petition. [Para 8.3][637-C]

1.4 What exact relief is granted by the High Court is notclear. The High Court has simply stated that the writ petitionis allowed. However, it is required to be noted that what waschallenged. Even at the time when the respondent no.1 enteredinto the agreement to sale/MoU he was aware about theproceedings pending before the DRT before the High Courtwas the e-auction notice dated 28.07.2016 which was alreadyconducted on 31.08.2016. Therefore, the writ petition was filedmuch after conducting the e-auction on 31.08.2016. Noconsequential relief has been granted by the High Court.Therefore, also the impugned judgment and order passed bythe High Court is unsustainable. [Para 8.4][637-D-E]

1.5 Now so far as the submission the respondent no.1has paid/deposited the amount of sale consideration and nowthe respondent no.1 has died his heirs will have to vacate theflat in question and on the other hand the appellant shall beentitled to return the amount of Rs.6,45,250/ deposited at therelevant time being 25% of the auction sale consideration withinterest is concerned, at the outset it is required to be notedthat as such the transaction between the respondent no.1 andthe borrower pursuant to the agreement to sale dated16.06.2016 was absolutely illegal and behind the back of thetribunal as well as the Bank and during the pendency of theproceedings before the tribunal. In order dated 24.08.2016the tribunal had in fact already held the sale transaction asvoid. Even at the time when the respondent no.1 entered intothe agreement to sale/MoU he was aware about the proceedingspending before the DRT which is apparent from Clause 4 ofthe MoU . Therefore, respondent no.1 and/or his heirs cannotbe permitted to get the benefit of his own wrong and cannotbe permitted to get the benefit of a void transaction. [Para8.5][637-E-H; 638-A]

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A1.6 The impugned judgment and order passed by theHigh Court is quashed and set aside. It is directed that on thefull payment of the auction sale consideration by the appellant(after deducting the 25% of the amount already depositedearlier) with 9% interest from the date of auction till the actualamount is paid, to be paid within the stipulated period, theBsale certificate be issued in favour of the appellant with respectto Flat No.6401. Whatever the amount is already deposited bythe respondent no.1/his heirs shall be returned to therespondent no.1 (now his heirs) with the interest at 9% fromthe date of such deposit till the actual date of return whichCshall be returned within the stipulated period. The heirs oforiginal respondent no.1 are granted three months’ time tovacate the flat in question and are directed to hand over thepeaceful and vacant possession of the Flat No.6401 to theappellant. [Para 9][638-B-D]

DMathew Varghese v. M. Amritha Kumar(2014) 5 SCC610 : [2014] 2 SCR 736;Narandas Karsondas vs.S.A. Kamtam(1977) 3 SCC 247 : [1977] 2 SCR 341;B. Arvind Kumar vs. Govt. of India & Ors. (2007) 5SCC 745;Pal Alloys & Metal India Pvt. Ltd. & Ors.vs. Allahabad Bank & Ors.2021 SCC OnLine P&HE2733;M/s India Finlease Securities Ltd. vs. PrasadIndian Overseas Bank2012 SCC OnLine AP 205 –referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.3152-3153 of 2023.G

From the Judgment and Order dated 08.09.2017 in WPNo.31098 of 2016 and dated 08.12.2017 in RWPMP No.45031 of2017 of the High Court of Judicature at Hyderabad for the State ofTelangana and the State of Andhra Pradesh.

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A. Sirajudeen, Sr. Adv., Venkateshwara Rao Anumolu, SunnyKumar, Tanmaya Agarwal, Advs. for the Appellant.

Buddy A. Ranganadhan, Ms. Nandini Tomar, A. V. Rangam,Ananga Bhattacharyya, M/s. Veritas Legis, Ms. Devahuti Tamuli,Vatsal Anand, Advs. for the Respondents.

The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 08.09.2017 passed by the High Court of Judicature atHyderabad for the State of Telangana and Andhra Pradesh passed inWrit Petition No.31098 of 2016 and the subsequent order dated 08.12.2017passed in Review Petition No.45031 of 2017 in Writ Petition No.31098of 2016, the appellant and the auction purchaser has preferred the presentappeals.

2. The facts leading to the present appeals in nutshell are as under:

2.1 That the respondent no.3 herein – builder had taken loan fromrespondent no.2 – Bank for the development of the multi-storey housingproject. That the respondent no.3 (hereinafter referred to as the borrower)was not able to repay the security interest to the Bank, the Bank initiatedproceedings against the borrower under Section 13 of the Securitizationand Reconstruction of Financial Assets and Enforcement of SecurityInterest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act, 2002).The Bank attached the properties of the borrower under Section 13(4)of the SARFAESI Act. Against the measures taken by the Bank underSection 13(4) of the SARFAESI Act, the borrower filed S.A. No.253 of2012 before the Debt Recovery Tribunal (DRT), Hyderabad. S.A. No.253of 2012 was listed before the DRT on 19.02.2016, when the borrowerwas given liberty to file a list of intending buyers of the property andbring forth with the buyers so as to enable the Tribunal to consider thesame for the repayment of the dues of the Bank. On 25.02.2016, theDRT passed anorder permitting the Bank to go ahead with the saleasproposed excluding flat to be identified and communicated by theborrower to the Bank by 29.02.2016 with full details of all purchasers tothe bank officials on affidavit so as to enable the bank officer to excludethose flats, provided the remaining flats are sufficient for recovery ofthe dues. The Tribunal directed that the bank may proceed with the salebut shall not confirmthe sale till the next date of hearing. At this stage it A

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Ais required to be noted that the aforesaid order was passed by the Tribunalin view of the submissions made by the borrower that he had sold sevenflats out of 37 flats which were to be sold by the Bank to some thirdpersons. Flat No.6401 – flat in question was not amongst the said sevenflats.

B2.2 A Memorandum of Understanding (MoU) was entered intobetween the respondent no.1 and the borrower with respect to the saleof Flat No.6401 on 10.04.2016 for a lumpsum consideration of Forty-five lakhs. It is pertinent to note that in the MoU itself there was areference to some proceedings going on before the DRT and that theBank and the borrower will obtain clearance in order to process theCagreement to sale. That an agreement to sale was executed betweenthe bank and the borrower for a sale of Flat No.6401 on 16.06.2016. Atthis stage, it is required to be noted that the said agreement to sale wasexecuted by the borrower without informing/obtaining any consent fromthe DRT as well as the Bank and the permission, if any, given to theDborrower earlier obtained only to the seven flats which were alreadyrecognized by the DRT on 25.02.2016.

2.3 That thereafter the Bank issued a public notice on 28.07.2016for auctioning the properties of the borrower. The said notice waspublished in the newspaper on 29.07.2016. The property in question, i.e.EFlat No.6401 was also subjected to auction. It was placed in Lot No.1for which the e-auction was proposed on 30.08.2016.

2.4 The borrower filed an application before the DRT praying forstay on all proceedings of the Bank pursuant to the auction notice dated28.07.2016. On 24.08.2016 the DRT was pleased to reject the applicationFfor stay filed by the borrower. While rejecting the stay application andrefusing to grant the stay as prayed, the DRT observed as under:

“…Pending the decision, this Tribunal has directed to sell theproperty and the Applicant now has entered into an agreement tobe sold for some other flats. This is utter violation of theSARFAESI action as also the direction of the Tribunal.”

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“7. As stated hereinabove, it is also question of great concern thatthe Applicant has entered into an agreement with third party inrespect of few other flats i.e. Flat No.3202, 6401, 7101, 7202 and3201 without the permission of the Respondent Bank or thisTribunal. Hence, any such transaction is declared as void.”H

2.5 That thereafter e-auction was conducted by the Bank on31.08.2016 in which the appellant also participated. The appellant wasdeclared as a successful bidder with respect to Flat No.6401 in LotNo.1. Accordingly, he made a payment of 25% of the bid amount i.e.Rs.6,45,250/-. The Bank also issued a confirmation receipt to the appellanton 31.08.2016.

2.6 That thereafter the respondent no.1 filed aWrit PetitionNo.31098 of 2016 before the High Court on 14.09.2016 challenging thee-auction notice dated 28.07.2016 to the extent it concerns Flat No.6401.The said writ petition was filed much after the auction was completeand the appellant was declared as a successful bidder. The respondentno.1 did not disclose in the writ petition that the auction has alreadytaken place. The appellant herein was also not made party.By impugnedjudgment and order dated 15.09.2016 the High Court stayed the auctionqua Flat No.6401 as notified under the e-auction sale notice subject torespondent no.1 (original wit petitioner) paying to the bank not less than25.81 lakhs before the scheduled date and time of the auction, failingwhich, the Bank shall be free to proceed with the auction. The Bankissued a letter to the appellant dated 20.09.2016 stating that the HighCourt has stayed the auction proceedings with respect to Flat No.6401and that the respondent no.1 herein has paid the amount to the Bank asdirected by the High Court.

2.7 On becoming aware of the pending proceedings in Writ PetitionNo.31098 of 2016 the appellant herein filed an application for gettingimpleaded in the said writ petition and filed the counter affidavit. In thecounter affidavit it was specifically stated that the DRT has declaredthe agreement of sale executed between the respondent no.1 and theborrower as void and that the appellant is the successful auction purchaserand that the respondent no.1 had not disclosed the complete and correctfacts of the case. It was also stated that the right, if any, available to therespondent no.1 (original writ petitioner) would have been under Section17 of the SARFAESI Act and not the writ petition filed by him. It wasalso stated that the respondent no.1 had not informed the Court that theauction proceedings were already over at the time when the stay orderwas passed. The Bank also filed the counter affidavit in the writ petitionseeking dismissal of the writ petition primarily on the ground that analternative remedy under Section 17 of the SARFAESI Act was available.The High Court allowed the impleadment application. Despite the above, A

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Aby the impugned judgment and order the High Court has allowed thewrit petition filed by respondent no.1 herein. That thereafter the appellantherein the auction purchaser filed the review petition which has beendismissed by the High Court. Hence,against the final decision of theHigh Court in the main writ petition allowing the same in favour of therespondent no.1 herein and rejecting the review application filed by theBappellant, the appellant – successful auction purchaser has preferredthe present appeals.

3. Shri A. Sirajudeen, learned Senior Advocate has appeared onbehalf of the appellant. Shri Buddy A. Ranganadhan, learned counselhas appeared on behalf of respondent no.1 – original writ petitioner andCShri Ananga Bhattacharyya, learned counsel has appeared on behalf ofrespondent no.3.

4. Shri A. Sirajudeen, learned Senior counsel appearing on behalfof the appellant has made the following submissions:

(i) That the High Court has materially erred in entertaining theDwrit petition filed by respondent no.1 which was againstthe steps taken by the Bank under Section 13(4) of theSARFAESI Act namely against e-auction notice;

(ii) That the respondent no.1 being the agreement to sale holderhad no right title in the flat in question and therefore couldEnot have filed the writ petition challenging e-auction noticeon the basis of the agreement to sale in his favour;

(iii) Even if the respondent no.1 had any right, if any, in thatcase also he had alternative efficacious statutory remedyavailable under Section 17 of the SARFAESI Act challengingFthe e-auction notice;

(iv) That there was suppression of material facts on the part ofrespondent no.1 which was specifically pointed out by theappellant in the counter affidavit that at the time when thewrit petition was filed and the interim relief was obtainedGthe auction had taken place in which the appellant wasdeclared the successful bidder;

(v) That in fact the DRT in the earlier order dated 24.08.2016declared the sale agreement in favour of the respondentno.1 by the borrower as void as the same was entered intoHwithout prior permission of the DRT or even the Bank; and

(vi) The High Court has materially erred in relying upon Section13(8) of the SARFAESI Act.

4.1 It is further submitted by learned counsel appearing on behalfof the appellant that the High Court has not properly appreciated thefact that a sale agreement holder cannot seek redemption of a propertyunder Section 91 of the Transfer of Property Act, 1882 and cannot betreated at par with an auction-sale purchaser under Section 54 of theTransfer of Property Act makes it clear that no interest /charge is createdupon a property only by way of sale-agreement. It is stated that in factthe impugned judgment passed by the High Court that the respondentno.1 be able to seek redemption of the subject property which wasattached by the Bank. It is submitted that the bank attached the propertyas against the borrower and the respondent No.1 was only the sale-agreement holder. It is submitted that as such by virtue of the impugnedjudgment and order, the High Court has granted the decree for specificperformance of the agreement to sale which is not permissible whileexercising the powers under Article 226 of the Constitution of India.

4.2 It is further submitted by learned counsel appearing on behalfof the appellant that the High Court has materially erred in observingthat the equity would be in favour of respondent no. 1 as he has depositedthe entire amount as directed. It is submitted that the High Court hasmaterially erred in observing that if the sale is confirmed the respondentno.1 will suffer greater hardship and if the sale is not confirmed at themost, the appellant may lose interest on Rs.6,45,250/-.

4.3 It is further submitted that as such there is no clarity in theimpugned judgment and order passed by the High Court on what exactrelief the High Court has granted except observing that the writ petitionis allowed.

5. While opposing the present appeal learned counsel appearingon behalf of the respondent no.1 has vehemently submitted that in thepresent case Section 13(8) of the SARFAESI Act shall be applicableand therefore when the respondent no.1 being the agreement to saleholder of the flat in question agreed to pay/deposit the entire saleconsideration the High Court has not committed any error in entertainingthe writ petition under Article 226 of the Constitution of India challengingthe e-auction notice.

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A5.1 It is submitted that as soon as respondent no.1 came to knowthat the flat in question which was agreed to be sold in favour of respondentno.1 for which part consideration was paid is put to auction,immediatelyhe filed the writ petition showing his inclination to deposit the entireamount of sale consideration which is permissible under Section 13(8)of the SARFAESI Act. It is submitted that the object and purpose ofBSection 13(8) of the SARFAESI Act is to save the property from auctionin case the borrower and/or the person interested in the property agreesto clear the dues.

5.2 It is submitted that in the present case at the relevant timethere was no concluded sale in favour of the appellant, as at the relevantCtime the appellant deposited only 25% of the auction sale consideration.It is submitted that as per the catena of decisions unless the full saleconsideration is paid; the sale deed is executed and/or the sale certificateis issued in favour of the auction purchaser there is no concluded sale. Itis submitted that if the sale is not concluded, Section 13(8) of theDSARFAESI Act shall be applicable and/or can be invoked. In support ofhis submissions, he has relied upon the decisions of this Court in the caseof Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 (para38); Narandas Karsondas vs. S.A. Kamtam, (1977) 3 SCC 247; B.Arvind Kumar vs. Govt. of India & Ors., (2007) 5 SCC 745 (para12). He has also relied upon the decision of the Punjab and HaryanaEHigh Court in the case of Pal Alloys & Metal India Pvt. Ltd. & Ors.vs. Allahabad Bank & Ors., 2021 SCC OnLine P&H 2733 as wellas the decision of the Andhra Pradesh High Court in the case of M/sIndia Finlease Securities Ltd. vs. Prasad Indian Overseas Bank,2012 SCC OnLine AP 205.F

5.3 It is further submitted by learned counsel appearing on behalfof the respondent no.1 that the respondent no.1 has subsequently diedand his heirs including the widow are residing in the flat in question sincelong and that they have paid/deposited the entire sale consideration andtherefore if now the appeal is allowed in that case, they have to vacateGthe premises which will not be equitable. Therefore, it is prayed to dismissthe present appeal.

6. Learned counsel appearing on behalf of the Bank has thoughopposed the writ petition before the High Court, has stated that whateverthe decision, the Bank shall abide by the same.

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7. Heard learned counsel appearing on behalf of the respectiveparties at length.

8. At the outset, it is required to be noted that what was challengedbefore the High Court by respondent no.1 in a writ petition under Article226 of the Constitution of India was the e-auction notice which waspursuant to the action initiated by the Bank in exercise of powers underSection 13(4) of the SARFAESI Act. At this stage it is required to benoted that e-auction was held/conducted on 31.08.2016 in which theappellant participated and was declared as a successful bidder and hemade a payment of 25% of the bid amount on the very day i.e., on31.08.2016. However, thereafter the respondent no.1 filed the writ petitionbefore the High Court challenging the e-auction notice dated 28.07.2016on 14.09.2016 that is after conducting of the auction. It is required to benoted that against any steps taken by the Bank under Section 13(4) ofthe SARFAESI Act the aggrieved party has a remedy under theSARFAESI Act by way of appeal under Section 17 of the SARFAESIAct to approach the DRT. Therefore, in view of the availability of thealternative statutory remedy available by way of proceedings/appealunder Section 17 of the SARFAESI Act, the High Court ought not tohave entertained the writ petition under Article 226 of the Constitutionof India in which the e-auction notice was under challenge. Therefore,the High Court has committed a very serious error in entertaining thewrit petition under Article 226 of the Constitution of India challengingthe e-auction notice issued by the Bank in exercise of power underSection 13(4) of the SARFAESI Act.

8.1 Even otherwise it is required to be noted that the respondentno.1 – original writ petitioner filed the writ petition as agreement to saleholder of the flat in question. At this stage it is required to be noted thatearlier against the measures taken by the Bank under Section 13(4) ofthe SARFAESI Act the borrower filed S.A.No.253 of 2012 before theDRT, Hyderabad. The DRT, Hyderabad by order dated 19.12.2016 gavethe liberty to the borrower to file the list of intending buyers of the propertyand to bring forth with the buyers so as to enable the Tribunal to considerthe same for repayment of the dues of the Bank. That thereafter on25.02.2016 the DRT passed the following order:

“The Bank is directed to go ahead with the sale as proposedexcluding the Flat to be identified and communicated by theApplicant to the Respondent Bank by 29.02.2016 with full detailed AB

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Aof all the Purchasers to the Bank Officers on affidavit so as toenable the Bank Officer to exclude those Flats, provided theremaining Flats are sufficient for recovery of the dues. The Bankmay proceed with the sale but shall not confirm the same till thenext date of hearing.”

B8.2 At this stage it is required to be noted that the flat in questionnamely Flat No.6401 was not the seven flats identified by the borrowerto be kept out of the auction proceedings. At the relevant time the flat inquestion was not sold amongst the seven flats mentioned before theTribunal. That thereafter during the pendency of the S.A. No.253 of2012 and without obtaining prior approval and/or intimation to the DRTCand even the bank, the borrower entered into the sale agreement withthe respondent no.1 on 16.06.2016. At this stage, it is required to benoted that in the MoU dated 10.04.2016 between the borrower and therespondent no.1 in Clause No.4 it was specifically provided that first theparty should obtain clearance of sale from DRT/SBH so that they can Dprocess with further agreement to sale. Thus, as such respondent no.1at the relevant time was aware about the pending DRT proceedings.Still the respondent no.1 entered into the agreement to sale with theborrower on 16.06.2016. At this stage, it is pertinent to note that thereafterwhen the Bank issued a public notice on 28.07.2016 for auctioning theproperties of the borrower. Before the date of auction, on 24.08.2016Ethe borrower filed an application before the DRT praying for stay of allproceedings of the Bank pursuant to the auction notice dated 28.07.2016.The DRT was pleased to reject the said application for stay vide theorder dated 24.08.2016 by observing that the sale of the flat in questionwithout the permission of the Bank or the Tribunal is void. The orderFdated 24.08.2016 is reproduced hereinabove. Thus, as such thetransaction in favour of the respondent no.1 with respect to Flat no.6401was already held to be void by the DRT. That thereafter,after theborrower having failed to obtain any order, the respondent no.1 hadstraightway filed the writ petition challenging the e-auction notice which the borrower failed to get any relief before the DRT. If the respondentGno.1 would have approached the DRT against the e-auction notice hewould have been non-suited in view of the earlier order passed by theDRT dated 24.08.2016. Therefore, calculatively the respondent no.1 filedthe writ petition before the High Court challenging the e-auction noticeand that too after conducting of the e-auction on 31.08.2016 and the saleHin favour of the appellant was confirmed. The aforesaid facts were pointed out before the High Court and despite the same the High Courthas allowed the writ petition which is not sustainable at all. By theimpugned order the respondent no.1 has got the relief which as such theborrower failed to get from the DRT. On the aforesaid grounds theimpugned judgment and order passed by the High Court is unsustainable.

8.3 Even otherwise it is very debatable whether Section 13(8) ofthe SARFAESI Act shall be applicable in favour of a person who is onlyan agreement to sale holder or Section 13(8) of the SARFAESI Actshall be applicable only in case of the borrower who is ready and willingto pay the entire debt. In the present case the borrower failed to get anyrelief from the DRT. The borrower did not apply and/or invoke Section13(8) and did not agree to clear the entire dues. Therefore, also the HighCourt has materially erred in allowing the writ petition.

8.4 Even otherwise it is required to be noted that as such whatexact relief is granted by the High Court is not clear. The High Courthas simply stated that the writ petition is allowed. However, it is requiredto be noted that what was challenged before the High Court was the e-auction noticedated 28.07.2016 which was already conducted on31.08.2016. Therefore, the writ petition was filed much after conductingthe e-auction on 31.08.2016. No consequential relief has been grantedby the High Court. Therefore, also the impugned judgment and orderpassed by the High Court is unsustainable.

8.5 Now so far as the submission on behalf of the respondentno.1 that the respondent no.1 has paid/deposited the amount of saleconsideration and now the respondent no.1 has died his heirs will haveto vacate the flat in question and on the other hand the appellant shall beentitled to return the amount of Rs.6,45,250/- deposited at the relevanttime being 25% of the auction sale consideration with interest isconcerned, at the outset it is required to be noted that as such thetransaction between the respondent no.1 and the borrower pursuant tothe agreement to sale dated 16.06.2016 was absolutely illegal and behindthe back of the Tribunal as well as the Bank and during the pendency ofthe proceedings before the Tribunal. In order dated 24.08.2016 theTribunal had in fact already held the sale transaction as void. As observedhereinabove even at the time when the respondent no.1 entered into theagreement to sale/MoU he was aware about the proceedings pendingbefore the DRT which is apparent from Clause 4 of the MoU referredto hereinabove. Therefore, respondent no.1 and/or his heirs cannot be A

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Apermitted to get the benefit of his own wrong and cannot be permitted toget the benefit of a void transaction.

9. In view of the above and for the reasons stated above, theimpugned judgment and order passed by the High Court is herebyquashed and set aside. It is directed that on the full payment of theBauction sale consideration by the appellant (after deducting the 25% ofthe amount already deposited earlier) with 9% interest from the date ofauction till the actual amount is paid, to be paid within a period of fourweeks from today, the sale certificate be issued in favour of the appellantwith respect to Flat No.6401. Whatever the amount is already depositedby the respondent no.1/his heirs shall be returned to the respondent no.1C(now his heirs) with the interest at 9% from the date of such deposit tillthe actual date of return which shall be returned within a period of fourweeks from today. The heirs of original respondent no.1 are grantedthree months’ time to vacate the flat in question and are directed to handover the peaceful and vacant possession of the Flat No.6401 to theDappellant within a period of three months from today as ordered above.

Present appeals are allowed. However, in the facts andcircumstances of the case there shall be no order as to costs.

Nidhi JainE(Assisted by : Tamana, LCRA)

Appeals allowed.

F

G

H