* THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE MR JUSTICE A.VENKATESHWARA REDDY
+ W.P.No.11435 OF 2021
% Date: 17-08-2022
# Mr. Amme Srisailam
... Petitioner
v.
$ Union Bank of India, Regional Office, Guntur,
rep. by its Regional Head & Deputy General Manager,
Andhra Pradesh and others.
... Respondents
! Counsel for the Petitioner : Mr. Vedula Srinivas, learned Senior Counsel for Ms. Vedula Chitralekha ^ Counsel for respondents 1 and 2 : Mr. Sethu Madhav Counsel for respondent No.3 : Mr. Murali Manohar < GIST:
HEAD NOTE:
? CASES REFERRED:
1. Manu/SC/1119/2019
2. 2019 (3) ALD 384
3. AIR 2021 SC 4559
4. AIR 2022 P&H 23
5. AIR 2012 Guj 26
2
THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE MR JUSTICE A.VENKATESHWARA REDDY WRIT PETITION No.11435 OF 2021 JUDGMENT AND ORDER: (Per the Hon'ble the Chief Justice Ujjal Bhuyan) Heard Mr. Vedula Srinivas, learned Senior Counsel appearing on behalf of Ms.Vedula Chitralekha, learned counsel for the petitioner; Mr. Sethu Madhav, learned counsel for respondent Nos.1 and 2; and Mr. Murali Manohar, learned counsel for respondent No.3.
2. By filing this petition under Article 226 of the Constitution of India petitioner seeks quashing of sale/ e-auction conducted on 16.03.2021 in respect of plot Nos.A11 to A15, survey No.302, Maheshwaram Revenue Village and Mandal, Ranga Reddy District, under letter No.7860/45/111 dated 31.03.2021.
3. Case of the petitioner as projected in the writ petition is that third respondent M/s.Mycon Realtors Private Limited had availed loan from the second respondent, Union Bank of India, Rentachintala Branch, Guntur District in the State of Andhra Pradesh. For 3 availing the loan, third respondent mortgaged the following properties:
...property situated in Plot Nos.1, 2, 7, 8, 13 to 21, 33 to 38 of Mycon Acropolis in Site - B and Plot Nos.1 to 12 of Mycon Acropolis in Site - C in Sy.No.24/EE, total extent 10010.74 sq.yards in Nandupalli Village, Nagaram Gram Panchayat, Maheshwaram Mandal, R.R.District and also Plot Nos.A11 to A15 in Sy.No.302, Maheshwaram Revenue Village & Mandal, R.R.District...
4. For various reasons, third respondent failed to repay the loan. Consequently, respondent Nos.1 and 2 i.e., Union Bank of India declared the loan account as Non Performing Asset (NPA), whereafter steps were taken for realisation of outstanding dues under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, 'the SARFAESI Act' hereinafter). The total amount due from the third respondent was around Rs.14,00,17,012.00 i.e., about Rs.14.00 crores. Second respondent issued sale notice dated 06.02.2021 for sale of the mortgaged properties by way of e-auction. The date of auction was scheduled on 16.03.2021.
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5. Petitioner participated in the auction. His bid for plot Nos.A11 to A15 was Rs.57.00 lakhs. That was accepted by respondent Nos.1 and 2, whereafter petitioner paid the initial amount of 25% on 17.03.2021 and the balance amount of Rs.42,42,000.00 was paid within the prescribed time limit. Thereafter first respondent issued sale certificate to the petitioner on 25.03.2021. According to the petitioner, possession of the auctioned property was handed over to him on the same day.
6. It is stated that the petitioner received letter No.7860/45/111 dated 31.03.2021 from the first respondent stating that the borrower had settled the amount under One Time Settlement (OTS) scheme. Therefore the competent authority decided to cancel the e-auction conducted on 16.03.2021, whereafter the amount of Rs.57.00 lakhs paid by the petitioner was remitted back to his bank account.
7. Petitioner represented before the first respondent stating that the sale was already concluded and he was 5 issued sale certificate. Therefore, it was impermissible to settle the matter with the borrower and cancel the sale already concluded in favour of the petitioner. First respondent informed the petitioner on 08.04.2021 that the matter was settled with the borrower i.e., third respondent under OTS and hence cancellation of e-auction was justified. Earlier letter dated 31.03.2021 was reiterated.
8. Petitioner has contended that Section 13(8) of the SARFAESI Act has undergone amendment in the year 2016. Post amendment the borrower can redeem the property only upto the date of sale notice but not beyond that. In this connection, reliance has been placed on the decision of the Supreme Court in Shakeena v. Union of India1.
9. With the above grievance, the present writ petition came to be filed.
1 Manu/SC/1119/2019 6
10. This Court by the order dated 28.04.2021 had issued notice and passed an interim order to the effect that no third party rights should be created against the subject property.
11. Respondent Nos.1 and 2 have filed common counter affidavit. Respondent Nos.1 and 2 have stated that four properties were put up for auction sale on 16.03.2021. The details of the above properties have been furnished as under:
S.No. Brief description of the property Reserve Price 1 Plot No.A-11, A-12, A-13, A-14 & A-15, 56.00 Sy. No.302, Maheshwaram Revenue Village and Gram Panchayat, Maheshwaram Mandal, Ranga Reddy District.
Extent: 1619 Sq. Yards 2 Open Plot Nos: 1, 2, 4, 5 to 13, 15, 16, 25 165.50 to 39 Sy.No:24/EE, Nandupally Village, Nagaram Gram Panchayat, Maheshwaram Mandal, Ranga Reddy District.
Extent: 9763 Sq. Yards 3 Open Plot Nos: 1, 2, 7, 8, 13, 14, 15, 16, 170.00 17, 18, 19, 20, 21, 33, 34, 35, 36, 37, 38 of Mycon Acropolis in Site - B and Plot Nos: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 of Mycon Acropolis in Site-C in Sy.No.24/EE.
Extent: 10010.74 Sq. Yards 4 Property situated at D.Nos.873 and 874 of 125.00 Rentachintala Village, Near Macherla to Rentachintala Road, Rentachintala Mandal, Guntur District.
Extent: Ac.1.79 Cents 7
12. It is stated that out of the above four properties, the first three properties were sold in auction on 16.03.2021. Auction sale for the fourth property did not materialise for want of bidders. In so far the property in respect of which petitioner is concerned, the following details have been furnished:
Property No:1: Mr. Amme Srisailam/Petitioner was the successful bidder for the Property No.1, who has remitted the amounts as follows:
Bid Amount Amount Remitted Date of Remarks
Receipt
57.00 Lakhs 5.60 Lakhs 08.03.2021 EMD - 10%
9.00 Lakhs 17.03.2021 Part Payment
- 15%
42.40 Lakhs 24.03.2021 Final Payment
- 75%
TOTAL 57.00 Lakhs
13. While the petitioner made the payments as per the details furnished above, the borrower i.e., third respondent approached respondent Nos.1 and 2 for settlement of the loan account under OTS scheme vide letter dated 18.03.2021. Respondent Nos.1 and 2 approved the OTS proposal vide letter dated 31.03.2021 for Rs.5.10 crores with the stipulation that the total OTS amount should be paid on or before 08.04.2021.8
Accordingly, the OTS amount was paid within the aforesaid period.
14. Keeping in view the apparent tangible benefit to respondent Nos.1 and 2, the e-auction conducted on 16.03.2021 was cancelled and it was decided to refund the amounts to the successful bidders.
15. Respondent Nos.1 and 2 have relied upon clause 27 of the terms and conditions of the sale notice to contend that the authorised officer of the Bank (Union Bank of India) was vested with the right to cancel or postpone the sale at any point of time without assigning any reasons, which decision was final, binding and unquestionable. Petitioner had accepted such condition.
16. In view of the approval of OTS on 31.03.2021, respondent Nos.1 and 2 immediately wrote letter dated 31.03.2021 to the petitioner informing that the outstanding dues was settled under OTS for which the competent authority had decided to cancel the e-auction conducted on 16.03.2021. Rs.57.00 lakhs deposited by 9 the petitioner was remitted back to account No.123110027000236 of the petitioner maintained with Union Bank of India, Kothur Branch.
17. It is further contended that the OTS proposal was recommended by the second respondent vide letter dated 20.03.2021. It was confirmed therein that the branch had not issued any sale certificate in favour of the petitioner. It is asserted that as on 06.04.2021, the so called sale certificate dated 25.03.2021 was not in existence. It is further contended that respondent Nos.1 and 2 had not delivered possession of the auctioned property to the petitioner nor had they issued the sale certificate which in any event was not registered.
18. According to respondent Nos.1 and 2, the borrower is M/s.Palnadu Cold Storage and the property in question was mortgaged by the third respondent as security for the loan availed of. M/s.Palnadu Cold Storage has instituted S.A.No.148 of 2021 before the Debts Recovery Tribunal, Visakhapatnam which is pending. Non-joinder of M/s.Palnadu Cold Storage has 10 vitiated the writ proceedings because it is a necessary party.
19. Finally respondent Nos.1 and 2 have stated that immediately after OTS, the sale price of Rs.57.00 lakhs was refunded to the petitioner. Therefore, no prejudice has been caused to the petitioner.
20. Third respondent has also filed counter affidavit. At the outset, a preliminary objection has been raised that petitioner has got adequate and efficacious alternative remedy available under Section 17 of the SARFAESI Act. Without availing such remedy, petitioner has straightaway invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India which is not justified. According to the third respondent, Ex.P.2 letter dated 17.03.2021 filed by the petitioner is not a sale confirmation letter. That apart in Ex.P.5 letter dated 08.04.2021 petitioner had requested respondent Nos.1 and 2 to consider issuance of sale certificate and registration of the property. This would show that the first respondent has not issued the sale certificate dated 11 25.03.2021 as claimed by the petitioner. Had first respondent issued the sale certificate dated 25.03.2021, there would not have arisen any need or necessity for the petitioner to request respondent Nos.1 and 2 to issue sale certificate. In these circumstances, third respondent has disputed the statement of the petitioner that sale certificate was issued on 25.03.2021.
21. It is asserted by the third respondent that it would be an erroneous interpretation of Section 13(8) of the SARFAESI Act, post amendment in the year 2016 that the borrower can have no opportunity of paying the outstanding dues once auction notice is issued. Adverting to Section 60 of the Transfer of Property Act, 1882, it is asserted that the right of redemption is available to the third respondent till the sale certificate is registered and physical possession delivered to the auction purchaser.
22. Thereafter averments have been made on merit. However, it is contended that as against the bid amount of Rs.57.00 lakhs offered by the petitioner, the loan account was settled under OTS for Rs.5.10 crores which 12 amount was completely paid. Therefore, the law cannot be invoked or interpreted in a manner which would cause pecuniary loss to the Bank which had undertaken a financial transaction.
23. Mr. Vedula Srinivas, learned Senior Counsel for the petitioner has referred to Section 13(8) of the SARFAESI Act. Section 13 deals with Enforcement of Security Interest. Prior to 01.09.2016, sub-section (8) of Section 13 provided that if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset should not be sold or transferred by the secured creditor and no further steps should be taken by him for sale or transfer of that secured asset. This sub-section was substituted by way of amendment with effect from 01.09.2016. On and from 01.09.2016, sub-section (8) of Section 13 says that where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before 13 the date of publication of notice for public auction or inviting quotation or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured asset - (i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount, no further steps shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. Learned Senior Counsel therefore contends that post amendment the right of redemption of the borrower ceases the moment notice for public auction is issued. After the right of redemption was extinguished it was not open for the Bank to enter into OTS with the borrower to frustrate the auction which was lawfully conducted in which petitioner was the successful bidder. He further submits that in view of the overriding effect of the SARFAESI Act in terms of Section 35 thereof, Section 60 of the Transfer of Property Act, 1882 would not be available to the borrower post notice for public auction. 14 In this connection, learned Senior Counsel has placed reliance on the decision of the Supreme Court in Shakeena (supra).
24. The above contention of the learned Senior Counsel for the petitioner has been strongly resisted by learned counsel for the respondents. Mr. Sethu Madhav, learned counsel for respondent Nos.1 and 2 after referring to the averments made in the counter affidavit filed by the said respondents submits that Section 13(8) of the SARFAESI Act cannot be interpreted in a manner to foreclose the option of the secured creditor to have the best deal in respect of the secured asset even after issuance of notice for public auction. He has justified the action taken by respondent Nos.1 and 2 as being taken in the best interest of the Bank. In support of his submission, leaned counsel for respondent Nos.1 and 2 has relied upon the following decisions:
(1) Concern Readymix v. Authorised Officer, Corporation Bank2;
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2019 (3) ALD 384 15 (2) S.Karthik v. N.Subhash Chand Jain3; and (3) Pal Alloys & Metal India Private Limited v. Allahabad Bank4.
25. Mr. Murali Manohar, learned counsel for respondent No.3 has adopted the arguments advanced by learned counsel for respondent Nos.1 and 2. In addition he submits that petitioner had tried to purchase the subject property at a throw away price of Rs.57.00 lakhs whereas the third respondent had settled the loan account for Rs.5.10 crores which is about nine times more than the amount offered by the petitioner. It is in the interest of the Bank that the challenge made by the petitioner should be rejected. In support of his submissions, learned counsel for the third respondent has referred to the following decision:
Sushen Medicamentos Private Limited v. Ashok Enterprises5.
3 AIR 2021 SC 4559 4 AIR 2022 P&H 23 5 AIR 2012 Guj 26 16
26. Submissions made by learned counsel for the parties have received the due consideration of the Court.
27. In the instant case, the facts are not disputed though there is a dispute regarding issuance of sale certificate. But without getting bogged down on this aspect, what is deducible from the materials on record is that the third respondent is a guarantor for the loan availed of by the borrower (M/s.Palnadu Cold Storage). Third respondent had mortgaged the properties in question with respondent Nos.1 and 2 to enable the borrower to avail the loan. When the borrower failed to repay the loan, respondent Nos.1 and 2 after declaring the loan account as NPA proceeded under the SARFAESI Act. Ultimately auction sale notice was issued on 06.02.2021, whereafter auction was held on 16.03.2021. Petitioner was the successful bidder for the subject land for Rs.57.00 lakhs which it paid. In the meanwhile, third respondent submitted proposal dated 18.03.2021 for OTS which was recommended by the second respondent on 20.03.2021 and was accepted by first respondent on 17 31.03.2021 for Rs.5.10 crores which admittedly has been paid by the third respondent. Thereafter respondent Nos.1 and 2 returned Rs.57.00 lakhs to the petitioner.
28. According to the petitioner, such an action by respondent Nos.1 and 2 is not permissible in law.
29. Let us deal with this aspect. Basic contention of the petitioner is that Section 13(8) of the SARFAESI Act prohibits such a course of action.
30. Section 13 deals with Enforcement of Security Interest. As per sub-section (1), notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of the SARFAESI Act. Sub-section (8) of Section 13 prior to its substitution was as follows:
(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date 18 fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.
31. By way of amendment, sub-section (8) has been substituted with effect from 01.09.2016 in the following manner:
(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,--
(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub- section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.
32. The instant public auction as well as OTS had taken place in the year 2021. Therefore sub-section (8) of Section 13 as substituted with effect from 01.09.2016 would be applicable. Section 13(8) as it stands today says 19 that where the amount of dues of the secured creditor together with all costs etc., is tendered to the secured creditor at any time before the date of publication of notice for public auction etc., for sale of the secured assets etc., the secured assets shall not be transferred by way of sale etc., and in case, any step has been taken in this regard, no further steps shall be taken by the secured creditor for sale etc. of the secured assets.
33. A minute and careful analysis of the above provision would reveal that if before publication of auction notice, the outstanding dues together with costs etc., is paid to the secured creditor, then the secured creditor would not proceed further with the public auction.
34. But the moot question is whether sub-section (8) of Section 13 of the SARFAESI Act can restrain the secured creditor from realising the outstanding dues from the borrower after notice for public auction is issued? In other words, whether sub-section (8) of Section 13 of the SARFAESI Act can bar the secured creditor from 20 receiving the outstanding dues from the borrower post publication of notice for public auction?
35. Before we attempt to answer the above question, it would be apposite to briefly advert to the decisions cited at the bar.
36. In so far the decision of the Gujarat High Court in Sushen Medicamentos Private Limited (supra) relied upon by learned counsel for respondent No.3 is concerned, the said decision was rendered on 03.08.2011 much before Section 13(8) of the SARFAESI Act was substituted. Therefore, the above decision may not have any significant relevance to the present litigation. Nonetheless, in the facts of that case, Gujarat High Court took the view that though the highest bidder in the auction may be entitled to refund of the amount offered and deposited by him but he cannot claim the right to get the property if there has been a compromise between the borrower and the secured creditor even after the auction sale.
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37. A Division Bench of this Court in Concern Readymix (supra) noted the changes that were made to the SARFAESI Act by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 including the substitution of sub-section (8) of Section 13 of the said Act. Thereafter the Division Bench compared and analysed sub-section (8) of Section 13 as it stood before the amendment and as it stands post amendment. This Court noted the distinction between the unamended and the amended sub-section (8) of Section 13 in the following manner:
10. The first distinction between the unamended and amended sub-section (8) of Section 13 is that before amendment, the facility of repayment of the entire dues along with the costs, charges and expenses, was available to the debtor at any time before the date fixed for the sale or transfer. But after the amendment, the facility is available upto the time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty. The second distinction is that the unamended sub-section (8) did not provide for the contingency when the dues are tendered by the borrower before the date of completion of the sale or lease but after the issue of notice. But the amended sub- section (8) takes care of the contingency where steps have already been taken by the secured creditor for the 22 transfer of the secured asset, before the payment was made. Except these two distinctions, there is no other distinction.
38. After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale if the dues are paid before issuance of notice for public auction. Thereafter it has been held that a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor. Payment of the amounts mentioned in Section 13(8) ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the SARFAESI Act. Redemption comes later. It has been held as follows:
The danger of interpreting Section 13(8) as though it relates to the right of redemption, is that if payments are not made as per Section 13(8), the right of redemption may get lost even before the sale is complete in all respects. But in law it is not.23
39. Thus this Court emphasised that the right of redemption is not lost immediately upon the highest bid made by the purchaser in an auction is accepted.
40. A three-Judge Bench of the Supreme Court in S.Karthik (supra) held that the right of redemption which is embodied in Section 60 of the Transfer of Property Act, 1882 is available to the mortgagor unless it has been extinguished by the act of the parties. Only on execution of the conveyance and registration of transfer of mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. Referring to the previous decisions of the Supreme Court, it has been held that the right to redemption stands extinguished only on the sale certificate getting registered.
41. This position has been explained by the Punjab & Haryana High Court in Pal Alloys & Metal India Private Limited (supra), wherein it has been clarified that the amended Section 13(8) of the SARFAESI Act merely prohibits the secured creditor from proceeding further 24 with the transfer of the secured asset by way of lease, assignment or sale if the dues are paid before issuance of sale notice for public auction. A restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor.
42. Let us now examine the decision of the Supreme Court in Shakeena (supra) relied upon by the petitioner. As opposed to S.Karthik (supra) which was rendered by a three-Judge Bench, Shakeena (supra) was delivered by a two-Judge Bench of the Supreme Court. That was a case which dealt with Section 13(8) of the SARFAESI Act prior to amendment. In this case, the appellants failed to exercise their right of redemption until registration of the sale certificate; therefore, relief was declined. While coming to the above conclusion, the Division Bench of the Supreme Court adverted to the amended Section 13(8) of the SARFAESI Act observing by way of obiter that tender of dues to the secured creditor with all costs, charges and expenses incurred by him shall be at any 25 time before the date of publication of notice for public auction etc.
43. The decision in Shakeena (supra) was rendered by a two-Judge Bench of the Supreme Court on 20.08.2019. On the other hand, the decision in S.Karthik (supra) was rendered by a three-Judge Bench of the Supreme Court much later i.e., on 23.09.2021. The decision in S.Karthik (supra) being a later judgment and by a larger bench therefore will be binding on us and this decision says that the right of redemption stands extinguished only on the sale certificate getting registered.
44. Before we revert back to the facts of the present case, we may also refer to Sections 35 and 37 of the SARFAESI Act. While Section 35 says that the provisions of the SARFAESI Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, Section 37 clarifies that provisions of the SARFAESI Act or the rules made thereunder shall be in addition to and not in derogation of any other law for the time being in force. 26
45. This brings us to Section 60 of the Transfer of Property Act, 1882. Section 60 says that at any time after the principal amount has become due, the mortgagor has a right, on payment or tender, of the mortgage money, to require the mortgagee (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof back to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. As per the proviso, the right conferred under the aforesaid provision shall not be extinguished by any act of the parties or by decree of a Court.
46. Therefore, on a careful application of Sections 35 and 37 of the SARFAESI Act, it is evident that the 27 situation contemplated under Section 13(8) of the SARFAESI Act does not exclude application of Section 60 of the Transfer of Property Act, 1882. As explained by this Court in Concern Readymix (supra), a restriction on the right of the mortgagee to deal with the property post issuance of notice for public auction is not the same as the right of redemption available to the mortgagor.
47. In so far the present case is concerned, admittedly the bid amount of the petitioner was Rs.57.00 lakhs. Though the auction was conducted on 16.03.2021 and payment was made by the petitioner within the stipulated period, there is clear dispute between the parties as regards issuance of sale certificate by respondent Nos.1 and 2 in favour of the petitioner. However, admittedly there is no registration of any sale certificate. On the other hand, the borrower had approached respondent Nos.1 and 2 for settlement of the loan account under OTS Scheme on 18.03.2021 which was recommended by second respondent on 20.03.2021 and was accepted by first respondent on 31.03.2021 for an amount of Rs.5.10 28 crores, which has been paid by the borrower i.e., third respondent. On the one hand petitioner's amount was Rs.57.00 lakhs which the petitioner had paid but on the other hand third respondent has paid Rs.5.10 crores as per the OTS. Lending of money, recovery of dues and entering into OTS are all commercial decisions which are taken by the banks/financial institutions in their best interest, subject of course within the statutory framework. In this case, we have already come to the conclusion that third respondent had not lost the right of redemption upon publication of notice for auction sale. If that be the position, then it should be left to the discretion of the secured creditor as to which course of action would be more beneficial to it. Evidently, the OTS with the third respondent is much more beneficial to the secured creditors i.e., respondent Nos.1 and 2 and as has been explained above such a course of action is not restricted or extinguished by Section 13(8) of the SARFAESI Act.
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48. Respondent Nos.1 and 2 had exhibited great alertness in repaying back Rs.57.00 lakhs to the petitioner. Therefore, entering into OTS with the borrower, i.e., third respondent and allowing the borrower to redeem the mortgaged property would not cause any prejudice to the petitioner.
49. Further, the amount of Rs.5.10 crores paid by the borrower (third respondent) under the OTS has been accepted by respondent Nos.1 and 2, which amount is much more higher than the bid amount of Rs.57.00 lakhs paid by the petitioner. Banks and financial institutions should have the discretion to accept the offer which is beneficial to their interest which is also in the larger public interest till such time the sale certificate is registered.
50. Right to property is a valuable right. Though no longer a fundamental right, it is still a constitutional right. The interpretation which we have adopted subserves such a right. That apart, third respondent had not lost the right of redemption upon publication of 30 notice for auction sale; his right of redemption would have been lost only upon the sale certificate getting registered which admittedly has not taken place. Therefore, the action of respondent Nos.1 and 2 in accepting the higher OTS amount of the third respondent though after publication of notice for public auction and auction is justified and cannot be faulted.
51. For the reasons cited supra, we are not inclined to accede to the request of the petitioner. Consequently, the writ petition fails and is accordingly dismissed. Interim order passed earlier stands vacated. However, there shall be no order as to costs.
Miscellaneous applications, pending if any, shall stand closed.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ A.VENKATESHWARA REDDY, J 17.08.2022 Note: LR Copy be marked.
(By order) pln