Smt.Indira Thru.Attor.Sharad Agrawal vs Authorised Officer,State Bank Of ...
2025 Latest Caselaw 5003 MP

Madhya Pradesh High Court

Smt.Indira Thru.Attor.Sharad Agrawal vs Authorised Officer,State Bank Of ... on 3 March, 2025

Author: Vivek Rusia

Bench: Vivek Rusia, Prem Narayan Singh

                           NEUTRAL CITATION NO. 2025:MPHC-IND:5675


                                                              -1-                          WP-1297-2008
                           IN THE HIGH COURT OF MADHYA PRADESH
                                        AT INDORE
                                                 BEFORE
                                    HON'BLE SHRI JUSTICE VIVEK RUSIA
                                                     &
                                HON'BLE SHRI JUSTICE PREM NARAYAN SINGH
                                        ON THE 3rd OF MARCH, 2025
                                       WRIT PETITION No. 1297 of 2008
                                 SMT.INDIRA THRU.ATTOR.SHARAD AGRAWAL
                                                   Versus
                           AUTHORISED OFFICER, STATE BANK OF INDORE AND OTHERS

                           Appearance:
                                 Shri Nilesh Agrawal - Advocate for the petitioner.
                                 Shri Vinay Kumar Zelawat - Senior Advocate alongwith Shri Aashay
                           Dubey - Advocate for respondent No.3.
                                 Shri Manoj Munshi - Senior Advocate alongwith Shri Lucky Jain -
                           Advocate for respondents No.1 & 2.

                                                            ORDER

Per: Justice Vivek Rusia

The petitioner has filed the present petition seeking direction to respondent No.2 to issue a sale certificate as she has deposited the full sale consideration after the auction proceedings.

02. Shri Manoj Munshi, learned senior counsel appearing for respondents No.1 & 2 submits that the State Bank of Indore had been merged in the State Bank of India, therefore, the name of respondent No.2 is liable to be deleted and State Bank of India is liable to be impleaded as respondent.

03. Shri Nilesh Agrawal, learned counsel appearing for the petitioner prays for time to file an appropriate application.

04. The State Bank of Indore was merged with the State Bank of India way back in the year 2008-09 and till date the petitioner has not

NEUTRAL CITATION NO. 2025:MPHC-IND:5675

-2- WP-1297-2008 taken any step to amend the cause title of this petition to implead the State Bank of India. There is an interim order in favour of the petitioner passed on 29.02.2008, therefore, at the oral request of counsel for the petitioner, the petitioner is permitted to amend the cause title and State Bank of India through Branch Manager be implicated as respondent No.2. No fresh notice and service to the state Bank of India is required as the State Bank of Indore had filed the reply.

05. This petition is pending since 2008 with an interim order in favour of the petitioner, therefore, it was heard finally today.

Facts of the case in short are as under:

06. Respondent No.3 / M/s Sunder Foods Ltd. secured the financial assistance from the then State Bank of Indore (now The state Bank of India). In the year 2006, the loan account was classified as NPA and respondent No.2 initiated the process under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act"). Respondent No.2 issued a notice on 18.05.2006 inviting a bid to sell the secured asset with the reserved price of Rs.29.00 Lacs. The petitioner submitted a bid of Rs.30.00 Lacs to the respondents No.1 & 2 to purchase the secured asset. On 31.08.2006, the sale was confirmed in favour of the petitioner subject to a deposit of 25% of Rs.30.00 Lacs. On 01.09.2006 the petitioner deposited 25% of the amount. On 08.09.2006 the petitioner deposited the balance amount and requested the execution of the registered sale certificate. The petitioner sent the reminder on 19.10.2006, 01.11.2006, 04.11.2006 and 07.11.2006.

07. On 20.11.2006 respondent No.3 made an offer to the respondent Nos.1 and 2 to settle the loan and redeem the secured assets. On 04.01.2007 the offer of respondent No.3 was accepted by the bank. The respondent No.3 deposited the entire amount and the secured assets

NEUTRAL CITATION NO. 2025:MPHC-IND:5675

-3- WP-1297-2008 were released with NOC.

08. The petitioner approached the civil Court by way of Civil Suit No.2-A/2007 seeking the decree of declaration and permanent injunction. The defendant bank filed an application under Order VII Rule 11 of CPC for rejection of the plaint as not maintainable by virtue of Section 34 of the SARFAESI Act. Vide order dated 07.05.2007, the civil suit was dismissed being barred under Section 34 of the SARFAESI Act. Thereafter, respondents No.1 and 2 issued an NOC dated 14.05.2007 in favour of respondent No.3 hence, the petitioner has filed the present petition under Article 226 of the Constitution of India seeking the following reliefs:

(i) Direct the Respondent Bank to issue a sale certificate of property in question in favour of the petitioner;

(ii) Restrain the Respondent Bank from alienating or transferring the property in question in any other name;

(iii) The release of mortgaged property by Respondent Nos. 1 and 2 in favour of Respondent No.3, M/s. Sunder Foods Ltd. be declared to be illegal;

(iv) Award the interest @ 18% per annum to the petitioner against the respondents on the amount of Rs.30.00 Lakhs deposited by the petitioner with the Respondent, Bank;

(v) Respondent No.3, M/s. Sunder Foods Ltd. be also directed to put the petitioner in possession of the property in question which has been released by Respondent Nos. 1 and 2 in his favour.

(vi) Allow this petition with costs.

(vii) Any other relief, which this Hon'ble Court deems fit in the premises aforesaid may also be granted to the petitioner.

09. After notice, respondent No.1&2 filed their reply to oppose the writ petition. They did not dispute that the petitioner deposited the auction price of Rs.30,58,781/-, but the sale was not confirmed. The acceptance of the offer cannot be construed as confirmation of sale in view of the provisions of sub-rule 2 of rule 9 of the Security Interest (Enforcement) Rules, 2002. It is further submitted that respondent No.3 deposited Rs.42.00 Lacs and cleared the debt, therefore, the NOC was issued and the secured asset was redeemed hence, this petition is liable

NEUTRAL CITATION NO. 2025:MPHC-IND:5675

-4- WP-1297-2008 to be dismissed.

10. The respondent No.3 also filed the reply by submitting that the writ petition is not maintainable as after dismissal of the suit, the petitioner ought to have approached the DRT under the provisions of Section 17 of the SARFAESI Act, 2002. It is further submitted that the petitioner was also had the remedy to file a first appeal against the judgment and decree dated 07.05.2007. The petitioner was aware that the respondents No.1 and 2 had received the amount of Rs.42.00 Lacs from respondent No.3 and released the secured asset and by suppressing this fact, the interim order has been obtained.

Submissions of the parties

11. Shri Nilesh Agrawal, learned counsel for the petitioner submits that the petitioner had deposited the entire sale price after declaring a successful bidder in the auction proceedings, therefore, the bank ought not to have withheld the sale certificate and accepted the offer of the respondent No.3. In support of his contention, learned counsel has placed reliance on the judgments passed by the Hon'ble Apex Court in case of Celir LLP V/s Bafna Motors (Mumbai) Pvt. Ltd. and others in Civil Appeal No.5542 - 5543 of 2023 and IDBI Bank Ltd. V/s Ramswaroop Daliya and others reported in 2024 SCC OnLine SC 2878.

12. Learned counsel appearing for the respondents opposed the writ petition and sought its dismissal.

Appreciations and Conclusion

13. It is not in dispute that in an auction proceeding, the petitioner was declared as successful bidder and called upon by the Bank to deposit 25% of the auction price. The petitioner deposited 25% of the amount and thereafter, deposited the balance amount, but the sale certificate was not issued by the bank. The bank conducted the auction

NEUTRAL CITATION NO. 2025:MPHC-IND:5675

-5- WP-1297-2008 proceedings by opting for one of the measures provided under Section 13(4) of the SARFAESI Act, 2002. Sub-section (8) of Section 13 prior to the amendment on 01.09.2016 reads as under:

1. Subs. by Act 44 of 2016, sec. 11(iii), for sub-section (8) (w.e.f.

1-9-2016, vide S.O. 2831(E), dated 1st September, 2016). Sub- section (8), before substitution, stood as under:

"(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 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.".

2. Subs. by Act 31 of 2016, sec. 251 and Seventh Sch., for "In the case of" [w.e.f. 15-11-2016, vide S.O. 3453(E), dated 15th November, 2016].

3. Subs. by Act 1 of 2013, sec. 5(c), for "three-fourth" (w.e.f. 15- 1-2013, vide S.O. 171(E), dated 15-1-2013).

14. According to the aforesaid provision, if the dues of the secured creditor together with all cost, charges, and expenses are tendered to the secured creditor at any time before the date 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 assets. Therefore, prior to the amendment in sub-section (8) of Section 13, the borrower had a right to clear the dues of the secured creditor before the transfer or sale of that secured asset. In the case of Celir LLP (supra) in Para 105(iii) the Hon'ble Apex Court has held that by the unamended Section 13(8) of the SARFAESI Act, the right of the borrower to redeem the secured asset was available till the sale or transfer of such secured asset. In other words, the borrower's right of redemption did not stand terminated on the date of the auction sale of the secured asset itself and remained alive till the transfer was completed in favour of the auction purchaser, by registration of the sale certificate and delivery of possession of the secured asset.

15. In view of the above, admittedly, no registered sale certificate

NEUTRAL CITATION NO. 2025:MPHC-IND:5675

-6- WP-1297-2008 was issued and the property was transferred in favour of the petitioner, therefore, the bank did not commit any mistake in accepting the offer given by respondent No.3. The respondent No.3 cleared all the debts of Rs.42.00 Lacs and the NOC was issued by the bank.

16. So far as the amount of Rs.30.00 Lacs deposited by the petitioner is concerned, respondents No.1 & 2 already tendered the amount to the petitioner along with the letter dated 05.01.2007 after accepting the offer of settlement given by respondent no.3. Since petitioner did not accept the said amount, therefore, the bank deposited with interest in the Court of District Judge, Dewas. Vide order dated 07.05.2007, while dismissing the suit the petitioner/plaintiff was permitted to receive the said amount from the Court.

17. At last Shri Agrawal, learned counsel for the petitioner submits that the petitioner is entitled to the interest on the amount of Rs 30.00 lakhs at the rate of 18%. Since the bank had offered to return the amount to the petitioner, but he refused to receive the same in the year 2007, and the bank deposited in the court with interest therefore, the petitioner is not entitled to interest on the said amount.

18. With the aforesaid discussion, this Writ Petition stands dismissed.

No order as to cost.

                              (VIVEK RUSIA)                                  (PREM NARAYAN SINGH)
                                 JUDGE                                              JUDGE
                           Divyansh