Amme Srisailam vs Union Bank Of India
2022 Latest Caselaw 4161 Tel

  * 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

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

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.

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

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.

Manu/SC/1119/2019

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

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

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.

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

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

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

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

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

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.

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;

2019 (3) ALD 384

(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.

AIR 2021 SC 4559

AIR 2022 P&H 23

AIR 2012 Guj 26

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

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

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

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

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.

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

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.

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

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

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.

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

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

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.

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

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