G. Vikram Kumar vs State Bank of Hyderabad & Ors.

in favour of the respondent no. 1 with respect to Flat no.6401 was already held to be void by the DRT – If the respondent no. 1 would have approached the DRT against the e–auction notice he would have been non-suited in view of the earlier order passed by the DRT – Therefore, calculatively the respondent no. 1 filed the writ petition before the High Court challenging the e-auction notice and that too after conducting of the e-auction and the sale in favour of the appellant was confirmed – Respondent no. 1 and/or his heirs cannot be permitted to get the benefit of his own wrong and cannot be permitted to get the benefit of a void transaction – Thus, the impugned judgment and order passed by the High Court is unsustainable – Constitution of India – Art. 226.

Allowing the appeals, the Court

HELD: 1.1 What was challenged before the High Court by respondent no.1 in a writ petition under Article 226 of the Constitution of India was the e–auction notice which was pursuant to the action initiated by the Bank in exercise of powers under Section 13(4) of the SARFAESI Act. Against any steps taken by the Bank under Section 13(4) of the SARFAESI Act the aggrieved party has a remedy under the SARFAESI Act by way of appeal under Section 17 of the SARFAESI Act to approach the DRT. Therefore, in view of the availability of the alternative statutory remedy available by way of proceedings/appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India in which the e-auction notice was under challenge. Therefore, the High Court has committed a very serious error in entertaining the writ petition under Article 226 of the Constitution of India challenging the e-auction notice issued by the Bank in exercise 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 the seven flats identified by the borrower to be kept out of the auction proceedings. At the relevant time the flat in question was not sold amongst the seven flats mentioned before the tribunal. That thereafter during the pendency of the S.A. No.253 of 2012 and without obtaining prior approval and/or intimation to the DRT and even the bank, the borrower entered into the sale agreement with the respondent no.1 on 16.06.2016. In the MoU dated 10.04.2016 between the borrower and the respondent no.1 in Clause No.4 it was specifically provided that first the party should obtain clearance of sale from DRT/SBH so that they can process with further agreement to sale. Thus, as such respondent no.1 at the relevant time was aware about the pending DRT proceedings. Still the respondent no.1 entered into the agreement to sale with the borrower on 16.06.2016. At this stage, it is pertinent to note that thereafter when the Bank issued a public notice on 28.07.2016 for auctioning the properties of the borrower. Before the date of auction, on 24.08.2016 the borrower filed an application before the DRT praying for stay of all proceedings of the Bank pursuant to the auction notice dated 28.07.2016. The DRT was pleased to reject the said application for stay vide the order dated 24.08.2016 by observing that the sale of the flat in question without the permission of the Bank or the tribunal is void. Thus, as such the transaction in favour of the respondent no.1 with respect to Flat no.6401 was already held to be void by the DRT. That, thereafter, after the borrower having failed to obtain any order, the respondent no.1 had straightway filed the writ petition challenging the e– auction notice which the borrower failed to get any relief before the DRT. If the respondent no.1 would have approached the DRT against the e-auction notice he would have been non–suited in view of the earlier order passed by the DRT dated 24.08.2016. Therefore, calculatively the respondent no.1 filed the writ petition before the High Court challenging the e-auction notice and that too after conducting of the e– auction on 31.08.2016 and the sale in favour of the appellant was confirmed. The said facts were pointed out before the High Court and despite the same the High Court has allowed the w rit petition which is not sustainable at all. By the impugned order the respondent no.1 has got the relief which as such the borrower failed to get from the DRT. On the said grounds the impugned judgment and order passed by the High Court is unsustainable. [Para 8.2][636-B-H; 637-A]

ORS.

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

1.4 What exact relief is granted by the High Court is not clear. The High Court has simply stated that the writ petition is allowed. However, it is required to be noted that what was challenged. Even at the time when the respondent no.1 entered into the agreement to sale/MoU he was aware about the proceedings pending before the DRT before the High Court was the e-auction notice dated 28.07.2016 which was already conducted on 31.08.2016. Therefore, the writ petition was filed much after conducting the e-auction on 31.08.2016. No consequential relief has been granted by the High Court. Therefore, also the impugned judgment and order passed by the High Court is unsustainable. [Para 8.4][637-D-E]

1.5 Now so far as the submission the respondent no.1 has paid/deposited the amount of sale consideration and now the respondent no.1 has died his heirs will have to vacate the flat in question and on the other hand the appellant shall be entitled to return the amount of Rs.6,45,250/ deposited at the relevant time being 25% of the auction sale consideration with interest is concerned, at the outset it is required to be noted that as such the transaction between the respondent no.1 and the borrow er pursuant to the agreement to sale dated 16.06.2016 was absolutely illegal and behind the back of the tribunal as well as the Bank and during the pendency of the proceedings before the tribunal. In order dated 24.08.2016 the tribunal had in fact already held the sale transaction as void. Even at the time when the respondent no.1 entered into the agreement to sale/MoU he was aware about the proceedings pending before the DRT which is apparent from Clause 4 of the MoU . Therefore, respondent no.1 and/or his heirs cannot be permitted to get the benefit of his own wrong and cannot be permitted to get the benefit of a void transaction. [Para 8.5][637-E-H; 638-A]

1.6 The impugned judgment and order passed by the High Court is quashed and set aside. It is directed that on the full payment of the auction sale consideration by the appellant (after deducting the 25% of the amount already deposited earlier) with 9% interest from the date of auction till the actual amount is paid, to be paid within the stipulated period, the sale certificate be issued in favour of the appellant with respect to Flat No.6401. Whatever the amount is already deposited by the respondent no.1/his heirs shall be returned to the respondent no.1 (now his heirs) with the interest at 9% from the date of such deposit till the actual date of return which shall be returned within the stipulated period. The heirs of original respondent no.1 are granted three months’ time to vacate the flat in question and are directed to hand over the peaceful and vacant possession of the Flat No.6401 to the appellant. [Para 9][638-B-D]

Mathew Varghese v. M. Amritha Kumar (2014) 5 SCC

610 : [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) 5 SCC 745; Pal Alloys & Metal India Pvt. Ltd. & Ors. vs. Allahabad Bank & Ors. 2021 SCC OnLine P&H 2733; M/s India Finlease Securities Ltd. vs. Prasad Indian Overseas Bank 2012 SCC OnLine AP 205 – referred to.