Govind Kumar Sharma & Anr. vs Bank of Baroda & Ors.

Court

Supreme Court of India

Date

18 April 2024

Case No.

SLP (C) No. 24155 of 2018

Result

Disposed

Bench

Vikram Nath, Satish Chandra Sharma

Citation

[2024] 4 S.C.R. 633 : 2024 INSC 326

Acts & Sections

Securitisation and Reconstruction of… Security Interest (Enforcement) Rules, 2002

Issue for consideration

Whether an auction/ sale under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFESI Act) carried out without issuing the mandatory 30-day notice to the borrower under Rules 8(6) and 8 (7) of the Security Interest (Enforcement) Rules, 2002 is liable to be set aside. If so, can the bona fide purchaser, who was originally the tenant, be forced to hand over the physical possession of the premises in order get the refund. Whether the bona fide purchaser would be entitled to refund of the auction money and interest, and compensation for improvement/investments made by him.

Headnote

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Security Interest (Enforcement) Rules, 2002 – Appellants/ Original tenants in physical possession of premises – Appellants were issued sale certificate after auction- Bank admitted to procedural lapse – DRT set aside sale and directed Bank to refund auction money with interest as applicable to fixed deposit only after receiving the possession of the premises – DRT found no proof of improvements/investments – DRAT and High Court confirmed.

Held: Supreme Court upheld the setting aside of the auction/sale in view of concurrent findings and Bank’s admission- Supreme Court modified DRT’s directions – Appellants were allowed to retain physical possession in the capacity of tenants and borrower/landlord could to evict as per law and Bank was directed to return the auction money with 12% per annum compound interest. [Paras 12-15]

Judgment Vikram Nath, J. Leave granted. 2. The appellants herein have assailed the correctness of the judgment and order dated 02.07.2018 passed by the Allahabad High Court dismissing the Writ Petition of the appellants, confirming the orders passed by the Debt Recovery Tribunal1 as also the DRT Debt Recovery Appellate Tribunal2, whereby the auction sale held in favour of the appellants had been set aside and the appeal was dismissed. Brief facts in nutshell are as follows: 3. The firm-respondent no.3, had taken a loan from the respondent no.1Bank. However, as it went into default, the

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