LALIT MOHAN AGGARWAL AND ANR  Vs ANDHRA BANK AND ORS

W.P.(C.) No. 8749 /2020 Page 1 of 6 $~1.
* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ Date of Decision: 28.01 .2021

% W.P.(C) 8749/2020 & CM APPL. 28188/2020
LALIT MOHAN AGGARWAL AND ANR ….. Petitioner s
Through: Mr. Ajay Sharma, Adv.
versus
ANDHRA BANK AND ORS ….. R espondent s
Through: Mr. N.P. Gaur, Adv for R -1.
CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI
HON’BLE MS. JUSTICE REKHA PALLI

VIPIN SANGHI, J. (ORAL )

1. The present petition preferred by the auction purchaser assails the
order dated 13.03.2020, passed by the Debts Recover Appellate Tribunal,
Delhi (DRAT). Under the impugned order, the DRAT has – while allowing
the appeal preferred by the mortgager Mr.Atul Gupta being Appeal No.
498/2018 , set aside the auction sale of the mortgaged property in favour of
the petitioner held on 21.07.2015.
2. The mortgager i.e Mr.Atul Gupta had preferred a securitisation
application being S.A. No. 73/2015 before the Debts Recovery Tribunal
(DRT) to challenge the auction sale of the mortgaged property under the
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W.P.(C.) No. 8749 /2020 Page 2 of 6 Securitisation an d Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act).
3. The DRT vide its order dated 08.05.2018 in I.A. No. 1846/2015
rejected the mortgagor’s plea that the auction was vitiated and liable to be
set aside as the requisite notice required under rule 8 (6) of the Security
Interest (Enforcement) Rules, 2002 was never served upon him .
4. The learned DRAT vide its impugned order has reversed the said
order passed by the DRT and has agreed with the contention of the
mortg agor that no notice under rule 8 (6) regarding the auction sale held on
21.07.2015 was served on him and, therefore, the auction was vitiated.
While coming to the said conclusion, the DRAT has relied upon the decision
of the Supreme Court in Mathew Varghes e vs. M. Amritha Kumar &
Ors.[(2014) 5 SCC 610 ].
5. The DRAT while allowing the appeal has set out the relevant extract
of the DRT’s order dated 08.05.2018, which reads as under: –
“31. Heard and the arguments have been heard on behalf of
all the respective c ounsels of the parties at length and the record
has been perused thoroughly. So far as, the issue of notice is
concerned, it is admitted fact that the auction /sale was conducted
on 21.07.2015 and 30 days’ notice under Rule 8(6) of Rules, 2002
was duly serv ed on 05.03.2015 by the respondent bank and
publication was also affected on 19.06.2016 in the newspapers
Hindustan Times and Amar Ujala. The notice dated 15. 05.2015
was also duly addressed to the applicant/ director /borrower
/guarantor /mortgagor as appar ently seen from the letter as well
as registered postal receipt placed on record.
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W.P.(C.) No. 8749 /2020 Page 3 of 6 32. In this context, it is worthwhile to be mentioned that the
purpose of giving 30 days’ notice under Rule 8 (6) of Rules, 2002
is to get aware the borrower/guarantor /mortgag or about
conducting the sale to enable them to clear the dues of the
secured creditors and also acknowledge the proposed bidder to
verify the status of the property during this period. Apparently,
the due notice was given to the applicant / borrower / guaran tor/
mortgagor / director and even otherwise, the applicants were well
aware of the facts that the sale of the property in question was
being conducted by the respondent bank, which stands fortified
from the application being I.A. no.506 of 2015 moved by Ms .
Ritesh Gupta – one of the director the applicant company on
02.03.2015 for restraining the respondent bank from taking
measures in terms of sale notice dated 24.01.2015 and another
application moved in the month of April, 2015 for quashing the
sale notic e dated 21.03.2015. Accordingly, the Ld. Predecessor
of this Tribunal, vide order dated 24.04.2015, clearly held that
the sale will be subject to outcome of this S.A. and in the said
order, it was also mentioned that it was fourth time, they were
putting t he property on auction. Hence, the present applicants
were continuously observing and knew about the auction
proceedings, which was being held from time to time by the
respondent bank.
33. Though, Ld. Counsels for the respective parties have
relied upon th e citation of Mathew Varghese Vs. M. Amritha
Kumar & Ors. – MANU/SC/ 0114/2014 and the said citation
clearly laid down that ” … Sub -rule (6) of Rule 8 and Sub -rule(1)
of Rule 9 together, the service of individual notice to the
borrower, specifying clear 30 days ’ time gap for effecting any
sale of immovable secured asset is a statutory mandate …. “. In
this matter, the said provisions were duly followed by the
respondent bank and the applicants were having got more than
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W.P.(C.) No. 8749 /2020 Page 4 of 6 30 days prior notice with respect to the auction conducted on
21.07.2015. Accordingly, the sai d issued stands decided against
the applicant. ”
6. The submission of learned counsel for the petitioner is that the learned
DRAT has failed to appreciate that the mortgagor had been duly put to
notic e of the proposed auction sale inasmuch as repeated notices were issued
to him informing him that the property in question would be put to public
auction and that the date, time and other particulars of the said auction
would be notified. Learned counsel s ubmits that in pursuance of the said
notices issued to the mortgagor, publication was affected in Hindustan
Times and Amar Ujjala newspapers on 19.06.2015 clearly stating that the
subject property would be put to auction on 21.07.2015. Thus, according to
the petitioner, the mortgagor had ample notice in terms of aforesaid rule
8(6). Our attention has been drawn to the notices dated 05.03.2015 and
15.05.2015 issued to the mortgagor. We, however, find that neither of these
notices informed the mortgagor of the specific date or place for holding of
the auction . All that they informed to the mortgagor was that the property
would be put to auction on account of non-liquidation of the dues owed by
the borrower to the respondent/Bank. Both these notices contained the
following statement: –
“The date of and time of auction and the details of the
service provider shall be informed through a Sale Notice
which shall be issued separately, and the property would
be sold to the person who offers highest price. ”
7. Thereafter , it is evident that no specific notice was issued to the
mortgagor in terms of rule 8 (6) of the Security Interest (Enforcement) Rules,
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W.P.(C.) No. 8749 /2020 Page 5 of 6 2002 , informing him of the actual date, time and place of the public auction.
According to the petitioner, the publicati ons made in the newspapers
communicating the date, place and time of the auction of the property in
question, were sufficient notice in compliance of rule 8 (6). The DRAT has
found no merit in this submission by placing the reliance on the decision in
Mathe w Varghese (supra) and, in our view, rightly so. In fact, we find that
the relevant extract from Mathew Varghese (supra) had been taken note by
the DRT itself in para 33 of its decision extracted hereinabove and the same
leaves no manner of doubt that a st atutory notice is required to be given to a
borrower before holding of a public auction of the mortgaged property.
8. If the petitioner’s submission – that the publication of notice about the
auction in daily newspapers is sufficient notice to the borrower i n terms of
Rule 8( 6), were to be accepted, the very purpose of incorporating rule 8(6)
of the Security Interest (Enforcement) Rules, 2002 – which specifically
provides that the authorised officer shall serve to the borrower a notice of 30
days for sale of immovable secured asset, would stand defeated. The
purpose of this rule is two fold . Firstly , to enable the borrower to redeem the
mortgage and , secondly , to ensure that even if he is unable to redeem the
mortgage, he has the opportunity to bring genuine a nd serious buyers at the
auction so that his property is sold at the highest possible price and does not
go for a song. This is more so because the public notice issued in the
newspapers may not attract enough genuine buyers. If the public notice
publish ed in the daily newspapers were sufficient notice to the borrower,
there was no need to incorporate Rule 8(6) in the aforesaid Rules. The
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W.P.(C.) No. 8749 /2020 Page 6 of 6 purpose of the publication in the Newspapers is primarily to invite the public
at large to participate in the public auction.
9. We are, therefore, clear ly of the view that a notice to the borrower
under rule 8(6) of the Security Interest (Enforcement) Rules, 2002 is a
mandatory requirement laid down by the statute , and failure to issue such a
notice would vitiate the auc tion itself.
10. For the aforesaid reasons, we do not find any merit in the petition.
The same is accordingly dismissed.
VIPIN SANGHI, J

REKHA PALLI, J
JANUARY 28, 2021
kk
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