Can entire SARFAESI proceedings be quashed for mis-description of property in Show cause Notice issued by the Bank?

-

 

 



Shubham Budhiraja[1]

 

Mr. A took a loan of 8 Lakhs from Bank B. Mr. C stood as guarantor in the transaction. Mr. A made default and Bank-B after declaring  Mr. A to be NPA, proceeded under SARFAESI by issuing section 13 Notice After taking physical possession, Bank- B took steps for auction sale.  Mr. A filed an application before DRT but the same got dismissed. No appeal filed before DRAT but Writ filed before High Court challenging the e-action notice for being vague for misdescription of property and for failure of auction purchaser to deposit 75% within 15 days. Hon’ble High Court allowed the Writ and set aside the SARFAESI proceedings. Hon’ble Supreme court held that auction notice cannot be set aside for mere typo errors.[2]

 

(i)                    It is true that the secured creditor is under an obligation to undertake the exercise and crosscheck the description of the mortgaged property at the stage when the initial proceedings under Section 13(2) are initiated or in the later consequential proceedings.

 

(ii)                   But at the same time, mere typographical error due to inadvertence which has not caused any prejudice to the borrowers, that in itself could not be considered to be the ground to annul the process held by the secured creditor which is in due compliance with the requirement as contemplated under the provisions of Rules, 2002.

 

(iii)                 The pre-amended Rule 9(4) refers to the period of 15 days for confirmation of sale or such extended period, but the outer limit has not been defined and that appears to be not as sacrosanct and the period can be extended, as agreed upon in writing between the parties. In sequel thereto, if the time stands extended, the auction purchaser would not be considered to be a defaulter as referred to under Rule 9(5) of the Rules and if the amended provisions are being taken note of, of which reference has been made, effective from 4th November, 2016, however, may not be relevant as the auction in the instant case was held in March 2015, but the fact remains that by an amendment, the legislature with its consciousness has clarified that the agreement has to be between the purchaser and the secured creditor exceeding 15 days but in any case may not exceed three months although who are the parties to the agreement are not clear in the pre-amended Rule 9(4) of the Rules.


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com , +91-9654055315

[2] CIVIL APPEAL NO(s). 8470 OF 2022, Supreme Court of India, Judgment dated 16/11/2022

Comments

Post a Comment

Popular posts from this blog

Whether a person can be appointed as an arbitrator if his daughter is married to the son of the eldest brother of one of the parties in the arbitration proceedings?

-
Image
    Shubham Budhiraja [1] Two brothers running a family business in the form of a company and dispute arise between them and both decide to resolve through arbitration. During course of arbitration proceedings, one of party filed Section 14(2) r/w Section 15 Petition filed challenging mandate of arbitrator as being terminated because son of arbitrator is married to daughter of eldest brother of one of party and thus should be disqualified under Section 12(5) being ‘close family relationship’. The Hon’ble Delhi High Court declined the relief and held that neither the Seventh Schedule of the A&C Act nor the IBA Guidelines define the expression ‘close family relationship’. The plain language of Entry no. 9 indicates that it is not the legislative intent to render a distant relative of the parties to be ineligible for being appointed as an arbitrator, if both the parties so agree. It is not sufficient that the arbitrator is related to any one of the parties; the relationship must
Read more

ELECTRONIC EVIDENCE: THE UNFERTILE CROP

-
Image
ELECTRONIC EVIDENCE: THE UNFERTILE CROP SHUBHAM BUDHIRAJA [1] Digital images are no different from the droplets of rain that fall, merge, and then divide: there is no telling whether the droplets that split are identical to the droplets that came together to form the larger droplet [2] . INTRODUCTION Law may be divided into substantive and procedural laws. The laws by which rights, duties and liabilities are defined are called substantive law whereas laws which prescribe mode by which application of substantive law is regulated are called procedural law. Law of Evidence is a judicial recognition to the system of logical reasoning. The Indian Evidence act, 1872 is a bunch of 167 sections divided into 11 chapters and 3 parts. Part II, Chapter V is headed as “of Documentary Evidence” is of relevance for our discussion in this article. At the threshold, it is submitted that the proving of oral evidence are in contrast to the proving of documentary
Read more

REPUGANCY UNDER ARTICLE 254 & TEST OF VALIDATING LAW

-
Image
  Shubham Budhiraja [1] [1] Company Secretary, LLB Final Year,DU & Bcom (H) The land acquisition falls in concurrent list and parliament in year 2013 has introduced a new act which provides for rehabilitation, compensation and procedure on land acquisition of property. The State of T.N has made 3 different state laws w.r.t. land acquisition which was struck off by the High Court. Thereafter, state of TN in year 2019 enacted the same law but with president assent under Article 254 to avoid the repugnancy with 2013 act under Article 254. The appeal filed before apex court w.r.t. repugnancy of 2019 state law with 2013 central law & test of validating the struck off law. The Supreme Court observed as: VALIDATING A LAW WITH RETROSPECTIVE EFFECT Case Law Relevant Remarks National  Agricultural  Cooperative  Marketing  Federation  of India Ltd. & Anr. vs. Union of India & Ors, (2003) 5 SCC 23 The legislati
Read more