The Supreme Court has set aside the High Court’s Order staying auction of a flat in respect of which auction proceedings were already over at the time when the stay order was passed.

The bench of Justice MR Shah and Justice CT Ravikumar observed that in the e­auction appellant was declared as a successful bidder and he made a payment of 25% of the bid amount on the very day. The Court noted that much after that the respondent no.1 filed a plea before the High Court against the e­auction notice.

The Court pointed out that 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.

“…in view of the availability of the alternative statutory remedy available by way ofproceedings/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”, the Court held.

Senior Advocate A. Sirajudeen appeared on behalf of the appellant and Advocate Buddy A. Ranganadhan appeared for respondent no.1 – original writ petitioner.

In this case, the borrower wasn’t able to repay the security interest to the Bank, thus the Bank initiated proceedings against the borrower and attached the properties of the borrower under Section 13(4) of the SARFAESI Act. Against this, the borrower filed a plea before the Debt Recovery Tribunal. The DRT permitted the Bank to go ahead with the sale as proposed excluding flat to be identified and communicated by the borrower to the Bank with full details of all purchasers to the bank officials on affidavit so as to enable the bank officer to exclude those flats, provided the remaining flats are sufficient for recovery of the dues.

The Tribunal directed that the bank may proceed with the sale but shall not confirm the sale till the next date of hearing. an agreement to sale was executed between the bank and the borrower for a sale of flat No.6401. Thereafter the Bank issued a public notice for auctioning the properties of the borrower. The property in question, i.e. Flat No.6401 was also subjected to auction.

The e­-auction was conducted by the Bank in which the appellant was declared as a successful bidder with respect to Flat No.6401. Accordingly, he made a payment of 25% of the bid amount i.e. Rs.6,45,250/­.

Thereafter the respondent no.1 filed a Writ Petition before the High Court on challenging the e­auction notice. By impugned judgment the High Court stayed the auction qua Flat No.6401 subject to respondent no.1 (original wit petitioner) paying to the bank not less than 25.81 lakhs before the scheduled date and time of the auction.

The Apex Court noted that “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. The order dated 24.08.2016 is reproduced hereinabove. 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”

The Court observed that after the borrower having failed to obtain any order, the respondent no.1 had straightway filed the writ petition challenging the e­auction notice which the borrower failed to get any relief before the DRT.

The Court asserted “…calculatively the respondent no.1 filed the writ petition before the High Court challenging the e­auction notice and that too after conducting of the e­auction on 31.08.2016 and the sale in favour of the appellant was confirmed. The aforesaid facts were pointed out before the High Court and despite the same the High Court has allowed the writ 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.”

Thus the Court set aside the impugned judgment and 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 a period of four weeks, the sale certificate be issued in favour of the appellant with respect to Flat No.6401.

Cause Title- G. Vikram Kumar v. State Bank Of Hyderabad & Ors

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