Summary
The auction purchaser succeeded against an agreement-holder who obtained writ relief after the bank auction. The statutory DRT remedy should have been used, and the agreement had already been declared void for being entered without the required approval during pending proceedings. The Court directed completion of the auction sale on specified payment terms, refund to the agreement-holder’s heirs with interest, and vacation within three months.
Issues
- Whether writ relief against the auction was justified despite the section 17 remedy and the DRT’s prior ruling on the agreement.
- Consequential rights and payment obligations of the auction purchaser and agreement-holder’s heirs.
Provisions considered
- Section 17 read with Section 13(4), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The challenge to measures including the auction notice belonged before the DRT through the available statutory remedy in the circumstances. (¶ 8)
Held
- The High Court should not have entertained this Article 226 challenge to the bank’s auction notice when a statutory remedy under section 17 was available. The writ was filed only after the auction had occurred and the appellant had paid twenty-five per cent as successful bidder. (¶ 8)
- The flat was not among those the DRT had permitted to be excluded from the sale. The agreement-holder knew of the pending proceedings but contracted without approval of the DRT or bank, and the DRT had already declared the transaction void. Writ proceedings could not be used to secure the relief the borrower had failed to obtain there. (¶¶ 8.1, 8.2, 8.5)
- The Court described the applicability of section 13(8) to a mere agreement-holder as debatable; it did not conclusively resolve that general question. Here the borrower had not invoked it or offered to clear the entire dues. Payment by the agreement-holder and hardship to the heirs did not justify benefiting from the void transaction. (¶ 8.3-8.5)
- The appellant was to pay the auction consideration, crediting the earlier twenty-five per cent deposit, with nine per cent interest from auction to actual payment, within four weeks, upon which the sale certificate was to issue. The heirs’ deposited amount was to be returned with nine per cent interest from deposit to refund within four weeks, and they were given three months to deliver vacant possession. (¶ 9)
Result
Appeals allowed without costs; High Court judgments set aside. Auction sale to be completed on the directed payment terms; heirs to receive refund with nine per cent interest and vacate within three months.