The Chief Manger Credit Sbi And ORS v. S Subramanian
IN THE HIGH COUR AT CALCUTTA
CIVIL APPELLATE JURISDICTION [ CIRCUIT BENCH AT JALPAIGURI] ...
MAT/1/2021 IA No: can/1/2021 The Chief Manager Credit, SBI And others ...Appellants Vs.
S. Subramanian ... Respondent Mr. Debasish Saha, Advocate ... for the appellant [through virtual mode] Mr. Gopala Binnu Kumar, Advocate... for the respondent November 11, 2021 [GNC] Item No.1 The appeal is directed against an order dated 19th March,2021 passed by the Single Bench in WP No.04 of 2021.
The Brief facts of the case are, inter alia, that in the year 2017, pursuant to a sale advertised by the State Bank of India under the provisions of Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, particularly section 13(4) thereof, the writ petitioner -respondent has purchased the immovable property. The property comprised in 500 square meters, situated at Bimblitan village, Port Blair. The sale, by private treaty, was confirmed after full consideration amount was paid by the writ petitioner. The entire procedure under the provisions of Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, and the Rules of 2002 were stated to have been complied with by the State Bank of India. It could also be presumed that there is a representation made by the State Bank of India in the sale notices that all stipulations under the Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and the Rules of 2002 have been complied with and the
bank is otherwise competent to pass appropriate title to the writ petitioner. The writ petitioner appears to have acted upon and altered his position based on the said representation.
The Bank executed and registered, with concurrence a sale deed with the appropriate authorities after paying appropriate stamp duty and fees. Mutation in respect of the said property was also effected in favour of the writ petitioner.
It appears from the records that the sale came to be challenged by the principal borrower/guarantor before the Debt Recovery Tribunal No.2 at Kolkata and it was set aside on 28th February, 2020, in SA No.237/2017. The borrower/guarantor was allowed to redeem his mortgage. At the time when the petitioner approached the Tehsildar, Port Blair for conversion of the aforesaid property from domestic to commercial he informed that there are disputes pending between the Bank and its borrower and that the sale was set aside.
It is submitted by the counsel for the Bank, Mr. Debasish Saha, that the Bank has since preferred an appeal against an order of the Debt Recovery Tribunal and the same is pending adjudication. The said appeal is stated to be numbered as Diary No.507/2020.
The writ petitioner approached the bank and demanded clarification and/or refund, but in vain. The writ petition was filed in early 2nd December, 2020 and the impugned order came to be passed on contest.
By the impugned order, the learned Single Judge has directed the bank to refund the entire sale consideration along with the registration charges together with interest. The sale consideration was directed to be refunded with interest @ 6% and the registration and other charges o f a sum of Rs.78,765/- was directed to be refunded with 9% interest per annum.
Mr.Debasish Saha has challenged the impugned order on the following grounds, a) that the writ petitioner has a remedy under Section 18 of the Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and the Rules of 2002 to challenge the order of the Debt Recovery Tribunal (supra) which has set aside the same. The writ petition should not have been
entertained for availability of an efficacious alternative remedy; b) that the Debt Recovery Tribunal had committed an error in setting aside the said sale and hence, the appellant bank was not at fault; and c) that the bank's appeal against the impugned order of the Debt Recovery Tribunal (supra) would be rendered infructuous, if the impugned order is sustained.
This Court has carefully considered the rival contentions of the parties and the detailed submissions of Mr. Debshish Saha for the Bank and Mr. Gopala Binnu Kumar, learned advocate for the writ petitioner. It is now well settled that the sale under the Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and the Rules, 2002 is on "as is where is and whatever there is basis". This means that the buyer/auction purchaser, had verified the title of, and encumbrances in respect of the property and has inspected the same. There is no dispute as regards the original title of the guarantor/borrower in respect of the subject property.
There is also no dispute as regards the bank's right to sell the property under the Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and the Rules, 2002. The question, therefore, to be considered as to whether the expression "as is where is and whatever there is basis" can also include of any misrepresentation and/or representation by the Bank, as regards compliance with the provisions of the Secruritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and the Rules, 2002.
This Court is of the view that to include any representation and misrepresentation by the bank as regards the compliance of the procedure under the said Act and Rules, 2002 into the expression "as is where is and whatever there is basis", would be fallacious and improper. The writ petitioner-respondent is admittedly a third party and in no way connected with the dispute between the Bank and its constituents. Having done due diligence to the extent required by a bonafide purchaser for value, the writ petitioner cannot be saddled with the consequences and rigours of legal issues between the Bank and its constituents inter alia in the compliance of the provisions of the said Act and the Rules, 2002.
This Court is also of the view that the bank was under a legal obligation to have conducted the sale strictly in terms of the provisions of the said Act and Rules, 2002. There is a presumption and/or deemed representation by the Bank to that effect. There is a clear finding by a Tribunal constituted under the statute to the contrary. The appeal preferred by the Bank against such finding is of no consequence to the third party borrower.
The Bank has to suffer the consequences of breach of representation and a bonafide purchaser for value cannot be made to suffer for the same.
The remedy of the petitioner before the Debt Recovery Appellate Tribunal is in addition to other civil remedies, unlike a borrower or guarantor. The gross impropriety suffered by the writ petitioner is reason enough for the writ court to have entertained the writ petition and interfered in the matter.
An auction purchaser would be entitled to cancellation and refund once the Court/forum of first instance has pronounced in favour of the borrower. He cannot be compelled to go the Debt Recovery Appellate Tribunal.
The Debt Recovery Appellate Tribunal is not an efficacious remedy in the facts of the case.
For the reasons stated hereinabove, we are unable to interfere with the order passed by the learned Single Judge. The impugned order is upheld and confirmed. The appeal and the connected application shall stand dismissed. Time to refund the amount as directed by the Single Judge along with interest is extended by a period of seven days from date.
Although the appeal of the Bank now pending before the Debt Recovery Appellate Tribunal may become rather academic, this Court would like to clarify that the legality and/or the propriety of the order passed by the Debt Recovery Tribunal has not been addressed by this Court. (Rajasekhar Mantha, J. ) (Amrita Sinha, J. )