Sarfaesi - Auction

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( 54 of 2002 ) -  Typographical error – 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  - Error in description of the door number of the property and instead of “12­3­39”, it was indicated as “12­3­393”, but the fact is that  there was no error in the description of the property rather the dimensions with measurement and boundaries were properly indicated of the mortgaged property  - Fact is that there is no such property No. “12­3­393”available in the locality/vicinity and as full description of the mortgaged property was mentioned/indicated, although there was a typographical error - Respondent borrowers failed to demonstrate any prejudice being caused on account of the inadvertent error being caused in description of the mortgaged property - Failed to demonstrate that because of a typographical inadvertent error in door number, the property could not have fetched the value as it ought to have fetched - No record to substantiate the kind of prejudice, if any, being caused –  It is not the case of the respondents that participants in e­auction sale are misguided because of the error in description of the property put to auction and when there is no ambiguity with regard to the detailed description of the mortgaged property put to auction - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( 54 of 2002 ), S. 13, 14 - Security Interest (Enforcement) Rules, 2002. 2022 SCeJ 1281, 2022 PLRonline 1492502, (2022-4)208 PLR 737 (SC) (SN) 

Security Interest (Enforcement) Rules, 2002, Rule 9(4) -  Appears to be not as sacrosanct and the period can be extended - Clearly manifests that the Rule 9(4) (pre-amended)  referring  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 - If the time stands extended, the auction purchaser would not be considered to be a defaulter - 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 pre­amended Rule 9(4) of the Rules. 2022 SCeJ 1281, 2022 PLRonline 1492502, (2022-4)208 PLR 737 (SC) (SN) 

Security Interest (Enforcement) Rules, 2002, Rule 9(4) -  Four days’ delay which was caused in terms of the original auction notice, in deposit of the auction bid amount , in no manner, would frustrate or annul the auction proceedings  -  Under the Pre­amended Scheme of Rule 9(4),  there was no written consent by all the three partners, namely, secured creditors, borrowers and auction purchaser - Respondent borrowers in the first instance approached the Tribunal assailing the e­auction notice issued by the respondent Bank (secured creditor) and were able to secure an interim order from the Tribunal dated 26th March, 2015 permitting the auction proceedings to continue, subject to the condition that the borrower shall deposit Rs.6 lakhs directly with the respondent Bank within 15 days from the date of order, which admittedly expired on 9th April, 2015 and the respondent borrowers failed to deposit the aforesaid amount - On the last date i.e. 9th April, 2015, an I.A. was filed seeking extension of time period by 15 days for depositing the sum of Rs.6 lakhs and as there was no stay in withholding the e­auction proceedings -  Auction purchaser  deposited not only the earnest money but 25% of the bid amount in the first instance on 28th March, 2015, the balance 75% of the bid amount was deposited on 15th April, 2015 – In interregnum period was in incomplete phase of flux as to what will be the fate of the auction purchaser pending proceedings before the Tribunal, more so when the application was filed by the respondent borrowers on 9th April, 2015 seeking extension of time and that being the situation, 75% of the bid amount was deposited on 15th April, 2015 and sale certificate was issued - Still thereafter the Tribunal granted extension of 15 days’ of time to the respondent borrowers by an order dated 17th April, 2015 to deposit the sum of Rs.6 lakhs, the respondent borrowers failed to deposit the aforesaid amount and as it reveals from the record, a further time was granted to the respondent borrowers to deposit a sum of Rs.6 lakhs by an order dated 1st May, 2015 and much before that, the auction proceedings were finalised and even the rectification deed came to be executed on 21st April, 2015 - In the given facts and circumstances, the four days’ delay which was caused in terms of the original auction notice, in no manner, would frustrate or annul the auction proceedings and the Debts Recovery Tribunal has rightly held that because in such state of flux, particularly when the bank/secured creditor requested the auction purchaser to wait for some time because the borrowers are negotiating with the bank in the light of interim order dated 26th March, 2015 of the Tribunal, delay in depositing 75% of the bid amount by four days in no manner would frustrate the rights of the parties inter se, more so, when the conduct of the borrowers in getting extension orders on two different occasions and still not depositing Rs.6 lakhs in terms of the order of the Tribunal would clearly reflect that the intention of the borrowers was only to frustrate the auction sale by one reason or the other, which they could not succeed. 2022 SCeJ 1281, 2022 PLRonline 1492502, (2022-4)208 PLR 737 (SC) (SN)