K RAMASELVAM Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) Respondents have entered appearance and filed their counter. The matter is taken up for disposal with the consent of the counsel appearing for the parties. The present writ petition has been filed praying for declaration, declaring the action of the first respondent in proceeding under the SARFAESI Act (hereinafter referred to as 'the Act') and confirming the sale in respect of the properties of the petitioners comprised at new door No. 61, old door No. 7, Part, Gajapathy Street, Aminjikarai, Chennai- 600 030 and Door No. 8, Kanniammal Koil Street, Shenoy Nagar, Chennai-600 030 in favour of the second respondent as arbitrary, illegal, unconstitutional and ultra vires the provisions of SARFAESI Act and Security Interest (Enforcement) Rules, 2002.

(2.) Bereft of all details, the basic facts are as follows: The present writ petitioners are the borrowers. In respect of a loan transaction entered between the present petitioners and the first respondent Bank, the property in question was given as a security. After the Bank took action under the requisite provisions under Section 13(4) of the SARFAESI Act, challenging the sale notice, proceedings under Section 17 was initiated by the petitioners and the same is still pending before the Debts Recovery Tribunal. During the pendency of such proceedings, an interim order of stay was passed by the Debts Recovery Tribunal subject to deposit of One crore. The petitioners filed an appeal before the Debt Recovery Appellate Tribunal challenging the above condition. The Tribunal however, passed an order permitting the petitioners to deposit the amount in two instalments to be paid on or before 13.2.2009 and 13.3.2009. The Bank however, filed W.P. No. 1149 of 2009 challenging such order of the Debt Recovery Appellate Tribunal and the High Court by entertaining the writ petition passed an interim order permitting the Bank to go ahead with the auction, but not to confirm the same until further orders. The Authorised Officer of the Bank thereafter, issued notice on 21.2.2009 fixing sale on 26.3.2009. At that stage, S.A. No. 47 of 2009 was filed by the persons who had agreed to purchase the property from the petitioners and the Debts Recovery Tribunal-Ill, Chennai, passed an order of interim stay of auction. The Bank filed W.P. No. 5272 of 2009 and the High Court by interim order permitted the Bank to open the tender, but not to confirm the same. The present second respondent was the only person who was the bidder in respect of Item No. 2 property at Rs. 1,85,00,000/- which was the upset price. Similarly, he was the only bidder in respect of Item No. 3 property quoting Rs.2,35,00,000/- which was the upset price. Both the aforesaid writ petitions were taken up and by order dated 29.7.2009 in W.P. No. 5272 of 2009, the Division Bench set aside the interim order of stay dated 25.3.2009 passed by the Debts Recovery Tribunal and passed an order to the following effect:

(3.) A similar order was passed on the same day i.e. on 29.4.2009 in W.P. No. 1149 of 2009, wherein it was observed as under: