INDIA FINLEASE SECURITIES LIMITED Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) Whether under sub-section (8) of Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act 54 of 2002) (hereinafter referred to as 'the Securitization Act") a borrower is permitted to redeem the immovable secured asset after the secured asset was sold but before the confirmation of sale by the secured creditor under the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as 'the Rules') is the question involved in this appeal filed by the auction purchaser under Clause 15 of the Letters Patent challenging the order of the learned single Judge opining that the borrower is entitled to redeem the immovable secured asset before the confirmation of sale.

(2.) Facts leading to the controversy may briefly be noted: Respondent No.3 herein - M/s Sruthi Builders Private Limited - secured loan from the respondent- banks - Indian Overseas Bank, Andhra Loyola College Branch, Vijayawada and Dena Bank, Vijayawada Branch, Governorpet, Vijayawada respectively. When Respondent No.3 has become a non-performing asset recourse was taken to the provisions of the Securitization Act and accordingly a tender notification was issued on 27.2.2012 for sale of the immovable secured asset of the borrower and the date for auction was fixed as 31.3.2012. The borrower requested for one time settlement on 29.3.2012 by paying Rs.1.00 crore and Rs.27.00 lakhs to the respondents-banks respectively, but they proceeded with the auction. The auction purchaser - M/s India Finlease Securities Ltd., Chennai has become the highest bidder for Rs.18.00 crores for the secured asset i.e "Sainag Complex" Chandramoulipuram, Vijayawada. The Authorized Officer, Dena Bank and the Authorized Officer, Indian Overseas Bank jointly issued letter dated 31.3.2012 accepting the auction purchaser as the highest bidder and directing the purchaser to pay the balance of 25% after deducting EMD amount by 3.4.2012 and the balance bid amount of Rs.1350 lakhs on or before 16.4.2012. It was indicated in the letter that the sale shall be confirmed in the name of M/s India Finlease Securities Ltd., on payment of the entire bid amount subject to confirmation by the banks. The purchaser paid Rs.2.93 crores by cheque dated 3.4.2012 in favour of Dena Bank.

(3.) At this stage, the appellant-auction purchaser filed Writ Petition No.16254 of 2012 on 4.6.2012 without impleading the authorized officers of the banks and the borrower for a direction to the respondent-banks to execute sale deed in favour of the appellant or its nominees and register the same in respect of the property in question and for a further direction to pay a sum of Rs.10.00 lakhs to the appellant towards damages for the delay of each day in executing the sale deed in favour of the appellant by declaring the inaction of the respondents-banks in executing the sale deed in spite of the payment of the amount by 13.4.2012 is unjust, contrary to the terms and conditions of auction notice and violative of Articles 14 and 21 of the Constitution of India.