SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002:

s.13(1) - Held: Any secured creditor may be entitled to enforce the secured asset created in its favour on its own without resorting to any court proceedings or approaching the Tribunal, however, such enforcement should be in conformity with the other provisions of the SARFAESI Act.s.13(8)

Right of borrower - Held: There is a valuable right recognized and asserted in favour of the borrower, who is the owner of the secured asset and who is extended an opportunity to take all efforts to stop the sale or transfer till the last minute before which the said sale or transfer is to be effected - Such an ownership right is a Constitutional Right protected under Article 300A of the Constitution, which mandates that no person shall be deprived of his property save by authority of law - Therefore, de hors, the extent of borrowing made and whatever costs, charges were incurred by the secured creditor in respect of such borrowings, when it comes to the question of realizing the dues by bringing the property entrusted with the secured creditor for sale to realize money advanced without approaching any Court or Tribunal, the secured creditor as a trustee cannot deal with the said property in any manner it likes and property can be disposed of only in the manner prescribed in the SARFAESI Act -Therefore, the creditor should ensure that the borrower was clearly put on notice of the date and time by which either the sale or transfer will be effected in order to provide the required opportunity to the borrower to take all possible steps for retrieving his property or at least ensure that in the process of sale the secured asset derives the maximum benefit and the secured creditor or anyone on its behalf is not allowed to exploit the situation of the borrower by virtue of the proceedings initiated under the SARFAESI Act - Constitution of India, 1950 - Article 300A.

s.13(8) - Conflict with r.15(1) of Income Tax Rules, 1962 C - Held: r. 15 of the Income Tax Rules, 1962 does not in any way conflict with either s.13(8) of the SARFAESI Act or rr.8 and 9 of the Security Interest (Enforcement) Rules, 2002 - The sub-rule (1) of r. 15 only deals, with the discretion of the Tax. Recovery Officer to adjourn the sale by recording his reasons for such adjournment - As far as sub-rule (2) is concerned, the same is clear to the effect that a sale of immovable property once adjourned under sub-rule (1) for a longer period than one calendar month, a fresh proclamation of sale should be made unless the defaulter consents to waive it - The said sub-rule also does not conflict with any of the provisions of the SARFAESI Act, in particular s.13 or rr.8 and 9.

s.35 - Non obstante clause - Held: s.35 states that the provisions of the SARFAESI Act will have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force - Therefore, reading s.35 and s.37 together, it will have to be held that in the event of any of the provisions of RDDB Act not being inconsistent with the provisions of the SARFAESI Act, the application of both the Acts, namely, SARFAESI Act and RDDB Act, would be complementary to each other - The effect of s.37 would, therefore, be that in addition to the provisions contained under the SARFAESI Act, in respect of proceedings initiated under the said Act, it will be in order for a party to fall back upon the provisions of the other Acts mentioned in s.37 namely, the Companies Act, 1956, the Securities Contract& (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Finances Institutions Act, 1993, or any other law for the time being in force - Recovery of Debts Due to Banks and Finances Institutions Act, 1993.

SECURITY INTEREST (ENFORCEMENT) RULES, 2002:

rr.8 and 9 - Procedure to be followed by a secured creditor while resorting to a sale after the issuance of the proceedings u/s s.13(1) to (4) of the SARFAESI Act - Held: Reading sub-rule (6) of r.8 and sub-rule (1) of r.9 together, the service of individual notice to the borrower, specifying clear 30 days time gap for effecting any sale of immovable secured asset is a statutory mandate - No sale should be affected before the expiry of 30 days from the date on which the public notice of sale is published in the newspapers - Therefore, the requirement u/r.8(6) and r.9(1) contemplates a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspapers.

rr.8 and 9 - Sale effected in favour of appellant without complying with the mandatory requirement of 30 days notice to the borrower - High Court set aside the sale and passed interim order directing the borrower to furnish demand draft of Rs.2 crores in favour of appellant and in case of non-payment directed to confirm sale in favour of appellant - Payment not made by borrowers - Request by borrowers for six weeks time to arrange money - By another interim order, High Court extended time and permitted 8th respondent to deposit Rs.2.03 crores and on such deposit to cancel sale in favour of appellant - Held: Since very valuable rights of the appellant were at stakes, there was no justification at all for High Court to interfere with the said right in such a casual manner by passing interim orders on flimsy grounds raised by borrowers - Ownership right which accrued in favour of appellant ought not to have been interfered with by the High Court - Interim orders set aside - Value of the property was knocked out in favour of the appellant for Rs. 1. 27 crores - Since proper procedure for effecting sale was not followed, the price fetched through the appellant cannot be held to be the correct price for the mortgaged property - In the year 2010 the property could fetch Rs.2.03 crores while the price paid by the appellant was Rs.1.27 crores - Therefore, after giving credit of Rs.1.27 crores, the appellant directed to pay a further sum of Rs. 76 lacs to the borrowers.