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Kalyani (India) Pvt. Ltd. Vs. Punjab National Bank and Anr. – Delhi High Court Read Post »
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Rockline Construction Company Vs. Doha Bank QSC & Ors. – Supreme Court Read Post »
Hon’ble High Court held that a certificate of sale issued by a Civil or a Revenue Officer in evidence of a sale conducted by way of public auction is not compulsorily registrable and Section 89(4) imposes an obligation on the Revenue Officer, who conducts an auction sale to forward the certificate to the Registering Authority to enable him to file the same in Book-I maintained by him. Under Section 17(2)(xii) would show that a certificate of sale issued by a Civil or a Revenue Officer in evidence of a sale conducted by way of public auction is not compulsorily registrable and Section 89(4) imposes an obligation on the Revenue Officer, who conducts an auction sale to forward the certificate to the Registering Authority to enable him to file the same in Book-I maintained by him.
The Petitioner is challenging constitutional validity of amended Rule 8(8) as it removes the requirement of consent of borrower for the purpose of settlement of terms of sale for conducting the same by obtaining quotations or by private treaty of secured assets by secured creditor/authorized officer.
Hon’ble High Court held that it is possible that as a result of the amended Rule 8(8), the sale of secured asset by private treaty can be conducted, even at the first instance, without making attempts to sell the same by public auction or by inviting public tender. Thus allowing sale by private treaty without failure of sale by method of public auction or by inviting public tender will be violative of the object of the said Act and said Rules of ensuring receipt of maximum possible price by sale of the secured asset. In that case, the said amended Rule 8(8) will become unconstitutional as unfettered and arbitrary powers are conferred on the secured creditor/authorised officer to that extent. Said amended Rule 8(8) is not per se unconstitutional. However the stage when said amended Rule 8(8) is invoked is very crucial and important. If the said Rule is invoked at the first instance, then in view of absence of public notice as public participation is denied, the same will amount to conferring unfettered, arbitrary and excessive powers on the secured creditor/ authorised officer resulting into destroying the object of the said Act and said Rules. Thus to save the said amended Rule 8(8) from unconstitutionality on the ground that unfettered and arbitrary powers are given to secured creditors/authorised officer it is necessary to read into said Rule 8(8) that sale by private treaty can be conducted only after the sale by inviting tenders from the public or by holding public auction fails.
Hon’ble High Court of Allahabad held that (i) Merely because the petitioner is a bonafide auction purchaser who had purchased assets Corporate Debtor through auction/bidding so conducted by orders of NCLT, will not absolve it from paying arrears of lease rental and interest thereon. (ii) The Insolvency Bankruptcy Code, 2016 grants limited protection to the petitioner (auction purchaser) while allowing it to step into the shoes of the Corporate Debtor but in order to the lessee of the principle lessor (GNIDA) the petitioner has to honor the commitments and discharge its contractual obligation as embodied in the lease deeds, Transfer Memorandum and Sale Certificate. (iii) The words so employed in the Certificate of Sale Deed being “AS IS WHERE IS”, ”AS IS WHAT IS”, “WHATEVER THERE IS” AND “NO RECOURSE” itself creates contractual obligation upon the petitioner to honor the commitments and to discharge the obligations so embodied in the lease and the subsequent lease deeds for the payment of past lease rentals and interest thereon. (iv) The principal lessor has paramount interest over the demised land put to auction and it has legal as well as contractual right to raise demand of out standing arrears of lease rentals and interest thereon. (v) High Court under Article 226 of the Constitution of India cannot by a judicial fiat creates a podium to facilitate avoidance of agreements while wriggling out from contractual obligations so embodied therein. A writ petition containing solitary relief of refund of the amount deposited for fulfilling contractual obligation, is not maintainable.
In this case, the highest bid amount received by the respondent Bank was the reserve price, the auction purchase was confirmed at the reserve price. The petitioner contended that the said auction at the reserve price, and confirmation thereof, are violative of Rule 9(2) of the Security Interest (Enforcement) Rules, 2002.
Hon’ble High Court holds that the whole purpose of undertaking the sale of the immovable property through a public auction/ tender would be defeated, if the authorised officer is obliged to first obtain the consent of the borrower – where the highest bid/ offer received during the public auction/ tender is equal to the reserve price, and not higher. The second proviso to Rule 9(2) would become relevant and be attracted, only if the case is not covered by the first proviso, namely, where the amount offered towards sale price is equal to, or more than the reserve price specified under sub-Rule (5) of Rule 8. It is only when the offered sale price is lower than the reserve price, that the second proviso comes into play, and in such a situation, without the consent of the borrower and the secured creditor, the authorised officer cannot confirm the sale. The second proviso to Rule 9(2) provides flexibility to the concerned parties, namely, the borrower and the secured creditor, to sell the secured asset, with their consent, at a price which is even below the reserve price.
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M/s. Soga Impex Pvt. Ld. & Ors. Vs. Canara Bank – DRAT Delhi Bench Read Post »
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Bank of Baroda Vs. M/s. Maa Vaishno Cold Warehouse Pvt. Ltd. – DRAT Allahabad Bench Read Post »
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