IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH CWP.No.13136 of 2011 (O&M) Date of Order: 21.9.2011 Kusum Lata Sood .....Petitioner Versus Canara Bank and others .....Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. Vikas Kuthiala, Advocate for the petitioner. Mr. Aalok Jagga, Advocate for respondent Nos.1 & 2. HEMANT GUPTA, J (ORAL) The challenge in the present writ petition filed under Article 226 of the Constitution is to an order dated 27.10.2010 (P.4) passed by respondent No.3-District Magistrate, Ludhiana whereby the Tehsildar, Khanna was directed to take possession of the land of the petitioner and that for issuance of a writ of mandamus directing respondent Nos.1 & 2 to settle the outstanding amount against the property of petitioner, which was mortgaged by Satwant Singh to the respondent-Bank as a guarantor. CWP.No.13136 of 2011 (O&M) (2) Petitioner purchased a two storey built up house on land measuring 1 and 2/3rd marla from respondent No.4-Satwant Singh in the year 1998 for a consideration of Rs.1,80,000/-. Respondent No.1-Canara Bank published a notice under Section 13(2) of the Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the Act”) claiming dues from respondent No.4- Satwant Singh, who was the guarantor to the Bank as well as vendor of the present petitioner. Thereafter, on 3.12.2009 respondent-Bank filed an application under Section 14 of the Act to take possession of the secured assets of Satwant Singh and in pursuance of the same, the property purchased by the petitioner became subject matter of action by the District Magistrate. At this stage, the petitioner invoked the jurisdiction of this Court against the action having been taken by the respondent-Bank in recovering of its dues against the property purchased by the petitioner. Before this Court, it was stated by learned counsel for the petitioner on 26.7.2011 that the Bank had sought to recover a sum of Rs.23.98 lacs against the secured asset, purchased by the petitioner. A statement was made by the learned counsel that the petitioner would pay Rs.5 lacs in a week and also pay the balance amount as mentioned in the demand notice, within a month thereafter. Admittedly, the petitioner has deposited the entire amount of Rs.23.98 lacs as per the valuation given by the Bank in its demand notice under Section 13 of the Act. As a consequence of the payment, learned counsel for the petitioner seeks release of the title deeds of the property from the Bank. Learned counsel for the respondent-Bank relies upon Rule 8 (5) of the Security of Interest (Enforcement) Rules, 2002 (for short “the CWP.No.13136 of 2011 (O&M) (3) Rules”) to contend that the valuation given by the Bank in its notice (P.2) is not relevant to determine the value of the property purchased by the petitioner rather the reserve price of the property is to be fixed before the sale has to be effected and that as per the current valuation, the value of the property is Rs.60 lacs and thus the said amount is payable before complete discharge is given to the petitioner. Before considering the aforesaid arguments, relevant extracts form the Act and Rules, are extracted as under: “Section 13. Enforcement of security interest (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower.” Rule 4. Procedure after issue of notice.- If the amount mentioned in the demand notice is not paid within the time specified therein, the authorized officer shall proceed to realize the amount by adopting any one or more of the measures specified in sub-section (4) of Section 13 of the Ordinance for taking possession of movable property, namely:- xx xx xx Rule 8. Sale of immovable secured assets:- CWP.No.13136 of 2011 (O&M) (4) xx xx xx (5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of theproperty from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods: (a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or (b) by inviting tenders from the public; (c) by holding public auction; or (d) by private treaty.” The Bank has started process of realizing its security by serving a notice under Section 13(2) of the Act in the month of July 2009. Such process was initiated on the basis of valuation report obtained on 25.7.2009. Such valuation reported value of the property to be Rs.23.98 lacs. Having initiated the process of valuation of the assets on the basis of valuation report obtained by the Bank in 2009, it is not open for the respondent-Bank to rely upon the valuation report obtained in 2011 after the petitioner has satisfied the claim of the respondent-Bank as per its earlier valuation. The demand notice in terms of Section 13(2) of the Act is required to give details of the amount payable by the borrower, which expression in terms of Section 2(f) of the Act includes guarantor. It is the failure to discharge in full the liabilities within 60 days by the guarantor, the Bank could take action to initiate the process of sale of the secured assets. CWP.No.13136 of 2011 (O&M) (5) Such intention is apparent from reading of Rule 4 of the Rules, as it contemplates the authorized officer to proceed with the sale, if the amount mentioned in the demand notice is not paid. Since, the petitioner has paid the entire amount as mentioned in the demand notice, therefore, the Bank cannot turn around to say that more amount than mentioned in the demand notice is payable by the petitioner. The Rule 8(5) of the Rules, relied upon by Mr. Jagga does not authorize the Bank to obtain fresh valuation report after declaring the valuation in the demand notice. Therefore, in the facts and circumstances of the case, we find that the petitioner having paid a sum of Rs.23.98 lacs as per the valuation of the respondent-Bank in the demand notice, the Bank cannot be permitted to revalue of the property again. Thus the respondent-Bank cannot be permitted to initiate any other action in respect of the said property purchased by the petitioner. Writ petition is disposed of with a direction to respondent No.1-Bank to release all the documents in respect of the aforesaid property purchased by the petitioner forthwith. ( HEMANT GUPTA ) JUDGE ( JASWANT SINGH ) JUDGE September 21, 2011 Manoj/ds