CWP No.10121 of 2011 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.10121 of 2011 (O&M) Date of decision:14.12.2011 Smt.Dulari and another ..... Petitioners Versus State of Haryana and others ..... Respondents CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE TEJINDER SINGH DHINDSA Present: Mr.Ravinder Malik (Ravi), Advocate for the petitioners. Mr.Arun Walia, Advocate for respondents No.1 to 3. Mr.Vikas Singh, Advocate for respondent No.4. ***** RAJIVE BHALLA, J (Oral). CM No.16989 of 2011 Application is allowed and written statement filed on behalf of respondent No.4, is taken on record. CWP No.10121 of 2011 The petitioners pray for issuance of a writ in the nature of certiorari for quashing impugned letter/order bearing Memo No.2666 dated 18.05.2010 (Annexure P-10) and letter/order bearing Memo No.1879 dated 20.05.2011 (Annexure P-12), whereby their application for transfer of Plot/House No.2335, Sector-17, HUDA, Jagadhari, to the name of petitioner No.1 has been rejected. The facts in brief are that Plot No.2335, Sector-17, HUDA, CWP No.10121 of 2011 (O&M) -2- Jagadhari was reallotted to one Mr.Anil Kumar, S/o Krishan Lal on 24.08.2005. Anil Kumar mortgaged the plot with Vijaya Bank- respondent No.4. As Anil Kumar could not discharge the loan, respondent No.4-Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the 'SARFEASI Act') for recovery. In accordance with the procedure prescribed by the SARFEASI Act and the Rules framed thereunder, respondent No.4-Bank took possession of Plot No.2335, Sector-17, HUDA, Jagadhari and put it to auction. Deepak Sansarwal, petitioner No.2, was the highest bidder. A sale certificate dated 05.02.2009 was issued in the name of petitioner No.1 (mother of petitioner No.2) under Section 13 read with Rule 12 of the Security Interest (Enforcement) Rules, 2002. The petitioner approached the Estate Officer, HUDA, Jagadhari-respondent No.3, for issuance of no objection certificate and for transfer of the plot to the name of petitioner No.1. Vide order dated 18.05.2010, the application was rejected on the ground that Anil Kumar, the original owner had mortgaged the plot without prior permission of HUDA. Counsel for the petitioners submits that petitioner No.2 is a bonafide auction purchaser of the plot in dispute in an auction conducted by respondent No.4-Bank under the SARFEASI Act. The property in dispute vests in the petitioner free from all encumbrances. CWP No.10121 of 2011 (O&M) -3- The plot is free-hold and no amount is due to HUDA from the original owner. The respondents, therefore, have no power to reject the application filed by petitioner No.2. Counsel for HUDA submits that as the original mortgage was created without obtaining prior permission of HUDA, as provided in condition No.6 of the reallotment letter, the mortgage and all subsequent proceedings taken by respondent No.4-Bank for auction of this plot are null and void. The petitioners' prayer for transfer of plot to their names, has therefore, been rightly rejected. We have heard counsel for the parties, perused the paper book and the impugned orders/letters. The admitted facts are that HUDA reallotted a free-hold plot to one Anil Kumar, who mortgaged the plot with Vijaya Bank, respondent No.4, without permission from HUDA. Anil Kumar could not discharge his debt, the Bank, invoked the provisions of the SARFEASI Act, attached the plot, and in exercise of its powers under the aforementioned Act and Rules framed thereunder, auctioned the property in a public auction. Admittedly, petitioner No.2, purchased this property being the highest bidder and a sale certificate was issued, by the bank, in the name of his mother, petitioner No.1. HUDA has refused to register petitioner No.1 as owner of the plot on the premise that the plot was mortgaged with Vijaya Bank without prior permission from HUDA. CWP No.10121 of 2011 (O&M) -4- The question that requires consideration is whether HUDA can refuse to register the plot in the name of an auction purchaser, who has admittedly purchased the plot in an auction conducted under the SARFEASI Act and the Rules framed thereunder. Section 13 of the SARFEASI Act empowers a secured creditor, in the present case respondent No.4-Bank, to enforce its interest against a borrower, who defaults in payment of a loan. The Act empowers the secured creditor to take possession of the secured asset and put it to auction under Rule 12 of the Security Interest (Enforcement) Rules, 2002 (for short referred as 'Rules'). Rules 8 and 9 of the Rules prescribe the procedure for sale of immovable secured assets. Rule 9 (6) provides that on confirmation of sale by the secured creditor and if terms of payment are complied, the authorised officer exercising power under the Rules shall issue a certificate of sale of immovable property in favour of the purchaser and the property shall vest in the purchaser, free from any encumbrance. Admittedly, the plot in dispute was purchased by petitioner No.2 in an open auction held in accordance with procedure prescribed by Rules 8 & 9 of the Rules read with the relevant provisions of the SARFEASI Act. A legally valid sale certificate has been issued, in the name of petitioner No.1 (mother of petitioner No.2). The SARFEASI Act and the Rules framed thereunder provide for vesting of auctioned property free from all encumbrance. A condition in the allotment CWP No.10121 of 2011 (O&M) -5- letter, requiring the owner to obtain prior permission of HUDA before mortgaging the property has no nexus with the validity of the auction or the legality of the sale certificate issued under the provisions of the SARFEASI Act. If HUDA has any grievance or right it may exercise its right against the person who mortgaged the property and if it is in any manner aggrieved by the auction it may approach the appropriate authority under the SARFEASI Act. The sale certificate has transferred the plot in dispute to petitioner No.1 free from all encumbrances. The HUDA, cannot by a unilateral act of refusing to register the plot nullify the effect of an auction conducted under the SARFEASI Act. We are, unable to discern any prejudice or conceivable objection that may be available to HUDA to reject the petitioners' prayer for recording the name of petitioner No.1 as owner. We, therefore, allow the writ petition, set aside letter/order bearing Memo No.2666 dated 18.05.2010 (Annexure P-10) and direct respondent No.3-Estate Officer, HUDA, Jagadhari, District Yamuna Nagar, to forthwith register the name of the petitioner No.1 as owner of Plot No.2335, Sector-17, HUDA, Jagadhari, in accordance with the sale certificate, within one month from receipt of a certified copy of this order. [RAJIVE BHALLA] JUDGE 14.12.2011 [TEJINDER SINGH DHINDSA] shamsher JUDGE CWP No.10121 of 2011 (O&M) -6-