IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THIS THE 27th DAY OF JANUARY, 2010 W.P.No.23886 of 2009 Between: Bank of India, S.R. Nagar Branch, 24/3, SR Nagar, Hyderabad, represented by Senior Branch Manager ….PETITIONER(S) and The Debts Recovery Tribunal, rep. by its Registrar, Hyderabad and others …RESPONDENT(S) HON’BLE SRI JUSTICE A. GOPAL REDDY AND HON’BLE SRI JUSTICE NOUSHAD ALI W.P.No.23886 of 2009 ORDER: (Per Hon’ble Sri Justice A. Gopal Reddy) By means of filing this petition under Article 226 of the Constitution of India, the petitioners seek to issue a writ in the nature of certiorari calling for the records relating to and connected with I.A.No.888 of 2009 in S.A.No.235 of 2009 dated 23.09.2009 on the file of the Debts Recovery Tribunal, Hyderabad, and to quash the same. Background facts in a nutshell leading in filing of this petition by the petitioner-Bank are that the respondent nos.2 and 3 filed S.A.No.235 of 2009 on the file of the Debts Recovery Tribunal, Hyderabad, seeking to declare the Possession Notice dated 01.07.2009 and the Sale Notice dated 15.07.2009 allegedly issued by the petitioner-Bank, against the application schedule properties, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as - ‘the Act’), as null and void; and, along with that appeal, they also filed I.A.No.888 of 2009 seeking to stay all further proceedings against the petition schedule properties pursuant to the Sale/Auction Notice dated 15.07.2009 issued by the petitioner-Bank, pending appeal; and the Tribunal, by order dated 23.09.2009, allowed the said I.A., granting stay of all further proceedings against the petition schedule properties pursuant to the Sale/Auction Notice dated 15.07.2009 issued by the petitioner-Bank under the Act till disposal of the appeal. Assailing the said order, the present petition is filed. The learned counsel appearing for petitioner-Bank submits that once the respondents/borrowers have not denied the factum of their availing loan and committing default in payment of the installments, equity and balance will not lie in their favour to grant a blanket order of stay and, therefore, the Tribunal, which is conferred with limited jurisdiction, cannot prevent the petitioner- Bank from taking steps to recover the amounts due to it from the borrowers and, therefore, the order of the Tribunal dated 23.09.2009 passed in I.A.No.888 of 2009 is liable to be quashed. On the other hand, Sri D.Jaganmohan Reddy for R-2 and Sri A.Samir Kumar Reddy, learned counsel appearing for respondent no.3, contends that since the petitioner-Bank failed to serve the mandatory notice of 30 days prior to sale, as envisaged under Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as – ‘the Rules’), and since the notice issued under Section 13(2) of the Act does not contain the details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor, as required under Section 13(3) of the Act, and since the petitioner-Bank has not communicated its non-acceptance to the objections submitted by the respondents/ borrowers, under Section 13(2) of the Act, within seven days, as required under Section 13(3A) of the Act, the Tribunal rightly granted stay of all further proceedings against the petition schedule properties pursuant to the Sale/Auction Notice dated 15.07.2009 and, therefore, the petition is liable to be dismissed. It is not in dispute that a notice dated 25.02.2009 was issued to the respondents/borrowers containing the amount payable by them as required under Section 13(2) of the Act. On issuance of the said notice, the respondents/borrowers have filed their objections dated 09.03.2009 and the petitioner-Bank sent its reply on 24.03.2009. Later, the petitioner-Bank issued the possession notice dated 01.07.2009 under Section 13(4) of the Act giving all particulars of the property and the sale notice dated 15.07.2009 was issued inviting tenders in sealed covers to reach the 2nd petitioner on or before 17.08.2009 and the same was published in the newspapers on 17.07.2009. The said proclamation of sale was sent to the borrower on 22.07.2009. Suffice it to say whether disposal of the objections/ representation filed under Section 13(3A) of the Act within 7 days is mandatory or not and the factum of disposal of the objections/ representation within 7 days of its receipt is invalid and non-est has to be gone into and decided in the main appeal. Rule 8(6) of the Rules envisages that the authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets under sub-rule (5); and the proviso to Rule 8(6) of the Rules envisages that if the sale of a secured asset is being effected by either inviting tenders from the public or by holding public auction, the creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale as mentioned in the clauses (a) to (f) thereof. Rule 8(7) of the Rules envisages that every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorized officer deems it fit, put on the web-site of the secured creditor on the internet. Rule 8(8) of the Rules envisages the sale by any method other than public auction or public tender shall be on such terms as may be settled between the parties in writing. Issuance of 30 days notice to the borrower for sale of secured immovable property is only to enable him to discharge the loan. It is only to see that the borrower can liquidate the secured debt and see that the property would not be sold in public auction. Rule 9 of the Rules prescribes the procedure for sale of immovable property and, according to it, no sale of immovable property under these Rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower. Rule 9(2) of the Rules envisages that the sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor and the proviso thereof says that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9. When once it is admitted that the sale notice was published on 17.07.2009 inviting sealed tenders by 17.08.2009, and the same was sent to the respondents/ borrowers on 22.07.2009, it is clear that the respondents/ borrowers were not put on 30 days notice. In view of the same, the respondents/borrowers are entitled to the benefit of stay of auction, but on some terms, which the Tribunal ought to have imposed for granting stay of the auction, more particularly, when they admit the liability and default in repayment of the loan. In view of the stay granted by the Tribunal, the auction could not be conducted. Since the notice was issued to the principal borrower on 22.07.2009 and since the 30 days period has already been expired, we deem it appropriate to pass the following order. It is not necessary for the petitioner-Bank to issue sale notice afresh to the respondents/borrowers and the notice issued on 22.07.2009 can be treated as the one issued in compliance with Rule 8(6) of the Rules and the petitioner-Bank is at liberty to publish the auction notice inviting tenders either by public auction or by any other mode as permitted under the Rules, in compliance with the proviso to sub-rule(6) of Rule 8 of the Rules, and proceed with the auction, if the principal borrower does not discharge the amount due to it. Whether non-disposal of the representation dated 09.03.2009 within 7 days vitiates the steps taken by the petitioner-Bank or not, can be gone into in the main appeal. It is needless to say that the sale, if effected, shall always be subject to the order that may be passed by the Tribunal in S.A.No.235 of 2009 pending on its file. The writ petition is, accordingly, disposed of. There shall be no order as to costs. _____________________ A. GOPAL REDDY, J __________________ NOUSHAD ALI, J 27th January 2010 cvrk