Case: Agarwal Tracom Pvt. Ltd Vs. Punjab National Bank &amp; Others

b National Bank(hereinafter referred to as "PNB") is a Nationalised Bank. The PNB had given loan facility to a Company called "M/s India Iron & Steel Corporation Limited" (in short, "Borrower") for their business, which they were carrying at a place called Noorpur Khirki, Village Farid Nagar, Tehsil Dhampur, District Bijnor (U.P.).5. To secure the loan amount, the Borrower had secured their assets, which consisted of the land, factory building, plant and machinery situated at Dhampur. The Borrower, however, failed to clear their loan amount and became a defaulter in its repayment. The PNB, therefore, invoked their powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") and issued a public sale notice in leading English newspapers for sale of the mortgaged assets of the Borrower in the public auction fixed for 17.06.2014The appellant herein was one of the bidders, whose bid was declared the highest.6. The appellants bid was accordingly accepted by the PNB followed by execution of memorandum of understanding between the appellant and the PNB (AnnexureThe PNB also sent a letter to the appellant stating that the entire plant, machinery, land and the building is auctioned in favour of the appellant. The letter also authorized the appellant to dismantle and sell the scrap plant and the machinery which was lying at the Borrowers factorys premises after depositing the necessary installment of sale amount, as agreed upon between the parties in the memorandum of understanding.7. The appellant, however, failed to pay the regular installments towards sale money in terms of memorandum of understanding to PNB and sought extension of time to pay and remove the scrap material from the site.8. This gave rise to the disputes between the parties, namely, PNB, appellant (auction purchaser) and the Borrower before the Debt Recovery Tribunal (DRT), Lucknow being S.A. No 310 of 2014 wherein an order was passed on 03.07.2014directing the appellant not to remove any material from the factory premises. The appellant then wrote a letter to PNB requesting them to refund their money with interest. This led to another dispute between the parties which was filed in the DRT and then before the appellate authorityDRAT and finally, in the High Court at Allahabad in Writ Petition(c) No. 22246/2015 by the Borrower. This writ petition was disposed of finally on 29.05.2015 observing therein that since the appellant had failed to comply with the term of memorandum of understanding inasmuch as the appellant having failed to deposit the requisite installment of sale money, the PNB cannot proceed with the auction sale held on 17.06.2014 and nor can the appellant be permitted to remove the scrap material lying in the factory premises.9. This led the PNB to forfeit the appellants deposit by their letter dated 26.06.2015The appellant objected to the action of PNB by letters and then filed the writ petition in the High Court of Delhi challenging therein the action of PNB in forfeiting the appellants deposit of money.10. The Single Judge of the High Court, by order dated 01.09.2015, dismissed the appellants writ petition on the ground of availability of alternative statutory remedy to the appellant of filing the application under Section 17 of the SARFAESI Act before the DRT to challenge the action of PNB in forfeiting the deposit money of the appellant. The Single Judge, therefore, declined to go into the merits of the case.11. The appellant, felt aggrieved of the order of the Single Judge, filed intra Court appeal (LPA 699 of 2015) before the Division Bench. By impugned judgment, the Division Bench dismissed the appeal and confirmed the order of the Single Judge. The Division Bench was also of the view that the writ petition filed by the appellant was rightly not entertained by the Single Judge (writ Court) on the ground that the proper remedy of the appellant was to file an application before the DRT under Section 17 of the SARFAESI Act to question the action of forfeiture made by PNB and not in filing the writ petition under Article 226 of the Constitution. Felt aggrieved, the auction purchaser has filed the present appeal by way of special leave in this Court.

Reasoning: 17. Having heard the learned counsel for the parties and on perusal of the record of the case, we find no merit in the appeal. In other words, the view taken by the High Court appears to be just and reasonable and hence does not call for any interference.So far as this case is concerned,(5) of Rule 9 is relevant. It provides that, if the auction purchaser commits any default in payment of sale consideration within the time specified, the deposit made by auction purchaser shall be "forfeited" to the secured creditor and the auctioned property shall be resold and the defaulting purchaser shall "forfeit" all claims to the property or its part of the sum for which it may be sold subsequently.Reading of the aforementioned Sections and the Rules and, in particular, Section 17(2) and Rule 9(5) would clearly go to show that an action of secured creditor in forfeiting the deposit made by the auction purchaser is a part of the measures taken by the secured creditor under Section 13(4).28. The reason is that Section 17(2) empowers the Tribunal to examine all the issues arising out of the measures taken under Section 13(4) including the measures taken by the secured creditor under Rules 8 and 9 for disposal of the secured assets of the borrower. The expression "provisions of this Act and the Rules made thereunder" occurring in(2), (3), (4) and (7) of Section 17 clearly suggests that it includes the action taken under Section 13(4) as also includes therein the action taken under Rules 8 and 9 which deal with the completion of sale of the secured assets. In other words, the measures taken under Section 13 (4) would not be completed unless the entire procedure laid down in Rules 8 and 9 for sale of secured assets is fully complied with by the secured creditor. It is for this reason, the Tribunal has been empowered by Section 17(2),(3) and (4) to examine all the steps taken by the secured creditor with a view to find out as to whetherthe sale of secured assets was made in conformity with the requirements contained in Section 13(4) read with the Rules orWe also notice that Rule 9(5) confers express power on the secured creditor to forfeit the deposit made by the auction purchaser in case the auction purchaser commits any default in paying installment of sale money to the secured creditor. Such action taken by the secured creditor is, in our opinion, a part of the measures specified in Section 13(4) and, therefore, it is regarded as a measure taken under Section 13(4) read with Rule 9(5). In our view, the measures taken under Section 13(4) commence with any of the action taken in clauses (a) to (d) and end with measures specified in Rule 9.30. In our view, therefore, the expression "any of the measures referred to in Section 13(4) taken by secured creditor or his authorized officer" in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section13(4).31. The auction purchaser (appellant herein) is one such person, who is aggrieved by the action of the secured creditor in forfeiting their money. The appellant, therefore, falls within the expression "any person" as specified under Section 17(1) and hence is entitled to challenge the action of the secured creditor (PNB) before the DRT by filing an application under Section 17(1) of the SARFAESIhave gone through the decision and unable to agree with the view taken therein. Their Lordships, while holding that Section 17(1) does not apply to auction purchaser and, therefore, writ petition filed by him can be entertained in such cases, did not notice the Rules, which deal with the measures taken under Section 13(4) and nor considered its effect on the measures.In the light of foregoing discussion, we are of the considered opinion that the Writ Court as also the Appellate Court were justified in dismissing the appellants writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellants deposit under Rule 9(5). We find no ground to interfere with the impugned judgment of the High Court.