Gm, Sri Siddeshwara Co-Op.Bank Ltd.& ... vs Sri Ikbal & Ors

3. The facts are these: on 08.02.1996, the respondent no.1, Ikbal (hereinafter referred to as “borrower”), took a housing loan of Rs. 5,00,000/- from Sri Siddeshwara Co-operative Bank Ltd. (for short, “the Bank”). He mortgaged his immovable property being RS No.872, Plot No.29, Mahalbagayat situate at Bijapur. The borrower committed default in repayment of the said housing loan. Despite several reminders when the borrower failed to make payment of the loan amount, the Bank issued a notice on 16.02.2005 calling upon him to repay the outstanding loan amount of Rs.10,43,000/- with interest and costs failing which it was stated in the notice that the mortgaged property will be sold according to law.

4. The borrower failed to make payment of the outstanding loan amount as demanded in the notice dated 16.02.2005. The Bank then issued a notice to him on 30.06.2005 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “SARFAESI Act”). In that notice borrower was informed that if he failed to discharge the outstanding dues within 60 days, the Bank may exercise action under Section 13(4) of the SARFAESI Act and the mortgaged property shall be sold.

6. On 18.12.2005, the Bank published the auction notice in the local newspapers. The conditions of the public notice were also mentioned in the auction notice.

7. Bashir Ahmed (appellant in two appeals and respondent no.3 in the appeals of the Bank), who we shall refer to hereafter as “auction purchaser” made the payment of Rs.90,000/- towards earnest money deposit on 18.12.2005 itself. The public auction was conducted on 11.01.2006. The auction purchaser gave the bid of Rs.8,50,000/- which was accepted being the highest bid. The auction purchaser made payment of Rs.1,45,000/- towards 25% of the sale consideration. However, he did not make the payment of remaining 75% within 15 days of the confirmation of sale in his favour. He made the payment towards balance sale price in installments on various dates and the final payment was made on 13.11.2006. On 16.11.2006, the Bank issued the sale certificate in favour of the auction purchaser.

8. The proceeds from the sale of the mortgaged property fell short of the total outstanding amount against the borrower. As on 09.02.2007, Rs.2,27,000/- remained outstanding against him. The Bank moved the Joint Registrar of Co-operative Societies for recovery of the outstanding amount. In those proceedings, on 26.02.2007 an ex parte award for a sum of Rs.2,37,038/- including the interest and miscellaneous expenses was passed against the borrower.

10. The Single Judge of that Court, after hearing the parties, by his order of 12.12.2011 quashed the sale certificate issued in favour of the auction purchaser and the demand notice dated 09.02.2007. In that order the Bank was granted liberty to conduct fresh sale in accordance with the law. The Single Judge made certain observations against the authorised officer and directed the Additional Registrar of the High Court to send a copy of the order to the Superintendent of Lokayukta Police at Bijapur for further action in accordance with law.

226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.

34. We are, thus, satisfied that impugned orders cannot be sustained. Appeals are, accordingly, allowed. The impugned orders are set aside. The writ petitions filed by the borrower before the High Court are dismissed with no order as to costs.

* * 9. Time of sale, Issue of sale certificate and delivery of possession, etc.-

(1) 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. (2) 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 authorised officer and shall be subject to confirmation by the secured creditor: