Case Note & Summary
The petitioners, original certificate debtors, challenged the auction sale of their property conducted by Punjab National Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The bank had issued a sale certificate and delivered possession to the auction purchasers. The petitioners filed appeals before the Debts Recovery Appellate Tribunal (DRAT) under Section 18 of the SARFAESI Act, which were dismissed as barred by limitation and on merits. The petitioners then filed writ petitions under Article 226 of the Constitution before the Bombay High Court. The court held that once the sale certificate is issued and possession is delivered, the auction sale is complete and cannot be challenged under Section 17 of the SARFAESI Act. The court also found that the appeals were filed beyond the limitation period and no sufficient cause was shown for condonation of delay. Consequently, the writ petitions were dismissed.
Headnote
A) SARFAESI Act - Auction Sale - Confirmation - Once sale certificate is issued and possession is delivered, the auction sale is complete and cannot be challenged under Section 17 of the SARFAESI Act. The court held that the remedy under Section 17 is not available after the sale is confirmed. (Paras 5-7)
B) Limitation - Appeal under Section 18 of SARFAESI Act - Delay - The appeals before DRAT were filed beyond the prescribed period of limitation and the petitioners failed to show sufficient cause for condonation of delay. The DRAT's dismissal on ground of limitation was upheld. (Paras 3-4)
C) Writ Jurisdiction - Article 226 - Interference with DRAT order - The High Court declined to interfere with the DRAT order as the petitioners had an alternative remedy and no exceptional circumstances were made out. (Para 8)
Issue of Consideration
Whether the auction sale conducted by the bank under the SARFAESI Act was vitiated by irregularities and whether the DRAT was justified in dismissing the appeals as barred by limitation and on merits.
Final Decision
Both writ petitions are dismissed. The DRAT order dismissing the appeals is upheld. No order as to costs.
Law Points
- Auction sale under SARFAESI Act
- once confirmed and sale certificate issued
- cannot be challenged under Section 17 of SARFAESI Act
- Limitation for filing appeal under Section 18 of SARFAESI Act
- Maintainability of writ petition under Article 226 against DRAT order
Case Details
2022 LawText (BOM) (08) 5
Writ Petition No. 11618 of 2019 and Writ Petition No. 11619 of 2019
Mangesh S. Patil, Sandeep V. Marne
Mr. A.G. Talhar (for petitioners), Mr. S.V. Adwant (for respondent No.1), Mr. Rajendrraa Deshmukkh, Senior Advocate a/w S.R. Vakil (for respondent Nos.2 & 3)
M/s Kumandas Visanji & Co. and others
Punjab National Bank and others
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Nature of Litigation
Writ petitions under Article 226 of the Constitution challenging the order of the Debts Recovery Appellate Tribunal (DRAT) dismissing appeals against auction sale of property under SARFAESI Act.
Remedy Sought
The petitioners sought to set aside the auction sale of their property conducted by Punjab National Bank and to quash the DRAT order dismissing their appeals.
Filing Reason
The petitioners alleged irregularities in the auction sale conducted by the bank under the SARFAESI Act and challenged the DRAT order dismissing their appeals as barred by limitation and on merits.
Previous Decisions
The Debts Recovery Appellate Tribunal (DRAT) dismissed Appeals No. 14/2018 and 15/2018 as barred by limitation and on merits.
Issues
Whether the auction sale conducted by the bank under the SARFAESI Act was vitiated by irregularities?
Whether the DRAT was justified in dismissing the appeals as barred by limitation?
Whether the writ petitions under Article 226 are maintainable against the DRAT order?
Submissions/Arguments
Petitioners argued that the auction sale was conducted in an irregular manner and that they were not given proper notice.
Respondent bank and purchasers argued that the sale was conducted in accordance with law, sale certificate was issued, and possession was delivered, and the appeals were time-barred.
Ratio Decidendi
Once a sale certificate is issued and possession is delivered under the SARFAESI Act, the auction sale is complete and cannot be challenged under Section 17 of the Act. The remedy under Section 17 is not available after confirmation of sale. Additionally, appeals under Section 18 must be filed within the prescribed period of limitation, and delay cannot be condoned without sufficient cause.
Judgment Excerpts
Since both these petitions arise out of a common order passed by the Chairperson of the Debts Recovery Appellate Tribunal (hereinafter ‘DRAT’) but in two separate appeals No. 14/2018 and 15/2018, to avoid rigmarole we are disposing of both these writ petitions by this common judgment.
The court held that once the sale certificate is issued and possession is delivered, the auction sale is complete and cannot be challenged under Section 17 of the SARFAESI Act.
Procedural History
The bank conducted an auction sale of the petitioners' property under the SARFAESI Act. The petitioners filed appeals before the Debts Recovery Appellate Tribunal (DRAT) under Section 18 of the SARFAESI Act, which were dismissed as barred by limitation and on merits. The petitioners then filed writ petitions under Article 226 before the Bombay High Court.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 17, 18
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970:
