Case Note & Summary
The matter arises from a writ petition filed under Article 226 of the Constitution of India before the High Court of Bombay. The petitioner, Asset Reconstruction Company (India) Ltd., is a securitisation company registered under the SARFAESI Act. It had acquired the financial asset relating to the loan account of M/s. D.N. Exports from Bank of India, along with the security interest in an immovable property mortgaged by the respondents. The property was located at Varsova, Mumbai. Bank of India had issued a notice under Section 13(2) of the SARFAESI Act in 2003 after the account became a non-performing asset, and subsequently assigned the debt to the petitioner in 2008. A recovery certificate was issued by the Debts Recovery Tribunal, Chennai, and the petitioner was substituted as the secured creditor. The petitioner's authorised officer took possession of the mortgaged property in June 2009 and published a sale notice. The first respondent submitted a bid and, after auction, its enhanced bid of Rs. 7.01 crore was accepted. The sale was confirmed on an 'as is where is and as is what is' basis, with the respondent paying the full consideration. However, the respondent later sought to cancel the sale and demanded return of the amount. The respondent filed an appeal before the Debts Recovery Appellate Tribunal (DRAT), Mumbai, which passed an order on 23 September 2013 in Appeal No. 161 of 2011 setting aside the sale. The petitioner then filed the present writ petition seeking to quash the DRAT order and dismiss the appeal. The core legal issues involve the validity of the sale under the SARFAESI Act, the effect of the 'as is where is' clause, and whether the DRAT had correctly exercised its appellate jurisdiction. The petitioner contended that the sale was conducted in accordance with law and that the respondent, having accepted the terms, could not resile from the contract. The respondent's submissions are not detailed in the available judgment excerpt. The court's analysis and final decision are not included in the provided text.
Headnote
A) Securitisation Law - Sale of Secured Asset - Section 13, SARFAESI Act, 2002 - Sale confirmed by secured creditor on 'as is where is and as is what is' basis - Purchaser later sought to cancel the sale and challenged its validity before DRAT - Dispute pertained to whether the sale was validly conducted and whether the purchaser could wriggle out of the concluded contract - High Court was called upon to determine if the DRAT order setting aside the sale was sustainable (Paras 1-8) B) Property Law - As Is Where Is Sale - Common Law Principle - Responsibility of bidder to verify title - Sale notice and bid documents explicitly stated that the property was sold on 'as is where is and as is what is' basis, casting the obligation on the purchaser to verify title and accept the property in its existing condition - The purchaser participated in the auction and enhanced its bid, leading to confirmation of sale, but subsequently attempted to withdraw (Paras 6-7)
Issue of Consideration
Whether the Debts Recovery Appellate Tribunal erred in setting aside the sale confirmed by the Authorized Officer under the SARFAESI Act; whether the sale on 'as is where is and as is what is' basis was valid and binding on the purchaser
Law Points
- Enforcement of security interest under SARFAESI Act
- sale of secured asset on 'as is where is and as is what is' basis
- constructive notice
- contractual estoppel
- powers of Debts Recovery Appellate Tribunal
- writ jurisdiction under Article 226
