NDLI: Arce Polymers Private Limited Vs. M/s. Alphine Pharmaceuticals Private Limited and Others

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	SARFAESI Act : ss.13(2) and (4)
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Waiver: Meaning and applicability of – Held: Waiver is an intentional relinquishment of a known right – Waiver applies when a party knows the material facts and is cognizant of the legal rights in that matter, and yet for some consideration consciously abandons the existing legal right, advantage, benefit, claim or privilege – Waiver can be contractual or by express conduct in consideration of some compromise – However, a statutory right may also be waived by implied conduct, like, by wanting to take a chance of a favourable decision – The fact that the other side has acted on it, is sufficient consideration – SARFAESI Act. SARFAESI Act : ss.13(2) and (4) – Failure of Borrower to repay loan as per payment schedule – Loans declared NPA – Notice issued by Bank under s.13(2) calling upon Borrower to discharge its liability – However, Borrower neither made any payment nor responded by way of reply – Thereafter, Borrower wrote letter in which while accepting defaults and non payment enlisted reasons for not being able to adhere to payment schedule and requested to grant further moratorium – Bank granted further moratorium and deferred action under SARFAESI Act to enable Borrower to submit detailed project/viability report – Borrower failed to fulfill promise made – Post this default also there were negotiations with assurances and promises by the Borrower – Displaying forbearance, the Bank granted indulgence as action under the SARFAESI Act was deferred for nearly one year – Thereafter Bank issued notice under s.13(4) and took symbolic possession of subject property – After several attempts to auction the property, fourth attempt was successful and property was sold and sale certificate issued – Before auction, Borrower was given notice of auction – Thereafter borrower filed petition before DRT challenging the enforcement proceedings in respect of the subject property including all steps taken right from issue of notice under s.13(2) of the SARFAESI Act – DRT dismissed borrower ’s application – Borrower preferred writ petition – Meanwhile auction purchaser sold the property to second purchaser – High Court held that the Borrower can challenge the possession notice, taking of symbolic possession notice, taking of physical possession, sale notice and sale certificate as they all form part of the same cause of action – High Court concluded that compliance with s.13(3A) being mandatory, Bank had failed to respond with reasons to the representations made by the Borrower – Instant appeal filed by second purchaser – Held : It is correct that waiver being an intentional relinquishment is not to be inferred by mere failure to take action, but the instant case is of repeated positive acts post the notices under ss.13(2) and (4) of the SARFAESI Act – Not only did the Borrower not question or object to the action of the Bank, but it by express and deliberate conduct had asked the Bank to compromise its position and alter the contractual terms – The Borrower wrote repeated request letters for restructuring of loans, which prayers were considered by the Bank by giving indulgence, time and opportunities – The Borrower, aware and conscious of its rights, chose to abandon the statutory claim and took its chance and even procured favourable decisions – Borrower’s conduct had put the Bank in a position where they have lost time, and suffered on account of delay and laches, which aspects are material – Action on the subject property was delayed by more than a year as at the behest of the Borrower, the Bank gave them a long rope to regularise the account – To ignore the conduct of the Borrower would not be reasonable to the Bank once third party rights have been created – In this background, the principle of equitable estoppel as a rule of evidence bars the Borrower from complaining of violation – The Borrower challenged the actions taken by the Bank after the Subject Property had changed hands and third party interests had been created – Thus, the Borrower waived and is estopped from challenging violation of s.13(3A) of the SARFAESI Act. Judgment/Order: Remedy/relief – Grant of, scope – Held: Power of the courts/judicial authorities to mould relief – While holding that the general approach is that the claimant who succeeds in establishing the unlawfulness of administrative action is entitled to grant of remedial order, the general proposition does not undermine the discretion which the courts or judicial authorities have in assessing “what is fair and just to do in the particular case to withhold the remedy altogether or to mould the remedy by grant of a declaration rather than a more coercive quashing, prohibiting or mandatory order or injunction which may have been sought” – Relief may be granted in respect of one aspect and not others – The general approach, therefore, is that a complainant who succeeds in establishing unlawfulness of an action is entitled to a remedial order, but the court has discretion in the sense of determining what is fair and just to do in a particular case.
Judge	Hon'ble Mr. Justice L. Nageswara Rao
Neutral Citation	2021 INSC 820
Petitioner	Arce Polymers Private Limited
Respondent	M/s. Alphine Pharmaceuticals Private Limited And Others
SCR	[2021] 11 S.C.R. 1059
Judgement Date	2021-12-03
Case Number	7372

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