Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | SECURITISATION AND RECONSTRUCT/ON OF FINANCIAL ASSETS AND ENFORCEMENT OF C SECURITY INTEREST ACT 2002 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | SECURITISATION AND RECONSTRUCT/ON OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002: s. 13(8) - Right of borrower - Held: The provision contained in s. 13(8) is specifically for the protection of the borrowers in as much as, ownership of the secured assets is a constitutional right vested in the borrowers and protected u/Article 300A of the Constitution - Therefore, the secured creditor as a trustee of the secured asset cannot deal with the same in any manner it likes and such an asset can be disposed of only in the manner prescribed in the SARFAESI Act - Therefore, the creditor should ensure that the borrower was clearly put on notice of the date and time by which either the sale or transfer will be effected in order to provide the required opportunity to the borrower to take all possible steps for retrieving his property - Such a notice is also necessary to ensure that the process of sale will ensure that the secured assets will be sold to provide maximum benefit to the borrowers - The notice is also necessary to provide the required opportunity to the borrower to take all possible steps for retrieving his property or at least ensure that in the process of sale the secured asset derives the maximum benefit and the secured creditor or anyone on its behalf is not allowed to exploit the situation of the borrower by virtue of the proceedings initiated under the SARFAESI Act - Constitution of India, 1950 - Article 300A.s. 13 - Sale of Non performing asset - Sale consideration only Rs. 10,000 above the reserve price whereas property worth much more - Held: The secured creditors are expected to take bonafide measures to ensure that there is maximum yield from such secured assets for the borrowers - Sale null and void being in violation of provisions of s. 13 and rr. 8 and 9 and liable to be set aside - Security Interest (Enforcement) Rules, 2002 - rr.8 and 9. s. 13 - Sale of Non performing asset - Single judge of the High Court after holding that the sale was invalid as there was violation of rules, directed making of payments by borrowers to the Bank with clear direction that on such payment, insofar as the bank is concerned its dues would be settled - Not only borrowers made the payment as directed which was accepted by bank, the Bank even accepted the said judgment and did not file any appeal thereagainst - Only the buyer filed the appeal - In the facts of the case, once the payment is made to the buyer by borrowers the possession of the property shall be delivered to the borrowers with no further liability towards the bank. SECURITY INTEREST (ENFORCEMENT) RULES, 2002: rr.8 and 9 - Held: Any sale effected without complying with the rules would be unconstitutional and null and void. r. 8(8) - Sale by any method other than public auction or public tender shall be on such terms as may be settled between the parties in writing - In the instant case, no terms were settled between the parties that the sale can be effected by Private Treaty - The Borrowers were not even called to the joint meeting between the Bank and the Sale Agent - There was violation of rules rendering the sale void. |
Judge | Hon'ble Mr. Justice S.S. Nijjar |
Neutral Citation | 2014 INSC 196 |
Petitioner | J. Rajiv Subramaniyan & Anr. |
Respondent | M/s. Pandiyas & Ors |
SCR | [2014] 3 S.C.R. 1140 |
Judgement Date | 2014-03-14 |
Case Number | 3865 |
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