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Court declined to interfere in the auction procedure on grounds of proper compilation of mandatory requirements of SARFAESI Act by the bank: High Court of Delhi

When the petitioners did not have the financial resources to repay the bank and wanted to sell the properties in question to repay the loan of the respondent bank, the petitioners cannot object to the auction conducted by the respondent bank in respect of the mortgaged properties. The aforesaid has been upheld by the High Court of Delhi while adjudicating the case of Franco Leone Limited And Ors V. Punjab And Sind Bank [CM(M) 684/2021 & CM No.35081/2021] which was decided upon by  single judge bench comprising Justice Amit Bansal on 29th October 2021.

The facts of the case are as follows. The petitioners availed various credit facilities from the respondent bank. To avail such credit facilities, the petitioner company had mortgaged 12 properties with the respondent bank. The account of the petitioner company was declared to be Non Performing Asset (NPA) and a demand notice was issued to the petitioners by the respondent bank under Section 13(2) of the SARFAESI Act, calling upon the petitioners to make payment of Rs.46,13,45,410.39/-. The petitioners, sought permission of the respondent bank to sell a few of the properties to repay their dues. the petitioners proposed a One Time Settlement (OTS) payment of Rs.30,00,00,000/- in respect of their dues. respondent bank taking steps under Section 13(4) of the SARFAESI Act to take possession of the mortgaged properties, the petitioners, vide letter dated 29th November, 2018, handed over possession of the property. In response to the letter by the respondent bank, the petitioners requested a copy of the bank policy to improve their offer, however, the respondent bank issued the impugned auction notice to sell 8 out of the 12 mortgaged properties of the petitioners. The present auction notice was challenged by the petitioner by way of filing a Securitization Application before the Debts Recovery Tribunal-II (DRT).

The court perused the facts and arguments presented. It was of the opinion that “ There is merit in the contention of the respondent that all mandatory provisions of the SARFAESI Act and the rules framed thereunder have been fully complied with by the respondent bank. There is no reason to disbelieve the respondent bank that the auction notice along with the enclosed newspapers was duly sent to the petitioners 30 days before the auction date. As regards the ground taken with respect to non-receipt of the OTS policy, the counsel for the respondent bank has contended that the said policy is not a public document and the bank is not bound to disclose the same. Yet, the relevant portions of the said policy have been reproduced in the reply filed by the respondent bank before this Court, wherein it is stated that the objective of the policy is to receive maximum amounts that can be recovered from the borrower. In view of the above, no grounds for interference are made out. The petition along with the accompanying applications are dismissed.”

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Judgment Reviewed by – Aryan Bajaj

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