Calcutta High Court
Steel Armadura Innovaciones Pvt Ltd. … vs Union Of India And Ors on 25 April, 2025
OD-2
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
WPO/269/2025
STEEL ARMADURA INNOVACIONES PVT LTD. AND ANR.
-VS-
UNION OF INDIA AND ORS.
BEFORE:
The Hon'ble JUSTICE GAURANG KANTH
Date: 25th April, 2025.
Appearance:
Mr. Ratnanko Banerji, Sr. Adv.
Mr. Kumarjit Banerjee, Adv.
Ms. Sanchari Chakraborty, Adv.
Mr. SamridhaSaha, Adv.
...for the petitioner.
Mr. R. Chowdhury, Adv.
Mr. PurnenduModak, Adv.
Ms. S. Saha, Adv.
...for respondent nos. 2 & 3.
Mr. Siddhartha Chatterjee, Adv.
Ms. AniktaUpadhyay Agarwal, Adv.
…for successful bidder.
The Court: The petitioner has filed the present writ petition
challenging the auction sale conducted by the respondent bank under the
SARFAESI Act in pursuance of the Third Auction Notice dated 14.02.2025
as well as the Sale Certificate issued in favour of the respondent no. 4 in
respect of the secured assets of M/s. Chhabra Ispat Private Limited.
The origin of this writ petition lies in the facts that M/s Chhabra
Ispat Private Limited defaulted in repaying the credit facilities availed from
the respondent no. 2 bank. Hence, the respondent no. 2 took measures
under the SARFAESI Act to enforce its security interest over the borrower’s
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immovable property i.e. all the piece and parcel of property along with plant,
machinery, furniture and fixture situated at the Industrial Land having land
area of 10.73 acres in Industrial Area in Khatha No. 612, J.L. No. 26 having
Plot Nos. 925, 964, 965, 966, 967, 968, 969, 971, 972, 973, 974, 978, 980,
981, 982 and 983, Mouja- Nakrajuria, P.O. and P.S.- Salanpur, District-
Paschim Burdwan, West Bengal.
In furtherance of such measures, respondent no. 2 issued first
auction notice dated 11th August, 2024 for auction sale of the secured asset
to be held on 13.09.2024. The first auction notice was published in
“Financial Express” newspaper (English) and one prominent Bengali
vernacular newspaper, both having wide circulation in the State of West
Bengal. The first auction sale could not materialise as the respondent bank
had withdrawn the said auction notice vide Withdrawal of Sale Notice dated
28.08.2024.
Thereafter, the respondent bank published the second auction
notice on 08.09.2024 for the auction sale of the secured assets to be held on
09.10.2024. The Second Auction Notice was also published in widely
circulated English language newspaper, viz. “Financial Express” and also a
vernacular newspaper, being a Bengali daily having wide circulation in the
State of West Bengal. The second notice also could not culminate into sale
as the respondent bank had cancelled the auction sale.
The respondent bank issued the third public notice which was
published on 15.02.2025 in an English daily “Echo of India” (Kolkata
Edition) and in “Arthik Lipi”, a vernacular newspaper in Bengali. In the said
auction process, the M/s Maithon Infrabuilt Private Limited participated and
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the secured assets were sold in favour of the M/s Maithon Infrabuilt Private
Limited. Thereafter, a sale certificate under Section 9(6) of the Security
Interest (Enforcement) Rules, 2002 was also issued in favour of M/s
Maithon Infrabuilt Private Limited.
It is the contention of the learned senior counsel for the petitioner
that he is interested in purchasing the secured assets, however, the
respondent bank issued public notice in a newspaper which does not have
wide circulation in the locality. The first two auction notices were issued in
“Financial Express” whereas the third one has been issued in two obscured
newspaper – “Echo of India” and “Arthik Lipi”. It is his allegation that neither
“Echo of India” nor “Arthik Lipi” is a newspaper of general prominence or
wide circulation in Kolkata (or the concerned locality) and thus, the said
publication is in violation of proviso to Rule 8(6) of Security Interest
(Enforcement) Rules, 2002. He further contended that as a result of such
lack of proper publicity and notice, the e-auction held pursuant to the Third
Auction Notice had no competitive participation. The M/s Maithon Infrabuilt
Private Limited was the sole participant in the said auction and was
accordingly declared the successful bidder by default without any fair
bidding. The sale was purportedly confirmed in favour of M/s Maithon
Infrabuilt Private Limited at a price of Rs. 9,95,28,500/-, which was the
lowest permissible incremental bid above the reserve price set by the
respondent bank.
Learned senior counsel for the petitioner further contends that the
bank has acted in an arbitrary and mala fide manner, in collusion with
successful bidder, for the sale of the secured assets. Leaned counsel for the
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petitioner also contends that the circulation of the “Echo of India”
newspaper (Kolkata Edition) is lesser than the “Financial Express”. The
petitioner states that he is ready and willing to offer a higher price for the
auctioned property.
Learned counsel for the respondent bank submits that the said
auction was conducted in accordance with law and there was no mala fide
intent in publishing the auction notice in “Echo of India” (Kolkata Edition).
Rather, he submits that the circulation of the said newspaper is more
prominent than that of the “Financial Express”. M/s Maithon Infrabuilt
Private Limited had participated in the auction process and quoted a price
above the reserve price. Accordingly, the sale certificate was duly issued to
the respondent no. 4 in terms of under Section 9(6) of the Securities Act,
2002.
Learned counsel for the respondent bank further submits that the
sale certificate has been issued in favour of M/s Maithon Infrabuilt Private
Limited, though the petitioner, in the present writ petition has not
impleaded Maithon Infrabuilt Private Limited as a party, and has instead
made Maithon Alloys Limited as a party to the present proceedings. Learned
counsel for the respondent bank submits that there is no mala fide or
arbitrariness in confirming the sale in favour of Maithon Infrabuilt Private
Limited.
This Court had heard the arguments advanced by the parties and
perused the documents placed on record.
The scope of judicial intervention in matters of auction sale is very
narrow and limited. It is a well-settled principle of law that a confirmed sale
5can only be set aside on the grounds of material irregularity, fraud or any
other fundamental error in the procedure of auction. In conducting an
auction sale, the respondent bank is required to follow the due process as
enumerated under Section 8(6) of the Securities Rule, 2002 and in
furtherance of the said sale procedure, the certificate of sale is issued under
Rule 9(6) of the said Act. The said Sections are quoted below: –
“8. Sale of Immovable secured assets: – (1) Where the secured
asset is an immovable property, the authorized officer shall take or
cause to be taken possession, by delivering a possession notice
prepared as nearly as possible in Appendix IV to these rules, to the
borrower and by affixing the possession notice on the outer door or
at such conspicuous place of the property.
(2) The possession notice as referred to in sub-rule (1) shall
also be published, as soon as possible but in any case not
later than seven days from the date of taking possession,
in two leading newspapers, one in vernacular language
having sufficient circulation in that locality, by authorized
officer.
(2A) All notices under these rules may also be served upon the
borrower through electronic mode of service, in addition to
the modes prescribed under sub-rule (1) and sub-rule (2) of
Rule 8.
(3) In the event of possession of immovable property is actually
taken by the authorized officer, such property shall be kept
in his own custody or in the custody of any person
authorized or appointed by him, who shall take as much
care of the property in his custody as a owner of ordinary
prudence would, under the similar circumstances, take of
such property.
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(4) The authorized officer shall take steps for preservation and
protection of secured assets and insure them, if necessary,
till they are sold or otherwise disposed of.
(5) Before effecting sale of the immovable property referred to
in sub-rule (1) of Rule 9, the authorized officer shall obtain
valuation of the property from an approved valuer and in
consultation with the secured creditor, fix the reserve price
of the property and may sale the whole or any part of such
immovable secured assets by any of the following
methods:-
(a) by obtaining quotations from the persons dealing with
similar secured assets or otherwise interested in buying
the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction including through e-auction mode;
or
(d) by private treaty.
[Provided that in case of sale of immovable property in the
State of Jammu and Kashmir, the provisions of Jammu and
Kashmir Transfer of Property Act, 1977 shall apply to the person
who acquires such property in the State.]
(6) The authorized officer shall serve to borrower a notice of
thirty days for sale of the immovable secured assets, under
sub-rule (5):-
[Provided that if the sale of such secured assets is being
effected by either inviting tenders from the public or by holding
public auction, the secured creditor shall cause a public notice in
the Form given in Appendix IV-A to be published in two leading
newspaper including one in vernacular language having wide
circulation in the locality]
(7) Every notice of sale shall be affixed on the conspicuous
part of the immovable property and the authorized officer
7shall upload the detailed terms and conditions of the sale,
on the web-site of the secured creditor, which shall include;
(a) the description of the immovable property to be sold,
including the details of the incumbrances known to the
secured creditor;
(b) the secured debt for recovery of which the property is to be
sold;
(c) reserve price of the immovable secured assets below which
the property may not be sold;
(d) time and place of public auction or the time after which sale
by any other mode shall be completed;
(e) deposit of earnest money as may be stipulated by the
secured creditor;
(f) any other terms and conditions, which the authorized
officer considers it necessary for a purchaser to know the
nature and value of the property]
(8) Sale by any method other than public auction or public
tender, shall be on such terms as may be settled [between the
secured creditors and the proposed purchaser in writing]
9. Time of sale, issue of sale certificate and delivery of
possession, etc.-
(1) No sale of immovable property under these rules, in first
instances shall take place before the expiry of thirty days
from the date on which the public notice of sale is
published in newspapers as referred to in the proviso to
sub-rule (6) of Rule 8 or notice of sale has been served to
the borrower:
[Provided further that if sale of immovable property by
anyone of the methods specified by sub-rule (5) of Rule 8 fails
and sale is required to be conducted again, the authorized officer
shall serve, affix and publish notice of sale of not less than fifteen
days to the borrower, for any subsequent sale]
8(2) The sale shall be confirmed in favour of the purchaser who
has offered the highest sale price in his bid or tender or
quotation or offer to the authorized officer and shall be
subject to confirmation by the secured creditor:
[Provided that no sale under this rule shall be confirmed, if
the amount offered by sale price is less than the reserve price,
specified under sub-rule (5) of Rule 8]:
Provided further that if the authorized officer fails to obtain a
price higher than the reserve price, he may, with the consent of
the borrower and the secured creditor effect that sale at such
price.
(3) On every sale of immovable property, the purchasers,
shall immediately, i.e., on the same day or not later than
next working day, as the case may be, pay a deposit of
twenty-five per cent of the amount of the sale price, which
is inclusive of earnest money deposited, if any, to the
authorized officer conducting the sale and in default of
such deposit, the property shall be sold again.
(4) The balance amount of purchase price payable shall be
paid by the purchasers to the authorized officer on or
before the fifteenth day of confirmation of the sale of the
immovable property or such extended period [as may be
agreed upon in writing between the purchaser and the
secured creditor, in any case not exceeding three months]
(5) In default of payment within the period mentioned in sub-
rule (4), the deposit shall be forfeited [to the secured
creditor] and the property shall be resold and the defaulting
purchaser shall forfeit all claim to the property or to any
part of the sum for which it may be subsequently sold.
(6) On confirmation of sale by the secured creditor and if the
terms or payment shave been complied with, the
authorized officer exercising the power of sale shall issue a
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certificate of sale of the immovable property in favour of the
purchaser in the Form given in Appendix V to these rules.
(7) Where the immovable property sold is subject to any
encumbrances, the authorized officer may, if the thinks fit,
allow the purchaser to deposit with him the money required
to discharge the encumbrances and any interest due
thereon together with such additional amount that may be
sufficient to meet the contingencies or further cost,
expenses and interest as may be determined by him:
[Provided that if after meeting the cost of removing
encumbrances and contingencies there is any surplus available
out of the money deposited by the purchaser such surplus shall
be paid to the purchaser within fifteen days from the date of
finalization of the sale]
(8) On such deposit of money for discharge of the
encumbrances, the authorized officer shall issue or cause
the purchaser to issue notices to the persons interested in
or entitled to the money deposited with him and take steps
to make the payment accordingly.
(9) The authorized officer shall deliver the property to the
purchaser free from encumbrances known to the secured
creditor on deposit of money as specified in sub-rule (7)
above.
(10) The certificate of sale issued under sub-rule (6) shall
specifically mention that whether the purchaser has
purchased the immovable secured asset free from any
encumbrances known to the secured creditor or not.”
A combined reading of both the sections makes it clear that the
auction notice is to be published in two newspapers having wide circulation
in the locality; one in English and the other in a vernacular language, as
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enlisted in the Act. In addition to the paper publication, the Rules envisages
two other modes of services:-
(I) the auction notice also to be affixed on the conspicuous
part of the immovable property which is to be auctioned
and
(II) the authorized officer also had to upload the details and
terms and conditions of the sale on the website of the
secured creditors.
Hence, the Rule itself provides 3 mandatory modes of circulation of auction
notices in order to ensure proper participation of the bidders.
In the present case, the petitioner alleges that they were interested
in purchasing the secured asset, however, they could not participate in the
auction sale as the respondent bank had published the said auction notice
in a newspaper which is having a much lesser circulation and they were
unaware about the said auction sale. However, this allegation is not
sustainable, as the respondent has shown that the newspaper “Echo of
India” (Kolkata Edition) has a wide circulation, with more than 24,000
subscribers.
Moreover, upon a closure examination, it is evident that if the
petitioner was genuinely interested in purchasing the said secured assets, it
would not have been difficult for him to find out the details of the said
auction sale. The petitioner himself admits that he was in touch with the
officials of the respondent bank since August, 2024 and the sale was
conducted in March 2025, much later. The sale notice was also conspicuous
affixed on the immovable assets to be auctioned as well as the same was
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also uploaded on the website of the secured creditor. Hence, it is not
possible to believe that the petitioner was not aware of the said auction sale.
The Petitioner has not placed any documents or material on record to
show that the newspaper ‘Echo of India’ is having lesser circulation than the
‘The Financial Express’. The said contention is without any material support.
Learned counsel for the petitioner has failed to point out any
material irregularity or fundamental error in the auction procedure. The
auction sale has already been concluded and the sale certificate has been
issued to the successful bidder.
In view of this, this Court is not inclined to exercise its discretionary
jurisdiction to interfere with the concluded sale.
There is no merit in the present writ petition. The same is dismissed.
(GAURANG KANTH, J.)
KB
AR(CR)
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