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IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT

HYDERABAD

(SPECIAL ORIGINAL JURISDICTION)

WEDNESDAY, THE TWENTY NINTH DAY OF DECEMBER

TWO THOUSAND AND TEN

THE HON'BLE SRI JUSTICE GHULAM MOHAMMED

and
THE HON’BLE SRI JUSTICE N. RAVI SHANKAR

WRIT PETITION No.27920, 18314, 25758, 26652, 28134 and 28314 of 2010

W.P.No.27920 of 2010

BETWEEN:

Kalluri Siddaiah

… PETITIONER(S)

And

The Indian Overseas Bank, Bank Street, Koti, Hyderabad, rep. by its General Manager
and others
… RESPONDENT(S)

THE HON'BLE SRI JUSTICE GHULAM MOHAMMED

and
THE HON’BLE SRI JUSTICE N. RAVI SHANKAR

WRIT PETITION No.27920, 18314, 25758, 26652, 28134 and 28314 of 2010

COMMON ORDER: (Per HON’BLE SRI JUSTICE N. RAVI SHANKAR)

The point that arises for determination in W.P.No.27920 of 2010 is about the
validity of the sale of petitioner’s property held on 01.11.2010 pursuant to the sale
notification dated 20.10.2010 issued by the Authorized Officer of the Indian Overseas
Bank, Nandyal, in order to recover the loan amounts due to it from the petitioner in the
said writ petition.

2. This writ petition has not been admitted and on notice being ordered before
admission the concerned officer of the above Bank filed counter along with its material
papers opposing the admission of this writ petition.

3. The said property is shown as item No.1 in the sale notification dated 20.10.2010
and the sale was proposed to be held under the provisions of The Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and
The Security Interest (Enforcement) Rules, 2002 (hereafterwards referred to for short as
‘the Act’ and ‘the Rules’). The description of this property in the sale notification is
given as Door
Nos.2-428-232-A3, 2-428-232-A4 and 2-428-232-A5 and it is stated to be situate in a
complex called Balaji Complex in Nandyal Town. The second item is shown with Door
No.2-428-232-A5 i.e. part of the third item in Item No.1 in the same complex. The
reserve prices of both the properties are given as Rs.5,30,00,000/- and Rs.1,25,00,000/- in
the sale notification dated 20.10.2010. This aspect is mentioned as petitioner raised a
dispute regarding the fixation of reserve prices also. As will be presently seen the 1st
item was sold on 01.11.2010 but even according to the Bank the second item was not
sold.

4. The other writ petitions are connected to the sale of the said first item of the
property of the petitioner and one writ petition is concerned with the second item
belonging to the petitioner in W.P.No.27920 of 2010 and their details relevant to the
point will be mentioned infra.

5. The circumstances which led to the filing of all these writ petitions are these. The
petitioner in W.P.No.27920 of 2010 is the borrower (hereafter referred to as borrower)
from the Indian Overseas Bank, Nandyal (hereafterwards referred to for short as Bank)
and he borrowed in 2005 a certain amount for the purposes of the development of his
school run in the above premises/properties. The sale notification dated 20.10.2010 in
question would show that a sum of Rs.1,96,61,386/- was due from the borrower to the
Bank and for recovery of that amount it issued Section 13(2) notice under the Act to the
borrower and took further steps and brought the two items of property belonging to him
for sale and these are the two items mentioned in the sale notification dated 20.10.2010.

6. Before adjudicating W.P.No.27920 of 2010, mention should be made about the


other writ petitions. The borrower himself earlier filed W.P.No.18314 of 2010
questioning an earlier sale notification dated 05.07.2010 which was issued by the Bank
for the sale of the above two items and pursuant to that notification the sale was to be
held on 12.08.2010. In W.P.M.P.No.23120 of 2010 in the said writ petition this Court on
09.08.2010 granted interim stay of the said sale on the condition that the borrower should
deposit Rs.50 lakhs within two weeks from 09.08.2010 and a further sum of Rs.50 lakhs
within two weeks thereafter.

7. Admittedly, the borrower did not comply with the above condition and so the
said interim stay stood vacated, but the said sale notification lapsed. Thereafter, the Bank
issued the present sale notification dated 20.10.2010 which is questioned in
W.P.No.27920 of 2010. As W.P.No.18134 of 2010 was filed against the earlier sale
notification dated 05.07.2010 which lapsed it follows that the said writ petition has
become infructuous and it is accordingly dismissed as infructuous.

8. It must be now mentioned here that according to the counter filed by the Bank in
W.P.No.27920 of 2010 the first item mentioned in the sale notification dated 20.10.2010
was sold by tender on 01.11.2010. The Bank say that one Gaddam Ankala Reddy
submitted a tender to purchase it for Rs.5,30,50,000/- and it was accepted by the Bank
and the sale was also confirmed in his favour. The learned counsel for the Bank across
the Bar stated that that from out of the said sale proceeds the Bank has adjusted the loan
amount due to it from the borrower and it is holding the surplus. The second item is
admittedly not sold as the sale proceeds from the first item was sufficient to clear the loan
of the borrower.

9. Now coming to the other writ petitions, 2nd petitioner in W.P.No.28314 of 2010,
petitioner in W.P.No.28134 of 2010, petitioners in W.P.No.26652 of 2010 and petitioners
in W.P.No.25758 of 2010 claim to be subsequent mortgagees/ creditors of the borrower
and they are questioning the sale notification dated 20.10.2010 on various grounds and
the main ground is that their interest in items 1 and 2 of the sale notification should be
protected. The 1st petitioner in W.P.No.28314 of 2010 claim to be an intending bidder
for item No.1 of the sale notification. The learned counsel appearing for the petitioners
in all these writ petitions have not been able to show what is their right to question the
sale notification issued by the Bank which is admittedly a prior mortgagee. Hence, all
these writ petitions are dismissed as they do not involve any question of law which
requires to be adjudicated by this Court. If they have any grievance they can work out
their remedies before the concerned civil Court or in an appeal under Section 17 of the
Act.

10. That takes us to W.P.No.27920 of 2010 which is filed by the borrower questioning
the validity of the sale notification dated 20.10.2010. All the pleadings taken in the
affidavit of the borrower filed in support of this writ petition relate to the disputes which
he raised regarding the amounts due from him to the Bank and also the fixation of the
upset prices for both the items in the said sale notification as too low. The Bank has in its
counter denied each and every averment in the writ petition about the amounts due and it
also pleaded that the upset prices fixed are quite proper. Thus, these are again questions
relating to disputed facts which cannot be gone into by this Court under Article 226 of the
Constitution and therefore they are not gone into. However, the question of fixation of
upset prices will be dealt with infra.

11. The learned counsel for the borrower in this writ petition however raised a question
of law which is not pleaded in the affidavit of the borrower and that is this. It may be
noted that the sale notification is dated 20.10.2010 and it was published in the Sakshi
daily newspaper issue of 21.10.2010 circulated in Kurnool District. The auction date is
mentioned as 01.11.2010. The contention is that as per the proviso to sub-rule 6 of Rule
8 of the Rules a clear notice of 30 days is required to be served upon the borrower for the
sale of immovable property and further Rule 9(1) of the Rules clearly stipulates that no
sale of immovable property shall be held before the expiry of thirty days of the public
notice of sale published in newspapers. It is pointed out that since sale notification is
dated 20.10.2010 and as it was published in the Sakshi daily newspaper on 21.10.2010
and as the date of sale was fixed on 01.11.2010 which is within thirty days from
21.10.2010 the said sale must be held to be violative of Rule 9(1) and also the proviso to
Rule 8(6) and consequently it must be held to be void as violative of the said Rules.

12. The above contention though not pleaded in the writ petition has been entertained as
it is a question of law based on the statutory rules as it is well settled that it is not
necessary to mention a question of law in the pleadings. It is clear that the date of sale is
fixed as 01.11.2010 and it is within thirty days from the date of sale notification which is
20.10.2010/21.10.2010 and it is contrary to Rule 9 and
Rule 8(6) of the Rules. The question now is whether the sale notification and the date of
sale are valid and, if not, whether this Court should not interfere with the sale having
regard to the conduct of the borrower and the other circumstances in this case as
contended by the Bank’s counsel.

13. The learned counsel for the Bank firstly pointed out certain circumstances to show
that the date of sale is valid and cannot be said to be contrary to the Rules. Secondly, he
also pointed out certain circumstances relating to the conduct of the borrower and argued
that the borrower’s conduct has been through out unfair and one of concealment of
material facts before this Court and therefore even if there is violation of Rule 9 in
conducting the sale this Court should not in the circumstances of this case interfere with
the sale. On the other hand, the learned counsel for the borrower argued that whatever
may be the conduct of the borrower this Court should interfere with the sale and set it
aside as it is clearly contrary to Rule 9(1) of the Rules.

14. Supporting the validity of the date of the sale which is fixed as 01.11.2010, the
learned counsel for the Bank has argued that the Bank has earlier issued a sale
notification dated 05.07.2010 which was duly served on the borrower and the date of sale
then fixed was 12.08.2010 which is beyond thirty days and if the period is reckoned from
05.07.2010 (i.e. date of earlier sale notification) the present date of sale fixed as
01.11.2010 can be said to be valid as the borrower was put on notice about the sale on
05.07.2010 itself and as the present date of sale i.e. 01.11.2010 is beyond thirty days from
the earlier sale notice. In support of this contention, he placed reliance upon a Division
Bench decision dated 27.01.2010 of this Court given in W.P.No.23886 of 2009. He also
filed a copy of this decision.
15. The facts in the above mentioned W.P.No.23886 of 2009 are easily distinguishable
from the facts in the present case. The said writ petition arose out of the proceedings in
the appeal before the Debt Recovery Tribunal, Hyderabad. There the Bank gave a sale
notice dated 15.07.2009 fixing the date of sale as 17.08.2009. The sale notice was
published in the newspapers on 17.07.2009 but the sale proclamation was sent to the
borrower on 22.07.2009. Thus, the date of sale 17.08.2009 was not beyond thirty days
from the date 22.07.2009 on which the sale notice was served on the borrower. In those
circumstances this Court held that the borrowers were entitled to the stay of auction given
by the Tribunal and the auction could not be conducted. In the circumstances of that case
this Court held that the sale notice served on the borrower on 22.07.2009 holds good and
then directed the Bank to publish the auction notice and the sale date which should be
beyond thirty days from 22.07.2009 and then proceed with the sale holding that there was
no need to direct the bank to issue a fresh sale notice. It was in those circumstances it
was held that the date of earlier sale notice could be relied upon by the bank. That is
however not the case here.

16. It is true that the Bank in the present case issued an earlier sale notice dated
05.07.2010 fixing the date of sale as 12.08.2010. The said proceedings however fell
through and could not be taken up in view of the interim stay granted on 09.08.2010 in
W.P.M.P.No.23120 of 2010 in W.P.No.18314 of 2010 filed by the borrower and the sale
could not take place. The Bank in its wisdom did not act upon the earlier sale notice
dated 05.07.2010, but proceeded in its wisdom to issue a fresh sale notification dated
20.10.2010 and fixed the date of sale as 01.11.2010. The present date of sale 01.11.2010
is not beyond thirty days from 20.10.2010 which is the date of sale notification or
21.10.2010 which is the date on which the sale notice was published in the Sakshi daily
newspaper. Thus, having issued a fresh sale notification dated 20.10.2010 the Bank
cannot rely upon the earlier sale notification dated 05.07.2010 and contend that since the
present date of sale i.e. 01.11.2010 is beyond thirty days from 05.07.2010, the sale should
be held valid. The arrangement made in the decision in W.P.No.23886 of 2009 must be
treated as an arrangement made in the circumstances of that case. As the present date of
sale 01.11.2010 is not beyond thirty days from 20.10.2010/21/10.2010 which is the date
of sale notification the above decision does not help the Bank.

17. Further the decision dated 12.03.2007 given in W.P.No.4914 of 2007, relied
upon by the borrower’s counsel, supports his contention. In this case, decided by a
learned Single Judge of this Court, the bank issued a sale notice dated 27.12.2006 but the
sale date could not be fixed pursuant to that sale notice dated 27.12.2006 for various
reasons. The bank again sent a notice on 02.03.2007 to the borrower drawing his
attention to the earlier sale notice dated 27.12.2006 and informed him that pursuant to
that notice it proposed to hold the sale on 13.03.2007 on the same terms and conditions as
specified in the earlier sale notice/ proclamation dated 27.12.2006 and followed it up by a
sale publication dated 03.03.2007 proposing to hold the sale on 13.03.2007.
18. It was held in the above decision that Rules 8(6) and Rule 9(1) of the Rules are
intended to ensure wide publicity to get a good price for the property sought to be sold
and in that view of the matter a fresh sale notice/proclamation are necessary and the sale
should be held after thirty days of such sale notice/proclamation and this is mandatory.
Thus, this decision supports the contention of the borrower’s counsel whereas the
Division Bench decision relied upon by the Bank’s counsel is a case where the
arrangement has been made by the Court itself in the particular facts of that case. It is
thus clear that the contention of the Bank’s counsel that it can rely upon the earlier sale
notice dated 05.07.2010 to argue that the date of present sale which is 01.11.2010
complies with Rule 9(1) of the Rules cannot be accepted. In other words, the date of
present sale which is 01.11.2010 which is within thirty days from the sale notification/
proclamation dated 20.10.2010/21.10.2010 must be held to be contrary to Rules 8(6) and
9(1) of the Rules.

19. Thus, the above legal position shows that in the present case the date of sale being
01.11.2010 being within thirty days from the sale notification/ proclamation dated
20.10.2010 is no doubt contrary to Rule 9(1) and Rule 8(6) of the Rules as contended by
the learned counsel for the borrower. The question however is whether this Court should
exercise its discretion in favour of the borrower in this writ petition and set aside the sale
having regard to the circumstances which according to the Bank show an unfair conduct
on the part of the borrower. The Bank’s counsel relied upon the following circumstances
alternatively to show that this Court should refuse to go to the rescue of the borrower
despite the sale being contrary to Rules 8(6) and 9(1) of the Rules. We now proceed to
consider the said circumstances to decide about the above contention of the Bank’s
counsel.

20. The first circumstance pointed out on behalf of the Bank is that this borrower
already illegally sold away the first item mentioned in the sale notification which was
auctioned, by three agreements of sale cum GPAs dated 10.06.2009 in favour of third
parties for a total sale consideration of Rs.3,03,31,000/- and therefore he has no right now
to question the auction even assuming that there is any illegality in conducting it
inasmuch as he has no subsisting interest now in the said item. Mention is made about
these agreements in the counter of the Bank and it also filed Xerox copies of the said
agreements. The learned counsel for the borrower did not deny this aspect. The
borrower’s affidavit in his present W.P.No.27920 of 2010 or his affidavit in his previous
W.P.No.18314 of 2010 do not disclose about the above agreements of sale. His counsel,
however, repeatedly relied upon the violation of the Rule 8(6) and Rule 9(1) of the Rules
for seeking to set aside the sale. The learned counsel for the Bank pointed out this
suppression of fact in both the writ petitions of the borrower and urged that this Court
should not show any indulgence to the borrower as he no longer has a subsisting interest
in the property sold.

The learned counsel for the borrower pointed out that despite the above agreements of
sale cum GPAs the borrower still continues to be the title holder and therefore he has got
a right to question the auction held on 01.11.2010. He also argued that since the said
agreements of sale were subsequent to Section 13(2) notice they have to be treated as
void in view Section 13(13) of the Act as it prohibits a borrower from alienating the
secured asset in any manner and therefore the said agreements should be ignored. It may
be noted that whether they are legal or illegal the borrower received Rs.3,03,31,000/-
from the said agreements of sale on 10.06.2009 but he did not think of discharging the
Bank’s loan from the said amount. This cannot be said to be a fair conduct on his part
and he did not disclose about the said agreements. Hence, the above contention of the
borrower’s counsel cannot be accepted. From this circumstance it is clear that the
borrower did not act in a fair manner.

21. The second circumstance pointed out by the learned counsel for the Bank is that the
borrower earlier filed W.P.No.18314 of 2010 questioning the previous auction notice and
got stay of it in WPMP No.23120 of 2010 on 09.08.2010 and that this Court granted a
conditional stay in it by directing him to deposit Rs.1 Crore in two instalments of Rs.50
lakhs each fixing the periods. His plea is that the borrower did not comply with the
conditional stay order in depositing a sum of Rs.50 lakhs within two weeks from that date
and a further sum of Rs.50 lakhs within two weeks thereafter but successfully got the sale
proceedings stalled and again filed this writ petition questioning the present sale. He
pointed out this conduct of the borrower is also not fair and therefore this Court now
should not interfere in this writ petition though the sale is not in accordance with Rules
8(6) and 9(1) of the Rules.

22. In this writ petition, the borrower took a plea that the property i.e. item No.1 was
worth Rs.15 Crores and that the upset price was fixed at Rs.5,30,00,000/- and this upset
price was fixed by the Bank to help the intending auction purchaser to buy it at a throw
away price. Dealing with this plea of the petitioner, the learned counsel for the Bank
pointed out as pleaded in the Bank’s counter that the abovementioned three agreements
of sale cum GPAs would themselves show that the borrower himself sold the said item in
June 2009 for Rs.3,03,31,000/- and therefore the borrower cannot now complain about
the upset price fixed at Rs.5,30,00,000/- which is far more than the price at which he sold
away the said item. The Bank’s counsel pointed out this aspect and showed that the
borrower’s conduct in this behalf cannot also be said to be fair. The learned counsel for
the borrower pointed that even this circumstance does not come in his way to challenge
the sale on the ground of violation of Rules 8(6) and 9(1) of the Rules. Certain other
circumstances relating to the valuation of the property and the documents filed by the
borrower himself were relied upon by the Bank to show that borrower’s plea regarding
valuation cannot be accepted. It is however not necessary to go into the same.

23. Basing upon the above three circumstances, the learned counsel for the
petitioner relied upon certain decisions of the Apex Court to show that this Court should
not exercise its discretion under Article 226 of the Constitution in favour of the borrower
in a case like this. The first decision relied upon by him is the one given in
K.D.SHARMA vs. SAIL[1]. He relied upon this decision to show that where a person
approaches a High Court under Article 226 of the Constitution by concealing facts the
High Court should not exercise its discretion in his favour and it would also be justified
to reject the writ petition at the threshold without going into the merits. This decision is
relied upon in support of the Bank’s contention that the borrower having sold away the
property in question under three agreements of sale cum GPAs dated 10.06.2009 and
having concealed the same in his affidavits in both the writ petitions cannot be held
entitled to any relief from this Court and this Court can even reject the writ petition
without going into the merits of the matter. Laying down the proposition on this aspect,
the Apex Court, in paras-34, 36, 37 and 38 of the said judgment observed as follows.

“34. The jurisdiction of the Supreme Court under Article 32 and of the High Court under
Article 226 of the Constitution is extraordinary, equitable and discretionary. Prerogative
writs mentioned therein are issued for doing substantial justice. It is, therefore, of utmost
necessity that the petitioner approaching the writ court must come with clean hands, put
forward all the facts before the court without concealing or suppressing anything and
seek an appropriate relief. If there is no candid disclosure of relevant and material facts
or the petitioner is guilty of misleading the court, his petition may be dismissed at the
threshold without considering the merits of the claim.”

“36. A prerogative remedy is not a matter of course. While exercising extraordinary


power a Writ Court would certainly bear in mind the conduct of the party who invokes
the jurisdiction of the Court. If the applicant makes a false statement or suppresses
material fact or attempts to mislead the Court, the Court may dismiss the action on that
ground alone and may refuse to enter into the merits of the case by stating "We will not
listen to your application because of what you have done". The rule has been evolved in
larger public interest to deter unscrupulous litigants from abusing the process of Court by
deceiving it.”

“37. In Kensington Income Tax Commrs. [(1917) 1 KB 486 : 86 LJKB 257 : 116 LT 136
(CA)], Viscount Reading, C.J. observed: (KB pp. 495-96)
"…Where an ex parte application has been made to this Court for a rule nisi or other
process, if the Court comes to the conclusion that the affidavit in support of the applicant
was not candid and did not fairly state the facts, the Court ought, for its own protection
and to prevent an abuse of its process, to refuse to proceed any further with the
examination of the merits. This is a power inherent in the Court, but one which should
only be used in cases which bring conviction to the mind of the Court that it has been
deceived. Before coming to this conclusion a careful examination will be made of the
facts as they are and as they have been stated in the applicant's affidavit, and everything
will be heard that can be urged to influence the view of the Court when it reads the
affidavit and knows the true facts. But if the result of this examination and hearing is to
leave no doubt that this Court has been deceived, then it will refuse to hear anything
further from the applicant in a proceeding which has only been set in motion by means of
a misleading affidavit". (emphasis supplied)”

“38. The above principles have been accepted in our legal system also. As per settled
law, the party who invokes the extraordinary jurisdiction of this Court under Article 32 or
of a High Court under Article 226 of the Constitution is supposed to be truthful, frank
and open. He must disclose all material fats without any reservation even if they are
against him. He cannot be allowed to play “hide and seek” or to “pick and choose” the
facts he likes to disclose and to suppress (keep back) or not to disclose (conceal) other
facts. The very basis of the writ jurisdiction rests in disclosure of true and complete
(correct) facts. If material facts are suppressed or distorted, the very functioning of writ
courts and exercise would become impossible. The petitioner must disclose all the facts
having a bearing on the relief sought without any qualification. This is because “the
court knows law but not facts.”

The above decision of the Apex Court, though given in a different fact situation, in my
opinion, supports the contention of the Bank’s counsel. It should be noted here not only
did the borrower did not disclose about the three agreements of sale cum GPAs
mentioned by the Bank in his both the writ petitions i.e. the present W.P.No.27920 of
2010 and the earlier W.P.No.18314 of 2010 but he also executed subsequent mortgage
deeds in respect of the property in question and did not disclose about them also and this
conduct of the borrower cannot be said to be fair in approaching this Court in the present
writ petition again.

24. The Bank’s counsel then placed reliance upon another decision of the Apex Court
given in PRESTIGE LIGHTS LTD. vs. STATE BANK OF INDIA[2] in support of his
second contention that since the borrower did not pay even a single rupee pursuant to the
interim stay order granted in W.P.No.18314 of 2010 cannot now again approach this
Court questioning the sale. It may be noted that in W.P.No.18314 of 2010 filed by the
borrower himself earlier interim stay of earlier auction was granted by this Court on
09.08.2010 on condition of borrower depositing Rs.1 Crore within the periods stipulated
therein. The borrower admittedly did not pay even a single rupee to the Bank and the
Bank again issued the present sale notification and fixed the date of sale and the borrower
approached this Court again by the present writ petition questioning the same.

25. It may be noted that the Bank’s plea that the borrower executed three agreements of
sale cum GPAs dated 10.06.2009 for this property in question is not disputed by the
borrower etitioner. Perhaps these agreements of sale and the earlier subsequent
mortgages executed by the borrower in respect of this property could be the reason for
him in not complying with the above stay order. Dealing with such an attitude, the Apex
Court expressing the view that a Court should not go to the rescue of a party showing an
unfair attitude, in the decision second cited observed in paras-20 and 24 of the said
judgment as follows:

“20. But, there is an additional factor also as to why we should not exercise discretionary
and equitable jurisdiction in favour of the appellant. It is contended by the learned
counsel for the respondent-Bank that having obtained interim order and benefit
thereunder from this Court, the appellant-Company has not paid even a pie. The appellant
is thus in contempt of the said order. The Company has never challenged the condition as
to payment of amount as directed by this Court. Thus, on the one hand, it had taken
benefit of the order of interim relief and on the other hand, did not comply with it and
failed to pay instalments as directed. Neither it raised any grievance against the condition
as to payment of instalments nor made any application to the Court for modification of
the condition. It continued to enjoy the benefit of stay ignoring and defying the term as to
payment of money. The Company is thus in contempt of the order of this Court, has
impeded the course of justice and has no right of hearing till it has purged itself of the
contempt.”

“24. An order passed by a competent court---interim or final---has to be obeyed without


any reservation. If such order is disobeyed or not complied with, the Court may refuse the
party violating such order to hear him on merits. We are not unmindful of the situation
that refusal to hear a party to the proceeding on merits is a “drastic step” and such a
serious penalty should not be imposed on him except in grave and extraordinary
situations, but sometimes such an action is needed in the larger interest of justice when a
party obtaining interim relief intentionally and deliberately flouts such order by not
abiding the terms and conditions on which a relief is granted by the Court in his favour.”

26. The learned counsel for the borrower on the other hand placed reliance upon
another decision of the Apex Court given in ARUNIMA BARUAH vs. UNION OF
INDIA[3] and contended that the question of denial of relief will arise only when a fact
material to the determination of the lis is suppressed and not otherwise and that since the
borrower has not suppressed any material facts concerning the validity of the sale
notification dated 20.10.2010 and the sale held on 01.11.2010, this Court should ignore
the above two decisions cited by the Bank’s counsel and grant the relief. In the course of
arguments, the learned counsel for the borrower was specifically asked whether the non-
disclosure of the agreements of sale cum GPAs dated 10.06.2009 in a case like this would
not amount to suppression of a material fact concerning the merits of the matter in this
W.P.No.27920 of 2010 but there was no convincing reply from him. Hence, the above
decision cannot help the borrower.

27. We have gone through the material on record placed by the Bank’s counsel and we
are convinced that the conduct of the borrower in not disclosing about the
abovementioned agreements of sale cum GPAs and the subsequent mortgages and
borrower’s non-compliance with the conditional stay granted in W.P.No.18314 of 2010
earlier filed by him and also his averments about the fixation of the upset price for item
No.1 in the sale notification in question constitute a totally unfair conduct on his part
which leaves much to be desired. It is true that the sale held on 01.11.2010 is in violation
of Rules 8(6) and 9(1) of the Rules. At the same time, it is an admitted fact that the
borrower took a considerable amount as loan from the Bank and failed to repay it. The
money lent by the Bank is the money of depositors, and the borrower did not show a fair
conduct in approaching this Court. Added to this, the agreements of sale cum GPAs
which show that he executed them for a consideration of Rs.3,03,31,000/- would show
that he parted his interest in item No.1 mentioned in the sale notification knowing fully
well that he did not repay the loan amount to secure which he executed the mortgage in
favour of the Bank. It could not have been difficult for the borrower to discharge the loan
amount due from him to the Bank from our of the above sum of Rs.3,03,31,000/-.

28. Having regard to the principles laid down in the two decisions of the Apex
Court relied upon by the Bank’s counsel and mentioned supra, we are of the opinion that
the borrower has approached this Court, to say politely, with unclean hands suppressing
material facts and therefore this Court should not interfere in the matter on merits though
there is violation of Rules 8(6) and 9(1) of the Rules in conducting the sale. Further, the
upset price fixed for the item No.1 at Rs.5,30,00,000/- is also considered reasonable
having regard to the value mentioned by the borrower himself in the agreements of sale
cum GPAs mentioned by him which is at Rs.3,03,31,000/-. According to the Bank, the
auction purchaser’s bid was for Rs.5,30,50,000/- which is higher than the upset price.

29. It may, at the risk of repetition, be noted that the money belongs to the Bank which
is a nationalized one and which deals in public money in the form of their deposits. The
above circumstances show that the borrower has taken the Bank and as well as this Court
for a ride and this conduct on the part of the borrower to say the least is reprehensible.
Despite this reprehensible conduct of the borrower, his counsel says that the thirty days
period stipulated in Rule 9(1) of the Rules is meant for the borrower to discharge the loan
before the actual sale and therefore it should be enforced. There is no dispute about this
legal position. However, the borrower concealed about the agreements of sale cum GPAs
dated 10.06.2009. He failed to pay even a single pie to the Bank at least in partial
compliance of the interim stay granted in his earlier W.P.No.18314 of 2010 to show his
bona fides and he took the Bank and this Court also for granted. To repeat, he did not
make any attempt to discharge the loan from out of Rs.3,03,31,000/- obtained under
agreements of sale cum GPAs. This attitude of the borrower shows that he took
everything for granted and behaved in a manner which shows that he can be termed as
belonging to that creed of litigants who shamelessly resort to unethical means for
achieving their goals as observed in
para-2 of the judgment of the Apex Court given in DALIP SINGH vs. STATE OF U.P.
[4]. From the above attitude of the borrower his plea that he could have paid the amount
within thirty days if the sale had been held after thirty days from 20.10.2010 i.e. the date
of sale notification cannot be accepted as a bona fide one.

30. In the above circumstances, we are satisfied that this is not a fit case where we
should exercise our discretion in favour of the borrower notwithstanding the violation of
Rules 8(6) and 9(1) of the Rules in conducting the sale. The point is therefore decided in
favour of the Bank. Accordingly, this W.P.No.27920 of 2010 which is still at the stage of
admission is also dismissed. There shall be no costs in all the writ petitions.

31. So far as the surplus remaining in the hands of the Bank, the Bank shall deal with
the same in accordance with law for the benefit of the other creditors of the borrower, if
any, who according to the Bank’s counter are said to have filed various suits.

___________________________

GHULAM MOHAMMED, J.

_______________________

N. RAVI SHANKAR, J.
29/12/2010
CVRK

[1] (2008) 12 SCC 481

[2] (2007) 8 SCC 449

[3] (2007) 6 SCC 120

[4] (2010) 2 SCC 114

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