REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
                                                                         
CIVIL APPEAL NOS.3152­3153 of 2023
(@ SLP (Civil) Nos.5973­5974 of 2018)

G. VIKRAM KUMAR   ...Appellant(s)

Versus

STATE BANK OF HYDERABAD 
& ORS.                                      ...Respondent(s)

J U D G M E N T

M. R. Shah, J.

1. Feeling   aggrieved   and   dissatisfied   with   the

Signature Not Verified impugned   judgment   and   order   dated

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 08.09.2017   passed   by   the   High   Court   of

Judicature   at   Hyderabad   for   the   State   of

Telangana and Andhra Pradesh passed in Writ

Petition No.31098 of 2016 and the subsequent

order   dated   08.12.2017   passed   in   Review

Petition   No.45031   of   2017   in   Writ   Petition

No.31098   of   2016,   the   appellant   and   the

auction   purchaser   has   preferred   the   present

appeals. 

2. The   facts   leading   to   the   present   appeals   in

nutshell are as under:

2.1 That the respondent no.3 herein – builder had

taken loan from respondent no.2 – Bank for the

development   of   the   multi­storey   housing

project.   That the respondent no.3 (hereinafter

referred   to   as   the   borrower)   was   not   able   to

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 repay   the   security   interest   to   the   Bank,   the

Bank   initiated   proceedings   against   the

borrower under Section 13 of the Securitization

and   Reconstruction   of   Financial   Assets   and

Enforcement   of   Security   Interest   Act,   2002

(hereinafter   referred to as ‘the SARFAESI  Act,

2002).  The Bank attached the properties of the

borrower under Section 13(4) of the SARFAESI

Act.   Against the measures taken by the Bank

under Section 13(4) of the SARFAESI Act, the

borrower  filed S.A. No.253 of 2012 before the

Debt   Recovery   Tribunal   (DRT),   Hyderabad.

S.A. No.253 of 2012 was listed before the DRT

on   19.02.2016,   when   the   borrower   was   given

liberty to file a list of intending  buyers of the

property and bring forth with the buyers so as

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 to enable the Tribunal to consider the same for

the   repayment   of   the   dues   of   the   Bank.     On

25.02.2016,   the   DRT   passed   an   order

permitting the Bank to go ahead with the sale

as proposed excluding flat to be identified and

communicated by the borrower to the Bank by

29.02.2016 with full details of all purchasers to

the   bank   officials on  affidavit so as to enable

the bank officer to exclude those flats, provided

the remaining flats are sufficient for recovery of

the dues.  The Tribunal directed that the bank

may   proceed   with   the   sale   but   shall   not

confirm   the   sale  till  the  next   date of   hearing.

At this stage it is required to be noted that the

aforesaid order was passed by the Tribunal in

view of the submissions made by the borrower

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 that   he   had   sold   seven   flats   out   of   37   flats

which   were   to   be   sold   by   the   Bank   to   some

third persons.   Flat No.6401 – flat in question

was not amongst the said seven flats.

2.2 A   Memorandum   of   Understanding   (MoU)   was

entered into between the respondent no.1 and

the   borrower   with   respect   to   the   sale   of   Flat

No.6401   on   10.04.2016   for   a   lumpsum

consideration of Forty­five lakhs.  It is pertinent

to   note   that   in   the   MoU   itself   there   was   a

reference to some proceedings going on before

the DRT and that the Bank and the borrower

will   obtain   clearance   in   order   to   process   the

agreement to sale.   That an agreement to sale

was   executed   between   the   bank   and   the

borrower   for   a   sale   of   Flat   No.6401   on

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 16.06.2016.   At this stage, it is required to be

noted   that   the   said   agreement   to   sale   was

executed   by   the   borrower   without

informing/obtaining any consent from the DRT

as well as the Bank and the permission, if any,

given  to  the  borrower  earlier  obtained only  to

the   seven flats which were already  recognized

by the DRT on 25.02.2016.

2.3 That thereafter the Bank issued a public notice

on 28.07.2016 for auctioning the properties of

the borrower.  The said notice was published in

the newspaper on 29.07.2016.  The property in

question, i.e. Flat No.6401 was also subjected

to auction.  It was placed in Lot No.1 for which

the e­auction was proposed on 30.08.2016.

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2.4 The   borrower   filed   an   application   before   the

DRT praying for stay on all proceedings of the

Bank   pursuant   to   the   auction   notice   dated

28.07.2016.     On   24.08.2016   the   DRT   was

pleased   to   reject  the   application  for   stay   filed

by   the   borrower.     While   rejecting   the   stay

application   and   refusing   to   grant   the   stay   as

prayed, the DRT observed as under:

“…Pending the decision, this Tribunal has
directed   to   sell   the   property   and   the
Applicant   now   has   entered   into   an
agreement to be sold for some other flats.
This   is   utter   violation   of   the   SARFAESI
action   as   also   the   direction   of   the
Tribunal.”
“7.     As   stated   hereinabove,   it   is   also
question   of   great   concern   that   the
Applicant   has   entered   into   an   agreement
with   third   party   in   respect   of   few   other
flats i.e. Flat No.3202, 6401,  7101, 7202
and   3201   without   the   permission   of   the
Respondent   Bank   or   this   Tribunal.
Hence,   any   such   transaction   is   declared
as void.”

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2.5 That thereafter e­auction was conducted by the

Bank   on   31.08.2016   in   which   the   appellant

also participated.   The appellant was declared

as   a   successful   bidder   with   respect   to   Flat

No.6401 in Lot No.1.   Accordingly, he made a

payment   of   25%   of   the   bid   amount   i.e.

Rs.6,45,250/­.     The   Bank   also   issued   a

confirmation   receipt   to   the   appellant   on

31.08.2016.

2.6 That thereafter the respondent no.1 filed a Writ

Petition   No.31098   of   2016   before   the   High

Court on 14.09.2016 challenging the e­auction

notice   dated   28.07.2016   to   the   extent   it

concerns Flat No.6401.   The said writ petition

was filed much after the auction was complete

and the appellant was declared as a successful

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 bidder.   The respondent no.1 did not disclose

in the writ petition that the auction has already

taken place.  The appellant herein was also not

made party. By impugned judgment and order

dated   15.09.2016   the   High   Court   stayed   the

auction qua Flat No.6401 as notified under the

e­auction   sale   notice   subject   to   respondent

no.1 (original wit petitioner) paying to the bank

not less than 25.81 lakhs before the scheduled

date and time of the auction, failing which, the

Bank shall be free to proceed with the auction.

The Bank issued a letter to the appellant dated

20.09.2016   stating   that   the   High   Court   has

stayed the auction proceedings with respect to

Flat   No.6401   and   that   the   respondent   no.1

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 herein   has   paid   the   amount   to   the   Bank   as

directed by the High Court.

2.7 On becoming aware of the pending proceedings

in Writ Petition No.31098 of 2016 the appellant

herein   filed   an   application   for   getting

impleaded in the said writ petition and filed the

counter affidavit.  In the counter affidavit it was

specifically   stated   that   the   DRT   has   declared

the   agreement   of   sale   executed   between   the

respondent no.1 and the borrower as void and

that   the   appellant   is   the   successful   auction

purchaser   and   that   the   respondent   no.1   had

not disclosed the complete and correct facts of

the case.   It was also stated that the right, if

any, available to the respondent no.1 (original

writ petitioner) would have been under Section

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 17   of   the   SARFAESI   Act   and   not   the   writ

petition   filed   by  him.   It was also stated that

the   respondent   no.1   had   not   informed   the

Court   that   the   auction   proceedings   were

already   over   at   the   time   when   the   stay   order

was  passed.   The Bank also filed the counter

affidavit in the writ petition seeking dismissal

of the writ petition primarily on the ground that

an alternative remedy under Section 17 of the

SARFAESI Act was available.   The High Court

allowed the impleadment application.   Despite

the   above,   by   the   impugned   judgment   and

order   the   High   Court   has   allowed   the   writ

petition filed by respondent no.1 herein.   That

thereafter   the   appellant   herein   the   auction

purchaser   filed   the   review   petition   which   has

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 been   dismissed   by   the   High   Court.     Hence,

against the final decision of the High Court in

the   main   writ   petition   allowing   the   same   in

favour   of   the   respondent   no.1   herein   and

rejecting   the   review   application   filed   by   the

appellant,   the   appellant   –   successful   auction

purchaser has preferred the present appeals.

3. Shri   A.   Sirajudeen,   learned   Senior   Advocate

has appeared on behalf of the appellant.   Shri

Buddy   A.   Ranganadhan,   learned   counsel   has

appeared   on   behalf   of   respondent   no.1   –

original   writ   petitioner   and   Shri   Ananga

Bhattacharyya,   learned   counsel   has   appeared

on behalf of respondent no.3.

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4. Shri   A.   Sirajudeen,   learned   Senior   counsel

appearing on behalf of the appellant has made

the following submissions:

(i) That the High Court has materially erred

in   entertaining   the   writ   petition   filed   by

respondent   no.1   which   was   against   the

steps   taken   by   the   Bank   under   Section

13(4) of the SARFAESI Act namely against

e­auction notice;

(ii) That   the   respondent   no.1   being   the

agreement to sale holder had no right title

in the flat in question and therefore could

not have filed the writ petition challenging

e­auction   notice   on   the   basis   of   the

agreement to sale in his favour;

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 (iii) Even if the respondent no.1 had any right,

if any, in that case also he had alternative

efficacious   statutory   remedy   available

under   Section   17   of   the   SARFAESI   Act

challenging the e­auction notice;

(iv) That   there   was   suppression   of   material

facts on the part of respondent no.1 which

was   specifically   pointed   out   by   the

appellant in the counter affidavit that  at

the time when the writ petition was filed

and   the   interim   relief   was   obtained   the

auction   had   taken   place   in   which   the

appellant   was   declared   the   successful

bidder;

(v) That in fact the DRT in the earlier order

dated   24.08.2016   declared   the   sale

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 agreement   in   favour   of   the   respondent

no.1 by the borrower as void as the same

was entered into without prior permission

of the DRT or even the Bank; and

(vi) The   High   Court   has   materially   erred   in

relying   upon   Section   13(8)   of   the

SARFAESI Act.

4.1 It   is   further   submitted   by   learned   counsel

appearing   on   behalf   of   the  appellant   that  the

High   Court   has   not   properly   appreciated   the

fact that a sale agreement holder cannot seek

redemption  of  a property  under  Section 91 of

the Transfer of Property Act, 1882 and cannot

be   treated   at   par   with   an   auction­sale

purchaser under Section 54 of the Transfer of

Property   Act   makes   it   clear   that   no   interest

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 /charge is created upon a property only by way

of sale­agreement.   It is stated that in fact the

impugned judgment passed by the High Court

that   the   respondent   no.1   be   able   to   seek

redemption of the subject property which was

attached by the Bank.  It is submitted that the

bank   attached   the   property   as   against   the

borrower and the respondent No.1 was only the

sale­agreement holder.  It is submitted that as

such by virtue of the impugned judgment and

order,   the  High Court has granted the decree

for   specific   performance   of   the   agreement   to

sale  which   is  not permissible while exercising

the   powers   under   Article   226   of   the

Constitution of India.  

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4.2 It   is   further   submitted   by   learned   counsel

appearing   on   behalf   of   the  appellant   that  the

High   Court   has   materially   erred   in   observing

that   the   equity   would   be   in   favour   of

respondent no. 1 as he has deposited the entire

amount   as   directed.   It is  submitted that   the

High   Court   has   materially   erred   in   observing

that   if   the   sale   is   confirmed   the   respondent

no.1 will suffer greater hardship and if the sale

is not confirmed at the most, the appellant may

lose interest on Rs.6,45,250/­.

4.3 It is further submitted that as such there is no

clarity   in   the   impugned   judgment   and   order

passed by the High Court on what exact relief

the   High   Court   has   granted   except   observing

that the writ petition is allowed.

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5. While   opposing   the   present   appeal   learned

counsel appearing on behalf of the respondent

no.1   has   vehemently   submitted   that   in   the

present case Section 13(8) of the SARFAESI Act

shall     be   applicable   and   therefore   when   the

respondent   no.1   being   the   agreement   to   sale

holder   of   the   flat   in   question   agreed   to

pay/deposit   the   entire   sale   consideration   the

High   Court   has   not   committed   any   error   in

entertaining the writ petition under Article 226

of the Constitution of India challenging the e­

auction notice.

5.1 It is submitted that as soon as respondent no.1

came to know that the flat in question which

was agreed to be sold in favour of respondent

no.1  for which part consideration was paid is

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 put   to   auction,   immediately   he   filed   the   writ

petition showing his inclination to deposit the

entire   amount   of   sale   consideration   which   is

permissible   under   Section   13(8)   of   the

SARFAESI Act.  It is submitted that the object

and purpose of Section 13(8) of the SARFAESI

Act is to save the property from auction in case

the   borrower   and/or   the   person   interested   in

the property agrees to clear the dues.

5.2 It is submitted that in the present case at the

relevant   time   there   was   no   concluded   sale   in

favour of the appellant, as at the relevant time

the appellant deposited only 25% of the auction

sale consideration.  It is submitted that as per

the   catena   of   decisions   unless   the   full   sale

consideration is paid; the sale deed is executed

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 and/or the sale certificate is issued in favour of

the   auction   purchaser   there   is   no   concluded

sale.     It   is   submitted   that   if   the   sale   is   not

concluded, Section 13(8) of the SARFAESI Act

shall be applicable and/or can be invoked.   In

support of his submissions, he has relied upon

the   decisions   of   this   Court   in   the   case   of

Mathew   Varghese   v.   M.   Amritha   Kumar,

(2014)   5   SCC   610   (para   38);  Narandas

Karsondas   vs.  S.A.   Kamtam,   (1977)   3  SCC

247; B. Arvind Kumar vs. Govt. of India &

Ors.,   (2007)   5   SCC   745   (para   12).    He   has

also relied upon the decision of the Punjab and

Haryana High Court in the case of  Pal Alloys

&   Metal   India   Pvt.   Ltd.   &   Ors.   vs.

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 Allahabad Bank & Ors., 2021 SCC OnLine

P&H   2733  as   well   as   the   decision   of   the

Andhra Pradesh High Court in the case of M/s

India   Finlease   Securities   Ltd.   vs.   Prasad

Indian Overseas Bank, 2012 SCC OnLine AP

205. 

5.3 It   is   further   submitted   by   learned   counsel

appearing   on   behalf   of   the   respondent   no.1

that   the   respondent   no.1   has   subsequently

died   and   his   heirs   including   the   widow   are

residing in the flat in question since long and

that   they   have   paid/deposited   the   entire   sale

consideration and therefore if now the appeal is

allowed   in   that   case,   they   have   to   vacate   the

premises   which   will   not   be   equitable.

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 Therefore,   it   is   prayed   to   dismiss   the   present

appeal.

6. Learned   counsel   appearing   on   behalf   of   the

Bank   has   though   opposed   the   writ   petition

before the High Court, has stated that whatever

the decision, the Bank shall abide by the same.

7. Heard  learned counsel appearing on behalf of

the respective parties at length.

8. At   the   outset,   it   is   required   to   be   noted   that

what was challenged before the High Court by

respondent no.1 in a writ petition under Article

226   of   the   Constitution   of   India   was   the   e­

auction   notice   which   was   pursuant   to   the

action   initiated   by   the   Bank   in   exercise   of

powers   under   Section   13(4)   of   the   SARFAESI

Act.  At this stage it is required to be noted that

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 e­auction   was   held/conducted   on   31.08.2016

in   which   the   appellant   participated   and   was

declared as a successful bidder and he made a

payment of 25% of the bid amount on the very

day   i.e.,   on   31.08.2016.     However,   thereafter

the   respondent   no.1   filed   the   writ   petition

before the High Court challenging the e­auction

notice dated 28.07.2016 on 14.09.2016 that is

after conducting of the auction.   It is required

to be noted that against any steps taken by the

Bank under Section 13(4) of the SARFAESI Act

the   aggrieved   party   has   a   remedy   under   the

SARFAESI Act by way of appeal under Section

17 of the SARFAESI Act to approach the DRT.

Therefore,   in   view   of   the   availability   of   the

alternative statutory remedy available by way of

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 proceedings/appeal   under   Section   17   of   the

SARFAESI   Act,   the   High   Court   ought   not   to

have entertained the writ petition under Article

226 of the Constitution of India in which the e­

auction notice was under challenge.  Therefore,

the   High  Court  has committed a  very   serious

error   in   entertaining   the   writ   petition   under

Article   226   of   the   Constitution   of   India

challenging the e­auction notice issued by the

Bank in exercise of power under Section 13(4)

of the SARFAESI Act. 

8.1 Even otherwise it is required to be noted that

the   respondent   no.1   –   original   writ   petitioner

filed   the   writ   petition   as   agreement   to   sale

holder of the flat in question.  At this stage it is

required   to   be   noted   that   earlier   against   the

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 measures   taken   by   the   Bank   under   Section

13(4)   of   the   SARFAESI   Act   the   borrower   filed

S.A.No.253 of 2012 before the DRT, Hyderabad.

The   DRT,   Hyderabad   by   order   dated

19.12.2016 gave the liberty to the borrower to

file the list of intending buyers of the property

and   to   bring   forth   with   the   buyers   so   as   to

enable   the   Tribunal   to   consider   the   same   for

repayment   of   the   dues   of   the   Bank.     That

thereafter   on  25.02.2016 the   DRT  passed  the

following order:

"The Bank is directed to go ahead with the
sale as proposed excluding the Flat to be
identified   and   communicated   by   the
Applicant   to   the   Respondent   Bank   by
29.02.2016   with   full   detailed   of   all   the
Purchasers   to   the   Bank   Officers   on
affidavit so as to enable the Bank Officer
to   exclude   those   Flats,   provided   the
remaining Flats are sufficient for recovery
of the dues. The Bank may proceed with

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 the sale but shall not confirm the same till
the next date of hearing."

8.2 At this stage it is required to be noted that the

flat  in   question  namely  Flat  No.6401 was not

the seven flats identified by the borrower to be

kept   out   of   the   auction   proceedings.     At   the

relevant time the flat in question was not sold

amongst  the   seven flats mentioned  before the

Tribunal.  That thereafter during the pendency

of   the   S.A.   No.253   of   2012   and   without

obtaining   prior   approval   and/or   intimation   to

the   DRT   and   even   the   bank,   the   borrower

entered   into   the   sale   agreement   with   the

respondent no.1 on 16.06.2016.  At this stage,

it is required to be noted that in the MoU dated

10.04.2016   between   the   borrower   and   the

respondent   no.1   in   Clause   No.4   it   was

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 specifically provided that first the party should

obtain clearance of sale from DRT/SBH so that

they   can   process   with   further   agreement   to

sale.     Thus,   as   such   respondent   no.1   at   the

relevant   time   was   aware   about   the   pending

DRT   proceedings.     Still   the   respondent   no.1

entered   into   the   agreement   to   sale   with   the

borrower   on   16.06.2016.     At   this   stage,   it   is

pertinent to note that thereafter when the Bank

issued   a   public   notice   on   28.07.2016   for

auctioning   the   properties   of   the   borrower.

Before the date of auction, on 24.08.2016 the

borrower   filed   an   application   before   the   DRT

praying for stay of all proceedings of the Bank

pursuant   to   the   auction   notice   dated

28.07.2016.  The DRT was pleased to reject the

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 said   application   for   stay   vide   the   order   dated

24.08.2016   by   observing   that   the   sale   of   the

flat in question without  the permission of the

Bank or the Tribunal is void.  The order dated

24.08.2016 is reproduced hereinabove.   Thus,

as   such   the   transaction   in   favour   of   the

respondent   no.1   with   respect   to   Flat   no.6401

was already held to be void by the DRT.   That

thereafter,   after   the   borrower   having   failed   to

obtain   any   order,   the   respondent   no.1   had

straightway   filed   the   writ   petition   challenging

the e­auction notice which the borrower failed

to   get   any   relief   before   the   DRT.     If   the

respondent   no.1   would   have   approached   the

DRT   against   the   e­auction   notice   he   would

have   been   non­suited   in   view   of   the   earlier

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 order   passed   by   the   DRT   dated   24.08.2016.

Therefore,   calculatively   the   respondent   no.1

filed   the   writ   petition   before   the   High   Court

challenging   the   e­auction   notice   and   that   too

after   conducting   of   the   e­auction   on

31.08.2016   and   the   sale   in   favour   of   the

appellant   was   confirmed.   The   aforesaid   facts

were   pointed   out   before   the   High   Court   and

despite   the   same  the   High   Court   has   allowed

the writ petition which is not sustainable at all.

By   the   impugned   order   the   respondent   no.1

has got the relief which as such the borrower

failed  to get  from  the DRT.   On the aforesaid

grounds   the   impugned   judgment   and   order

passed by the High Court is unsustainable.

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8.3 Even   otherwise   it   is   very   debatable   whether

Section   13(8)   of   the   SARFAESI   Act   shall   be

applicable in favour of a person who is only an

agreement to sale holder or Section 13(8) of the

SARFAESI Act shall be applicable only in case

of the borrower who is ready and willing to pay

the   entire   debt.     In   the   present   case   the

borrower failed to get any relief from the DRT.

The   borrower   did   not   apply   and/or   invoke

Section   13(8)   and   did   not   agree   to   clear   the

entire dues.  Therefore, also the High Court has

materially erred in allowing the writ petition.

8.4 Even otherwise it is required to be noted that

as such what exact relief is granted by the High

Court is not clear.  The High Court has simply

stated   that   the   writ   petition   is   allowed.

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 However,  it  is required to be noted that what

was challenged before the High Court was the

e­auction   notice   dated   28.07.2016   which   was

already   conducted  on   31.08.2016.     Therefore,

the   writ   petition   was   filed   much   after

conducting   the   e­auction   on   31.08.2016.     No

consequential   relief   has   been   granted   by   the

High   Court.     Therefore,   also   the   impugned

judgment and order passed by the High Court

is unsustainable.

8.5 Now so far as the submission on behalf of the

respondent no.1 that the respondent no.1 has

paid/deposited   the   amount   of   sale

consideration and now the respondent no.1 has

died   his   heirs   will   have   to   vacate   the   flat   in

question and on the other hand the appellant

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 shall   be   entitled   to   return   the   amount   of

Rs.6,45,250/­   deposited   at   the   relevant   time

being   25%   of   the   auction   sale   consideration

with   interest   is   concerned,   at   the   outset   it   is

required   to   be   noted   that   as   such   the

transaction   between   the   respondent   no.1   and

the borrower pursuant to the agreement to sale

dated   16.06.2016   was   absolutely   illegal   and

behind the back of the Tribunal as well as the

Bank   and   during   the   pendency   of   the

proceedings   before   the   Tribunal.     In   order

dated   24.08.2016   the   Tribunal   had   in   fact

already held the sale transaction as void.   As

observed   hereinabove   even   at   the   time   when

the respondent no.1 entered into the agreement

to   sale/MoU   he   was   aware   about   the

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 proceedings   pending   before   the   DRT   which   is

apparent from Clause 4 of the MoU referred to

hereinabove.     Therefore,   respondent   no.1

and/or his heirs cannot be permitted to get the

benefit   of   his   own   wrong   and   cannot   be

permitted   to   get   the   benefit   of   a   void

transaction.

9. In view of the above and for the reasons stated

above,   the   impugned   judgment   and   order

passed   by   the   High   Court   is   hereby   quashed

and   set   aside.     It   is   directed   that   on   the   full

payment   of   the   auction   sale   consideration   by

the   appellant   (after   deducting   the   25%  of   the

amount   already   deposited   earlier)   with   9%

interest from the date of auction till the actual

amount is paid, to be paid within a period of

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 four   weeks   from   today,   the   sale   certificate   be

issued in favour of the appellant with respect to

Flat No.6401.  Whatever the amount is already

deposited   by   the   respondent   no.1/his   heirs

shall be returned to the respondent no.1 (now

his heirs) with the interest at 9% from the date

of   such   deposit   till   the   actual   date   of   return

which shall be returned within a period of four

weeks   from   today.     The   heirs   of   original

respondent   no.1   are   granted   three   months’

time   to   vacate   the   flat   in   question   and   are

directed to hand over the peaceful and vacant

possession of the Flat No.6401 to the appellant

within a period of three months from today as

ordered above.

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 Present appeals are allowed.   However, in the

facts and circumstances of the case there shall

be no order as to costs. 

……………………………J.
             (M. R. SHAH)

……………………………J.
                                  (C.T. RAVIKUMAR)
New Delhi, 
May 2, 2023 

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