1)

The Appellant submits that the sale notice dated 29.5.2009 is devoid

of particulars in respect of taking possession of the movable properties like taking inventories and Panchanama as prescribed in Rule-4(1) and no copy of the inventory was served on the appellant as prescribed under Rule-4(2) of the Security Interest [Enforcement] Rules, 2002. The respondent has not taken inventory as prescribed under the Rule. 2) The appellant submits that the demand of Rs.3,87,58,986/- as on

23.12.2008 as mentioned in the Sale Notice is issued for an imaginary liability exceeding the actual outstanding of the account classified as NPA. is highly imaginary, arbitrary and the appellant is not liable to pay the amount as mentioned in the sale notice. The interest as claimed by the respondent is exorbitant and hence the proceedings taken by the respondent under the Act is liable to be set aside. 3) The sale notification is not describing the real pictures. Mere

issuance of 13[4] without properly taking possession under sec. 14, the impugned sale notification is liable to be set aside. 4) It is submitted that the date of classification of applicants account as

NPA is 31.3.1992 and the respondent has not taken any steps to recover the same till 2009. The present action in the year 2009 under SARFAESI Act is barred by limitation and the respondent bank has no locus standi to invoke the provisions of the Act as the same has not been invoked within the limitation period prescribed under the Limitation Act. The respondents right to invoke the provision of the Act is barred under Section 36 of the SARFAESI Act since the account has been classified as NPA with effect from 31.3.1992 prior to the Act and the notice under 13(2) was issued only on 23.5.2009. Moreover, the SARFAESI Act, 2002 has only prospective effect and cannot be applied retrospectively. Therefore, the sale notice dated 19.10.2009 as well the possession notice are barred by limitation and hence liable to be set aside.

5)

The Sale Notice dt 19.10.2009 has been served on the applicant only

on 30.10.2009 and hence there is no 30 clear days for sale on 23.11.2009 and

as such the Sale Notice dt 19.10.2009 is invalid as the same is issued in violation of Rule 9(1) of the Security Interest (Enforcement) Rules 2002. 6) The Sale Notice dated 19.10.2009 is not served on all the applicants,

depriving their right to approach this Honble Tribunal to safeguard their interest over the property. Therefore, the Sale notice is unsustainable in law and liable to be set aside. 7) The Authorised officer has not done the valuation of the security

asset in accorandace with the rule 8(5) of the Security Interest (Enforcement) Rules 2002 and no valuer has visited the property and no valuation has been done. The valuation, if any, has not been served on the applicant. The price quoted in the sale notice is very much below the actual market value and the property was undervalued by the Authorised officer. Therefore the Sale notice is untenable in law and liable to be set-aside. 8) The Authorised officer has not valued the security assets by an

approved valuer Registered under 34-B of the Wealth Tax Act as defined in 2(g) of the Rules. 9) The Auhtorised officer has not published the Sale notice dt

19.10.2009 in two leading newspapers as required under Rule (6).

10)

The Authorised officer has never visited the property and no affixture

of sale notice dt 19.10.2009 on the immovable property as required under Rule 8(7) of the Security Interest (Enforcement) Rules 2002 was effected and therefore the sale notice dated 19.10.2009 is not in accordance with law and is liable to be set aside. 11) The Respondent bank before invoking the provision of the SARFEASI

ACT has not considered the payments made by the Appellant and has not given due credit of the payments and arbitrarily imposed heavy interest as well as penal interest on the Appellant which is highly unreasonable and against the principles of natural justice.

12)

The applicant submits that Sec 13(8) of the SARFAESI Act provides

for payment of dues at any time before the date fixed for sale and in such case the secured assets shall not be sold or transferred by the secured creditor and no further step shall be taken by them for sale. Being so, in the circumstances of this case, it is obligatory on the respondent to put the owners of individual plots to notice regarding the sale and shall give them an opportunity to pay the proportionate dues in respect of their plots. The respondent bank without adopting the said procedure, acted in a mechanical manner and provided the opportunity only to those who approached them through mediators which is arbitrary, discriminatory and against the provisions of the Act. 13) It is obligatory on the part of the respondent/Secured Creditor that

the details of the encumbrances known to the secured Creditor shall be included in the Sale Notice and shall also be included in the Sale Certificate vide Appendix-III under Rule 7(2). In the present case the respondent Bank having ample knowledge of the sale in favour of the Applicant by the Borrower has deliberately not mentioned the same in the encumbrances column and issued a Sale Certificate with Nil encumbrance which is in violation of the Rule 8(6)(a). Therefore the alleged sale notice and the Sale Certificate dt 1-12-2008 is nullity in the eye of law and liable to be set-aside. 14) It appears from the records and it will be evident from the sale

conducted by the respondent that the property has been sold for a pittance while the market value is thrice the amount. The sale as such is a sham and nominal one done to aid the real estate brokers who thrive on speculative litigation. Unfortunately, the SARFAESI Act has become a tool of unjust enrichment in the hands of such real estate brokers who have a nexus with the Financial Institutions. 15) The applicant submits that it is seen from the records that the respondent bank has violated all the provisions of the SARFAESI Act and as well as the rules thereunder in bringing the property for auction and releasing some without any norms at their whims and fancies and the entire transactions were under suspicious background. Therefore it is just and necessary that the entire records pertaining to the sale shall be produced before this Honble Tribunal for verification.

16)

Article 21 of the Constitution of India, 1949 has provided as follows.

Protection of life and personal liberty. No person shall be deprived of his life or personal liberty except according to procedure established by law. 17) 3.2 As discussed earlier, right to life would include right to live with human

dignity and right to residence is one of the minimal human rights as fundamental right. The deprivation of right to life, therefore, must be consistent with the procedure established by law. It is pertinent to note here the maxim Nemo de Domo sua extrahi potest means No one may be dragged from his own house and another maxim Nemo potest esse simul actor et judex means No one can be at once suitor and judge. However, as provided in clause (a) of sub-section (4) of Section 13 of the Securitisation Act the secured creditor may realise the secured assets, including a self occupied residential house, by way of lease, assignment or sale by a common course of action and there is no special procedure established by the Securitisation Act to take possession and sale of a self occupied residential house. This is in gross violation of right to residence as fundamental right of the individual Director/Partner/Proprietor and/or Guarantor of the borrower company/firm. 18) However, on the contrary, as provided in clause (a) of sub-section (4) of Section

13 of the Securitisation Act the secured creditor may realise the secured assets, including a self occupied residential house, by way of lease, assignment or sale by a common course of action and there is no special procedure established by the Securitisation Act to take possession and sale of a self occupied residential house. This is clearly in gross violation of right to residence as fundamental right of the individual Director/Partner/Proprietor and/or Guarantor of the borrower company/firm. The fundamental rights, enshrined in Part III of the Constitution, are inherent and cannot be extinguished by any Constitutional or Statutory provision. Any law that abrogates or abridges such rights would be violative of the basic structure doctrine. Consequently, the Securitisation Act is violative of the right to residence as fundamental right as well as the basic structure doctrine. As discussed above, being the protectors of civil liberties of the citizens, the Supreme Court and the High Courts have not only the power and jurisdiction but also an obligation to protect the fundamental rights, guaranteed by Part III in general and under Article 21 of the Constitution in particular, zealously and vigilantly.

19)

As per definition of the term borrower in the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act), the term borrower, inter alia, means a guarantor. On the basis of erroneous interpretation of definition of borrower in the Act, almost all the secured creditors have illegally taken possession and/or sold the immovable assets (including a self occupied residential house) of a guarantor also, exercising powers under section 13(4) of the Act, whereas section 13(11) of the Act empowers the secured creditor only to proceed (means to file a suit) against the guarantors. It is pertinent to note here that in the context of section 13 of the Act the term borrower means "principal debtor" and does not mean guarantor at all. 20) 21) Preference should be given to that construction which avoids absurdity 2. In Bhatia International Vs Bulk Trading S. A. & Anr {2002 AIR 1432, 2002

(2) SCR 411, 2002 (4) SCC 105, 2002 (3)JT 150; Date of Judgment: 13/03/2002} a three judge bench of honble Supreme Court has held as follows (in para 15): 15If a language used is capable of bearing more than one construction, in selecting the true meaning, regard must be had to the consequences, resulting from adopting the alternative constructions. A construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference should be given to that construction which avoids such results. 22) Ordinarily, when a guarantee is sought to be enforced, the same must be done

through a court having appropriate jurisdiction 23) 3. In Karnataka State Financial Corporation Vs N. Narasimahaiah & Ors {2008

AIR 1797, 2008 (5) SCC 176, 2008(4) SCALE 473, 2008 (4) JT 183; Date of Judgment: 13/03/2008} honble Supreme Court has, inter alia, held as follows: 32.In a case where a court has to weigh between a right of recovery and protection of a right, it would also lean in favour of the person who is going to be deprived therefrom. It

would not be the other way round. Only because a speedy remedy is provided for that would itself lead to the conclusion that the provisions of the Act have to be extended although the statute does not say so. The object of the Act would be a relevant factor for interpretation only when the language is not clear and when two meanings are possible and not in a case where the plain language leads to only one conclusion. 24) Sale proceedings under SARFAESI Act, 2002? 25) Practically, many borrowers think of approaching Courts seeking relief only when the Bank take steps to auction the Secured Asset. It is because, the borrowers, in many cases, continue having negotiations with the Bank Officials and it will consume lot of time. It is only when the borrowers feel that they may not get their dispute or grievance settled with the Bank, then, they will approach the Tribunal or the Courts. This is a very difficult situation. On one side, the Banks are to be allowed to proceed with the sale proceedings and supposed to confer title on the successful bidder or purchaser. Because, no purchaser would be willing to purchase the property in the auction if there would be a rider over the title of the property even when the entire consideration is paid. Again, even if the bidder takes the risk and bids for the property, there is a chance that the property may fetch lesser value and the Banks may have to compromise with their rights at times or borrowers may be the losers in some cases as the residue of the sale proceeds comes to the borrowers. This continues to be the complicated situation and it is laudable that the Courts have interpreted the provisions of the Act even at this stage in favour of the borrower. The borrower is provided with a right to even challenge the sale proceedings and can exercise the right of redemption if he succeeds in his appeal under section 17 and if the sale gets set-aside finally. 26) Dealing with the sale proceedings under SARFAESI Act, the Delhi High Court in M/s. Ram Murty Pyara Lal & Others Vs. Central Bank Of India & Others, CDJ 2010DHC 1487, was pleased to observe as follows: 27) 17. In view of the above, we hold that the right of redemption claimed by the petitioners will depend upon success of the proceedings initiated by the petitioners under Section 17 of the SARFAESI Act. In case, the petitioners finally fail, then it will not have a right of redemption, however, in case the

petitioners succeed in the proceedings under Section 17 and orders are passed for setting aside the auction sale in terms of sub-section (2) to (4) of Section 17, then in such a case, it will be open to the petitioners to claim right of redemption. The conclusion which emerges is this that in case the borrower succeeds in its petition under Section 17, then, the DRT can pass orders under sub-sections 3 and 4 of Section 17 cancelling the auction sale proceedings. In case, the auction sale proceedings are cancelled because the action of the bank/financial institution is found to be violative of various provisions of the SARFAESI Act and the Rules framed there under, it is possible that a fresh auction may have to be conducted. In case a fresh auction of the mortgaged property has to be conducted then, a fresh date will be fixed for auction sale and it is at that stage that again Section 13 sub-section 8 will come into play and at which stage, the borrower can seek to exercise its right of redemption of the mortgaged property. Therefore, everything will turn upon the success or failure of the petitioners in the petition under Section 17 of the Act when the same reaches finality. Presently, the stage of the proceedings under Section 17 is that, and as already stated above, the same has been dismissed by the DRT and a statutory appeal under Section 18 is pending before the DRAT. Therefore, if the petitioners succeed in its appeal under Section 18 before the DRAT, the petitioners can exercise a right of redemption because fresh auction sale proceedings may have to be conducted and when so required to be conducted, once again a date will have to be fixed for sale/transfer/auction and before which date, the petitioners can seek to pay all the dues of the bank in terms of Section 13(8) of the SARFAESI Act.

28) This appeal impugns the common order dated 1.10.2009 passed by the Learned Presiding Officer, DRT-II, Chennai in SA No. 136/2008 and SA No.52/2009. 29) 2. The case of the appellant may be stated as follows: -

30) It is stated that the appellants who are engaged in the business of air conditioning had
obtained over draft facilities to the tune of Rs.85,00,000/- from the 1st Respondent Bank for the purpose of its business and they have been maintaining the loan account by making regular payments to the OD account. It is stated that subsequently due to the global recession the appellants could not clear the dues in time but had been periodically making deposits to the OD account. It is stated their account was classified as a NPA and a demand notice dated 1.8.2008 was issued under Section 13(2) of the SARFAESI Act demanding a sum of Rs.88,52,741/- as the dues on

31.7.2008. It is stated that the appellants could not repay the amount as demanded within 60 days as they had already paid Rs.25 lakhs towards another loan account with the 1st respondent bank and requested further time to settle the account. It is stated that the respondent bank without giving any further time proceeded to issue the possession cum sale notice dated 12.11.2008 fixing the auction sale on 4.1.2009 and published the possession cum sale notice in the newspaper dated 17.11.2008. It is stated that the appellants filed SA No. 136/2008 before the tribunal below and the tribunal by its order dated 29.12.2008 quashed the possession cum sale notice dated 12.11.2008 as the sale was fixed on 4.1.2009 i.e., a Sunday. It is stated that the respondent bank filed CRP No.501/2009 before the Honble High Court of Madras challenging the order of the tribunal below dated 29.12.2008 and the Honble High Court vide its order dated 3.3.2009 stayed the order of the Tribunal below dated 29.12.2008 and the respondent bank simultaneously issued the second possession cum sale notice dated 18.3.2009 fixing the auction sale on 24.4.2009. It is stated that the appellants had filed another SA No.52/2009 on the file of DRT-II Chennai challenging the second possession cum sale notice dated 18.3.2009 and the tribunal below passed an interim order allowing the auction sale to go on but directed the bank not to confirm the sale till 21.5.2009 subject to the condition of the appellant remitting a sum of Rs.25,00,000/- on or before 21.5.2009 and another sum of Rs.25,00,000/- on or before 21.6.2009 and that on appeal this Appellate Tribunal modified the interim order dated 21.4.2009 and the conditional amount ordered to be deposited was reduced to Rs.15,00,000/- to be paid by way of 2 payments on or before 2.6.2009 and 6.7.2009 respectively. It is stated that aggrieved by the order dated 21.4.2009 passed by the tribunal below and the order dated 1.5.2009 passed by this Tribunal the 1st respondent bank filed W.P. Nos. 9700/2009 and 9686/2009 respectively before the Honble High Court of Madras. The Honble High Court of Madras disposed of W.P. No. 9700/2009 by its order dated 2.6.2009 directing DRT-II Chennai to dispose of SA No. 136/2008 and SA No. 52/2009 within a period of two months from the date of receipt of the order. It is stated that pursuant to the said order of the Honble High Court of Madras the Ld. Presiding Officer, DRT-II Chennai took up both the SAs for hearing and finally dismissed both the SARFAESI Applications by a common order dated 1.10.2009 and had approved the "possession cum sale notices" dated 12.11.2008 and 18.3.2009. It is stated that aggrieved by the said common order of the Ld. Presiding Officer, DRT-II Chennai dated 1.10.2009 passed in SA No. 136/2008 and SA No. 52/2009 the present appeal is filed. It is prayed that the appeal be allowed. 31) 3. The Ld. Senior Counsel appearing on behalf of the Appellant took this Tribunal through the entire proceedings of the Authorized Officer and pointed out the various lacunae and also added that a combined "possession cum sale notice" has no sanction of law. The Ld. Senior Counsel also stated that the valuation of the secured asset in this case is improper and that the same is liable to be set aside. The Ld. Senior Counsel stated that the entire proceedings of the Authorized Officer are in contravention of the provisions of the Act and prayed that this appeal be allowed. 32) 4. The appellant filed its written submissions along with a synopsis of the same including a list of dates and the same forms part of record. The appellant relied upon the following judgments in support of its contentions:

33) 1. Authorized Officer, Indian Overseas Bank & Anr. Vs. M/s Ashok Saw Mill. AIR
2009 SC 2420.

34) 2. Lakshmi Machine Works Ltd., Vs. Deputy Commissioner (CT), Coimbatore and
Others. (2008) 17 VST 32 (Mad).

35) 3. R.Damodan Vs. Union of India and Others. Sales Tax Cases Vol. 88 Page 72. 36) 4. Hanu Reddy Realty India Pvt. Ltd., rep. by its Director, C. Suresh Reddy, Chennai.
Vs Jignesh and others (2008) 2 MLJ 896 :.

37) 5. M/s S.J.S. Business Enterprises (P) Ltd., Vs. State of Bihar and Others. AIR 2004
SC 2421.

38) 6. M/s Dwarakadhish Agro Pvt. Ltd. V. UCO Bank, Head Office, Kolkatta & Ors.
AIR 2009 Patna 102.

39) 7. Bhupinder Singh Vs. State Bank of Patiala & Ors. AIR 2008 Punjab and Haryana
148.

40) 8. Swastik Agency and Others V. State Bank of India, Bhubaneswar and others. AIR
2009 Orissa 147.

41) 9. The State Financial Corporation and another Vs. M/s Jagadamba Oil Mills and
another. AIR 2002 SC 834 (P).

42) 5.

The Ld. Counsel appearing on behalf of the 1st Respondent Bank stated that whatever has been done by the Authorized Officer has been done in accordance with law and further that there has been no violation of the provisions of the Act as can be seen from the records of the case. The Ld. Counsel stated that the appeal has no merits and that the same is liable to be dismissed with costs.

43) 6. The first respondent bank filed its written submissions and the same forms part of the record. The first respondent bank relied upon the following judgments in support of its contentions:

44) 1. Jupiter Jewel Tech represented by its Partners and Others Vs. Authorized Officer,
Indian Overseas Bank, Kilpauk Branch, Chennai. CDJ 2010 MHC 2311.

45) 2. Samir K. Shah and Another Vs. Union of India and Others. (2005) 10 SCC 134. 46) 3. M/s Kayjay Industries (P) Ltd., Vs. M/s Asnew Drums (P) Ltd., and Others.
(1974) 2 SCC 213.

47) 4. Anil Kumar Srivastava Vs. State of U.P and Another.

(2004) 8 SCC 671.

48) 5. Times Guarantee Limited, Mumbai and Others Vs. Branch Manager, Industrial
Development Bank of India, Chennai and Others. (2006) 4 MLJ 33.

49) 6. Valji Khimji and Company Vs. Official Liquidator of Hindustan Nitro Product
(Gujarat) Limited and Others. (2008) 9 SCC 299.

50) 7. Haryana Financial Corporation and Another Vs. Jagdamba Oil Mills and
Another. (2002) 3 SCC 496.

51) 8. Gayathri Devi and Others Vs. Shashi Pal Singh.

(2005) 5 SCC 527.

52) 9. Saheb Khan Vs. Mohd. Yousufuddin and Others.

(2006) 4 SCC 476.

53) 10. Orissa State Financial Corporation and Another Vs. Hotel Jogendra. (1996) 5
SCC 357.

54) 11. U.P. Financial Corporation Vs. Gem Cap (India) Pvt. Ltd. And Others. (1993) 2
SCC 299.

55) 12. Amar Alcohol Ltd. Vs. SICOM Ltd., and Another.
(2006) 1 SCC 199. 56) 7. R2 has been given up.

57) 8.

The Ld. Sr. Counsel appearing on behalf of 3rd and 4th Respondents stated that they have validly purchased the property from the Authorized Officer and that the sale process cannot be challenged and prayed for a dismissal of the appeal.

58) 9. The Respondent Nos. 3 and 4 also filed their written submissions and the same forms part of record. 59) 10. 60) 11. Heard the Ld. Counsel. Rule 8(5) of Security Interest (Enforcement) Rules, 2002 reads as under: -

61) 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 sell the whole or any part of such immovable secured asset by any of the following methods: -

62) (a)

by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or 63) (b) by inviting tenders from the public; 64) (c) by holding public auction; or 65) (d) by private treaty. 66) 67) 12. A reading of Rule 8(5) of Security Interest (Enforcement) Rules, 2002 clearly reveals that the Authorized Officer before proceeding to sell the secured asset shall obtain the valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and that this is mandatory before the Authorized Officer proceeds with the sale of the secured asset. 68) 69) 13. A perusal of the valuation report dated 12.11.2008 reveals that the clients name and address therein is stated to be M/s Airtech Project Engineering Pvt. Ltd., Owner Mrs. Vasantha Devi and it is clear from column No. 1 that the valuation for the land and building was done by the valuer M/s United Shakthi Associates at the request of M/s. Airtech Projects Engineers Pvt. Ltd. and not at the request of the Authorized Officer. Apart from the above there is no material in the valuation report which says that the valuation was caused to be done by the Authorized Officer in this case and in the absence of a valuation report made on the request of the Authorized Officer as required under Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 it can be easily said that the Authorized Officer has not at all sought for the valuation report from the approved valuer and such being the case it can be seen that

the Authorized Officer by failing to obtain the valuation certificate by himself has contravened Rule 8(5) of Security Interest (Enforcement) Rules, 2002. 70) 14. The 1st Respondent Bank has filed a copy of the valuation report dated 7.8.2002 of the property which has been sold in this case. A reading of the said valuation report reveals that the valuation was taken up pursuant to the request of the Manager, United Bank of India, T. Nagar for the purpose of assessing the fair market value of the property. The 1st Respondent Bank also filed a valuation report dated 28.6.2004 and the 2nd page of the said report has been submitted to the bank and from this it can be said that the valuation report had been obtained by the Bank. It can be seen that the 2 valuation reports dated 7.8.2002 and 26.8.2004 have been obtained by the Bank as a creditor. A reading of the valuation report dated 12.11.2008 reveals that neither the Authorized Officer nor the Bank obtained the said valuation report and that the client at whose instance the report was brought about is M/s. Airtech India Ltd., the appellant in this case and the comparative reading of the valuation reports caused by the Bank and the report caused by M/s. Airtech India Ltd., clearly reveals that it was not the Authorized Officer who obtained the valuation report of the property which was sold and that the Authorized Officer did not at all cause the valuation of the property prior to the sale. 71) 72) 15. Therefore the auction conducted by the Authorized Officer based on the valuation report not obtained by him cannot be said to be an auction conducted in accordance with the Rules. 73) 74) 16. Further the approved valuer is defined in Rule 2(d) of the Security Interest (Enforcement) Rules, 2002 as follows: 75) approved valuer means a person registered as a valuer under section 34AB of Wealth Tax Act, 1957 and approved by the Board of Directors or Board of Trustees of the secured creditor, as the case may be; 76) From the definition of the approved valuer it is clear that approved valuer is a person who is registered as a valuer under Section 34AB of Wealth Tax Act, 1957 and also approved by the Board of Directors or Board of Trustees of the secured creditor, as the case may be. 77) 17. It is seen from the valuation report dated 12.11.2008 that there is no evidence available in the report to show that the valuer is a registered valuer under Section 34AB of Wealth Tax Act, 1957 and further no proof is also placed to show that the valuer is approved by the Board of Directors of the secured creditor. 78) 18. It is also seen in this case that no evidence whatever has been placed by the Authorized Officer to reflect that he has fixed the reserve price in consultation with the secured creditor as prescribed in the Rules. 79) 19. The non obtaining of the valuation report by the Authorized Officer, the non demonstration of the registration of the valuer under Section 34AB of Wealth Tax Act 1957 and the non demonstration by the Authorized Officer that the valuer is a valuer approved by the Board of Directors of the Secured Creditor all go to render the valuation report in this case to be brushed aside as the said report is not in consonance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002. 80) 81) 20. A perusal of the Possession cum sale Notice dated 18.3.2009 reveals that the reserve price of the property under sale was Rs.2,15,00,000/- and the EMD to be deposited before the auction was Rs.21,50,000/- being 10% of the

reserve price or upset price. There were 2 bidders in this case viz. (1) Mrs. Meena Alagappan (2) Mrs. Lakshmi Mohan and M. Premkumar. A perusal of the letters dated 23.4.2009 given by them to the Chief Manager, United Bank of India, T. Nagar Branch reveals that both of them have enclosed pay orders for Rs.21,50,000/- each as the EMD. A perusal of the copy of the auction proceedings dated 24.4.2009 drawn up by the Authorized Officer and filed by the Respondent Bank reveals that the EMDs received from the bidders totally two in number was Rs.21,15,000/- each and a perusal of paragraph 8 of the said proceedings and a reading of paragraph 2 of the affidavit filed by the 3rd and the 4th Respondents in IA No.196/2010 in this appeal confirm the fact that the EMD deposited by the successful bidder in the auction was only Rs.21,15,000/- and not Rs.21,50,000/- as required in the "Possession cum Sale Notice" dated 18.3.2009 and such being the case this Tribunal is compelled to conclude that the Authorized Officer has himself violated the terms and conditions of the possession cum sale notice dated 18.3.2009 and conducted the auction with the bidders who did not even deposit the requisite EMDs as notified and further driven to conclude that such an auction sans the requisite EMDs cannot be countenanced in law and also that the Authorized Officer after opening of the tenders ought not to have conducted the auction for want of the deposit of the sum required to be deposited by the bidders towards the EMDs. 82) 21. The prejudice caused to the appellants in this case by the conduct of the auction sale based on a valuation report not in consonance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 is reflected in the contentions of the appellants who state that the value of the property is more than Rs.8 crores and that the auction purchaser has walked away with the property by paying a value less than 25% of the value of the property. It can be seen that had the Authorized Officer caused a proper valuation as required under the Rules the sale could have fetched more and this loss of money to the appellant has caused great prejudice to them and therefore it can be seen that the act of the Authorized Officer in not following the provisions of Rule 8(5) of Security Interest (Enforcement) Rules, 2002 has been prejudicial to the appellants. 83) 22. Similarly it can be said that the Appellant has been put to prejudice also because of the acts of the Authorized Officer in venturing to hold the auction even without the deposit of the required EMDs when he ought not have proceeded any further after discovering that the amount deposited as EMDs is much less than the amount advertised in the possession cum sale notice. 84) 23. Therefore from the fact that the Authorized Officer has not proceeded to conduct the auction with a valuation report in consonance with Rule 8(5) of Security Interest (Enforcement) Rules, 2002 and from the fact that the respondent bank has failed to place material on record to the effect that the valuer is registered under Wealth Tax Act, 1957 and from the fact that the Authorized Officer has himself violated the terms and conditions of the possession cum sale notice dated 18.3.2009 and conducted the auction with the bidders who did not even deposit the requisite EMDs as notified, this Tribunal is driven to conclude that the auction proceedings are not as per the provisions of the SARFAESI Act and that the Authorized Officer has contravened the provisions of the SARFAESI Act and the Rules made thereunder and the auction sale held on 24.4.2009 pursuant to the possession cum sale notice dated 18.3.2009 is liable to be set aside. 85) 24. Accordingly the common order dated 1.10.2009 passed by the Learned Presiding Officer, DRT-II, Chennai in SA No. 136/2008 and SA No. 52/2009 is set

aside as a consequence of which the possession cum sale notices dated 12.11.2008 and 18.3.2009 are too set aside. 86) 87) 25. The Authorized Officer is hereby directed to restore the possession of the secured asset to the appellant within 7 days from the date of receipt of a copy of this order. However, it is made clear that the Authorized Officer would always be at liberty to take up fresh proceedings against the appellant under the provisions of the SARFAESI Act after duly taking into account the various payments made by the appellant. 88) 26. In the result the appeal is allowed. No costs.

89)