Sri Korada Rama Gopal v. Union Of India & Ors.

Sri Korada Rama Gopal ...PETITIONER ...PETITIONER AND Union Of India and Others ...RESPONDENT(S) ...RESPONDENT(S) Petitioner: Counsel for the Petitioner: R SIVA SAI SWARUP 1. R SIVA SAI SWARUP Counsel for the Respondent(S): Counsel for the Respondent(S): CORAM: THE CHIEF JUSTICE DHIRAJ SINGH THAKUR CORAM: THE CHIEF JUSTICE DHIRAJ SINGH THAKUR CORAM: THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI SRI JUSTICE RAVI CHEEMALAPATI

25.04.2025 DATE : 25.04.2025 ORDER (Per Sri Justice Ravi Cheemalapati) (Per Sri Justice Ravi Cheemalapati) auction sale held by Challenge laid in this writ petition is to the E-auction sale held by Challenge laid in this writ petition is to the E auction Sale Notice issued respondent nos. 2 and 3 in pursuance of the E-auction Sale Notice issued respondent nos. 2 and 3 in pursuance of the E the Securitisation and Reconstruction of Financial Assets under Rule 8(6) of the Securitisation and Reconstruction of Financial Assets the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (For short, ‘the Act’) thereby Enforcement of Security Interest Act, 2002 (For short, ‘the Act’) thereby HCJ & RCJ W.P.No.7053 of 2025 2 declaring the single bidder as successful bidder adding some meager amount to the reserve price by undervaluing the Basic Sub Registrar Value.

2. The contents of the petition, in brief, are that the petitioner availed cash credit loan from erstwhile Andhra Bank, which later merged with Union Bank of India, by creating simple mortgage over the property for due discharge of the said loan. As the petitioner committed default in payment of loan amount, the loan account was declared as a Non-Performing Asset. After issuing demand notice and possession notice, finally, E-auction notice dated

7.2.2025 was issued and the same was also published in newspaper. On the date of auction, only one bidder participated in the auction. The Bank, instead of cancelling or adjourning the auction for lack of sufficient bidders, conducted auction and declared the single bidder for item no.2 of the sale notice, for a sum of Rs.60,50,000/-, which is nothing but addition of meager amount to the reserve price. Thereafter, sale confirmation letter was also issued. The said item in the open market would fetch more than one crore, however its rate was fixed as Rs.81,50,000/- at the time of first auction, which was further reduced to Rs.60,50,000/- at the time of second auction, by undervaluing the property less than the basic value register. Hence, it is evident that item no.2 was sold for less than the basic value register. The HCJ & RCJ W.P.No.7053 of 2025 3 auction purchaser though deposited 25% of the bid amount, did not deposit the full and complete auction price within the stipulated time. An auction is to be conducted for fetching more price to the borrower but not for mere getting the amount due. Therefore, the auction conducted by the bank is unlawful and in violation of the procedure prescribed under the Act. Hence, the writ petition.

3. Heard Sri R.Siva Sai Swarup, learned counsel for the petitioners.

4. Sri R.Siva Sai Swarup, learned counsel, in elaboration would contend that since the reserve price was fixed much below the value mentioned in valuation certificate and as there was no competitive bidding for single bidder had only participated in the auction, the sale held by the bank is illegal, besides being violative of procedure envisaged under the Act and hence the same has to be set aside. In support of his contentions, the learned counsel placed reliance on (1) Lakshmanasami Gounder vs. C.I.T., Selvamani and others1, and (2) Rajiv Kumar Jindal and others vs. BCI Staff Colony Residential Welfare Association and others2.

1.(1992) 1 Supreme Court Cases 91 2. 2023 SCC OnLine SC 507 HCJ & RCJ W.P.No.7053 of 2025 4

5. In Union Bank of India v. Satyawati Tondon3, the Hon’ble Supreme Court has deplored action of High Courts in exercising writ jurisdiction ignoring availability of statutory remedies under the DRT Act and SARFAESI Act. They are extracted hereunder: “55. It is a matter of serious concern that despite repeated pronouncements of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”

6. Of late, this Court, vide orders dated 11.07.2024, passed in Writ Petition No.14411 of 2024, held that in the absence of exceptions enumerated in the decision of the Hon’ble Supreme Court in PHR Invent Educational Society v. UCO Bank4, the petitioners should avail the alternate remedy in terms of SARFAESI Act and further taking note of the observations referred to supra in para-55 in Satyawati Tondon (supra 1), finding no merit in the writ petition granted liberty to the petitioners to avail an appropriate remedy.

7. Therefore, availability of alternative efficacious statutory remedy provided under SARFAESI Act debars the petitioner from invoking writ jurisdiction.