VARIMADUGU OBI REDDY versus B. SREENIVASULU & ORS.

VARIMADUGU OBI REDDY versus B. SREENIVASULU & ORS.

The High Court's setting aside of the e-auction and all consequential proceedings was unsustainable: the typographical error in the door number (12-3-393 for 12-3-39) was inconsequential since the full property description identified the mortgaged property and no prejudice was shown; the four-day delay in depositing the balance (caused by Tribunal proceedings and bank's request) did not frustrate or annul the auction under Rule 9(4); and the High Court should not have entertained the writ without the respondents exhausting the statutory appeal remedy under Section 18. Accordingly the appeal was allowed and the High Court judgment quashed and set aside.

Parties
Appellant (auction Purchaser): Varimadugu Obi Reddy; Respondents (borrowers/guarantors): B. Sreenivasulu & Ors.; Respondent (secured Creditor): Respondent Bank (secured creditor)
Jurisdiction
India
Judgment Date
16 November 2022
Procedural Posture
Civil Appeal (civil Appeal No.8470 of 2022) / Appeal From the Judgment and Order Dated 20.11.2019 of the High Court of Telangana at Hyderabad (writ Petition Under Article 226)
Outcome
Appeal allowed; impugned judgment and order of the High Court dated 20.11.2019 quashed and set aside
Legal Topics
E Auction Sale Under SARFAESI, Compliance With Rule 9(4) of the Rules, 2002, Effect of Typographical Error in Property Description, Exhaustion of Statutory Remedy and Pre Deposit Under Section 18, Possession and Sale Certificate Issuance
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Security Interest (enforcement) Rules, 2002 Banking Law and Recovery Constitutional Law (article 226) E Auction Sale Under SARFAESI Compliance With Rule 9(4) of the Rules, 2002 Effect of Typographical Error in Property Description Exhaustion of Statutory Remedy and Pre Deposit Under Section 18 +1 more

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Parties

Varimadugu Obi Reddy

Appellant (auction Purchaser)

B. Sreenivasulu & Ors.

Respondents (borrowers/guarantors)

Respondent Bank (secured creditor)

Respondent (secured Creditor)

Procedural Posture

Civil Appeal (civil Appeal No.8470 of 2022) / Appeal From the Judgment and Order Dated 20.11.2019 of the High Court of Telangana at Hyderabad (writ Petition Under Article 226)

Legal Issues

  1. 1 Whether a typographical error in the door number in Section 13(2)/13(4)/e-auction notices vitiates the e-auction sale
  2. 2 Whether failure to deposit the balance purchase price within the 15-day period under Rule 9(4) (four days' delay) vitiates the sale
  3. 3 Whether the High Court should have entertained a writ under Article 226 without exhausting the statutory appeal remedy under Section 18 of the SARFAESI Act

Ratio Decidendi

The High Court's setting aside of the e-auction and all consequential proceedings was unsustainable: the typographical error in the door number (12-3-393 for 12-3-39) was inconsequential since the full property description identified the mortgaged property and no prejudice was shown; the four-day delay in depositing the balance (caused by Tribunal proceedings and bank's request) did not frustrate or annul the auction under Rule 9(4); and the High Court should not have entertained the writ without the respondents exhausting the statutory appeal remedy under Section 18. Accordingly the appeal was allowed and the High Court judgment quashed and set aside.

Court Disposition

Appeal allowed; impugned judgment and order of the High Court dated 20.11.2019 quashed and set aside

Orders

  • Impugned judgment and order dated 20.11.2019 of the High Court quashed and set aside
  • The respondent Bank shall transfer the original surplus sum of Rs.16,30,000/- with interest accrued (approx. Rs.18,80,000/- to date) to the account of the borrower/guarantor within eight weeks upon written consent as to the account in which the money is to be transferred