1. SARFAESI - Fresh 30 Days Notice Not Needed If Failure To Conduct Sale As Per First Notice Was Due To Borrower's Actions : Supreme Court
In the case S. Karthik v. N Subhash Chand Jain, the Court stated that a fresh notice is necessary only if the sale got stopped due to reasons which are not attributable to the borrower.
A bench comprising Justices L Nageswara Rao, BR Gavai and BV Nagarathna dismissed the special leave petition filed by the borrower, after making critical observations against the litigant for instituting various proceedings to stall the SARFAESI proceedings.
If the sale of a mortgaged property as per the SARFAESI Rules was interrupted during the 30 days notice period due to the actions of the borrower, a fresh notice of 30 days is not necessary for the sale process to resume after the interruptions are over, held the Supreme Court in a recent judgment.
In this case, the appellants were guarantors for a loan taken by borrower from Respondent-Bank. Upon failure of the borrower to replay, the Respondent-Bank issued a sale notice in respect of mortgaged properties. The first sale notice was stayed by an order of DRT Chennai and subsequently the Respondent-Bank issued another sale notice and sold the mortgaged property to the Auction Purchaser. The guarantors contended that the sale notice issued was not in compliance with Rule 8 and Rule 9 of the SARFAESI Rules and thus the sale was void and liable to be set aside, as the second sale notice gave only 10 days as opposed to 30 days. The Madras High Court dismissed the challenge.
The Bench observed that:
"The SARFAESI Act was enacted with the purpose for securitization and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the Court." (Paragraph 76)
"If we look at the facts in the present case, it would show that, every attempt has been made to frustrate the purpose of the SARFAESI Act. The Respondent Bank was required to indulge in three rounds of litigations, out of which, the two have reached upto this Court."
The judgement authored by Justice B.R.Gavai has observed that a litigant, by taking recourse to a series of proceedings one after the other, cannot be allowed to block the enforcement of a security interest created in favour of a secured creditor and thereby defeat the very purpose for which the SARFAESI Act was enacted
The Bench dismissed the SLP with costs and observed that in matters like these the purpose with which the SARFAESI Act has been enacted has to be taken into consideration.
Source: Bar & Bench
2. Administrative Action Of Public Authority Cannot Be Invalidated Merely For Not Recording Reasons When It Had No Duty To Do So: Supreme Court
The Supreme Court observed that an administrative action of a public authority cannot be struck down merely for not 'recording' reasons when there was no duty on its part to do so
The court then noted that administrative decisions are made in a wide spectrum of situations and contexts. In this regard, the court said:
"Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, we may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights. There may be something in the nature or the context, under which, the administrative action is taken, which may necessitate the authority being forthcoming with rational reasons. There are other decisions, which essentially belong more to the realm of executive policy-making, which ordinarily may not require the furnishing of reasons."
The court may, when there is no duty to record reasons, support an administrative decision, with reference to the pleadings aided by materials, the bench of Justices KM Joseph and S. Ravindra Bhat observed. The bench said that, reasons may, in certain situations, have to be recorded in the order. But in other contexts, it would suffice that the reasons are to be found in the files.
The court also clarified that 'even if there is no duty to record reasons or support an order with reasons, there must be a reason'.
Source: Bar & Bench
3. 'In India, Every State Action Must Be Fair, Failing Which It Will Fall Foul Of Article 14' : Supreme Court Sets Aside Direction To Shift NH Toll Plaza
The Supreme Court set aside a Patna High Court Judgement which directed the National Highway Authority of India to shift the toll plaza on Patna-Bakhtiyarpur four-lane road (NH-30) from Karmalichak near Deedarganj.
In appeal, the Apex Court noted that High Court has read the second proviso in continuation with the first proviso and thereby concluding that, even the requirement of the first proviso, viz., the recording of reasons in writing, would also become necessary to invoke the power under second proviso.
"We would think that such an interpretation would fly in the face of the clear words used in the second proviso, and would, what is more, amount to rewriting the Rule. The real safeguard, which is present in the second proviso, is the nature of the objective and inflexible requirements, which are declared therein.", the court said.
The Patna High Court, while allowing the writ petitions challenging the setting up of Toll Plaza, had held that the toll plaza location was violation of Rule 8 of National Highways Fee (Determination of Rates and Collection) Rules, 2008 which provides that a toll plaza must be constructed beyond 10 kilometres of a municipal or town area and, in no condition, should be within five-kilometre limits.
Rule 8: Rule 8(1) provides that the Executing Authority or the Concessionaire shall establish toll plaza beyond a distance of 10 kilometres from a municipal or local town area limits. First Proviso states that the executing authority may, for reasons to be recorded in writing, locate or allow the concessionaire to locate a [fee plaza] within a distance of ten kilometres of such municipal or local town area limits, but in no case within five kilometres of such municipal or local town area limit.
Source: Bar & Bench
Comments
write a comment