Auction proceeding vitiated as rule 9(3) and 9(4) of Security Interest (Enforcement) Rules violated

Classic Chemicals Limited Vs Debts Recovery Appellate Tribunal At Kolkata (Telangana High Court)

Telangana High Court held that the whole auction proceedings are rightly vitiated since auction was done blatantly in violation of Rule 9(3) and Rule 9(4) of the Security Interest (Enforcement) Rules, 2002. Accordingly, writ dismissed.

Facts- This Writ Petition is filed by the auction purchaser (M/S Classic Chemicals Limited) in the nature of Writ of Certiorari for setting aside the impugned order, dated 10.01.2C25 passed by the Debts Recovery Appellate Tribunal (DRAT) at Kolkata and to quash the same, confirm the auction sale conducted on 22.03.2013 as valid and in accordance with The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002′) and the Rules made thereunder.

Conclusion- Held that the petitioners have not made out any case for Writ of Certiorari and as rightly held by learned DRAT that the auction was done blatantly in violation of Rule 9(3) and Rule 9(4) of the un-amended Rules which vitiates the whole action proceedings and we also concur with the findings of the DRAT that the actions of the auction purchaser were subject to the doctrine of Lis Pendence and the auction purchaser cannot take advantage of the amounts spent by him on the secured assets, which finding is fortified by the judgment of the Supreme Court in Shanmugavelu’s case.