BANK OF BARODAversusM/S KARWA TRADING COMPANY & ANR.

1100            SUPREME COURT
                          [2022]REPORTS
                                 1 S.C.R. 1100             [2022] 1 S.C.R.


 A                            BANK OF BARODA
                                        v.
                 M/S KARWA TRADING COMPANY & ANR.
                          (Civil Appeal No. 363 of 2022)
 B                            FEBRUARY 10, 2022
                 [M. R. SHAH AND SANJIV KHANNA, JJ.]
              Securitisation and Reconstruction of Financial Assets and
       Enforcement of Security Interest Act, 2002 – ss.13(2), 13(4), 14
       and 17 – Security Interest (Enforcement) Rules, 2002 – r.8 r/w r.9 –
 C
       Appellant (bank) granted term loan of Rs.100 lakhs and cash credit
       limit of Rs.95 lakhs to respondent (borrower) against security of
       two mortgaged properties – Borrower failed to repay the loan as
       per terms & conditions of the agreement – The account of the
       borrower became NPA on 31.10.2012 – Notice u/s.13(2) of
 D     SARFAESI Act served upon the borrower on 07.01.2013 demanding
       sum of Rs.1,85,37,218.80/- – Bank took symbolic possession of the
       immovable property / residential house and issued notice u/s. 13(4)
       of SARFAESI Act on 22.08.2013 – The bank issued sale notice by
       public auction of the residential property on 16.12.2013 – Reserve
       price fixed was Rs.48.65 lakhs – Date of auction notified was
 E
       20.01.2014 – Borrower challenged the auction by filing application
       u/s 17 of the SARFAESI Act before DRT – DRT passed interim order
       directing release / handover of possession of the mortgaged property
       to the borrower on deposit of Rs.48.65 lakhs – Bank filed appeal
       before DRAT which was dismissed – Single Judge of High Court set
 F     aside the orders passed by DRT & DRAT on ground that the orders
       were in contravention of s.13(8) of SARFAESI Act – Division Bench
       set aside the order of Single Judge and directed the bank to release
       the secured property (residential house) on the borrower depositing
       a further sum of Rs.17 lakhs to the bank and handover possession
       along with title deeds to the borrower – Propriety – Held: Not proper
 G
       –The bank/secured creditor could be restrained from selling the
       mortgaged property/secured property if the borrower deposited
       entire dues that was Rs.1,85,37,218.80/- as on 07.01.2013 with the
       secured creditor – DRT in its order which as such was an interim
       relief order pending appeal u/s.17 of the SARFAESI Act was not
 H     justified in directing to release the mortgaged property and
                                       1100
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                      1101


handover the possession along with the original title deeds to the       A
borrower on payment of Rs.48.65 lakhs only which was the base
price/ reserve price, which the Division Bench of the High Court
increased to Rs.65.65 lakhs on the ground that the highest bid
received was Rs.71 lakhs – Unless and until the borrower was ready
to deposit /pay the entire amount payable together with all costs
                                                                         B
and expenses with the secured creditor, the borrower could not be
discharged from the entire liability outstanding – It will be open for
the appellant to proceed with the auction proceedings of the
mortgaged properties – At the same time, DRT to decide and dispose
of the application filed by the borrower u/s 17 of the SARFAESI Act
in accordance with law.                                                  C
      Allowing the appeal, the Court
       HELD:1. The bank had already initiated the proceedings
under Section 13 of the SARFAESI Act and even the possession
of the mortgaged property was taken over by the bank under
Section 14 of the SARFAESI Act and thereafter the mortgaged              D
property was put to sale by a public auction and at that stage the
borrower wanted to stall the auction proceedings and restrain
the secured creditor/ bank from selling the property. In such a
situation the bank/secured creditor can be restrained from selling
the mortgaged property/secured property where the borrower               E
deposits entire dues that was Rs.1,85,37,218.80/- as on 18
07.01.2013 with the secured creditor. Therefore, the DRT in its
order dated 17.01.2014 which as such was an interim relief order
pending the appeal under Section 17 of the SARFAESI Act was
not justified in directing to release the mortgaged property and
handover the possession along with the original title deeds to           F
the borrower on payment of Rs.48.65 lakhs only which was the
base price/ reserve price, which the Division Bench of the High
Court has increased to Rs.65.65 lakhs on the ground that the
highest bid received was Rs.71 lakhs (which was not materialized
as the highest bidder did not come forward). Unless and until the        G
borrower was ready to deposit/pay the entire amount payable
together with all costs and expenses with the secured creditor,
the borrower cannot be discharged from the entire liability
outstanding. Therefore, as such no order could have been passed

                                                                         H
1102            SUPREME COURT REPORTS                      [2022] 1 S.C.R.


 A     either by the DRT and/or by the Division Bench of the High Court
       to discharge the borrower from the entire liability outstanding
       and to discharge the mortgaged property and handover the
       possession along with original title deeds to the borrower. As
       such the Single Judge rightly set aside the orders passed by the
       DRT as well as by the DRAT considering Section 13(8) of the
 B
       SARFAESI Act. The Single Judge was right in setting aside the
       order passed by the DRT confirmed by the DRAT. The Division
       Bench of the High Court has erred in interfering with the order
       passed by the Single Judge and has erred in directing to release
       the mortgaged property/ secured property and handover
 C     the possession along with the original title deeds to the borrower
       on payment of a total sum of Rs.65.65 lakhs only. [Para 7.1]
       [1110-G-H; 1111-A-F]
             2. However, at the same time the order dated 17.01.2014
       passed by the DRT was an interim relief order in SA No.9/2014
 D     and therefore even if the interim relief order is set aside by this
       Court the appeal/application will have to be decided and disposed
       of on merits and on whatever grounds which may be available to
       the borrower. However, at the same time the bank cannot be
       restrained from selling the mortgaged property by holding the
       public auction and realise the amount and recover the outstanding
 E     dues, unless the borrower deposits/pays the entire amount due
       and payable along with the costs incurred by the secured creditor
       as per Section 13(f) of the SARFAESI Act. [Para 7.2][1111-F-H]
              3. It will be open for the appellant – Bank to proceed further
       with the auction proceedings of the mortgaged property in auction
 F     i.e. residential house by inviting the bids afresh and whatever
       the amount is already paid by the borrower, may be in pursuance
       to the interim relief order passed by the DRT and/or the
       impugned judgment and order passed by the Division Bench of
       the High Court, the same may be adjusted against the dues/total
 G     liability of the borrower. At the same time DRT to decide and
       dispose of SA No.09/2014 filed by the borrower under Section 17
       of the SARFAESI Act in accordance with law and on its own merits
       and on the whatever grounds which may be available to the
       borrower. [Para 8][1112-B-D]

 H
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                           1103


      4. On public auction being finalized and the mortgaged                  A
property being sold by the bank the borrower has to handover
the peaceful and vacant possession of the property to the bank
and/or the auction purchaser. However, in the meantime the
original title deeds of the mortgaged property be retained by the
bank. Till the time the borrower remains in possession of the
                                                                              B
mortgaged property as per the present order and till the
mortgaged property is sold in a public auction, the borrower shall
not transfer and/or alienate the mortgaged property in any manner
whatsoever including the possession. [Para 8][1112-E-G]
        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 363 of
2022.                                                                         C

      From the Judgment and Order dated 20.09.2017 of the High Court
of Judicature for Rajasthan Bench at Jaipur in D.B. Special Appeal Writ
No.349 of 2017.
      Ms. Praveena Gautam, Pawan Shukla, Aman S. Sharma, Aman                 D
Rastogi, Advs. for the Appellant.
       Mrs. Christi Jain, Puneet Jain, Harsh Jain, Ms. Yashika Sharma,
Umang Mehta, Harsh Verdhan Sharma, Neeraj Kumar, Ms. Pratibha
Jain, Advs. for the Respondents.
        The Judgment of the Court was delivered by                            E
        M. R. SHAH, J.
       1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 20.09.2017 passed by the Division Bench of the High
Court of Judicature for Rajasthan Bench at Jaipur in D.B. Special Appeal
                                                                              F
Writ No.349 of 2017, by which the Division Bench of the High Court
has allowed the said intra-court appeal and has quashed and set aside
the judgment and order dated 12.01.2017 passed by the learned Single
Judge and has directed that if the respondent - borrower deposits a
further sum of Rs.17 lakhs to the bank, the bank shall release the property
and handover possession along with the title deeds of the residential/        G
housing property in question to the borrower and by which the Division
Bench of the High Court has further directed that the SA No.9/2014
filed by the borrower before the learned Debt Recovery Tribunal (DRT)


                                                                              H
1104            SUPREME COURT REPORTS                            [2022] 1 S.C.R.


 A     is restored to its original number to be heard on merits, the appellant
       herein - Bank of Baroda – financial institution – secured creditor has
       preferred the present appeal.
             2. The facts leading to the present appeal in nutshell are as under: -
              2.1 That the appellant herein – bank granted term loan of Rs.100
 B     lakhs and cash credit limit of Rs.95 lakhs to the respondent – borrower
       (hereinafter referred to as the borrower) against the security of two
       mortgaged properties namely (i) industrial plot situated at Chittor Road,
       Bundi measuring 500 Sq.Mtrs. and (ii) a residential/housing property
       situated at 1-Ja-27, Vikas Nagar, Bundi measuring 198 Sq.Mtrs. That
 C     the borrower failed to repay the term loan as per the terms and conditions
       of the agreement. The account of the borrower became NPA on
       31.10.2012. A notice under Section 13(2) of the Securitisation and
       Reconstruction of Financial Assets and Enforcement of Security Interest
       Act, 2002 (hereinafter referred to as the SARFAESI Act, 2002) dated
       07.01.2013 was served upon the borrower demanding a sum of
 D     Rs.1,85,37,218.80/- The bank took symbolic possession of the immovable
       property/residential house and also issued a notice under Section 13(4)
       of the SARFAESI Act, 2002 on 22.08.2013. An application was moved
       under Section 14 of the SARFAESI Act, 2002 which came to be allowed
       on 08.11.2013 and with the police assistance the bank took possession
 E     of the residential house, which was one of the mortgaged properties of
       the borrower, on 25.11.2013.
              2.2 That thereafter the bank issued a sale notice by public auction
       of the residential property dated 16.12.2013. The reserve price fixed
       was Rs.48.65 lakhs for sale of the said secured asset in terms of the
 F     procedure prescribed under Rule 8 read with Rule 9 of the Security
       Interest (Enforcement) Rules, 2002. The date of auction notified was
       20.01.2014. The borrower challenged the auction of the bank by filing
       Securitisation Application (SA) No.09/2014 under Section 17 of the
       SARFAESI Act, 2002 before the DRT, Jaipur. An interim order was
       passed by the DRT that if the borrower deposits Rs.20 lakhs on
 G     20.01.2014 by 12.00 noon, the bank shall accept the bids but not finalize
       the bids/confirm the sale of the secured asset and if the borrower commits
       default in payment of balance amount of Rs.28.65 lakhs, the restraint
       order shall stand vacated automatically. The DRT also observed that if
       the borrower deposits Rs.48.65 lakhs with the bank on or before
 H     27.01.2014, the bank shall deliver the possession of the secured asset
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                             1105
                    [M. R. SHAH, J.]

along with the original title deeds of the property in question. It is not in   A
dispute that the borrower deposited Rs.48.65 lakhs with the bank.
        2.3 That the aforesaid interim order passed by the DRT came to
be challenged by the bank in appeal before the DRAT (Debt Recovery
Appellate Tribunal). It was the case on behalf of the appellant - bank
that in public auction the bank had received bids up to Rs.71 lakhs and         B
the amount of debt due against the borrower at that point of time was
above Rs.2 crores and if at all the borrower is interested or keen to
redeem the mortgaged property, he could do so by discharging the entire
liability and not by making payment of Rs.48.65 lakhs, as ordered by the
DRT. It was also the case on behalf of the appellant – bank that order
                                                                                C
passed by the DRT dated 17.01.2014 was in violation of Section 13(8)
of the SARFAESI Act, 2002. However, it was submitted on behalf of
the bank that the bank may not find any difficulty in releasing the subject
property provided the borrower is ready to pay a sum of Rs.71 lakhs
which is the highest bid available with the bank. It was submitted that
even this amount would not ultimately go to discharge the entire liability      D
outstanding against the borrower but still if the borrower deposits Rs.71
lakhs, the bank may not find difficulty to release the subject property in
question.
       2.4 The DRAT dismissed the appeal by observing that as the
reserve price was Rs.48.65 lakhs which the borrower deposited and the           E
bank had received the bids ranging from Rs. 61.50 lakhs to Rs.71 lakhs
and the alleged bidders failed to deposit the earnest money and when
the borrower is ready to purchase the said property for Rs.71 lakhs no
fault can be found with the order passed by DRT. The order passed by
the DRAT dismissing the appeal preferred by the bank was the subject
                                                                                F
matter of challenge before the learned Single Judge. The learned Single
Judge set aside both the orders of DRT and DRAT vide its judgment and
order dated 12.01.2017 primarily for the reason that the said orders were
in contravention of Section 13(8) of the SARFAESI Act, 2002. The
judgment and order passed by the learned Single Judge was challenged
before the Division Bench of the High Court by the borrower by way of           G
present intra-court appeal. By the impugned judgment and order, the
Division Bench of the High Court has allowed the said appeal and has
quashed and set aside the judgment and order passed by the learned
Single Judge and has directed the bank to release the secured property
(residential house) on the borrower depositing a further sum of Rs.17
                                                                                H
1106             SUPREME COURT REPORTS                            [2022] 1 S.C.R.


 A     lakhs to the bank and handover the possession along with the title deeds
       to the borrower.
             2.5 Feeling aggrieved and dissatisfied with the impugned judgment
       and order passed by the Division Bench of the High Court, the bank –
       financial institution – secured creditor preferred the present appeal.
 B
             3. Ms. Praveena Gautam learned counsel appearing on behalf of
       the appellant – bank has vehemently submitted that in the facts and
       circumstances of the case the Division Bench of the High Court has
       committed a grave error in directing the bank to release the property
       and handover the possession along with the title deeds of the residential/
 C     housing property in question to the borrower on making a further payment
       of Rs.17 lakhs only.
             3.1 It is vehemently submitted by learned counsel appearing on
       behalf of the appellant – bank that even as observed by the Division
       Bench of the High Court the borrower did not come forward to redeem
 D     the property but to release the property in favour of the purchaser on
       payment of the reserve price of the mortgaged property in terms of the
       auction notice. It is submitted that therefore when the dues were of
       Rs.1,85,37,218.80/- at the time when the notice dated 07.01.2013 under
       Section 13(2) of the SARFAESI Act, 2002 was issued and served upon
 E     the borrower, on payment of a sum of Rs.71 lakhs only the borrower
       cannot be discharged from his liability to pay the entire dues.
               3.2 It is further submitted by learned counsel appearing on behalf
       of the appellant – bank that what was understood and agreed by the
       bank was that on payment of Rs.71 lakhs which was the highest bid
 F     received, the borrower may be handed over the possession. It is submitted
       that however, it was specifically made clear that on payment of Rs.71
       lakhs the said amount would not ultimately discharge the entire liability
       outstanding against the borrower. It is submitted that aforesaid has been
       misinterpreted and/or misconstrued by the Division Bench of the High
       Court and it is understood that on deposit of Rs.71 lakhs the bank agreed
 G     that the borrower be discharged from his entire liability outstanding against
       him.
             3.3 It is further submitted that the Division Bench of the High
       Court has also not property appreciated that the offer of Rs.71 lakhs in
       the auction was received in the year 2013/2014 and thereafter the
 H
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                              1107
                    [M. R. SHAH, J.]

valuation has increased. It is submitted that even the outstanding dues          A
have also gone up which was Rs.1,85,37,218.80/- as on 07.01.2013. It is
submitted that therefore the Division Bench of the High Court has
materially erred in treating and/or considering Rs.71 lakhs as sale/
purchase price and/or the value of the residential property. It is submitted
that therefore when the Division Bench of the High Court passed the
                                                                                 B
judgment and order if the property could have been auctioned it would
have fetched much more price than Rs.71 lakhs. It is submitted that on
deposit of Rs.71 lakhs only the borrower cannot be discharged from his
entire liability. It is submitted that the impugned judgment and order passed
by the Division Bench of the High Court is just contrary to Sub-section
(8) of Section 13 of the SARFAESI Act, 2002. It is submitted that as per         C
Sub-section (8) of Section 13 of the SARFAESI Act, 2002 only on deposit/
payment of entire payment of dues of the secured creditor together with
all costs, charges and expenses incurred by secured creditor to the secured
creditor, at any time before the date of publication of notice for public
auction or inviting quotations or tender from public, the secured asset          D
shall not be sold by the secured creditor. It is submitted that in the present
case the amount due was much more than Rs.71 lakhs. It is submitted
that therefore the impugned judgment and order passed by the Division
Bench of the High Court directing to release the secured property just
on payment of a total sum of Rs.65.65 lakhs is just contrary to Sub-
section (8) of Section 13 of the SARFAESI Act, 2002.                             E
       3.4 It is further submitted by learned counsel appearing on behalf
of the appellant – bank that when the subject property was mortgaged
to the bank in the housing loan account borrowed by the borrower and
without satisfying the entire outstanding dues the mortgaged property
cannot be discharged.                                                            F
       3.5 It is further submitted by learned counsel appearing on behalf
of the appellant – bank that the Division Bench of the High Court has
failed to appreciate the reserve price of Rs.48.65 lakhs was based on
the valuation carried out by the valuer of the bank and the process of the
auction of the subject property was through public auction in which an           G
actual market price could have been fetched. There could not have been
any directions for redemption of the secured subject property on making
payment of the reserve price or having paid the average of the two
highest bid to the borrowers unless the entire dues including the costs
and expenses are paid.
                                                                                 H
1108            SUPREME COURT REPORTS                          [2022] 1 S.C.R.


 A            3.6 It is further submitted by learned counsel appearing on behalf
       of the appellant – bank that the Division Bench of the High Court has
       not properly appreciated the fact that the initial order passed by the
       DRT which was the subject matter before the DRAT challenged by the
       bank by which the DRT directed to release/handover the possession of
       the mortgaged property to the borrower on deposit of Rs.48.65 lakhs
 B
       which was the reserve price, was an interim order. Therefore, the Division
       Bench of the High Court ought not to have passed the final order
       discharging the borrower from his entire liability just on payment of
       Rs.65.65 lakhs.
             3.7 Making the above submissions it is prayed to allow the present
 C     appeal.
             4. The present appeal is vehemently opposed by Mrs. Christi Jain
       learned counsel appearing on behalf of the respondents – borrowers.
              4.1 It is vehemently submitted by learned counsel appearing on
 D     behalf of the borrower that as the highest bid received by the bank in the
       public auction was Rs.71 lakhs which the borrower agreed to deposit/
       pay and even earlier the borrower deposited a sum of Rs.48.65 lakhs as
       per the order passed by the DRT dated 17.01.2014, thereafter when the
       Division Bench of the High Court has directed the bank to release the
       residential property on deposit of a further sum of Rs.17 lakhs (total
 E     making it Rs.65.65 lakhs) and thereafter has directed to handover the
       original title deeds to the borrower, the impugned judgment and order
       passed by the High Court is equitable order which does not warrant any
       interference by this Court in exercise of powers conferred under Article
       136 of the Constitution of India.
 F            4.2 It is submitted that even the learned counsel appearing on
       behalf of the appellant – bank agreed that on payment of a total sum of
       Rs.65.65 lakhs the property in question may be released. It is submitted
       that therefore the Division Bench of the High Court has not committed
       any error which warrants interference of this Court in exercise of powers
 G     conferred under Article 136 of the Constitution of India.
             5. We have heard the learned counsel appearing on behalf of the
       respective parties at length.
             6. At the outset, it is required to be noted that by the impugned
       judgment and order the Division Bench of the High Court has directed
 H     the bank – secured creditor to release the secured property and handover
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                            1109
                    [M. R. SHAH, J.]

the possession along with original title deeds of the residential/housing      A
property in question to the borrower on payment of a total sum of Rs.65.65
lakhs. Thus, by the impugned judgment and order the Division Bench of
the High Court has released the secured property/mortgaged property
on payment of a total sum of Rs.65.65 lakhs against the total dues which
as such as on 07.01.2013 was Rs.1,85,37,218.80/-.
                                                                               B
       6.1 From the impugned judgment and order passed by the High
Court it appears that the Division Bench of the High Court has treated
and/or considered the market value of the mortgaged property at Rs.71
lakhs. The DRT when initially granted the interim relief in favour of the
borrower which was the subject matter before the DRAT and the learned
Single Judge and thereafter before the Division Bench of the High Court,       C
directed to handover the possession of the mortgaged property to the
borrower on payment of Rs.48.65 lakhs which was the reserve price/
base price. The possession was taken over by the bank under the
provisions of the SARFAESI Act and after following the proceedings as
required under Section 13 of the SARFAESI Act, the mortgaged property          D
was put to auction and at that stage the borrower preferred an appeal/
application before the DRT under Section 17 of the SARFAESI Act and
as such the said appeal can be said to be technically pending as the
order dated 17.01.2014 passed by the DRT was an interim order. When
the auction proceedings were initiated under Section 13 of the SARFAESI
Act and after the bank took over the possession under Section 14 of the        E
SARFAESI Act as per Sub-section (8) of Section 13 of the SARFAESI
Act the secured asset shall not be sold and/or transferred by the secured
creditor, where the amount dues of the secured creditor together with all
costs, charges and expenses incurred by him is tendered by the borrower
or debtor to the secured creditor at any time before the date of publication   F
of notice for public auction or inviting quotations or tender from public or
private treaty for transfer by way of lease assignment or sale of the
secured assets. In the present case though as on 07.01.2013 the dues
were Rs. Rs.1,85,37,218.80/- and without the secured property was sold
in a public auction the Division Bench of the High Court has directed to
release the mortgaged property and handover the possession along with          G
original title deeds to the borrower on the borrower depositing/paying a
total sum of Rs.65.65 lakhs only. At this stage, it is required to be noted
that Rs.65.65 lakhs was not the amount realized by selling the mortgaged
property in a public auction. It was only a highest bid received and before
any further auction proceedings were conducted, the DRT passed an              H
1110             SUPREME COURT REPORTS                            [2022] 1 S.C.R.


 A     interim order directing to handover the possession and handover the
       original title deeds on payment of Rs.48.65 lakhs which was the base
       price, which was the subject matter before the DRAT and before the
       learned Single Judge. Therefore, the borrower did not deposit and was
       not ready to deposit the entire amount of dues with secured creditor
       with all costs, charges and expenses incurred by the secured creditor.
 B
       Therefore, it was open for the secured creditor to sell the mortgaged
       property which was put as a security and realize the amount by selling it
       in a public auction. At this stage, it is required to be noted that even as
       per the Division Bench of the High Court the borrower made an offer to
       deposit/pay Rs.71 lakhs as a purchaser and not by way of redeeming
 C     the mortgaged property. Therefore, the impugned judgment and order
       passed by the Division Bench of the High Court directing to release the
       mortgaged property/secured property and to handover the possession
       as well as the original title deeds to the borrower on payment of a total
       sum of Rs.65.65 lakhs only is contrary to Sub-section (8) of Section 13
       of the SARFAESI Act.
 D
               7. Even otherwise on making the payment i.e. Rs.65.65 lakhs
       against the total dues Rs.1,85,37,218.80/- as on 07.01.2013 the entire
       liability outstanding against the borrower cannot be said to have been
       discharged. Even if the mortgaged property would have been sold in a
       public auction say for an amount of Rs.71 lakhs and the bank has realized
 E
       Rs.71 lakhs by selling the mortgaged property, in that case also the liability
       of the borrower to pay the balance amount would still continue. By selling
       the mortgaged property/secured property it cannot be said that the
       borrower is discharged from the entire liability outstanding against him.
       The liability of the borrower with respect to the balance outstanding
 F     dues would still be continued. Therefore, the Division Bench of the High
       Court has erred in directing to release the mortgaged property/secured
       property and to handover the possession along with the original title deeds
       to the borrower on payment of a total sum of Rs.65.65 lakhs only.
              7. 1 At the cost of repetition it is observed that as such the bank
 G     had already initiated the proceedings under Section 13 of the SARFAESI
       Act and even the possession of the mortgaged property was taken over
       by the bank under Section 14 of the SARFAESI Act and thereafter the
       mortgaged property was put to sale by a public auction and at that stage
       the borrower wanted to stall the auction proceedings and restrain the
       secured creditor/bank from selling the property. In such a situation the
 H
 BANK OF BARODA v. M/S KARWA TRADING COMPANY & ANR.                          1111
                    [M. R. SHAH, J.]

bank/secured creditor can be restrained from selling the mortgaged           A
property/secured property where the borrower deposits entire dues that
was Rs.1,85,37,218.80/- as on 07.01.2013 with the secured creditor.
Therefore, the DRT in its order dated 17.01.2014 which as such was an
interim relief order pending the appeal under Section 17 of the SARFAESI
Act was not justified in directing to release the mortgaged property and
                                                                             B
handover the possession along with the original title deeds to the
borrower on payment of Rs.48.65 lakhs only which was the base price/
reserve price, which the Division Bench of the High Court has
increased to Rs.65.65 lakhs on the ground that the highest bid received
was Rs.71 lakhs (which was not materialized as the highest bidder did
not come forward). Unless and until the borrower was ready to deposit/       C
pay the entire amount payable together with all costs and expenses
with the secured creditor, the borrower cannot be discharged from the
entire liability outstanding. Therefore, as such no order could have
been passed either by the DRT and/or by the Division Bench of the
High Court to discharge the borrower from the entire liability outstanding   D
and to discharge the mortgaged property and handover the possession
along with original title deeds to the borrower. As such the learned
Single Judge rightly set aside the orders passed by the DRT as well as
by the DRAT considering Section 13(8) of the SARFAESI Act. The
learned Single Judge was right in setting aside the order passed by the
DRT confirmed by the DRAT. The Division Bench of the High Court              E
has erred in interfering with the order passed by the learned Single
Judge and has erred in directing to release the mortgaged property/
secured property and handover the possession along with the original
title deeds to the borrower on payment of a total sum of Rs.65.65
lakhs only.                                                                  F
       7.2 However, at the same time the order dated 17.01.2014 passed
by the DRT was an interim relief order in SA No.9/2014 and therefore
even if the interim relief order is set aside by this Court the appeal/
application will have to be decided and disposed of on merits and on
whatever grounds which may be available to the borrower. However, at         G
the same time the bank cannot be restrained from selling the mortgaged
property by holding the public auction and realise the amount and recover
the outstanding dues, unless the borrower deposits/pays the entire amount
due and payable along with the costs incurred by the secured creditor as
per Section 13(f) of the SARFAESI Act.
                                                                             H
1112              SUPREME COURT REPORTS                           [2022] 1 S.C.R.


 A            8. In view of the above and for the reasons stated above the
       present appeal succeeds. The impugned judgment and order dated
       20.09.2017 passed by the Division Bench of the High Court in DBSAW
       No.349/2017 is hereby quashed and set aside and the order passed by
       the learned Single Judge quashing and setting aside the order passed by
       the DRT dated 17.01.2014 confirmed by the DRAT is hereby restored.
 B
              It will be open for the appellant – bank to proceed further with the
       auction proceedings of the mortgaged property in auction i.e. residential
       house by inviting the bids afresh and whatever the amount is already
       paid by the borrower, may be in pursuance to the interim relief order
 C     passed by the DRT and/or the impugned judgment and order passed by
       the Division Bench of the High Court, the same may be adjusted against
       the dues/total liability of the borrower. At the same time DRT to decide
       and dispose of SA No.09/2014 filed by the borrower under Section 17 of
       the SARFAESI Act in accordance with law and on its own merits and
       on the whatever grounds which may be available to the borrower. It is
 D     also observed and directed that in case pursuance to the orders passed
       by the DRT and the Division Bench of the High Court if the borrower is
       put into possession, considering the fact that the mortgaged property is a
       residential property, till the auction is finalized and the mortgaged property
       is sold in a public auction, the possession of the borrower may not be
 E     disturbed. However, it is directed that on public auction being finalized
       and the mortgaged property is sold by the bank the borrower has to
       handover the peaceful and vacant possession of the property to the bank
       and/or the auction purchaser. However, in the meantime the original title
       deeds of the mortgaged property be retained by the bank. In the meantime,
       and till the borrower remains in possession of the mortgaged property as
 F     per the present order and till the mortgaged property is sold in a public
       auction, the borrower shall not transfer and/or alienate the mortgaged
       property in any manner whatsoever including the possession. The present
       appeal is allowed with the above further observations and directions
       accordingly. In the facts and circumstances of the case there shall be no
 G     order as to costs.


       Bibhuti Bhushan Bose                                            Appeal allowed.
       (Assisted by : Neha Sharma, LCRA)


 H